Estate planning is focused upon what you want to have happen with all of the things in your life when you pass away. Many people put planning off and only begin to think about it when they notice other friends or relatives are beginning to decline in health.
Estate planning is best when drafted as just that, a plan. You need to anticipate the possibility that you may have health problems in your life because the fact is, most all of us will experience them at some point. And those who never got sick before they died probably died young, which is all the more reason to get planning in place early. By starting sooner rather than later you will be able to take full advantage of all the opportunities available through the tax code to protect and direct your assets as you see fit.
Problems that I see consistently include spouses who wait until their husband or wife gets sick to seek planning. This is a mistake because sick individuals may have capacity related issues and no longer be able to sign legal documents. Another related problem stems from the “look-back” rules which state any gifts made within 1 year of death are brought back into an estate and if you anticipate a need for Medicaid, that look-back period is increased to 5 years when determining an ability to pay for nursing related care. These pitfalls are easily avoided but you need to be proactive and get plans in writing before an incident.
Younger people have their own problems because they often do not think about what might happen to their material possessions or their children in the event that something happened to them. I am a father and can’t imagine what might happen without some planning to dictate my wishes. In addition, young people without descendants really should take a good hard look at their assets and those of their parents because under intestacy laws, many states pass assets back to parents of a young person who passes away without children. This may not only miss the mark in terms of who the deceased individual may want to give, or believed needed, their money, but could potentially create an estate planning problem for their parents.
So when should you plan? NOW!
OK, so maybe not right this minute, but definitely as soon as you begin to accumulate assets, get married, have a child, when your children reach the age of majority, when you are approaching or begin retirement, or when you begin to anticipate some potential health problems. The fact of the matter is, there is no time like the present.
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