What Should You Know Before Creating an Estate Plan?

Creating an estate plan is an important step toward protecting your wishes, property, and loved ones. While estate planning is often associated with older adults or people with significant assets, having a plan can be valuable at many stages of life. An estate plan can address what happens to your property after your death while also establishing who can make certain decisions if you become unable to make them yourself.

It is also important to understand that estate planning is not necessarily a one-time task. Major life events, financial changes, marriages, divorces, births, and other circumstances may require you to review or update your documents. In this article, we will discuss when to begin estate planning, which documents may be important, and what to consider when creating your plan.

Know When To Start Estate Planning

Many people assume estate planning can wait until later in life. However, it can be helpful to begin thinking about an estate plan as soon as you become legally responsible for your own affairs. It is recommended to begin estate planning by the time you become a legal adult at age 18. Even a young adult with limited property may benefit from having documents that address financial and healthcare decisions.

Starting early also gives you an opportunity to establish a foundation that can be updated as your circumstances change. As you purchase property, build savings, start a family, or experience other major milestones, your estate plan can evolve with you.

Understand The Key Estate Planning Documents

An estate plan may include several documents designed to address different aspects of your wishes. According to the Texas State Law Library, four important documents to include in a comprehensive estate plan include a last will and testament, a trust, a power of attorney, and advanced healthcare directives.

Each document can serve a different purpose. A will can establish how certain property should be distributed after death, while a trust may provide another way to manage or distribute assets. A power of attorney can designate someone to act on your behalf for certain financial or legal matters, and healthcare directives can communicate your preferences regarding medical care.

Consider Your Family And Assets

Before creating an estate plan, think carefully about the people and property you want to protect. Consider who may inherit your assets, who you would trust to make decisions on your behalf, and whether there are particular instructions you want your family to understand.

Your financial circumstances should also be considered. Bank accounts, real estate, retirement accounts, investments, business interests, and personal property may all play a role in your planning. Understanding what you own can help you and your attorney determine which documents and strategies may be appropriate.

Review And Update Your Plan

Creating an estate plan is only the beginning. Your circumstances can change considerably over the years, so reviewing your documents periodically can help ensure they continue to reflect your current wishes.

Marriage, divorce, the birth or adoption of a child, the death of a beneficiary, acquiring significant property, or changes in your financial situation may all be reasons to revisit your plan. Keeping beneficiary designations and other related information current can also help prevent conflicts or unintended outcomes.

Take Estate Planning Seriously

Many Americans have yet to create even a basic will. According to Caring, in 2024, only 32% of Americans had a will. Taking the time to establish an estate plan can help you make your wishes clear and give your loved ones guidance when they may need it most.

An estate plan should reflect your individual circumstances, priorities, and goals. Working with an experienced estate planning professional can help you understand your options and determine which documents may be appropriate for your situation.