The Best Time To Create An Estate Plan Is When You Don’t Need It
I recently had a few different people ask me the following: “Jeff, when is the best time to create an estate plan?”
My inclination was to explain common triggers for creating (or updating) an estate plan — things like marriage or divorce, birth of a child or receiving an inheritance.
But after looking at it from a different angle…the very best time to create an estate plan is when you don’t need it. Wait, what?!? Allow me to explain.
Most purchases or projects are based on needs and wants, both perceived and real. For example, your car breaks down so you need and buy a new (or used) one. Or, you want a vacation so you book a flight and hotel reservations.
Nobody really wants to think about disability or dying though. You’d probably rather take that vacation. And the need for estate planning might not be perceived unless you are diagnosed with an illness or become very advanced in age.
But times of illness and advanced age are really not the best time to begin estate planning — or maybe more appropriately termed — advance planing. A couple reasons:
1. If you suffer an accident or illness, you and your family should be focused on your health, and enjoy the peace of mind of advance planning.
2. Estate planning under duress or emergency often produces results that are either poorer than advance planning, or worse, are disastrous.
What are some of the problems that I’ve seen associated with waiting too long?
- No estate plan (intestacy)
- Court-ordered guardianship
- Inability to do effective tax planning
- Difficulty in formulating and communicating wishes
- Inability to fully implement the estate plan (e.g. funding a trust)
- Ambiguity or uncertainty caused by a hastily created plan
- Family confusion, disagreement and disputes
- Challenges (capacity and/or undue influence) to deathbed-created estate plans
An estate plan is a form of insurance that you know will be needed at some point or points in time, but you can’t know when. Planning your estate today doesn’t mean that you will suffer disability or death tomorrow, just as buying auto insurance doesn’t mean you’re about to have an accident.
So when is the best time to create your estate plan? Now. When you don’t need it. Your family — and your future self — will thank you for it. And then take that vacation.
Image courtesy of Flickr/Luke Gattuso