By Jim Shellenberger, CFA, CFP®
Do you believe that estate planning is only for the elderly or the affluent? Think again! Whether you’re just starting your career in your 20s or enjoying a well-earned retirement, having an estate plan is crucial for everyone.
Shockingly, a 2024 survey (1) revealed that just 32% of Americans have established formal estate plans, leaving many without any say over their final wishes. This can lead to others—or even the government—making important decisions for them. In this article, we delve into why estate planning is not just smart, but necessary at every stage of life.
Starting Out: In Your 20s and 30s
Feeling invincible? We all do when we’re just starting out! These early years are when you least expect to need an estate plan, which is exactly why it’s a critical time to have one. Early estate planning helps clarify your wishes—however straightforward they may be at this stage—so they are clear and actionable.
Take Stock of Your Finances: Create a list of bank accounts, investments, real estate, and any other valuable assets. This first step helps you organize your financial life, right from the start.
Create a Will: It’s important to recognize that it’s not necessarily about the size of your estate but about making your wishes known. A well-drafted Will helps outline exactly how you want your assets distributed after your passing, and is a great way to look after your family if you can’t be there—especially if you have minor children.
Consider a Durable Power of Attorney (POA) and Healthcare Proxy: Unexpected events don’t wait until you’re older. Establishing a POA and healthcare proxy early allows you to designate someone you trust to handle your affairs if you can’t. A POA specifically authorizes this individual to manage your financial and legal matters, while a healthcare proxy empowers them to make medical decisions on your behalf.
Set Up a Living Will: This document (2) helps you lay out your wishes for medical intervention—a crucial piece if you’re unable to communicate those decisions yourself.
Building and Growing: In Your 40s and 50s
By the time you hit these middle years, life’s gotten a whole lot richer—both in terms of assets and complexity. Maybe you have kids, your dream home, or a thriving career. This stage is full of both financial and family growth, which makes it a great time to reassess and reinforce your estate plan.
Life Insurance Check-up: A key consideration for any estate plan, life insurance offers a safety net for your family that can help support them in your absence. But as your life evolves, so do your life insurance needs. That’s why it’s essential to reevaluate whether your coverage reflects your current situation.
Consider a Trust: Beyond a Will, a Trust is another way to manage and safeguard your growing assets. And despite what you may have heard, Trusts aren’t just for the wealthy. They are legal arrangements that allow for control over asset distribution, often avoiding probate and addressing specific wishes in estate planning.
Update Your Beneficiaries: Life changes—and so should your estate plan. Make sure the beneficiaries listed on your Will, insurance policies, investment accounts, and retirement accounts match your current wishes. Here’s one more thing to consider: it’s a good idea to review your beneficiary designations and Will at least every three years, or whenever you experience major life changes like marriage, divorce, the arrival of a new baby or grandchild, retirement, or a significant health event.
Pre-Retirement: Sharpening Focus in Your 60s
On the brink of retirement, now’s the perfect time to fine-tune your estate plan. The decisions you make now can significantly impact your legacy and retirement years, so it’s important to focus on strategies that reflect your upcoming lifestyle changes and the influence you want to have.
Advanced Trust Planning: Strategies like Charitable Remainder Trusts (3) or Irrevocable Life Insurance Trusts can help you extend your legacy far beyond your lifetime. These sophisticated tools are capable of far more than just reducing taxes—they offer you the opportunity to support the causes close to your heart in a significant and enduring way.
Business Succession Planning: If you’re a business owner, what’s your exit strategy? Including a clear succession plan or buy-sell agreement in your estate plan is vital for your business’s continuity. A well-drafted and funded buy-sell agreement supports smooth transitions, helping to manage disruptions or financial difficulties when you leave. Plus, it can also provide for your family financially if you pass away or cannot work. Without such planning, your business could pass to heirs who are unable or unwilling to operate it, leaving your business legacy at risk.
Tax Strategies: With a substantial estate, it’s critical to engage in tax planning to effectively transfer wealth to your heirs—and not to the IRS. This includes several strategies, like setting up Trusts, making charitable gifts, and gifting assets during your lifetime. Each of these is designed to reduce your estate’s tax burden while helping you fulfill your legacy goals.
Your Enduring Legacy: Retirement and Beyond
By this stage, many people are tempted to think they’re done planning. But retirement isn’t the finish line for estate planning. In fact, it’s a pivotal time for maintaining, updating, and shaping the legacy you’ll leave behind.
Estate Review: Regular reviews with your estate planning team can provide confidence that your plan will remain effective. Changes in laws, financial circumstances, or even family dynamics can all impact your estate plan, so checking in regularly helps keep it current.
Charitable Giving: What is the vision for the wealth you’ve built? For most people, leaving a legacy isn’t just about assets, it’s about making a difference. If this sounds like you, consider how charitable giving fits into your estate plan.
Gift Wisely: Gifting assets during your lifetime allows you to take advantage of the gift tax exclusion, potentially reducing the overall estate tax burden. Typically, you can give gifts up to a certain limit (determined annually) to as many people as you like without affecting the lifetime gift exemption amount. Plus, this lets you witness the impact of your generosity firsthand.
Prepare for Tomorrow, Starting Now
Your estate plan is not just a collection of legal documents; it’s a testament to your life’s achievements and the values you hold dear. As you progress through different stages of life, your estate planning strategy should evolve to reflect those changes.
Whether you’re beginning to accumulate wealth or preparing to pass down your legacy, proactive planning now can have a lasting impact on your future. At Elevate Wealth Management, we’re dedicated to supporting you throughout this journey.
For tailored guidance and to create an estate plan that aligns with your specific needs, don’t hesitate to contact us. Schedule an introductory meeting by reaching out to us at jshellenberger@frontierasset.com or 307.673.5675.
About Jim
Jim Shellenberger, CFA, CFP® is a financial advisor at Elevate Wealth Management, an independent, fee-only wealth management firm serving young professionals, pre-retirees, and retirees in Sheridan, Wyoming, and surrounding areas. With the mission of serving and educating, Jim is dedicated to providing comprehensive, top-notch services that not only help his clients reach their goals, but also empower them to make the best financial decisions for their lives and walk toward their future with confidence. Jim is known for going the extra mile, not only offering valuable knowledge in investment management as a former investment analyst, but building long-lasting relationships so he can give honest, customized advice and strategies that make an impact on their lives.
Jim has a bachelor’s degree in business administration with a minor in finance from the University of Wyoming. He is proud to be a Wyoming native and loves exploring the outdoors with his family—hiking, fishing, hunting, and backpacking. Faith is an integral part of Jim’s life, and he always looks forward to attending church on Sundays, Bible study on Fridays, and being part of his church community. He’s also an avid sports fan! Fun fact: Jim owns shares in the Green Bay Packers. To learn more about Jim, connect with him on LinkedIn.
The views expressed represent the opinion of Frontier Asset Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Frontier Asset Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. The use of such sources does not constitute an endorsement. Frontier does not have an affiliation with any author, company or security noted within. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the Frontier Asset Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. Past performance is not indicative of future results.
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(1) Caring.com, “2024 Wills and Estate Planning Study, July 30, 2024
(2) National Council on Aging, “Living Trust vs. Will: Key Differences”, September 20, 2024
(3) IRS, “Charitable Remainder Trusts”, 2024