No one is too young (or too broke) for an estate plan

One of the most common things I hear from younger or newly divorced clients is, “I don’t have enough to need an estate plan.” That’s usually followed by, “Once I buy a house, I’ll think about it,” or “My [fill in the blank] will just handle everything if something happens to me.”

The reality is those assumptions can lead to stressful and avoidable situations. Estate planning isn’t about how much someone owns. It’s about protecting what matters and making sure the right people are making the right decisions on your behalf should you become incapacitated or after you die.

Financial advisors are in the perfect position to bring this up early in the client relationship as they already help clients plan for their future. Estate planning is a natural extension of the work financial advisors do on behalf of their clients.

Common myths that delay planning 

• “I’m too young.” Emergencies do not wait until life is perfectly planned.
• “I don’t have anything valuable.” Sentimental objects, pets and personal wishes matter more than many people realize.
• “My family will take care of it.” Without legal documents, the probate courts decide who steps in. That’s not always who you want.

Another widespread misconception is that estate planning is only about death. It’s not. It’s about what happens when someone cannot make decisions for themselves due to a life-altering injury or illness. Without a document such as a health care proxy, medical decisions can fall to an estranged relative simply because no one else was legally named.

Why waiting to create an estate plan can be costly

When people delay planning, they lose control over who speaks for them and how their assets are handled after they pass away. I’ve seen families argue over journals and family heirlooms, not just money.

Legally, waiting can also mean dealing with probate, which is public, expensive and time consuming. A trust can help avoid this entirely. While a will goes through probate court, a trust offers more privacy and control.

When to bring up an estate plan

Any major life change is the right time to revisit an estate plan. That includes turning 18 years old, getting married or divorced, buying property, having a child or inheriting anything of value.

Even if none of these events has happened yet, it’s still a smart move to ask clients if they’ve started the estate planning process. Advisors do not need to know every legal detail. Simply starting a conversation can make a big difference.

The four essentials to recommend

To help clients take the first step, review these essential estate planning documents:

• Will – A straightforward tool that names beneficiaries, outlines who gets what and appoints guardians for children or pets.
• Health care proxy – A document that names someone to make medical decisions if the client is incapacitated. This document is critical and often overlooked.
• Trust – More comprehensive and private than a will. A trust will avoid probate and provides more control over how assets are distributed.
• POD (Payable On Death) – This is a simple way to name a beneficiary (i.e., parents, spouse or child) on your bank accounts, checking and savings, to bypass the probate process.

 

If your firm doesn’t offer estate planning in-house, building relationships with local attorneys or referring clients to the bar association lawyer referral program can add real value.

Even if estate planning isn’t your specialty, having these discussions can save your client, or their beneficiaries, a lot of money and heartache in the end. When you bring up these topics, you show them that you are thinking about their whole financial picture and not just the numbers. Estate planning is about more than money. It is about protecting your client’s voice, values, interests and the people they care about most.

 

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