The short answer to this question is everyone! Every adult should have some form of estate planning. The exact pieces of your estate plan, and what those documents say and do should be set up with the help of your professional advisors. No two situations are exactly the same, but here are some common "life events" that trigger the need for estate planning.
Turning 18 and/or leaving for college. When you reach age 18 in Michigan, you are legally an adult. As a result, your parents are not able to access your medical or financial information (or information from your school) without your consent. If you wish to give this consent, you should consider signing some basic estate planning documents. You might not have a ton of "traditional" assets to plan for at this stage, but if you have bank accounts, life insurance, digital assets, or other property, you should also plan for how those assets are distributed on death.
Getting married / Moving in with a partner. Any time two individuals cohabitate and/or get married, it is wise to ensure that both parties' estate plans are in place. This allows the parties to have a clear understanding of what should happen in the event one of the parties passes away or becomes incompetent. Spouses generally have more rights to claim against a deceased spouse's assets than non-married individuals, but depending on the situation, a surviving spouse may not be entitled to inherit everything.
Having kids (or grandkids). Becoming a parent comes with a great deal of responsibility. Estate planning is an often overlooked parental responsibility, but a very important one. Designating a guardian and conservator for a minor child in the event both parents are deceased is critical to allow you to have control over the process, and make it easier on those you designate to care for your child. For many parents, using a trust to restrict how and when assets are distributed also provides peace of mind and protection for assets that would otherwise be distributed to the child when the child becomes an adult. Further, if parents are going on vacation and leaving a minor in someone else's care, proper documents should be in place to allow the caregiver to temporarily have the ability to make decisions for the minor until the parents return. Estate planning is critical when young children are involved. Finally, many people realize the importance of estate planning when their children have kids because grandparents often want to ensure that their grandchildren receive assets directly.
Owning a business. Business owners have to think about how a business interest is handled upon death. Does the business cease to exist, and then liquidate its assets? Should the ownership be passed on to a family member or held in trust for the family member? Should the business interest be sold to a business partner? Trusts often make sense for business owners to address these and other issues, but occasionally these issues can be handled with updated corporate documents (such as Operating Agreements, Buy-Sell Agreements, and the like). Proper planning can ensure that the business can continue to exist after the death of the owner, if possible.
Blended families. Blended families present interesting challenges for estate planners. Some families use prenuptial agreements to ensure that each family can protect what it brought to the marriage. Others use trusts or wills to accomplish this purpose. Often times spouses don't think about how their assets would be handled in the event of death. For instance, if one spouse passes away, should the surviving spouse be entitled to completely dispose of assets and leave the children of the deceased spouse with nothing? Careful planning is necessary to ensure that both parties' intent is preserved.
Beneficiaries with special needs. If someone you intend to leave assets to is receiving governmental benefits, is incarcerated, or has bad habits you do not wish to support, you need to have a plan in place to preserve those assets for the benefit of the beneficiary. You may wish to designate other trusted individuals to hold money for the benefit of such a beneficiary with provisions outlining how and when that money can be distributed so that it does not jeopardize benefits the beneficiary is receiving from other sources or does not immediately get spent on supporting a bad habit.
Deaths or Divorces. Deaths and divorces in your family can have a significant impact on how your assets are distributed upon death. Or, you might inherit an asset upon the death of a loved one that needs to be addressed through your estate plan. Finally, getting divorced brings a new set of challenges that require careful estate planning or updating existing estate plans.
Significant changes in the type or value of assets. If the types of assets you own change significantly, or the value of the assets you own increases or decreases significantly, you should consider creating or updating your estate plan to make sure that your assets are protected accordingly. Sometimes, estate planning tools that were in place to protect a large portfolio of assets are no longer needed as the estate is consolidated. Sometimes, as asset portfolios grow, more advanced estate planning tools become necessary.
Carrying out charitable gifts. Leaving a charitable legacy is one of the most rewarding aspects of completing an estate plan. Often, people will leave gifts to organizations or causes that have a special meaning in their lives through wills, trusts or other charitable vehicles. Charitable giving can also have tax benefits, so it makes sense to coordinate your charitable giving with your professional advisors.
Buying a home or rental property. For many people, a home is the largest and most valuable asset they own. Whether you own one home, or multiple homes, having a plan in place for the ownership (and potentially maintenance) of a home after death can be accomplished with a variety of different estate planning tools. Different forms of ownership have different implications. Also, if you have a trust, it is very important to make sure that the ownership of the home is placed into your trust (either during lifetime or upon death) to avoid the necessity of probate.
Each of the items above are not only "trigger" events to think about creating an estate plan, they're also important events that may require updating an existing estate plan.
If you would like to begin the estate planning process, or if your existing estate plan needs to be reviewed, please contact us today to schedule a consultation.