When Should You Create an Estate Plan?

There's no birthday when an estate plan suddenly becomes necessary. The better question is what you'd want to happen if you couldn't make decisions for yourself, and who you'd want making them. Once you have people depending on you, property you care about, or a clear opinion on who should handle your affairs, it's probably time to create an estate plan.

For some people that happens at 25. For others it's 60. Most people can point to a specific change in their life that made them start thinking about it.

Why age isn't the deciding factor

A 30-year-old with two kids and a mortgage usually has more reason to plan than a 55-year-old renter with no dependents. Age matters less than responsibilities. Who relies on you? What do you own? What happens to both if you're suddenly not there to handle things, even temporarily? 

That last part is easy to overlook. An estate plan isn't only about what happens after death. A good plan also covers who can pay your bills and manage your accounts if an illness or accident leaves you unable to do it yourself.

Life changes that usually mean it's time

You've become a parent

This is the most common reason people start. If you have children under 18, a will is where you name the person you'd want to raise them if neither parent is living. A court still makes the appointment. In Missouri, though, the law directs the court to appoint the person named in the last surviving parent's will unless that person is unfit or unable to serve.

Parents also tend to think about money for the first time here. A young child can't manage an inheritance. Some parents decide they want property held and managed until their kids are older, which is one of the situations where a trust may come into the conversation.

You've gotten married

Marriage changes who you'd expect to inherit and who you'd want making decisions for you. It's also a good time to check the beneficiaries on life insurance and retirement accounts, since those usually pass directly to whoever is named on the account, regardless of what a will says.

For second marriages, especially with children from a prior relationship, planning matters more. How you balance a spouse and children from a first marriage is a decision best made on paper.

You've bought a home or land

Buying significant property often makes people realize they've never thought about where it goes next. How the property is titled matters. Property owned jointly with survivorship rights usually passes to the surviving owner automatically. Property in your name alone usually doesn't, which is part of what an estate plan addresses.

You own a business

Business owners have two sets of questions. One is personal. Who inherits your share? The other is about the company. Who runs it if you can't, and can the business keep operating while that's being sorted out?

Business succession planning connects your estate plan with your company's ownership documents. If you have partners, the operating agreement or buy-sell terms often decide more than your will does. That's why this kind of planning usually involves both estate planning and business and corporate law.

You own farmland you want kept in the family

In East Central Missouri, this comes up often. A farm that's been in the family for generations raises questions a simple will may not answer. If one child farms the land and the others don't, how should it be divided? Should the land stay together? Who decides?

These questions take time to work through, and they're much easier to answer while you're the one deciding.

You want someone you trust handling your finances if you can't

You don't need children or property for this one. If you were in the hospital for a month, someone would need to pay your bills and deal with your bank. A power of attorney lets you choose that person ahead of time.

In Missouri, a power of attorney only continues to work after you become incapacitated if it's written as a durable power of attorney. It also has to be signed and notarized. That's one reason these documents are worth getting right.

You've never done any of it

Plenty of people reach their 40s or 50s without a will. If you die without one in Missouri, state law decides who inherits your probate property based on family relationships. That may or may not match what you'd have chosen. It also means you haven't named who should handle your estate or who should raise your children.

Realizing you've never put anything in writing is a perfectly good reason to start.

When an existing estate plan needs another look

An estate plan written 15 years ago was written for a different life. It's worth reviewing yours after any major change.

Divorce is a big one. Under Missouri law, a divorce automatically cancels the parts of your will that benefit your former spouse, but the rest of the will stays in place. What's left may not make sense anymore.

Other changes to watch for include the death of someone named in your plan, a child reaching adulthood, a move, a large inheritance, or selling the property your will was built around. If your executor or the guardian you named is no longer the right person, the plan needs updating.

Even without a big event, reading through your documents every few years is a reasonable habit.

What an estate plan usually includes

For most people, an estate plan is a small set of documents that work together. That usually means a will, and a power of attorney for financial decisions. Some people also need a trust, depending on what they own and what they want to happen with it. Beneficiary designations on accounts and insurance are part of the plan too, even though they're not drafted by a lawyer.

You can read more about how these pieces fit together in our overview of estate planning in Missouri.

You don't need to know which documents you need

Most people come in with a situation, not a shopping list. They had a baby, bought a farm, or realized their will is two decades old. Working out which documents fit is part of the estate planning process.

Estate and succession planning is an important part of attorney Michael Yenzer's practice at Schmanke Law Firm. The firm works with families, landowners, and business owners across East Central Missouri from offices in Union and Owensville. If one of the situations above sounds familiar, that's usually a sign it's time to create an estate plan.