When we take vacations, we plan ahead to make sure we have a good time in the short period that we’re away from the humdrum of life. When the clock strikes midnight at the start of the year, we think of all the good things that we want to achieve and list down New Year resolutions and plans to make them happen. We lay out plans throughout our life to make sure that our retirement will be as we envisioned it to be. But why is it that people don’t plan for a good end of life, too?

Have you taken the time to consider what will happen to your assets and belongings after your death? There’s a common misconception in Australia that estate planning is something only those nearing retirement need to prioritise. In reality, this isn’t the case. While it might be uncomfortable to discuss, everyone knows that no one lives forever. With this, it’s critical to realise the importance of having a proper estate plan to distribute your assets according to your wishes. 

Just as you should do your retirement planning after entering the labor force, there are several life events that should prompt you to put an estate plan in place (or review the one you have already drawn up).

When is the right time to start developing your estate plan? 

As there is no guarantee when your life on earth may last, estate planning must be done while you are sound of mind and body. 

May financial advisers recommend starting your estate planning as you have the legal capacity to legally enter a contract and updating it three to five years after putting it in place. This is because at 18, you are responsible for your finances, healthcare and power of attorney and you want to ensure that every base is covered. 

But for most young adults, creating an estate plan (least of all a will) is the least of their concerns, which is normal. It’s one of the most common estate planning mistakes anyone can make. 

There are a few common life events that make it necessary for you to prioritise your estate plan. No matter what your age, you might want to think about starting (or updating) your estate plan during these life milestones. 

• Opening a savings account – After opening a savings account, you should think where those funds would go in the event of your death. Doing so will ensure that your money will be passed on to a beneficiary of your choosing. 
• Buying a property – The purchase of a property is a sign to begin estate planning. This event is usually the first significant financial commitment for a young couple or for an unmarried individual. Since a property is one of the most valuable assets you will own at this stage of your life, it’s important to think of who you would like to leave your home to in your estate plan. 
• Marriage, divorce and remarriage – Once you are married, you should consult with an estate planning attorney to discuss what should happen to your assets (both joint and separate) if one of you were to die. This involves drawing up a will, a trust or whatever you think will be necessary to protect your assets. In the event of a divorce or remarriage, experts advice to update your plan accordingly.  
• Birth of first child and each one after – One of the most obvious life milestones that should get you to start estate planning is the birth of a child. As a parent, you should place as much importance on custody arrangements for minor children as you would with the distribution of your assets. If you are married or with a longtime partner, you should have a thorough discussion as to who would be the best choice as your child/children’s guardian. Another key issue to tackle is when your children would be ready to take control of their inheritance. Additionally, you should set in place measures regarding their financial security in the event of your untimely passing. 
• Inheritance of money or other assets – Receiving a significant inheritance is a common trigger for people to start or revisit their own estate plan. You should update your estate plan to reflect any additional money or assets that you received. 

When should I draw up important legal documents?

By paying attention to certain life milestones, you can identify the right time to make the important legal documents needed to make a comprehensive estate plan. 

When should I nominate a guardian? 

As you prepare to welcome your first child, it’s advisable to start thinking about whom you should appoint as a guardian if anything were to happen. New parents don’t usually want to think about this, but it is still crucial to make it official. 

When should I make a will? 

As mentioned, the best time to create a will is as soon as you become a legal adult (18 years old) or you go through any of the mentioned estate planning triggers. Unfortunately, more than half of Australians have not even drafted a valid will. Failing to make one can leave your loved ones in a state of confusion in the midst of a loss. A will can help prevent this scenario by allowing you to designate a power of attorney, providing financial directives and specify how your assets will be distributed. 

When should I create a trust? 

You may start thinking of setting up a trust when you have more assets. Trusts give you more control over where your assets will be allocated while you’re still alive and after you pass. It can also help you avoid probate, as well as additional taxes or fees as your assets are inherited by your beneficiaries. 

Conclusion 

Estate planning is one of the most important things you can do to protect yourself, your assets and your loved ones. It’s never too early to think about how you can get your affairs in order and begin considering your options. The sooner you outline your plan, the less chance there will be for problems to happen after you’re gone.

Being prepared now with a comprehensive estate plan can provide you and your family with financial security if anything happens. It’s also important to continually update and review your estate plan as major life changes happen. 

Estate planning is an essential part of financial planning, but the undertaking might seem overwhelming at first glance. Not sure where to start? You can read up about estate planning on nestegg. Explore our website today!