Estate Planning Needs When Clients Turn 40

Nobody wants to talk about their own mortality, but it is especially difficult to get clients to open up about these things before they’ve even really hit middle age. After all, even in your thirties you still feel you have a long time to prepare for retirement and your estate. Despite the discomfort that younger clients may feel, it’s important to begin these conversations as early as possible so that clients have, at the very least, a basic roadmap laid out if the unthinkable does happen much sooner time than anticipated. Here three most basic things that a client should have by the time they are 40 years old:
1) Basic estate plans documents and components
By age 40, most, if not all, of your clients should have life insurance, a will, a living will, and a durable power of attorney in place.
An untimely death can devastate young couples who haven’t yet accumulated enough wealth to fully fund a retirement plan. This loss of income can throw the surviving spouse’s finances into chaos for many years. Life insurance helps protect against this turmoil by helping to replace lost wages. It is also important for clients to know they would get the added benefit of being approved for reduced rates the earlier they apply, rates which increase dramatically after age 35.
By their fortieth birthday, clients should also have drafted a will spelling out how they’d like their assets to be transferred to beneficiaries when they pass. Wills should also outline dependent guardianship wishes and any financial account trustees which may exist.
Trustees aren’t only appointed to manage the distributions of the deceased’s assets, but to perform tasks like paying bills, accessing bank accounts and selling homes, when necessary. This is why the durable power of attorney is so important. This person should be a designee that the client trusts, so there is no concern over potential abuse of power.
This designee can also be named as trustee in a living will. This document spells out how a client wants medical decisions to be handled if they become incapacitated, severely disabled or make decisions for themselves.
2) Have two sets of eyes on every major document
It’s crucial to have both a financial planning professional and an estate planning lawyer to review every major financial document while negotiating this process. Putting an estate planning focus on a client’s decisions, even while the client is in their thirties, will help safeguard their financial planning efforts. It’s also important to plan ahead and guard against having to use investments to pay expenses that will occur down the road, like long-term care expenses.
3) Encourage clients to communicate with family
As uncomfortable as these discussions can be, clients should have conversations with family. Not being mindful of implications and issues can hamper a client’s estate planning efforts and leave a bunch of unhappy people. Communicating wishes now can prevent a lot of trouble later.
Speaking about and planning for one’s inevitable passing is a difficult task for many people. Prudent investment advisors must be mindful of the long-term while assisting in making the short-term possible, so it is imperative to begin discussions with clients regarding estate planning as early as possible. Retirement is not the only financial planning that needs to be looked at early. However, if a client creates the proper estate and care documents early, has multiple professionals make sure everything is in order and includes family and other possible heirs in the early discussions, it is possible to gain peace of mind over something that causes many others much discomfort.