What’s the right age for adults to start estate planning? You are never too young or too old, although your needs will change as you get older, acquire assets, shed the financial responsibility of raising children and approach retirement.
50s—People in their 50s are finished (or nearly so) writing checks for college tuition. They may be in their peak earning years and turning their attention to saving for retirement. Because they lose up to 37 cents of every dollar they earn, they could certainly use the charitable deduction on their income taxes. An option: Make charitable gifts of appreciated assets. Donors who itemize receive an income tax deduction in high tax bracket years when it will do them the most good. And they avoid the capital gains tax that they would otherwise owe if they were to sell the assets.
60s—This is the age when many people begin simplifying their lives—moving to smaller homes, scaling back at work, selling businesses. If they haven’t already done so, this is a good time to review their estate plans. If estate taxes will be a problem (for those whose estates exceed $11.4 million in 2019), people in their 60s should consider a program of annual gifts to family members. Gifts to charity also make sense.
Donors in this age group may find they own stocks and mutual fund shares that have grown substantially but don’t produce much income. An option: Use the shares to fund a charitable remainder trust that will make payments for life. When the trust sells the shares and reinvests for increased income, nothing is lost to capital gains taxes. Donors are entitled to an income tax charitable deduction for the value of charity’s right to receive the assets when the trust ends.
70s and beyond—People age 70 and older often are concerned with how they will be remembered. While they want to leave treasured items to family members, they don’t necessarily feel they must leave everything to children and grandchildren. It’s possible to create gifts through a will or living trust to benefit both children or grandchildren and charity. Charitable remainder trusts and charitable lead trusts can be created in an estate plan to provide benefits for family members and charity. Both types of trusts offer estate tax savings for those whose estates will be subject to tax.