6 Estate Planning Moves You Should Make in Your 30s

Family of three with baby having quarrel quarrel over money at home
When you're in your 30s, planning for your eventual demise is likely to be low on your list of priorities. However, financial experts suggest that this could be the best time to start acting to protect your family and your assets in case the unexpected occurs.

"It is imperative that those in their 30s have their estate plans in order, because they have as much to lose as their elders -- in fact, sometimes more," says Dan White, owner of Dan White & Associates in Glen Mills, Pennsylvania. "You may be just settling down and getting married, purchasing your first home, and, most important, starting a family, which will now need to be protected."

To get started, experts recommend meeting with an attorney and financial adviser to put the following elements in place:

1. Last will and testament. A will establishes who will inherit your possessions and assets when you die, but Douglas A. Boneparth, vice president and chief operating officer of Life and Wealth Planning in New York City, notes a will has other vital aspects. "A will also states other important information such as who you want to place in charge of administering your estate and who you want to be the guardians of any minor children."

2. Living will. A living will outlines your wishes if you are incapacitated, death is imminent, or you are in a persistent vegetative state, says Boneparth.

3. Durable power of attorney. You should have a written durable power of attorney letter, which identifies someone who can make financial decisions for you if you're incapacitated and who can do things like pay your bills and manage your assets, says Boneparth.

4. Health care proxy. This document permits a specified person to make medical decisions on your behalf. "It even may make sense to have a conversation with the person you identify so that they clearly understand what your wishes are -- God forbid these circumstances arise," Boneparth says.

5. Life insurance. Term insurance is generally a cheap, cost-effective way to cover current debts that you don't want to straddle your significant other with should something happen to you, says Julian Guilfoyle, vice president of Cooper & Adel Financial in Centerburg, Ohio. Craig Myers, founder of CR Myers & Associates in Southfield, Michigan, says many of his clients opt for a permanent life insurance plan to fund retirement, growth, educational savings and general accumulation. "My young clients also appreciate the ability to utilize this permanent vehicle as a funding resource for spontaneous financial opportunities or unforeseen emergencies," he says.

6. Retirement fund. Guilfoyle says it's essential for 30-somethings to start saving for retirement, particularly if their employers offer incentives such as profit-sharing or matching contributions to a 401(k). Make sure you update the beneficiaries of any retirement savings plans.
After all of these items are in place, it is very important to review them annually with the professional who put the estate plan together, says White. "If you changed jobs and have a new 401(k) at work or expanded your family, you want this professional to evaluate everything properly," says White. "A common mistake I see way too often is people forgetting to name or change their beneficiary as their lives change. By not taking the time to write down one name, you could tie everything up in probate for months to years."

Michele Lerner is a Motley Fool contributor. Try any of our Foolish newsletter services free for 30 days. Motley Fool retirement experts have created a free report on a simple strategy to take advantage of a little-known IRS rule to boost your retirement income.

11 Money Moves to Make Before You Turn 40
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6 Estate Planning Moves You Should Make in Your 30s
Creating an emergency savings fund can prevent you from relying on a credit card and going into debt when unexpected costs strike, says "Today" show financial editor Jean Chatzky. "You've got to watch it with the debt," she warns, adding that half of Americans lack emergency funds. "Lack of savings and debt go hand in hand ... an emergency cushion is insurance against debt," she says.
"Insurance is always that thing that we don't think about that we should," Chatzky says. Rental insurance and disability insurance both tend to be "chronically under-bought," but taking out policies can end up saving you from financial catastrophe, she adds. She recommends looking into policies offered through work because they can be more affordable.
Automating your retirement savings -- having money taken out of your paycheck and put into a tax-advantaged retirement account -- makes it easier to save without thinking too much about it, Chatzky says. Since many companies' automatic opt-in programs start at 3 percent of income, you might need to scale it up yourself, and Chatzky says if you do it in 2 percent increments, you might not even notice the difference.
While some people prefer to manage their money on their own, others benefit from a professional's help. "It's easy to feel overwhelmed by all of the competing expenses," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial (AMP). "Sitting down with a financial adviser can help you understand where your expenses are and what is discretionary versus essential, and then you can create the right kind of budgeting and savings plan for you."
Kathleen Grace, a certified financial planner and author of "Prince Not So Charming," says maintaining excellent credit is important as you progress through your 30s, particularly because your credit report can play a big role when it comes to determining how much you will pay to borrow money for big expenses like a mortgage. She suggests reviewing your credit report once a year to check for errors and paying off your credit card balance in full each month.
Learning the ins and outs of income taxes, including any tax deductions and credits that might apply to you, can help you save a few hundred, or even a few thousand, dollars each year, says certified financial planner Nancy L. Anderson. Those amounts can add up over a lifetime, she adds.
This move isn't right for everyone, but it is a smart investment for many 30-somethings, says Bart Astor, author of "AARP Roadmap for the Rest of Your Life." Despite the flux in the real estate market, "it's still a good idea for a young person or family. It brings stability," he says. And over time, the investment should grow.
Many companies provide an additional 30 percent of pay in terms of employee benefits, Anderson says. Those benefits include retirement, tuition reimbursement, pretax transportation benefits, health savings accounts, employee assistance programs, wellness programs, financial planning and more. Since your company is already paying for those benefits, you can take advantage of them to help boost your own wealth.
"The single most important financial move you can make in your 30s if you have minor children is to put the time, effort and money necessary into drafting solid estate planning documents," says Tim Maurer, director of personal finance for the BAM Alliance of independent advisers. They should be written by an attorney who specializes in estate planning and include advance directives, a durable power of attorney and most importantly, a will.
You don't need to become a financial professional, but knowing your way around the stock market will help you make the right decisions for your own long-term savings and investments. Money and retirement expert Kerry Hannon recommends smartaboutmoney.org, by the National Endowment for Financial Education, for free guides on stocks, bonds and mutual funds. She also suggests taking a personal finance course at a local community college.
This decade is also the time to make slow and steady progress toward paying off any remaining student loan debts, as well as unloading any expensive credit card and other types of debt. Hannon even opted to cash in her 401(k) plan at age 30 to help pay off her credit card debt, which isn't necessarily the right choice for everyone. Still, becoming debt-free by age 40 is definitely something to celebrate.
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