In the early stages of a career or marriage, it’s easy to put off estate planning. You may be struggling under student loans or a new mortgage, and think that since you have no dependents, there is no reason to worry about who you will leave behind in the event of your death. However, establishing an estate plan now is not only smart, but necessary.
Estate planning is essential even for those who are in debt. Seeing to end of life documents, a last will and testament, medical directives, or other aspects of financial management and settlement tasks can lay down a basis for more complex planning in the future. It can also assist aging parents, a spouse, or siblings.
Careful estate planning and laying the groundwork for retirement early in a career might not be on the minds of many recent graduates, but they are ultimately unavoidable. Making certain decisions while young, healthy, and childless can allow for more freedom and less worry as you age.
Thinking Ahead to the Future With Estate Planning
Investing just a small part of income in insurance policies or retirement accounts can pay off enormously in later years, when it is most needed. Simply educating yourself in these matters will make difficult decisions much easier to make when the time comes. Even if you are currently unmarried, actions you undertake now will benefit your loved ones later on.
It might seem that you don’t have a lot of possessions, and that’s quite normal for recent graduates. Many are focused on pulling themselves out of debt. However, part of financial planning is becoming cognizant not only of what one’s present situation is, but what the future might look like. That means thinking about establishing end of life documents even if you’re healthy and do not have children.
The most important aspect of these documents is to inform family members or close friends about them, giving them copies, letting them know where the originals are, and ensuring that the signed forms are kept in a safe location. Your loved ones cannot ensure that your wishes are met if they don’t know what they are or how they can be legally enforced.
Living Wills, Advance Directives & Medical Documentation
Many people are familiar with the concept of living wills and other medical directives. Living wills are used when a person is incapacitated, in a vegetative state, or otherwise unable to communicate their wishes. Detailing these ahead of time is vital if you have strong opinions about how much care you would like to have in these circumstances.
You can decide how much effort you’d like medical professionals to take if you are determined to be in a vegetative state. For example, if you would like CPR performed, but do not want your life artificially extended with a feeding tube or other extraordinary means, you can make such a distinction. You are also free to appoint a health care proxy who is legally able to make such decisions for you in the event a medical situation arises which you have not addressed.
Some are surprised to learn that they can also express preferences for certain doctors or hospitals. They can decide whether or not to be organ donors, and which family members or friends should serve as their emergency contacts. A qualified legal professional can help you make these decisions and draft documents which are valid in your state.
Beneficiaries for Insurance Policies & Other Accounts
No matter how little you own, it’s still your estate. Even if it’s just a single car, the contents of a savings account, and a few personal possessions, someone must inherit, if only the state. Especially if you are unmarried, it can be startling to think that you must name beneficiaries for insurance policies and other investments. A beneficiary is any person or organization who receives physical times, insurance payouts, investments, and cash or the contents of bank accounts.
Remember, even if a retirement account holds a tiny amount, it still needs to go to someone. Usually, small estates and the payouts from insurance policies are not subject to the probate process. You can help to smooth the process after your death if you have clearly stated who you would like to collect them.
The beneficiary need not be a relative, although most will be named by outside entities if the policy holder has not made a specific designation. You can name a friend, a business partner, or even a charity. However, it is important to keep such paperwork current if you become married, begin a relationship with a new partner, make a change in your career, or shift allegiances within your family. It’s usually simple to make such a change, but doing so can avoid uncomfortable situations with your loved ones.
Deciding on Power of Attorney
You might be familiar with power of attorney in business dealings. For example, if you run a business with a person who is in another state, sometimes you might need to make transactions when you cannot be present. You probably designated temporary power of attorney to your business partner or another trusted person so that he or she can represent you.
Designating power of attorney regarding end of life decisions, no matter how young and healthy you are, is a good idea. Especially if you live alone, asking a trusted friend or family member to make legal decision in your stead can make a stressful period much easier for them.
The person you grant power of attorney can withdraw money from checking or savings accounts, sell real estate or vehicles, or pay medical bills and other debts. In the event you are deemed medically incapacitated, a person to whom you have granted durable power of attorney can make certain decisions for you, including, if you like, specific medical choices.
Granting durable power of attorney and similar documents is usually an easy process. It typically involves a notary public should be updated if you move to a different state.