The time to start estate planning for the inevitable is not when you have retired, but when your life as an adult truly begins. We are all saddled with legal, personal, and financial responsibilities from our early 20s and onwards, from the right to vote and drink, manage our own financial decisions, and being held legally accountable to our own actions.
It is right then that we should also make some crucial decisions on what should happen, should we die young. Death is something no one wants to think about, especially one’s own death. And for the young and healthy, the idea of passing away rarely if ever crosses the mind. However, it can happen – and the stark reality is that if it does, it can leave a family devastated in more ways than one.
Estate Planning Is for Everyone
When a person passes away, their friends and loved ones are concerned with cherishing their memories, grieving their passing, and surviving their loss. However, there are other things to be considered in the aftermath of a person’s death, as distasteful as it may seem sometimes.
A person’s possessions and belongings must pass on, and their children must be taken care of. Without any indication of the decedent’s will before they died, a state’s intestate laws take over. These determine where a decedent’s estate goes, and it chooses who takes care of any surviving children under the age of 18.
Everyone is involved in an estate plan – and every adult needs one. If you have a long-term romantic partner and have not married yet, then they may not be legally entitled to anything you owned after you pass away, regardless of how special it may have been to them.
Without a will, you cannot clarify who should take up guardianship of your children. And without the proper estate planning tools, you may end up incapacitated yet alive, unable to make financial or healthcare decisions critical in reflecting your will.
There are many estate planning tools that serve to do more than protect vast fortunes or avoid painful tax rates. Estate planning helps people create a guide for the law to ensure that your will is executed after you pass away, and your family is spared any excess or undue stress through paperwork or painful decisions.
Why Estate Planning May Be a Misnomer
In common law, an estate is the net worth of a person at any given point in time. When discussing an inheritance, an individual’s estate is typically referring to the net worth of the decedent at the time of their death, although an estate in the form of a trust can grow in value, through royalty income, for example.
However, estate planning is so much more than a person’s net worth. It is more than just the matter of deciding where the cash goes after a person passes. Estate planning is about ensuring that you, when you pass away, can have a final say in what happens with your hard work, with the people you love, and with your own life.
Estate planning does not begin with a person’s death, but can begin with comas and grave injuries, appointing individuals to make life or death situations, represent a person financially, and ensure that good decisions are made. For a young person, setting up basic power of attorney documents and a living will can count as a comprehensive estate plan.
If the person in question has a steady job with benefits, such as life insurance or a 401k, then naming a beneficiary or setting up a trust will ensure that the contents of these accounts are distributed as that person sees fit.
While federal student debt is typically discharged and thus no longer an issue once you pass away, private loans are not canceled when a person passes away. This means they are a liability to your estate – and it is important to plan accordingly. All liabilities must be settled before a person’s estate is completely evaluated.
Keep It Simple
Estate planning for young people is rarely complex. Keeping things simple will save money and time. The key to keeping it simple is knowing what documents you might need, and what documents you can do without.
Ideally, it is best to consult a local professional if you plan on putting together a lightweight estate plan – it will cost you more than doing it alone, but you may end up cutting down on costs by keeping the plan smaller than it otherwise would have been.
A healthcare directive or a living will is a document that outlines what actions should be taken should certain circumstances arrive. This allows you to make certain medical decisions while incapacitated.
Power of Attorney
Through a durable medical and a durable financial power of attorney, you can name agents to represent your will should you be alive yet unable to make crucial decisions. Power of attorney documents come in many different forms, including general power of attorney documents, special power of attorney documents, and a durable power of attorney document.
Choosing a Guardian
Through your last will and testament document, you can assign a guardian to any children you may leave behind should you pass away soon. This is often preferable to letting the courts decide without any of your first-hand knowledge of what is best for your child.
Get Some Legal Advice
Doing your research online is well and good, but there are limits to what can be accomplished without the prerequisite legal knowledge and the right resources. While DIY guides and templates exist all over the internet, even setting up a relatively simple estate plan without legal assistance may backfire. Investing in the services of an attorney might eat into your budget, but it is well worth it down the line.
Be sure to work with a reputable estate planning law firm that assists clients by sticking to budgetary constraints, rather than going for the unnecessary up-sell. Estate planning comes in many shapes and forms and becomes more expensive the more complex and involved the estate is. As a young person, chances are your financial affairs are simple and sorted, and a bare bones estate plan will suffice.