Many people think estate planning is just for retirees and the wealthy. However, for younger people, especially young parents, estate planning is arguably even more important.
An estate plan is a roadmap for your family in case of tragedy. It gives loved ones the tools they need to settle your affairs, and to help care for your children.
Here are five reasons young people need sound estate plans:
Naming a Guardian for children. Your Will lets you name an individual (often a family member or friend) to care for your children. Without a Will, your relatives and the Probate Court will decide what happens to your children without your input.
Protecting life insurance benefits. Many parents carry large amounts of life insurance, which pay hefty sums upon death – often to a child, sibling, or friend – with no strings attached. A simple Living Trust can serve as beneficiary instead, providing better direction (and protection) to ensure those benefits last until your children are adults.
Dealing with disability and incapacity. Your Durable Power of Attorney lets you empower someone you trust (perhaps your spouse, parent, or friend) to manage your affairs if you become incapacitated. It names them your “Attorney-in-Fact,” and lets them act on your behalf – so bills are paid, maintenance occurs, and taxes get filed.
Sharing your health preferences. An Advance Health Care Directive does two things. First, it lets you name an agent (spouse, sibling, friend) to help manage your health care decisions if you can’t. Second, it expresses your preferences around difficult issues such as life support, end-of-life care, and organ donation, so your family knows exactly what you would have wanted.
Ensuring a smooth transition. Your Will names a Personal Representative (or Executor) to manage your estate, wrap up your affairs, and make sure your wishes are carried out. It helps your family and the Probate Court, letting them know what they should do, and whom you want taking the lead.
Your estate plan probably doesn’t need to be overly complex, but it must be complete, properly executed, witnessed, and notarized. In the end, you’ll have a set of documents you hope not to use for a long time, but which could prove invaluable if tragedy strikes.