As a young professional, you may think that you don’t need an estate plan. After all, you’re likely young and healthy, and you may not have a lot of assets.
For most people, the word “estate” conjures up images of financial wealth. But in reality, everyone needs some degree of estate planning. Estate planning is the process of making arrangements for your assets and your loved ones in the event of your death or incapacity. It’s something that everyone should do, regardless of their age or wealth.
It is important to have a good estate plan because it:
- Provides support, guidance and financial stability for your family.
- Makes sure that your wishes are carried out when you are no longer able to handle your affairs.
- Ensures that your assets are distributed in a timely fashion.
- Provides care and support for your children, grandchildren or pets!
- Offers assistance to a favorite charity, college, or other cause.
- Minimizes the taxes and expenses that can be incurred as part of the estate settlement process.
- Protects your family’s privacy.
- Preserves assets for future generations.
You may have more assets than you think. Even if you don’t have a lot of money in the bank, you may have other assets that are worth something, such as a car, a house, or a retirement account. If you don’t have an estate plan, these assets could be distributed according to the laws of your state, which may not be what you want.
While the specific documents that you need will depend on your individual circumstances – here are some of the common documents included in an estate plan and what each does:
- Will: A will is a legal document that specifies how your assets will be distributed after your death. You can use your will to name beneficiaries for your property, appoint an executor to manage your estate, and make other arrangements for your affairs.
- Power of Attorney: A power of attorney (POA) is a legal document that appoints someone to act on your behalf if you become incapacitated. This person, called your agent, can make decisions about your finances, health care, and other matters.
- Healthcare Power of Attorney: A healthcare power of attorney is a legal document that appoints someone to make decisions about your medical care if you become unable to make your own decisions. This person, called your healthcare proxy, can make decisions about your treatment, including whether to continue or withdraw life support.
- Health Insurance Portability and Accountability Act (HIPAA) Waiver: This document allows medical professionals to share your general medical information with another individual(s) and/or family members. Allowing loved ones access to your medical information (including a diagnosis and care plans) in the event that you are unable to communicate can provide them with peace of mind.
- Living Will: A living will is a legal document that specifies your wishes for end-of-life care. This document can be used to indicate whether you want to be resuscitated, placed on life support, or have other medical interventions.
- Digital Asset Plan: While working with an estate planning attorney to update your wills, powers of attorney, and other estate documents, consider including language giving lawful consent for providers to divulge the contents of your electronic communications to the appropriate people.
It’s important to meet with an estate planning attorney to discuss your specific needs and create an estate plan that is right for you and your goals.
Here are some questions to ask yourself as you create your estate plan:
- Your beneficiaries: Who do you want to inherit your assets?
- Your executor: Who do you trust to manage your estate? Your executor is the person you select to have the legal responsibility to settle your estate when you die.
- Your agent under a power of attorney: Who do you trust to make decisions on your behalf if you become incapacitated?
- Your healthcare proxy: Who do you trust to make decisions about your medical care if you become unable to make your own decisions?
- Your end-of-life wishes: What are your wishes for end-of-life care?
- Your taxes: How will your estate be taxed?
- Your digital assets: What will happen to your online accounts and digital assets after you die? It’s important to understand the terms of use regarding access and control of your digital assets (for example, domain names and electronically stored photos and videos, and email and social media accounts).
Once you have a plan in place, it only needs to be changed if your circumstances change or if there is a substantial change in the value of your estate, if you move to another state, want to change an executor or trustee, or there is a change in relationship with your beneficiaries.
Estate planning can seem daunting, but it’s important to remember that it’s not something that you have to do all at once. Start by meeting with an estate planning attorney to discuss your specific needs. The attorney can help you create an estate plan that is right for you and your family.
We encourage you to take the time to get an estate plan in place. It’s one of the most important things you can do for yourself and your loved ones.
Take Action Now!
- Check your beneficiaries. Make sure beneficiaries are up to date on insurance policies, retirement and investment accounts (remember to update due to marriage, divorce, childbirth.)
- Consult with an estate attorney.
- Create a will and sign it! It’s typical to delay signing due to disagreement about child guardian, etc. Pick a guardian and sign the documents. These can always be modified later.
- Ensure that you have advanced directives and any POA is signed, and the agent has access to it.
- Make sure that parents, siblings, and children have your up-to-date estate planning documents so that your preferences are carried out.
- Read more about legal documents all young adults should have in place.