Doing a substantial amount of research into the topic recently, estate planning has jumped up to the top of my list, especially since this is something I should have done way back when I turned 18 (yes, that young) or got my first job, or bought my first house, or had my first child. As I said, way behind.
Why It’s Important To Start Estate Planning In Your 20’s
Even if you don’t have that much to your name in the form of finances or assets, and you’re not planning on dying anytime soon, estate planning is so much more than that. Many parents are surprised that once their children turn 18, they can no longer make doctor appointments for them. The truth is that once you turn 18, you’re technically an adult, and your parents can no longer make medical or financial decisions on your behalf.
Step 1: Name a Durable Power of Attorney (POA) and a Health Care Proxy
It may not be something young people want to think about but sometimes the unexpected happens and a tragic situation is unavoidable. whomever you name as your POA and/or healthcare proxy will be able to make health care decisions and financial decisions in the event that you are incapacitated to do so.
Naming a POA will also be beneficial for college students who may be studying abroad and need a parent to assist with taxes or other financial matters while they are away.
Step 2: Create a Will and Name a Beneficiary
Once you start your first “big girl/boy” job, that position may come with a 401k plan and perhaps even life insurance coverage. You may name a beneficiary for each account, that will inherit the assets and/or life insurance benefits after you pass.
Without a will, the court will decide how to distribute your assets, as minimal as they may be. The last thing your parents or unmarried partner will want to do in the event of your untimely passing is to spend time and money going through probate court for $5,000. If you do in-fact have a romantic partner, to whom you are not married – Unless directly specified in your will, that person will have few, if any, legal rights to your assets.
Estate Planning In Your 30’s Is Even More Important
If you haven’t done your estate planning in your 20’s (as I’m sure most of us 30-somethings haven’t), there are still some important decisions to be made. Start with the steps above and add pile on a couple more. As you enter your 30’s, you may or may not have gotten married and started a family, perhaps even bought your first house. Adding to your assets and increasing the risk of financial chaos if something does happen to you before you get your affairs in order with an estate plan.
As a parent of a 7-year-old and 4-year-old, I know that parents of minor children are juggling a lot these days. Careers, homes, mortgages, children. Too often the daily activities of life cause many parents to neglect or postpone planning for their own estate.
When the topic crosses their mind, they can easily push it aside with self-assurance that they are too young, too healthy, or cannot afford the expense. Some may even subconsciously erase any thoughts of estate planning because thinking about it would force them to deal with feelings and attitudes that people often prefer to ignore.
Whether the excuses are true or not, it is important for parents of minor children to plan for the care of their children. Estate planning assures that certain things will happen after your passing; knowing that your children will be taken care of may even reduce some of your fears. Estate planning in your 30’s may seem scary and overwhelming but so incredibly necessary.
Step 1: Nominate a Guardian For Your Children
Perhaps the most important benefit of an estate plan is that it allows parents to determine who will take care of the children if neither parent is able. If there is no Will nominating a guardian, the court will appoint one even though it cannot possibly know the values, lifestyle, and child-rearing philosophy of the parents.
The court must make a decision based on state law and the best interests of the children, which are often difficult to determine in a brief court hearing. Some parents postpone writing a Will because they cannot decide whom to name as guardian, but It is far better to name a first and second choice now, and change your designation later than postpone it completely.
Step 2: If You Are Married – Divide Your Assets Accordingly
For married couples with minor children, most spouses want the surviving spouse to receive their property at death. In Connecticut, however, if there is no Will, the spouse’s non-probate assets must be divided between the spouse and the minor children. The Court will likely place the children’s share of the assets in a custodial account to be held for their benefit until they turn 21.
Set Up a Trust For Your Children
Many couples do not feel comfortable with granting children full access to their inheritance at age 21 and would prefer the children’s assets to be held in a trust until they are 25 years or older. This can be achieved with an executed estate plan that includes a trust for the children. If you have minor children, the time to start estate planning is now.
Take These Simple Steps To Start Planning – No Matter Your Age
- Make a list of property you own, how it is titled, its fair market value, and the amount of debt against it. Include life insurance policies and retirement accounts, their owners, and primary and contingent beneficiaries.
- Think about the present and future needs of your family. Then ask friends and family if they have an attorney they know and trust.
- After locating an attorney, call for an initial appointment. Ask if there is a fee for this appointment and how fees are structured. Bring information about your family and property. Ask questions and be sure you understand the plan. And remember that it is possible to change the plan as your family’s needs and goals change.
Do You Need an Estate Planning Attorney?
Short answer, Yes! Whether you are estate planning in your 20’s or estate planning in your 30’s, the priority on everyone’s mind is to keep your costs down. There are numerous resources available on the world wide web free of charge nowadays. But, just because you can do it yourself, doesn’t mean you should.
DIYing an estate plan in your 20’s may be an easy and quick way to get all your ducks in a row since your needs are pretty basic. But as you start having children and accumulating assets, your needs become slightly more labor-intensive.
Even though an estate planning attorney isn’t free, trying to put together an estate plan on your own will only add unnecessary stress to your life. Starting your estate planning journey with a reputable and knowledgeable estate planning attorney will ease your concerns about whether everything is getting done correctly and nothing is missed. Since everyone’s needs are different, even the best template can’t provide the personalized guidance of an estate planning attorney.