Entering adulthood is an exciting time! You have your whole life ahead of you, with a lot of time to establish yourself and your legal and financial plans. You’re probably not prioritizing your assets and how they’ll be handled after death, but getting a few essential documents in place while you’re young will give you peace of mind and prevent financial mishaps.
What is Estate Planning?
Estate planning is creating a clear plan for preserving your wealth and assets while alive and distributing it after your death. Creating a plan can help you achieve your personal and family goals while making managing your financial and legal matters easier. Having a plan in place can minimize the taxes you’ll owe if you have a large estate. Your estate can consist of anything valuable that you own, such as real estate, business assets, investments, insurance payments, personal belongings, and even things like jewelry and sentimental items.
You can learn about standard terms used in estate planning on our blog: Estate Planning Terms to Know.
What to Include in Your Estate Plan as a Young Adult
Legally, individuals become adults at 18, which is the ideal time to start thinking about your estate plan because parents no longer have the legal capacity to make decisions for their children. Young adults can prevent future conflicts by proactively creating an estate plan early in adulthood. The bottom line is you don’t need to be old or have vast wealth to establish an estate plan. Start with critical components such as beneficiaries, POA, and a health care proxy. As your life changes, you can add more intricate levels to your estate plan.
Power of Attorney
Individuals of all ages should give power of attorney (POA) to a trustworthy person, such as a relative or friend. This legal responsibility provides that person with legal authority to act on your behalf in case you cannot physically or mentally make decisions about yourself. For young adults, a POA can help obtain a bill from a college, sign a check out of your account, handle an inheritance, file taxes, or even pay for pet care.
Health Care Proxy
Also referred to as a health care power of attorney (HCPOA), a health care proxy authorizes a person of your choosing to make critical health care decisions on your behalf. An HCPOA becomes effective ONLY when you become incapacitated and can’t make health decisions on your own.
You must name each beneficiary when you start to open financial accounts such as checking, savings, investment, or retirement accounts. A beneficiary is the person you select to receive the assets after your death.
Last Will and Testament
Your last will and testament is a document that provides a set of legal instructions to communicate your wishes upon death, such as how you want your assets distributed. Assets could include cash, investments, and real property, such as your car.
How to Get Started
There are two primary approaches to creating an estate plan: choose an online will maker or hire an experienced estate planning attorney. While many online will makers are much less expensive for a young adult, hiring an estate planning attorney can take a lot of confusion out of the process. Our qualified estate planning attorneys at Michaelson Law can help you get a jump start on the legal matters of adulthood. Give us a call today!