Most young professionals have a misconception that estate planning is purely for those who are elderly, have amassed a great deal of wealth, or have families they want to care for after their passing. While these are the typical situations for creating an estate plan, they are by no means the exclusive reasons for creating an estate plan.
The reasons why young people mistakenly think that they don’t need an estate plan is because they are only thinking of individual documents. So that we are all on the same page, an estate plan generally has several documents: a Revocable Living Trust, a Will, an Advance Health Care Directive, and a Financial Power of Attorney. While you may not initially need all of these documents, you still need an estate plan. Without further ado, let’s address these reasons.
Reason 1: My Family Gets Everything Eventually
The key word is eventually. In order to access your accounts, your family may have to file a probate if you don’t have an estate plan or have beneficiary designations for all your assets. Probate is a court proceeding to determine your assets, authorize someone access to your accounts, and settle any debts you may have.
If you have things that you want to leave to your parents, siblings, or other loved ones, chances are you want them to have access to it immediately. If you don’t have an estate plan, then your estate will likely have to go through probate. Probate is a lengthy, tedious, and costly process.
Reason 2: Estate Planning Isn’t Necessary, I Only Have Debt
Let’s be realistic, as a young person you most likely have more debt than you have income. It may seem like it shouldn’t matter having an estate plan to manage your negative assets. However, this outlook is accurate only if you die with debt. However, what happens if you become incapacitated for a short time? You will need someone in the interim to pay the rent or other bills. The last thing you want is to wake up from a coma and find you are delinquent in your bills. In order to avoid this, you should have someone managing your accounts through an agency designation in a Financial Power of Attorney.
Hopefully, as you continue in your professional career, you will (or should) create savings and retirement plans. This will further increase your need for an estate plan for the distribution of your assets.
Reason 3: I Don’t have a Spouse or Kids
Who said that having your own family was necessary for estate planning? Couldn’t you decide to give away large amounts to well deserving charities and individuals? There are various things you can have with your estate that doesn’t necessarily mean you have to be married with children. Some of the wealthiest people have estate plans to benefit worthy charitable causes or their extended family. If you don’t have a traditional family, you can still leave a legacy to organizations and others that you care about.
Also, you may have sentimental items that you wish to specifically leave someone upon your passing. In order to effectively distribute these assets, a properly executed Will and/or Revocable Living Trust needs to be in place.
Reason 4: My Family Is Perfectly Perfect in Every Way
While some families have a wonderful intimate connection, other families are not as fortunate and have friction. If you do not have an estate plan, you might be giving your assets to someone in your family you have interpersonal friction with.
For those who do not have a Will, the State has legislation for how an estate will be distributed. Shockingly, the State doesn’t always agree with our desires. If you consult with an attorney, you will be able to determine if you like the State’s distributions or if you want to draft around them. More often than not, you will want to create your own Will and/or Revocable Living Trust. It designates your wishes and distribution of your estate.
Reason 5: Estate Planning Isn’t Necessary, I Will Live Forever
Okay, you are invincible. If superheroes have taught us anything, it is that even the superheroes get whipped sometimes. It pays in those circumstances to have someone designated to make health care decisions, just in case, while you are saving a baby from the bullet train, you happen to be laid up in the hospital.
On a serious note, you never know what may happen to you. It is imperative that you consider who will be making decisions regarding your health. These can be end of life decisions that you will want to be sure aligns with your moral compass. It may be a less grave decision about who you think will best be able to care for you in case of incapacity.
As an adult, no longer will your parents automatically be making these decisions for you. Medical professionals will require court order or some designation of an agent in order to honor your wishes. This agency designation is done through an Advance Health Care Directive.
If suddenly struck by an illness, young people have more at stake with new medical technology that may keep them alive but insentient for decades. It is important to consider both what you want for the end of your life and your stance on California’s new laws on physician-assisted death with the End of Life Option Act. These are important conversations that an estate planning attorney can facilitate with you.
An estate plan is a lifelong conversation between a client and their attorney regarding their life circumstances. Consider this analogy, meeting with an estate planning attorney is like meeting with your general practice doctor. If you start going early and frequently, you can have a clean bill of health and walk away feeling relieved. However, if you wait until an illness develops you will likely have to have many painful scary meetings with your doctor.
By beginning estate planning early on, you are setting up yourself for a life of success. Furthermore you’ll be saving family and friends from the hassles of managing your estate if you pass away without a plan in place.