People with modest assets, young adults and parents should all have estate plans to protect themselves while they’re living, protect their children and provide a means for transferring assets of any size to heirs of their choosing. This is estate planning in a nutshell, with details furnished in a recent article from yahoo! finance, “Why millennials and Gen Z should have a basic estate plan.”
Most people first think about estate planning when they have children. It is a good reason, as a Will is used to name a guardian who will raise the children if both parents should die. Otherwise, a court will decide who should raise the children, and it isn’t always a family member. However, this is far from the only reason to have a Will.
All adults should have two essential documents: a Durable Financial Power of Attorney and a Durable Healthcare Power of Attorney. These documents give other people, referred to as “agents,” the legal power to act on behalf of the adult if they cannot do so for themselves. We don’t like to think about becoming incapacitated, even temporarily due to a medical condition or being under anesthesia. Nevertheless, it happens, and when it does, having these estate planning documents makes it possible for another person to act on your behalf.
If there is no Power of Attorney, depending upon the situation, the family may need to go to court to have someone named as a guardian if the person is permanently incapacitated. The process is both stressful and costly. Having a Power of Attorney is far easier. When you have an estate planning attorney create Powers of Attorney, you also get to name the person you want to be in charge. The court may not choose the person you would have wanted.
Wise parents have their children sign a financial and a healthcare power of attorney when they turn 18. Unless this happens, the parent may no longer be part of the newly-minted adult’s healthcare, including talking to doctors, discussing health insurance issues and being involved with decision-making. Financially, the newly-minted adult may need someone to handle things for them should they be in an accident or suffer another type of injury that keeps them from handling their finances.
If it seems unnecessary for an 18-year-old to have a Last Will and Testament, there are more than a few reasons for doing so. First, an 18-year-old who has been accumulating cryptocurrency might have assets to protect. In the same way, parents don’t have the right to make financial and medical decisions for an 18-year-old; they don’t have any say over their property. If the young adult has bank accounts, digital assets, car loans, or student loans, the parent will be better protected if there is a simple Will stating how their child wanted their assets to be distributed upon death.
Having a young adult think about having a Will and Powers of Attorney is a good life lesson. As they age, they must update their plan to reflect life’s milestones. Estate planning is an evolving process similar to owning and maintaining a home.
Young adults working and with retirement accounts should be mindful of who they name as their beneficiary on retirement accounts, insurance policies and any other financial account allowing a beneficiary to be named. These assets don’t pass through the Will but go directly to the designated beneficiary. Keeping a list of these accounts and who was named as a beneficiary is also a good practice for young adults.
Younger adults who tackle estate planning early on are setting themselves and their families up for success in the future. Many estate planning attorneys start working with multiple generations and are happy to advise their children as they grow into adulthood.
Reference: yahoo! finance (Nov. 18, 2024) “Why millennials and Gen Z should have a basic estate plan”
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