Simply put, yes, even the youthful among us need to take some time and get our affairs in order. An estate plan doesn’t necessarily just mean deciding how your friends and family should divide your assets after you are gone, but also includes deciding how to manage your health and finances if you no longer have the ability.
Most younger people haven’t necessarily had the time to build up assets in the same way that older people with longer working histories have. That does not let young people off the hook. On average, women are about 26 years old when they have their first baby, and the average age of a first-time homebuyer is 33. Considering that the median cost of a home in California is $458,000, and in Washington is $331,000, even just buying a home puts younger people in control of a pretty large asset.
In addition, if you are in your twenties or thirties, that means it is likely that you are beginning to save for retirement, or if you are really lucky beginning to invest in stocks or purchasing life insurance. These are all assets that will continue to grow in value, and will have to be parceled out to your family if you pass.
At the very least, if you are like 40% of millennials you already have at least one kid, even if you’re still working on getting the house and the retirement account. You want to make sure that you have planned ahead regarding who will take care of your kid. Often, even if we have talked about things like this in our families, people can forget conversations, or feel like they’re being taken by surprise in an emotional situation. Planning ahead and putting your wishes in writing may help ease the transition for everyone involved, including your child’s potential caretaker.
In general, a complete estate plan will include the following:
- A list of your assets and debts and what to do with them.
- Financial and medical powers of attorney.
- An advance health care directive.
- Instructions regarding your general wishes for care.
- Instructions regarding your children, if any.
A good way to start the planning process is to sit down and make a list of all your assets and all your debts. If you are married, make sure to involve your partner in the process so that you can get as much information as possible. All your assets would include cars, insurance policies, retirement accounts, regular bank accounts, investment accounts, cash in the mattress, and any money left to you by someone else. You will also want to figure out who you owe money to and in what amounts. If you are making payments on a car or a house, include those as well as student loans and information on whether the loans are federal, state, or private.
Next will come a very long conversation, mostly about values. If you become disabled and can no longer make decisions for yourself, how do you want to be cared for? Who do you want to make decisions for you, and possibly for your children? How long should your family wait before taking you off life support? Are you a donor, or do you want to be a donor? All of these questions do not necessarily concern money, but are part of a complete estate plan.
You want to consider carefully the values and background of the persons you are thinking of nominating to make the decisions outlined above. You might get along great with your best friend, and share a lot of the same values, but if that person is not very adept at handling paperwork or bureaucracies they may not be the best choice.
Even if you have no assets or debts at all, you want to make it easy on your loved ones to care for you if necessary, and that means having an estate plan ready to go.
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