Many young adults believe they are too young to concern themselves with estate planning. While in their 20’s and 30’s they think they don’t own enough assets to constitute an estate. However, an estate is the total of everything you own – money, investments, real estate, vehicles, business interests, digital assets (including cryptocurrency), and other personal belongings. No matter how much (or little) you own, your possessions need to go somewhere after you die. No one plans to die young. But if the coronavirus pandemic has taught us anything, it is that life is uncertain. This blog post confronts the myth that estate planning is just for the rich and the old.
What legal documents constitute an estate plan?
Some estate planning documents vary depending on your wealth or financial structure. However, everyone should have a will. At the time of your death, everything you own makes up your estate. Unless you have formal documents in order, the estate could go through the probate process. In probate, the court determines what becomes of everything you own. Because the probate court inventories your assets and notifies and pays creditors, your will becomes public record. If you have a will, the probate court uses it as a guide. In the absence of a will (dying intestate), the court uses state intestacy laws to determine who inherits your assets.
Why Young Adults Need a Will
A will designates two very important things:
- Naming your executor. The executor carries out the instructions in your will. They make payments on any outstanding debts. They also distribute assets to named heirs and filing final taxes.
- If dependents exist, your will names the guardian and backup guardian to provide care. The naming of an executor and guardian for a dependent only happens in a will.
Advanced Care Directives
For the Old & Infirm or Young Adults?
All young adults should create an advance healthcare directive, also known as a medical directive or living will. This includes a Durable Healthcare Power of Attorney (POA). These legal documents specify your healthcare wishes. This becomes important if you become permanently incapacitated. What’s more, it is necessary for end-of-life decisions and instructions. In addition, include a HIPAA privacy authorization form for your durable healthcare POA or trustee. The form permits medical and healthcare professionals to disclose pertinent health information and medical records to your healthcare proxy.
Incapacity Planning
Do you find it uncomfortable to contemplate events that could render you unable to make decisions for yourself as a young adult? Unfortunately, accidental injuries, heart disease, cancer, and strokes happen to people every day. And no one is immune. Make plans while you are competent and able. This is a prudent course of action which offers peace of mind.
Revocable Living Trusts (RLTs)
Some young adults own enough assets, real estate, or business interests to make a Revocable Living Trust (RLT) worthwhile. This type of trust circumvents the probate process, ensuring privacy. There is no limit to the number of times you can amend a living trust. You may change asset distribution or add assets as you acquire more throughout your life. An estate planning attorney can help you determine if your financial situation and age warrant the setting up of this type of trust.
Estate Planning in the Age of COVID-19
Working with an estate planning attorney is easier than ever now because COVID-19 introduced video and smartphone conferencing. These streamline legal planning. Estate planning attorneys, like me, can create a plan that best suits your situation, even if you remain unsure about what you should do. Proper legal documents can save your loved ones from an expensive probate trial if someone contests your will. Even as a young adult, start planning now!
About Michael J. Young & Walnut Creek Elder Law
When you have a legal case or just want some advice, turn to someone who is highly knowledgeable in the field. There are many areas of law. But our firm focuses exclusively on elder law. With such a specific focus, we understand the fine details of our clients’ cases and can give them more in-depth and accurate guidance. Call 1 (925) 256-0298 or click today for more information or to register for our next free Zoom workshop.