A Simple Guide to Estate Planning for Young Adults
Article by: Lucille Rosetti
Author of "The Bereved"
Most people wait until a major life event occurs to write a will and establish other estate planning documents. But this isn’t the best approach. Even if you’re young and healthy, anything could happen at any time, and it’s important to start thinking about how your assets will be handled in the event of an accident or serious illness. Don’t wait until it’s too late to get your affairs in order! Estate planner Melissa Dougherty Anderson offers some easy ways to get started with estate planning right now.
Consider Life Insurance
If you’re young, life insurance is probably the last thing on your mind. However, there are several good reasons why people in their 20s and 30s should think about purchasing life insurance. Student loan debt is one that will resonate with many millennials. If you die with private loan debt, your co-signer will be on the hook for payments. For most young people, this means their parents will be left to shoulder their debt. A life insurance policy will cover your debts so you can protect your loved ones from financial burden if something should happen to you.
Life insurance becomes even more important when you get married and have kids. Your life insurance policy will cover your lost income and help to provide for your dependents if you pass away unexpectedly. Your policy can even go toward your children’s college education! At the very least, having life insurance will help you sleep at night knowing your family will be okay if something happens to you.
Get a Burial Insurance Policy
If you don’t have many assets or debts right now, you could also consider purchasing burial insurance. Burial insurance is a type of life insurance that is meant to cover your final arrangements, but your beneficiary can also use the payout to pay off other debts like medical bills and personal loans. A burial insurance policy will have a much smaller benefit amount and lower premiums than traditional life insurance, but it’s a great supplemental option that can relieve a burden on your family. When choosing your policy, be sure to factor in the estimated costs of the final arrangements, as well as extra money to cover other end-of-life debts.
Appoint a Decision-Maker
As soon as you turn 18, your parents can no longer make financial or medical decisions for you unless authorized. What will happen if you become incapacitated? Make sure you name a health care proxy and power of attorney to give your loved ones the power to make important decisions if something tragic happens to you. This will ensure you get the care you want even if you’re unable to voice your opinion. Be sure to also appoint a financial power of attorney. Your financial power of attorney will be able to pay your bills, handle your taxes, and otherwise oversee your finances if you cannot.
Create a Will
If you die without a will, the court will distribute your assets according to the specific laws of your state. In some states, for example, your spouse will only receive one-third of your assets while your parents will get the rest. And if you live with someone you’re not married to, your partner won’t have any legal rights to your assets unless you include them in a will.
When creating your will, take stock of your assets ,like how much equity you have acccrued in your home. Even if you don’t own a home, you likely have more assets than you think. Your car, furniture, home decor, kitchen appliances, and savings accounts can really add up! Unless you specify who should get what, your loved ones may be left empty-handed when you die. U.S. News recommends against writing your will on your own since this can cause huge legal headaches for your beneficiaries. Instead, work with a reputable attorney like Melissa Dougherty Anderson.
Estate planning isn’t just for seniors and rich individuals. Even if you’re young, childless, and just starting out, it’s important to protect your loved ones—and your personal wishes—by planning for the unexpected. Get a head start on your peers and start thinking about your estate plan today!