As young adults embark on the journey toward independence, many significant milestones exist to celebrate. From securing your first job to getting married or purchasing a home, each milestone presents new opportunities and responsibilities. While estate planning might seem reserved for older individuals, it is a crucial step to take as soon as you reach certain key milestones. Below are five milestones in a young adult’s life that reveal a need for an estate plan:
1. Eighteenth Birthday:
Once a person becomes an adult at eighteen, their parents can no longer make their health care, legal, or financial decisions for them. Many young adults believe that if they were to become incapacitated in a car accident, their parents would be able to step in and manage their affairs for them easily. However, this is not the case, and therefore, everyone over the age of eighteen needs to execute the following two documents:
- Advance Health Care Directive: This document designates who you would like to make your health care decisions for you on your behalf if you became incapacitated.
- Durable Power of Attorney: This document designates who you would like to take legal and financial action on your behalf if you become incapacitated.
Without these documents, family members may need to establish a conservatorship in court to make decisions on behalf of the young adult. This process is time-consuming, expensive, and emotionally exhausting.
2. First Job With Benefits:
Starting your first “adult” job can be a very exciting milestone in a young adult’s life. The job may even come with benefits, such as a retirement plan. If your job offers a 401k, pension, or other employer-sponsored retirement plan, you must complete the beneficiary designations on your plan. This ensures that, upon your death, the people that you want to receive the funds in your retirement plan will receive it. If no beneficiaries are designated, the funds become a part of your estate and may be subject to probate.
3. Marriage:
Many people assume that their spouse will automatically be able to make health care and financial decisions for them during incapacity and receive all of their assets upon their death. However, this is not necessarily the case. It is essential to update your Advance Health Care Directive and Durable Power of Attorney documents if you want your spouse to be able to handle your health care and financial affairs upon your incapacity.
Further, your spouse may not automatically receive all your assets upon death. It is important to put your wishes for the distribution of your assets in writing in a will or a revocable living trust. Both wills and trusts allow you to state your wishes; however, a revocable living trust provides additional benefits, such as probate avoidance and control.
4. Buying a House:
Purchasing a house means acquiring a significant asset. Titling your home in the name of a revocable living trust protects your family from going through probate upon your death. Additionally, you may include provisions in your trust regarding your home, such as who you wish to inherit it upon your death or if you wish to permit certain individuals to live in your home during your incapacity.
5. Having Children:
Having children is perhaps one of the most significant milestones in a young adult’s life. As a parent, you now have the added responsibility of ensuring that your children’s future is financially secure, regardless of what happens to you. It is important to update your trust to provide for your children upon your death or during your incapacity.
Additionally, you should designate a guardian to care for your minor children upon your death or during your incapacity.
Many assume that estate planning is only for older people or those with significant wealth. However, starting early provides numerous benefits, from protecting your assets to ensuring your loved ones are cared for in an emergency. Estate planning is not just about preparing for death; it is about securing your future and ensuring your wishes are honored throughout all stages of life.
By addressing key aspects of estate planning, such as wills, trusts, powers of attorney, and beneficiary designations, young adults can ensure that they are prepared for whatever life brings them, whether early or unexpected. If you have questions about how these milestones may affect you and your estate planning goals, we at Absolute Trust Counsel would be happy to help.
[AD] Estate planning addresses many important factors about your future and legacy. Where do you get started if you don’t have an estate plan in place? If you do, how have new laws and life transitions changed? Will your plan still protect you? Regardless, you deserve to have control over your wants, needs, goals, and hopes for the future. We can help you understand your options and, legally, how you will best be protected at all touchpoints. Get started today by scheduling a free discovery call so we can discuss your needs. Visit https://absolutetrustcounsel.com/scheduling/ or call us at (925) 943-2740.