If you are a young adult, you probably have not given much thought to estate planning. After all, you are young and do not have a lot of assets to speak for, so why would you need an estate plan?
An estate plan includes a lot more than who gets what when you die. Creating an estate plan can ensure that your wishes will be granted when you’re no longer able to speak for yourself.
Estate planning must-have documents
Estate plans vary depending on individual needs and circumstances. However, your plan should at least have the following five documents:
- Last Will and Testament. This document is the foundation of any estate plan. Its primary purpose is to ensure that your estate is settled according to your instructions. When you create a Last Will and Testament, a crucial step is to choose someone you trust to be your executor. Your representative will have the legal duty to manage and distribute your estate. The document also appoints guardianship for dependent children.
- Durable Financial Power of Attorney. Durable Financial Power of Attorney allows someone to manage your finances on your behalf if you become incapacitated and are unable to make those decisions for yourself.
- Healthcare Power of Attorney. A Healthcare Power of Attorney designates a person to make vital healthcare decisions for you when you are unable to do so for yourself. This person is also charged with the authority to make medical end-of-life decisions on your behalf. This becomes active when a person is unable to make decisions or consciously communicate intentions regarding healthcare treatment.
- Living Will. A living will communicates what kind of healthcare you want to receive when you are unable to make decisions for yourself. It details what types of medical treatment you would or would not like at the end of life, commonly in terms of life-support treatments
- Retirement Plan Beneficiary Designation. If you have an IRA or a 401(k), you probably named a beneficiary when you set up your account. Life changes like a marriage or the birth of a child are reasons to review your beneficiary designation(s). If you initially named a parent or sibling as beneficiary, you will most likely want to update your appointment to reflect your life change.
Tragedies do not discriminate. They can happen at any time and to anybody. Taking the time to get your affairs in order now can save your loved ones from having to make tough decisions in the future.