In your 20s and 30s, estate planning might not be among your top priorities. After all, if you have kids, are building your career, and/or already feel like you have more responsibilities than you can handle, it can be difficult to imagine adding one more thing to your plate. Nonetheless, estate planning is essential, and waiting until your golden years means that you could miss out on several benefits.
Major life events that typically occur when you’re a young adult make estate planning all the more important. This might include anything from attending college and purchasing a house to getting married and having children. All of this is to say if you’re a young adult who hasn’t tackled your estate planning, you should consider starting sooner than later. And we’ve provided some information below to help you get going.
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Protecting Your Assets
Your assets may have more value than you realize, and you don’t want to risk losing control of them because you don’t have a plan in place. Whether it’s real estate property, family heirlooms, vehicles, or anything else that carries value, don’t you want to know where they will be distributed? By creating an estate plan, you will know exactly who receives each asset when you pass away. Make sure you understand the value of your assets. For example, you can get a home-value estimate online to determine your home’s value.
This is a subject that might be particularly unpleasant to think about, but it’s important. If you unexpectedly pass away and you don’t have burial insurance, your surviving loved ones could be left with the burden of paying for final arrangements. On the other hand, having a burial insurance policy in place will make sure that doesn’t happen.
Burial insurance can even help to cover the costs of personal loans, student loans, medical bills, and other outstanding debts. As you’re determining what kind of coverage to purchase, be sure to factor in the type of final arrangements you want and whether you want funds left over to pay for other debt.
Similar to burial insurance, life insurance can help cover the costs of various debts if you were to unexpectedly pass away. One key difference is that life insurance is tailored more specifically to pay those costs. And the younger you are when you purchase it, the easier it is to get and the cheaper it is in the long run.
Health Care and Finances
This is one of the most important parts of estate planning to consider. If you’re over 18-years-old, you need a health care proxy that declares your wishes in the event that you need medical care, particularly serious care. Also, establish a durable power of attorney in case there’s a need for someone to make financial decisions.
Declaring Guardianship Wishes for Your Children
If you have kids, this one is critical. If you were to unexpectedly pass away, you don’t want a random judge making the sole decision of who gets guardianship of your children. Establishing a will and naming guardians will ensure that your children are cared for by someone you know and trust.
Finally, consider whether or not you should set up a trust for your children. Doing so will give them immediate access to any assets you wish for them to inherit once they turn 18-years-old. Otherwise, they could spend a year or more in probate court before getting access.
Estate planning is something that every young adult should consider doing. While it requires time, energy, and money, there are many benefits of tackling it sooner than later. And as you begin to go through major life changes in your 20s and 30s, it becomes increasingly important. Consider the information provided here, and continue your research to learn more about how to get the process started.