You’re young, healthy, in your late teens or early 20s — just starting your life. Why do you need to think about estate planning?
Because you never know what tomorrow will bring.
Estate planning isn’t just planning for your death. In many ways, it’s planning for your life. Once you turn 18, there are things your parents can’t do for you, such as talk to your doctor about a diagnosis or withdraw money — even if you asked them to — from your bank account without your written permission. If you should have an accident on a Texas road, don’t you want to make it easier for your parents to talk to doctors in the hospital about your care?
Young adults should have the basic estate planning tools, then build on them as their wealth and assets grow.
The first documents that a young person should have are a durable power of attorney and a health care proxy. The durable power of attorney will allow parents to help their grown children who might be away at college and need assistance with their financial affairs. The health care proxy gives parents the right to make medical decisions should their children have a medical emergency and be unable to do that for themselves.
Young adults also should have a simple will. By doing so, the money you have put away likely won’t be subject to probate. Plus, they can leave something to a specific person – such as a significant other to whom they aren’t married – who otherwise wouldn’t have legal rights to any of their property.
And, as young people get their first jobs, it’s crucial they fill out the beneficiary section of company-paid life insurance forms or designate beneficiaries on retirement plans. That will determine who receives the benefits should the young person pass away.
Estate planning after your 18th birthday might seem unnecessary, but it will give you tremendous peace of mind as well as lay out a master plan should the unthinkable happen.