You’re a young adult, and you may be thinking, “Estate planning? That’s just for old people, right?”
Wrong. Even if you are young, estate planning is still wise. In this post, I’ll discuss what young adults need to consider in planning their estates.
Providing for someone to care for your children
This is one area of estate planning that is actually more important for young adults than for older people. An older “empty-nester” whose children are already grown, generally does not need to think about naming a guardian for young children. But many young adults do have young children, who would need a guardian if their parents die or become incapacitated. Whenever I get an estate planning client with minor children, I tell them to name a guardian. To provide someone to care for you children upon your death or incapacity, you can execute a “nomination of guardian” in which you name someone who will care for your children if you die or become incapacitated while the children are still minors.
If you don’t name a guardian, then, if you die or become incapacitated, someone else can step in and ask the court to appoint them guardian. Generally, courts will appoint a near relative as the children’s guardian. If you don’t name a guardian, your children’s guardian could end up being someone you don’t want. (I’ve had younger clients come to me specifically so that I can write a document naming a guardian to prevent the guardian from being someone they don’t approve.)
Providing for someone to care for your children’s property
If you die and leave behind any property, this will go to your children. When I have clients with young children, I often tell the clients to create a trust. A trust is a legal entity, in which one person (the trustee) controls property for the benefit of another person (the beneficiary.) Many people use trusts to provide for someone who can’t take care of the property themselves. So a trust is a particularly useful device for someone who leaves property to young children.
When you create a trust, you can write whatever terms you want to in the trust. You can specify an age at which your child will be able to handle the property himself, and it can be any age you want. For example, I’ve had clients who have had children in their early twenties, and they think their children are not mature enough to handle large amounts of money. I tell them to pick an age and write it into the trust. That age does not have to be eighteen.
For more information about trusts, read my earlier post here.
Deciding who gets your property after you die
Every estate plan includes a distribution of property. You write, in a will or other document, who will inherit your property upon your passing.
A concern here, that affects young adults more than older people, is that young adults can’t predict how much property, or what kind of property, they will have when they pass away. So I generally tell them to write a will that distributed the “residue” of their estate. “Residue” is a broad term that generally includes any property they have.
Your will is valid until you revoke it. So if you write a will when you are twenty-five, and die at seventy-five, your fifty-year-old will is still valid. I’ve had older clients come to me and say, “I had this will written up years ago, and I assume that it’s not valid anymore.” I tell them that the will is still valid.
So if you are young, you want to write a will that you will still be happy with later on. But you can change or revoke your will at any time you want, and many people do.
Providing for children who have not been born yet
This certainly affects young people more than it affects older people, because many younger people are still planning to have more children. A good lawyer can write a will or other estate document that provides for your “descendants” even if those descendants have not yet been born yet when the document is signed.
Naming someone who will make decisions for you if you become incapacitated
You should probably also think about naming someone who will make decisions for you if you become incapacitated. To do this, you can execute a “springing durable power of attorney.” It’s called “springing” because it “springs” into effect when you become incapacitated. It’s called “durable” because it lasts after you become incapacitated. It’s called a “power of attorney” because it gives someone the power to act as your agent (even if that person is not a licensed lawyer.)
There are two types of powers of attorney: a “health care power of attorney” (where you name someone to make health care decisions for you) and a “general power of attorney” (where you name someone to make financial decisions for you.)
Even if you’re young, it can still make sense to execute a springing durable power of attorney, in case you become incapacitated at a young age. For more information on powers of attorney, click here.
Deciding whether you want life-sustaining treatment
Closely related to powers of attorney, are “advance directives.” An advance directive is a document whether you state whether you do, or do not want, life-sustaining treatment if you have a terminal condition, and end-stage condition, or are persistently unconscious. An advance directive is sometimes called a “living will.” For more information on advance directives, click here.
How old do you have to be to plan your estate?
As I said above, estate planning is not only for old people. In Oklahoma, you have to be eighteen and of sound mind in order to execute most estate planning documents.
Have questions about estate planning? Contact the Persaud Law Office
The Persaud Law Office has helped many people, both young and old, with their estate plans. If you want to start on planning your estate, please give us a call. We’re happy to help.
Photo courtesy of https://www.flickr.com/photos/93963757@N05/8551939166. Licensed under Creative Commons 2.0.
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