In a prior blog post, we spoke about the fundamentals of estate planning for those in their 20’s. For this post, we will explore why estate planning in one’s 20’s is so important. After all, for most, this is the time in our lives when we are the most broke!
It is About the Living
First, estate planning has nothing to do with wealth, net worth or the amount of stuff one has in their dorm room. Instead, estate planning in our 20’s is about taking care of the people we love.
Without a solid estate plan, one’s parents will have to go through probate court. Even if you only have a few hundred dollars in a bank account, parents may have to spend thousands to access it. Imagine dealing with this while dealing with the loss of a child.
Age 18 Means Adult
When we first move out, we forget that we are adults now. Once one turns 18, parents can no longer make doctors or dentist appointments, which means that the first thing that must be done when doing an estate plan is naming the decision-maker, even if obvious.
This is done through a will, durable power of attorney and a health care proxy. Once this is done, one’s parents (or other responsible party) can make financial and health decision if one is incapacitated or dies. The durable power of attorney can also allow parents to help with financial matters, like taxes, when their child is studying abroad.
Costs and Benefits
Many young adults balk at the costs of these documents. But, the costs are generally much less than one expects. If the costs are too much though, many young adults may find that their parents would be more than willing to pay the estate planning costs. And, as one ages, updating documents becomes much cheaper.
The first step is calling an estate planning attorney. For those with no assets or funds, the costs can be quite small, but should one become incapacitated or die, their family will thank them for their preparation.