Estate planning can help secure your financial future and ensure you take care of your loved ones. While it may seem like a task for older adults with children, it is never too early to draw up an estate plan, even in your 20s.
New Yorkers need to consider their financial assets, health care preferences and the well-being of their families.
Take inventory of your assets
Begin by making a comprehensive list of your assets, including bank accounts, investments, real estate and personal property. Determine the value of these assets as they will play a major role in your estate plan.
Consider who you want to inherit your assets. For accounts such as life insurance policies and retirement plans, you can specify beneficiaries directly. This simplifies the distribution process and ensures your assets go to the right people.
Create a will
A will allows you to outline the distribution of your assets. For example, a will can include specific instructions for things such as the care of your pets and the distribution of sentimental items.
Set up a health care proxy
In case of a medical emergency, designating a health care proxy allows someone you trust to make health care decisions on your behalf if you are unable to do so. This decision should align with your values and beliefs.
Draft a power of attorney
A power of attorney document endows someone you trust with the authority to manage your financial affairs if you become incapacitated. Choose a responsible person who can handle financial matters in your best interest.
Consider a living will
A living will delineates your preferences for end-of-life medical care. It assumes a pivotal role in guaranteeing that health care professionals meticulously adhere to your preferences, should you ever confront a life-threatening medical scenario.
In New York, estate taxes can loom large with rates going as high as 16%. As of 2023, the estate tax applies to estates worth more than $6,580,000. Consult with a financial advisor to explore ways, such as gifting or creating trusts, to minimize your estate tax liability.
The inexorable march of life begets change. Marriage, the birth of children or significant asset acquisitions can impact your estate plan. It is prudent to engage in periodic reviews and updates of your estate plan to keep it current with your circumstances.
Estate planning provides peace of mind, knowing that you have taken steps to protect your loved ones and your assets, regardless of your age or current health.