Setting up an estate plan isn't a priority for many young people, usually taking a back seat to building careers, paying off student debt, starting families, or buying a first home. But while it's easy to push estate planning down the road, there are good reasons to take care of it today.
Even when you're young , it's impossible to predict what the future will bring; an estate plan isn't for life going according to plan, it prepares for the unexpected and catastrophic. Here are some common situations that having an estate plan in place can make a meaningful difference in the outcome.
You're unable to communicate and need someone to speak on your behalf
Being trapped in a dire medical situation unable to participate in your care or declare your wishes is a frightening scenario at any age. A healthcare power of attorney, however, allows you to give a person you trust the power to make health decisions for you based on your own previous instructions. This can include treatment options and life support decisions.
You're unable to make decisions on your own and need ongoing financial assistance
What would happen if you became unconscious and needed long-term care? How would you pay for it? A financial power of attorney lets you appoint someone you trust, a spouse, family member, or significant other, to make financial decisions on your behalf. "Durable" power of attorney means it remains effective as long as you are unable to make decisions on your own. A financial durable power of attorney allows the person you appoint, known as the "attorney-in-fact," to handle important legal and financial issues on your behalf.
Loved ones are asked to make decisions for you
If you're powerless in a health emergency and unable to communicate, think about what it could be like for your family or friends to take on the responsibility of making those tough decisions on your behalf. A living will also be known as a health care directive, lets you specify your medical wishes and makes very clear to everyone involved—loved ones, doctors, and the hospital—what they are. This relieves a great burden from the people you care about.
Probate causes unnecessary hardship
In many cases, before an estate can be distributed, it has to go through the probate process. That means your heirs will have to wait to receive your estate for up to nine months. Some situations can take even longer. By having a Last Will or a Living Trust in place, you can decide who will inherit your assets rather than letting that be decided by state law. In either of these documents, you can also choose the person that will oversee the distribution of your assets.
You don't want the courts to decide who'll be the guardian of your children
The term "last will and testament" has most people thinking of a legal document that spells out asset distribution. But a will can also make a crucial identification—who will be the guardian of your minor children. If a will is not in place, the courts decide who cares for your children, and chances are they won't choose the people you would have.
Of course, a will also allows you to direct the distribution of your assets as well as sentimental objects that could be of immense emotional value to a loved one. Or, you could decide to make a charitable donation which could help offset the tax burden on your estate. Bottom line, without a will, your heirs may have to spend precious time and money battling in court over your estate.
Communicating your wishes clearly is a responsible and loving act. To prepare for your estate planning, it's a good idea to speak with a financial or legal adviser to get their perspective. They can advise you on how to make the process as easy as possible for your heirs—even how to save taxes on your estate—so your heirs have fewer worries to deal with at a very emotional time.
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