Death can come when we least expect it—so you need to be ready.
“Estate planning is truly for the benefit and care of your loved ones, making the legal and financial issues easier to deal with if you pass away. Since planning for death is not always a No. 1 priority, we tend to postpone setting up the legal documents,” says Stan Murray of Investopedia.
There is no such thing as starting the estate-planning process too soon, and there are many basics to the process with which you can start at any age.
1. Begin with an open mind. As a young person drafting legal documents, you might be depressed and feel daunted, but it is a necessary evil. Starting the process without fear will help.
“It’s more about living than dying; it can be a pleasant process, but often people over think it and overcomplicate it. After all, we all know who we love and want to take care of,” says trusts and estates attorney Avi Kestenbaum, speaking to Fox Business.
2. Identify your assets. You have to know what there is worth passing down in order to do so, so start with a list of assets, including investments, real estate and business interests, insurance policies, annuities, and retirement savings. On the other side of the coin, you must also think about and be aware of your debts. Certain obligations like student loans can be passed on after you pass away.
3. Name a decision-maker. An estate plan ensures a deceased person’s wishes are carried out by naming an executor. There must be an assigned person(s) close to you who can do that for you when you are gone. These choices can be made clear back in your teen years.
“At 18, a young adult’s first priority is to name a durable power of attorney and a health care proxy. These people will then have the ability to make health care and financial decisions in the event a person is incapacitated,” says Maryalene LaPonsie of U.S. News & World Report.
4. Think about your beneficiaries. This is one area that will likely change over time as you grow and your family unit changes, but wills and other legal documents in estate planning are able and encouraged to be re-evaluated often, especially after major life events. You may have already designated a beneficiary even before venturing into the water of living wills. If a job early in life came with benefits such as life insurance or a 401(k), you will have likely already named a beneficiary to receive those assets or benefits after you pass away. Again, these should be reviewed during the estate planning process or after a life event.
If your beneficiary is a child of yours, this brings up the issue of guardianship, a crucial area to be addressed during planning that should be done immediately after your son or daughter’s birth.
5. Communicate your wishes. Making a plan for your estate is one thing; just as important is ensuring those close to you have knowledge of your wishes. Take the time to have a conversation with those people, clarify anything that needs clarification and give everyone involved a copy of the necessary documents.
As Murray affirmed above, planning your estate might not be a priority when you’re young, but once it is done, you will be able to rest a little easier knowing you took an important step for your family—in the present and future.