Like many people, you probably think that estate planning is something you should do later in life or after you have started a family. However, even if you are in your early twenties, it is not too soon to start planning for the future. Young adults with only a few thousand dollars in their savings accounts can still benefit from having proper estate plans in order to make things much easier for their parents or other loved ones if they should die or become incapacitated.
Estate planning is not only for the wealthy or the elderly. It is a very valuable tool for people of any age and any stage of life. Here are two things to think about when starting the estate planning process.
Choose a decision-maker
Estate planning is more than just writing a will or making decisions about what happens to your property after you die. It also involves things like naming a durable power of attorney and writing out your health care directives. For example, if you are in a car accident tomorrow, your health care directive would name the person you want to make medical decisions on your behalf as well as particular instructions for certain situations. When you create documents like this, you will want to choose someone you can trust to carry out your wishes. This could be a parent, a sibling or a trusted friend. However, you should take the time to consider your options and choose the person that you trust the most to make decisions on your behalf.
Choose your beneficiaries
As soon as you start working and have benefits like a pension plan or 401(k), you need to select your beneficiaries. In general, retirements accounts will immediately pass to beneficiaries without going through probate when the account holder passes away. If you do not have children or a spouse, you can name your parents or perhaps your favorite niece as the beneficiaries on your retirement account. Or, if you prefer, you can leave the fund to a charity. Later on, if you start a family, you can update this information to include your spouse and children.
If you are fresh out of college and starting on your career, now is the time to start estate planning. By taking the time to get your affairs in order, you can feel confident that your family will have an easier time handling your estate than if it is subject to the probate process.