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You’re young and healthy. You may be under a mountain of student loan debt with modest savings. The reality is, even if you don’t feel like you have an estate, you do. Almost everyone does. Estate planning might seem like something for people who are older (and richer). Even if you’re single and child-free, you should have a basic estate plan. Our public health crisis has caused many of us to visit (or revisit) our insurance and estate planning needs. Last month, I covered life insurance basics. This month, I want to discuss estate planning.
What documents do I need?
A proper estate plan protects your family and ensures your wishes are carried out. Everyone needs three basic documents: a will, power of attorney, and healthcare directive.
- A Will provides instructions on how you want assets distributed at your death and designates a person to oversee the distribution of your assets. A will also names guardians for minors and in some cases trustees for trusts.
- A Power of Attorney lets you appoint a person you trust as your “agent” to manage your financial affairs if you are unable to do so yourself.
- A Healthcare Directive lets you appoint a person you trust as a “health-care agent” to make medical decisions on your behalf if you are unable to do so yourself. This document also provides your agent with advice regarding your end of life wishes.
Depending on your situation, you may also need a Revocable Living Trust. This article explains reasons why you should consider a Revocable Trust instead of just a will.
What else should I consider?
In addition to the basic documents, you should review the beneficiary designations for your life insurance policies and retirement accounts. It’s also a good idea to document important information. This includes financial documents, medical documents, and information for online accounts. Store this information in a secure place and make sure the people who need access know where to find it. Finally, be sure to revisit your estate plan every few years or after a major life event (like marriage, a new child, or a divorce).
What happens if I don’t have an estate plan?
If you die without a will, your property is divided based on your state’s laws of intestacy. In many cases, your state’s intestacy laws may result in an outcome that is not in line with your wishes. In addition, not having important information documented can create more stress for loved ones who are already grieving. Creating an estate plan makes it easier for your loved ones and ensures that your wishes are respected.
Still have questions about estate planning and what’s appropriate for you? Need help finding an attorney? Let’s have a conversation!
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I was recently featured on the Money Checkup Podcast hosted by Anjali Jariwala, CPA, CFP®. We spoke about my work with tech employees and how I help them navigate the confusing world of stock compensation.
Listen to the episode here! You can also check it out the Money Checkup Podcast on Apple Podcasts, Spotify, Stitcher, and Google Play.
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Take care,
Chloé A. Moore, CFP®
Founder, Financial Staples
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