An Estate Plan doesn’t need to wait till your golden years. In fact, the longer you wait, the less time you have to reap the benefits of having one.
Once you are over the age of 18, according to the law you are an adult. That means that at the age of 18, you need to start thinking about who will make decisions for you in the event of your incapacity. Planning early ensures that you will be cared for in the way you want and by the people you want.
Planning is not just for older people. That is a myth and there are so many benefits from planning early.
Read this to find out more and remember, if you have any questions please reach out to me or feel free to attend one of our upcoming events.
Basics of Estate Planning
We understand that life is full of twists and turns, and it’s easy to think of Estate Planning as a concern for later in life. However, the truth is, you can and should start crafting an Estate Plan as early as possible. Beginning early brings numerous advantages, some of which you can enjoy during your lifetime and others that will benefit your heirs after you’re gone.
As a young person exploring this process, let’s first review the basics of what an Estate Plan includes.
An Estate Plan can be tailored perfectly to your needs and wishes. It can include a myriad of legal tools that work for your goals. Here are some of the main ones:
- Asset inventory: This involves creating and maintaining a comprehensive list of all your assets, including bank accounts, real estate, investments, and personal belongings.
- Wills: A will is a legal document that outlines how your assets should be distributed upon your death.
- Trusts: Trusts are legal entities that hold and manage assets for the benefit of specific individuals or entities. They offer flexibility, and privacy, and can help avoid probate.
- Powers of attorney: Powers of attorney grant legal authority to someone you trust (an agent) to make financial or healthcare decisions on your behalf in case you become unable to do so.
- Healthcare directives: Healthcare directives, including living wills and medical powers of attorney, express your preferences for medical treatment in the event of incapacity.
- Guardianship designations: If you have minor children, guardianship designations in your Estate Plan identify individuals you trust to take care of your children if you are unable to do so.
- Charitable giving: Charitable giving in Estate Planning involves leaving a legacy by supporting charitable causes or organizations.
- Succession planning: For business owners, succession planning ensures a smooth transition of ownership and management in the event of death or disability.
In addition to these, your Estate Plan can also cover your digital assets, a personal property memorandum to give away heirlooms and more. It can be made according to what your goals for the future are.
However, contacting Estate Planning lawyers is very important to make sure this is done in the best way. We can also give you advice on how to minimize taxes and how your family can avoid probate after your passing.
“I’m Too Young” – A Common Misconception
So, why do people so often think they’re ‘too young’ to have an Estate Plan?
On the one hand, it can be due to procrastination. As a young person, it is natural to imagine that you will have plenty of time to take care of your affairs. However, life can be unpredictable, making it crucial to have a solid plan for the future, including for potential incapacity.
On the other hand, it can be a fear of mortality. Discussing incapacity or death may not be our favorite conversation topic, especially when you’re young and those events seem distant. But, preparing for these possibilities is the best way to manage this fear. Having healthcare directives and a medical power of attorney for someone you trust can provide confidence that, if necessary, your healthcare preferences will be respected.
Additionally, some people don’t create an Estate Plan as they overestimate the word ‘estate’ and think that what they have isn’t enough. This isn’t true; any assets you own, regardless of size, contribute to your estate. Besides, an Estate Plan goes beyond just assets into decisions such as guardianship, and practical benefits such as tax minimization.
No matter how young you are, you can create an Estate Plan today and give yourself the peace of mind of having done that. Following this, all you need to do is regularly review and update it based on any changes in your life or the laws.
Benefits of Starting Early
Beginning the Estate Planning process early in life offers several key advantages:
- Compounding Growth: By establishing financial instruments sooner, your wealth has more time to accumulate and appreciate, potentially resulting in a larger legacy for your heirs.
- Insurance Accessibility: Obtaining life insurance and other forms of coverage is generally more accessible and affordable when you’re younger and healthier.
- Long-Term Goal Setting: Early Estate Planning enables you to set long-term financial and personal goals like funding education for your children and planning for retirement.
- Reduced Stress and Time Pressure: Early planning allows you to carefully consider your options, consult with professionals, and make well-informed choices without the urgency that may arise in later stages of life.
- Benefits of Health and Capacity: Beginning Estate Planning early ensures that you are of sound mind and body to make important decisions regarding your estate.
- Options for Adjustments: Your Estate Plan can be adjusted to accommodate changing circumstances, such as marriage, the birth of children, or the acquisition of new assets.
Lastly, let’s go through some examples of people who could have benefited from early Estate Planning.
Negative Impacts of Procrastination
Not investing time in Estate Planning early can lead to severe consequences, especially for your loved ones. In the absence of a clear plan, your assets may be distributed based on state laws, which may not align with your intentions.
Consider a situation where an individual, who had neither a spouse nor children, passed away, resulting in their estate being divided among six cousins. Of these, only one was still living and received nearly $60,000, while the descendants of the five deceased cousins each inherited about $9,000. Despite the legality of this distribution, it’s plausible that the decedent would not have preferred for the wealthier cousin, who had a $30 million personal estate, to receive the largest share.
Moreover, the writer later discovered a will in court papers leaving the entire estate to them and their siblings. However, the will was unsigned, rendering it insufficient.
This serves as a cautionary tale for those who might believe that handwritten, signed notes will suffice in the absence of a formal will.
Other issues that can happen due to the lack of an Estate Plan include disputes between the heirs, prolonged legal battles, and potential estrangement among family members. Avoiding these can make it much easier for the family and can give you peace of mind in knowing you have done your part.
It’s Never Too Early!
Ready to take control of your future?
Our team at Codispoti Law is here to assist. We specialize in creating comprehensive estate plans tailored to your unique circumstances and goals. From minimizing taxes to ensuring your wishes are clearly communicated and respected, we’re dedicated to providing the support and expertise you need.
Don’t wait for ‘someday.’ Start your estate planning journey today and embrace the peace of mind that comes with being prepared. Contact us to learn how we can help you craft a plan that secures your legacy and protects your loved ones!
