Estate Planning – not just for the rich
You are out of school, maybe working your first job, and for the first time have your own place. You’re a real person now – making your own way in the world. It’s a great time of life! so why would I ever want to interrupt your fun to talk about estate planning?
Usually when we think of estate planning we have in mind the orderly transition of assets at death. Death is something that you have a 100% chance of experiencing – we just don’t know when. Tomorrow isn’t promised to us – and neither is this afternoon, for that matter. Consequently it is prudent to plan for this eventuality.
What does the Young Professional need?
A valid will
What do you need to do at this point in life? A basic will is the foundational document of estate planning. You need that once you own real property or begin to accumulate assets. Typically, at the earlier stages of life, most of what you have is going to pass by operation of a beneficiary arrangement – by contract, in other words. Think life insurance or IRA and 401(K) beneficiaries. What won’t pass by operation of contract? everything else that you own. This would be real property, or your car, for example – assets that cannot have a beneficiary attached to them.
Guardianship for your children
You really need a valid will once you own real property, and even more so once you have children. Say you and your spouse are killed in a car crash, and you die intestate. That term means, without a will. Who will raise your children? Without a valid will, the courts will decide. The court will look for close relatives are willing to do the job. That might might lead to a fight amongst the relatives, where different ones want to raise your children. On the other hand, the court might appoint somebody you can’t stand – somebody who doesn’t share your values. All of this gets taken care of when you have a will with guardianship provisions. The court will approve your named guardians, and that issue will be settled.
What other document do you need, and need right away, even if you’re at an early stage in life? You need a living will. This is a document that directs what should be done if you become incapacitated – keep me alive or pull the plug. Remember Terry Schiavo? She is a very sad case in point. Terry had for years been in what’s called a persistent vegetative state. Her parents wanted her kept alive in hopes of a cure or a miracle. Her husband said she would not have wanted to remain alive under those circumstances. But there was no document! The case went to court, and eventually the court sided with her husband as her closest living relative. The plug was pulled, and Terry died. Bottom line: this the whole thing wouldn’t have happened if a living will have been in place.
Healthcare power of attorney
Another simple document to have in place is a healthcare power of attorney. Again, say you’re in a situation where medical decisions need to be made. You can’t make them because you’re too out of it, for whatever reason. You delegate these important health care decisions to a third party whom you’ve chosen, who will have your best interests at heart.
Although you’re just starting out, you have a promising career ahead of you, and the world is your oyster, these are things that you need to take care of. These documents are foundational to the point that much of the rest of your financial life is built upon them.
Visit wlling.com – that’s one place you can do some of this quickly online. You can pay a visit to OfficeDepot or Staples for that matter. They’ll have a section of legal forms. For more comprehensive advice and direction, by all means see an attorney.
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