Why You Should Plan
Nearly everyone owns something at death — a car, computer, jewelry, clothing, furnishings. These belongings are your “estate,” and they need to be directed somewhere at your death. If you haven't decided ahead of time where those things go, your family has to dig through your home and files to find the information they need after you are gone — further reminding them of their loss. There are many things that need to be done that you may not think about until you have experienced the loss of a loved one.
Planning in Your Twenties
You may think you don't need to plan because, after all, you're only twenty years old. The chance that something will happen to you is very slim but, if it does, your family will have a lot to do. Accidents can and do happen at all ages. Everyone at any age should have certain legal documents in place.
The most important of these are a medical designate or agent and a living will. If you are injured, a medical designate is the person who will make medical decisions on your behalf.
A living will is a legal document that expresses your wishes regarding whether or not you want your life artificially prolonged in the event that you are permanently incapacitated with no chance of recovery. This may seem morbid, but if you have strong feelings either for or against life support, you should specify your personal wishes in a document.
If you already have a living will or medical directive, check the laws of your state to be certain your living will complies with that state's requirements. If you move, you may find your living will is not recognized in your new state.
You've undoubtedly read stories about injured people who did not have written instructions and the disastrous — and expensive — situation that resulted for their families. A sample advance health care directive (also called a living will) can give you an idea of the issues you need to consider.
You should also consider preparing a will at this age. You may not have a lot of belongings, but it will be much easier for your family if you have a document stating how you want your property to be distributed.
The amount of planning you need to do for your property will depend on how much property you have. Later, you can determine whether you need something more than a will.
If you are newly married, you should consider creating a will promptly to protect your spouse. If you do not have a will naming your spouse as your beneficiary, the intestacy laws of your state may direct assets to other family members such as parents or siblings. “Intestacy” means dying without a will.
Although you may think your spouse will automatically inherit everything you have, that is not necessarily the case. Your spouse will receive a portion of your estate and, if you have children from a prior marriage, they will also inherit a portion. If there are no children, your parents or siblings may receive a portion of your estate, probably not at all what you anticipated or wanted.
Congratulations! You Just Had a Baby
One of the most important decisions you will ever make (besides whether or not to have a baby) is who will take care of your baby if you are gone. If something happens to you, your spouse will become the legal guardian of your child. If something happens to both of you, someone will have to be given the responsibility of raising your child. Wouldn't you like to be the one to decide just who that someone will be?
The only document that allows you to name a guardian for your baby, if both you and your spouse die, is your will or, in at least one state, a written declaration. Most young parents don't — or don't want to — think about this possibility. However, it is a very important matter concerning the well-being of your child, so it's best to be prepared, just in case.
Supporting and Educating Your Young Children
After you have started a family, you need to protect, support, and educate them. Just as with an infant, you need to be sure you have sufficient insurance or other assets to take care of them if you die before they are on their own.
If you have school-age children, they will need not only a guardian, but also funds for such things as clothing, music or sports equipment, books, field trips, and the like. You might want to consider a fund such as a 529 plan for your children's education costs. There are many different plans available today, and you should check to see what your state offers. Two possible sites to assist you are: CollegeAnswer.com or Savingforcollege.com.
The Children Have Left the Nest
When the children have all gone to college or have moved out of the house, parents' lives change dramatically. The daily planning associated with teenagers has ended and perhaps been replaced with long-distance telephone bills.
One of the reasons people don't prepare when they are in their later years is because they don't want to make an appointment with a professional to talk about their deaths. Some individuals think talking about death will cause it to happen sooner than if they pretend it won't happen!
When your children leave home, it is an excellent time to consider your own future. You will probably think more about retirement. This is the perfect time to take a serious look at your estate plan.
You are at a point in your life when you have likely accumulated a lot of things and have not had time to evaluate what would happen to these things if you were gone. And, more important, you've probably not had the time until now to assess whether you are making the best use of your property and investments. Creating an estate plan will help you do just that.
Retirement is the time when most people take a close look at their estate plan. If you have decided to retire, you probably took the time to gather most of the information you needed to evaluate your estate plan. That involved calculating how much money you have, and whether you will have enough money coming in to retire from your job. This is an excellent time to complete the planning process. After all, you've already gotten started; why not just finish the job?
Spending time and funds now to set up your plan can save your family considerable stress, time, and money later. Having no plan may cost your family more than paying a lawyer today. It's worth the effort to put your plan in place.
Every person during his lifetime has known someone who has died. The stories about the cost, delay, and turmoil are probably the general rule and not the exception. It doesn't have to be like this. Many times people think they are prepared but, sometimes, when it is too late, the family discovers that the plan was not as complete as everyone thought. Put your mind at rest and do what you can now to ensure a well-organized and comprehensive plan.
Another reason people avoid planning is because it is frustrating and expensive to try to figure out what needs to be done. Others may be concerned that their families may fight over their estate once they're gone. This book will help address these concerns.