Once your child turns 18, they are defined under the law as adults. Smart and conscientious professionals know that it is a misconception that you have to be old or rich to have an estate plan. Often, having an estate plan is part and parcel of accumulating wealth, which in the past would have signaled the need for an estate plan. An estate plan can give young adults peace of mind, reduce family conflicts, and protect assets.
In this modern era, with complicated tax schemes, a frenetic economy, and blended families, it is quite necessary to have an estate plan at an earlier stage than was needed in the past. For example, Daycare, K-12, and college expenses are much greater than they used to be and therefore need to be considered much earlier if you plan on having kids. Even if you don’t and want to support siblings or other people dear to you, staggering tuition costs in conjunction with a 529 plan can save a bundle in taxes. Who wouldn’t rather dedicate money to education or any other thing of value to your household than Uncle Sam?
Why Should Young Adults Begin Their Estate Plan?
Some people think they should wait until they have significant wealth or kids. There are many reasons why young adults should engage in estate planning before those indicators. To begin with, you should plan your estate to avoid your state’s intestacy laws. When you pass away without a will or other estate planning documents in place, your assets will be distributed according to California intestacy laws. This may not be consistent with your goals and could create unnecessary legal issues and delays for your loved ones. Estate planning lets you decide how your assets should be distributed after your death and you can take comfort that your loved ones will be provided for.
Should you be interested in protecting your health and financial interests, estate planning allows you to specify your wishes regarding health care and financial decisions if you become incapacitated. This can help ensure that your preferences are protected and that your loved ones are not forced to make difficult decisions. If you have young children, estate planning can help to ensure that they are taken care of by someone whom you trust in the event that you and their other parent or caretaker are unable to look after them.
Estate planning can help minimize estate taxes and ensure that more of your assets are passed on to your beneficiaries. Even if you do not have significant assets now, you may acquire them in the future. It is better to be prepared now, that way you won’t have to worry about your estate plan when you are busy with work, when revenue is flowing, or when you are retired.
What Should They Include in their Estate Plan?
There are several documents that they can include in your estate plan. The cornerstone for many estates is the will. A will is a legal document that will be used to pass along your assets after you die. You can also use it to dictate who will be the guardian of any children that you have. Even if you have a trust, you will want a pour-over will that dictates what happens to things that do not make it into trust. A trust is a legal relationship created by a contract, the trust document, which places power in a trustee to hold title and distribute property and assets to beneficiaries of the trust. The person who sets up and funds the trust is called the settlor.
There are documents that can help in case you are incapacitated, temporarily or permanently. The advanced health care directive allows you to specify your wishes regarding medical treatment in advance of incapacitation. A durable power of attorney allows someone to make important financial decisions on your behalf if you become unable to make them yourself.
If you own a business, you should have a business succession plan that indicates how your business should be handled after your death. Within other contracts or agreements, you should be sure that your beneficiary designations are made and updated, since they may fall outside of your will or trust. Finally, a letter of instruction can detail to your loved ones and heirs how you want your affairs handled after you pass.
What are the Long-Term Benefits of Starting to Plan Young?
Estate planning is an important tool for young adults to protect their interests and rights during their lifetime. It can give them greater control, reduce conflicts, and provide them peace of mind. It will later guarantee that their wishes are carried out in the event of incapacity or death.
Who Can Help Set Up My Estate Plan?
The Law Offices of David R. Schneider can help you set up your estate plan. We have significant experience in setting up successful, customized estate plans. The benefit of having an experienced attorney complete this work is that they can spot legal issues and pitfalls that may negatively impact an estate plan.
Estate planning consultations are available virtually and in the office, and David is happy to help clients throughout California. He has helped thousands of families successfully set and reach their estate planning goals. David sees clients by appointment only to ensure that each has his undivided attention. Contact us to schedule a free consultation today at 805-374-8777 or dschneider@drs-law.com. We look forward to hearing from you and helping you set up your comprehensive estate plan!
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