Natalia Vander Laan
A comprehensive estate plan allows a person to control what happens to one’s assets after one’s death. When we are young and just starting a family, it may seem like there is plenty of time to build a financially secure future. However, estate planning for young adults is crucial. It is important to take steps early to protect one’s family’s future and ensure the loved ones, including children, will be well-cared for if something unexpected happens.
Many young adults mistakenly believe that estate planning is for older people only. Others find the thought of planning for when they are gone to be uncomfortable or even scary. But by preparing the estate plan early, one can ensure that the property is passed on to the right beneficiaries and that loved ones are taken care of.
A basic estate plan for a young family should include at least a last will and testament, a power of attorney for health decisions, a power of attorney for financial decisions, a living will, and a nomination of guardian. In some cases, especially if the family owns real property and there are young children involved, a trust would be recommended.
The estate plan will clarify one’s wishes and ensure that the family is taken care of during incapacity and when a person passes.
One of the main decisions in estate planning for young families involves deciding who will serve as a fiduciary. The trustee under the trust, personal representative under the will, or financial agent under the power of attorney, is the person who will handle the financial affairs during one’s incapacity or after the person’s death. This fiduciary should be someone trusted to carry out one’s wishes.
Most people name their spouse or a life partner. But it is wise to include an alternate fiduciary in the case something happens to both spouses at the same time.
Another crucial aspect of an estate plan for a young family is the nomination of guardian for minor children. A guardian would continue to raise the children and manage their financial affairs if something happens to the parents. If the guardian is not nominated by the parents, the court will appoint a person best suited. However, that person may not know one’s wishes, one’s children, or the values that parents want to instill. With a properly prepared estate plan, parents can name a guardian for the minor children who will raise them according to their wishes.
An estate plan for young adults must also address the distribution of assets upon a person’s passing. In most cases, the assets will pass to the surviving spouse. If both spouses die when their children are minors, many young parents want their assets to be used to care for their children. An estate plan can be structured so the assets remain in trust and are appropriately managed for the health, maintenance, and education of one’s children.
Lastly, an often overlooked yet important part of an estate plan for a young adult with a family is planning for one’s disability. Powers of attorney for health and financial decisions allow a person to nominate an agent who will act on their behalf during their incapacity.
Preparing an estate plan to address difficult decisions about the future can be challenging, but it is crucial.
