Estate planning can be a confusing and intimidating subject. While you may be aware that you should have an estate plan in place at some point, you may not exactly know when to draft such a plan. The truth is that every adult should have an estate plan.
It is helpful to have certain documents whether you are 18 or 80. Here are some documents you should consider creating right away, no matter your age or stage in life.
Powers of attorney
Some aspects of estate planning are helpful whether you are young and broke or old and rich. Powers of attorney allow you to name loved ones to make medical and financial decisions for you if you suddenly suffer from a severe accident or terminal illness. If you suffer from incapacitation without powers of attorney in place, you will have no direct say in who handles your finances or health care decisions. Incapacitation can occur at any age, so any adult can plan for this situation.
You can benefit from a will no matter the size of your estate. This document is simply a way for you to express your desires regarding the distribution of your assets, management of your estate after you die and guardianship of any children you have. If you are young, unmarried, have no children and do not have many assets, it is still helpful to have a basic will in place. You can and should update your will frequently, especially after any significant changes in your life. The necessity of having a will increases as you age and accrue assets, but it is never too early to start.
If you have any bank accounts, retirement plans or life insurance, you likely already have beneficiary designation forms. Naming beneficiaries on any transfer- or payable-on-death accounts is necessary whether you open your first bank account at 18 or have a significant 401(k) later in life.