Although some young adults may not have any children or real estate, all young adults need to think about who they want to designate as decision-makers if they pass away or cannot make decisions for themselves. All young adults should strongly consider speaking with an estate planning attorney about having the following documents in place:
- Health Care Power of Attorney
- Durable General Power of Attorney
- Beneficiary Designations
- Last Will and Testament
The Health Care Power of Attorney allows a person to designate who they want to make health-related decisions on their behalf if such person cannot make those decisions for themselves. When an individual turns age 18, their parents are no longer entitled to any of their medical information. This happens often when a young adult gets sick or injured at college. Thus, it is important to execute a Health Care Power of Attorney to make sure that the right persons can access protected medical information and make timely medical decisions.
The Durable General Power of Attorney, or Financial Power of Attorney, allows a person to designate who they want to make financial decisions on their behalf. One key difference between this document and the Health Care Power of Attorney is that this document usually takes effect immediately upon signing (but this can be changed). Therefore, whoever the signer designates as the person to have this Power of Attorney will usually have power right away to manage the signer’s finances. The signer may, if desired, designate one person to hold both the financial and health care powers of attorney, though it is common to designate separate decision makers.
No estate plan is truly complete without reviewing Beneficiary Designations to confirm who an individual’s preferred beneficiaries are for their various assets, including investment accounts, retirement accounts, and bank accounts. Ensuring all beneficiary designations are updated and complete will help allow their family members avoid the costly and time-consuming probate process.
Next, a Will (sometimes formally called a Last Will and Testament) is a document that allows a person to designate who will take title to their probate assets (those which have no beneficiary designated). The Will also names an executor to carry out the Will, manage assets before transfer, distribute benefits, and settle the estate following the individual’s death. It doesn’t matter how many possessions an individual has—everyone should have a Will to avoid leaving assets to the default beneficiaries imposed by state law, who may or may not be whom the individual would designate—and to avoid any potential conflicts over who would serve as executor. An individual can also designate a guardian for their minor children.
There are other numerous documents that can play a part in someone’s estate plan, but enacting the above-mentioned documents will allow unexpected or inconvenient circumstances to be less burdensome and uncertain. What is needed will depend on personal circumstances. If you are eighteen years old or older, and you have yet to execute an estate plan, think about talking to an estate planning attorney who can help figure out what estate plan makes sense for you.