You might be wondering why you need an estate plan when you're young, don't have much in assets, and maybe don’t have an estate to begin with. Well actually, you do have an estate and more assets than you’re probably aware of. So many millennials share this misconception that estate planning is something of importance to the elderly, but the scary reality we tend to ignore is that death can find us at any age. In the unfortunate event of your early passing, here’s why you need an estate strategy.
1. You need a will and testament
You may not have much in savings yet, but that doesn’t disregard the importance of having a Will. Wills are in place for reasons other than solely transferring assets from one generation to the next. They can be used for determining who will receive your valuable personal items in the event of your early passing, such as your car, electronics, jewelry, collectibles, or anything else that you decide.
2. You need a Durable Power of Attorney, Living Will, and Healthcare Proxy
These are all crucial documents that need to be in place in the event of your legal incapacity. A Durable Power of Attorney enables a trusted agent to manage your personal affairs in the event that you are unable to. A Living Will explains your end-of-life medical wishes. It becomes effective when you no longer have the ability to communicate your own desires and has no power after death. It addresses your personal medical preferences, such as whether or not you want to be left on life support, as well as other medical details in regard to tube feeding, pain medications and more.
3. Protect your Children
Maybe you don’t have any children, but if you do, it’s crucial that you name their guardians or else a dispute is likely to occur in the court room. You’re able to leave assets to a trust for the benefit of the children in the event that both parents are to pass away. You’ll then want to consider naming a trustee manager. The guardian and trust manager can be the same person but are often times different people.
4. Protect your pets
That’s right, your beloved furry companions need protection too. All animals should be taken account for, whether it be horses, dogs, or even guinea pigs. Consider who you’ll designate to resume care of your pets proceeding your passing to ensure your animal’s needs are met. To reduce the burden, it’s a wise idea to set aside money in your estate plan specifically for the continued care of your pets.
5. Protect your Digital Assets
Growing up on the internet means Millennials tend to have a pretty large digital footprint. All of your digital assets including social media accounts, photos, online blog, emails, and online bank accounts need to be accounted for when establishing your estate strategy. It’s important that you name someone to assume authority over your digital assets in the event of your passing. This entails creating a list of username and passwords to all of your accounts and providing instructions for the accounts detailing how you wish for them to be handled.
6. Prepare for the cost of burial expenses
Do you want to be cremated, buried, or donated? An estate plan will address how you’d like to be memorialized. Unfortunately, funerals are a costly event. According to Parting.com, the cost of a traditional North American funeral ranges between $7,000 and $10,000. This total accounts for the service cost at a funeral home, cemetery burial and headstone installation. No estate strategy means potentially burdening loved ones with a substantial bill to cover these costs.
Don’t make the mistake of thinking that estate planning is only for the elderly. Remember that NO ONE is immortal. Establishing an estate strategy is an in-depth process that will require time and prep work, but it’s an important component to financial security.