Estate planning isn't just for the elderly or rich. You might think of estate planning as something older people do—not 20- or 30- somethings who are just starting out in their careers. In fact, a recent survey by Caring.com found that even though three quarters of adults know that a will is important, only 40% actually have one.
Unsurprisingly, older Americans have wills in place at a much higher rate than younger people. While only 21% of millennials have made a will, 66% of Americans 65 or older have completed the process. Most of us like to think that we’ll live to a ripe old age, the fact is that it often doesn’t work out that way. Accidents and illness can happen at any age. Being as prepared as possible for the unexpected helps to protect your loved ones from legal hassles and unanticipated expenses.
Most of the survey respondents who didn’t have a will in place said it was because they just hadn’t gotten around to it, but nearly a quarter said they didn’t have enough assets to leave to anyone. This is an important misunderstanding, however; if you own any amount of assets—even if it’s just the car you drive or a modest life insurance policy—a will is an important tool for avoiding unnecessary hassle and expense in the event that your life comes to an end earlier than you expect. Also remember that even if you don’t have much to pass on now, the will you put in place today can protect assets you gain in the future.
Estate planning includes more than just your will.
Depending on your individual circumstances, a number of other documents should be included as part of an estate plan to protect your loved ones and communicate your wishes.
- A letter of instruction provides private communication with your heirs to ensure that they are able to fully carry out your wishes. This can include things like PINs and passwords that are not appropriate for including in a will.
- A living trust can allow your heirs to avoid probate for the assets it contains and, if you have dependents, help to ensure their continued financial support.
- Durable powers of attorney (POA) designate decision makers in the event that you become incapacitated. You should have separate POA documents designating people you trust to make decisions about your health care and your finances.
- If you want to leave assets to children or others who are prone to being taken advantage of or making poor financial decisions, appoint a conservator or guardian to protect their interests.
- Consider the benefits of creating an asset protection plan to protect your heirs from loss due to potential lawsuits.
- If you own substantial assets that would be subject to estate tax, talk to a professional about advanced estate planning to help you minimize the tax burden.
If your estate planning needs are simple, you don’t necessarily have to hire a professional to get key documents in place. A number of free online tools are available to help create simple wills and powers of attorney. If your estate is more complex, however, it’s best to schedule time with a professional. Whichever route you choose, don’t leave your estate plan to chance.
At Boelman Shaw Tax & Financial Planning, our dual focus allows us to take a more holistic approach to our clients’ financial needs. We can help you find tax-advantageous ways to provide financial security for yourself, your family, and your heirs. Get in touch with us to talk about your estate plan, or subscribe to our blog for ongoing updates on our articles about important financial topics.
Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.