A lot of people think estate planning matters only when you are old or you are rich. That is not the case. According to a recent Gallup Poll, only 4 in 10 Americans have a will.
The statistics are even more staggering when looking at younger Americans. In 2016, only 14 percent of individuals under 30 had a will, compared to 24 percent in 2005.
Due to increasing advances in technology and medical science, most millennials have good reason to assume their death is far, far in the future. Everyone wants to believe that they will live a very long life, but that is not always the case. When the latter is true, it is good to have plans in place.
What is estate planning?
Estate planning means having a plan in place for yourself and your belongings when you die or are unable to care for yourself. If you do not have a plan in place, the state of California will distribute your possessions in case of your death and make health care decisions for you if you become incapacitated.
Estate planning is a good way to help you control your finances and end of life choices when you are gone/unable to do it yourself. Estate planning can help you manage:
- Your choice on who manages your assets
- How your assets, such as real property, bank accounts, physical belongings, etc., are distributed
- How your care is managed and who manages it if you cannot care for yourself
What do you need to do?
- Make a will: The last will and testament is a document that says how you want to distribute your belongings after you are gone.
- Create an Advance Health Care Directive: An Advance Health Care Directive includes both health care proxy designation and a living. A health care proxy is an individual of your choosing who you give the power to make important medical decisions if you cannot make them for yourself. A Living will is a predetermined medical treatment plan created by you and for you. It is common for people to put things such as if they would like doctors to take extraordinary measures in life-threatening situations.
- Establish a durable power of attorney: This is a document that allows you to designate someone you trust to make important financial decisions for you if you’re incapacitated.
- Execute a Revocable Living Trust: If your gross assets are worth more than $150,000 ($166,250 as of 2020) or if you have minor children, you most likely need a Revocable Living Trust in order to avoid probate and to give maximum protection to your children’s inheritance.
No one enjoys thinking about their death, especially when you are young. However, having an estate plan keeps you protected and in control of your future.