Estate Planning for Young Adults
Written on September 26, 2019

Estate Planning for Young Adults

 

Beneficiary Designations

Beneficiary designations are utilized on workplace retirement plan accounts (e.g., 401(k), 403(b)), individual retirement accounts (IRAs), annuities, and life insurance to name who should receive the funds upon your death.

One or more primary beneficiaries can be named to receive the account.  Contingent beneficiaries should also be named in the event the primary beneficiaries do not survive you.

Designations should be reviewed and updated upon life events including marriage, divorce, and birth of children.

Don’t forget about any retirement plan accounts from your old jobs – they need to be kept up to date as well.

 

Power of Attorney (Property)

A power of attorney for property is a written document which one person (the principal) uses to empower another person (the agent) to act on his/her behalf on financial decisions.  The document could be written to empower the agent now, or to become effective only upon the occurrence of a specific event, such as the principal’s incapacity.

 

Successor Agent(s) are recommended.

 

Power of Attorney (Healthcare)

In a power of attorney for healthcare, an individual (the principal) appoints another person (the agent) to make healthcare decisions if the principal is incapable of doing so.

 

Successor Agent(s) are recommended.

 

Living Trust

A Living Trust may be recommended to control the distribution of assets to yourself if incapacitated and to whomever you choose upon death.  A trust is a private document that avoids probate and provides for the orderly distribution of income during lifetime and the distribution of assets at death to those (e.g. family members, charities, etc.) you choose during lifetime.  A living trust is revocable and can be amended at any time.

You would be your own trustee (total control).  Successor trustee(s) are recommended if you could not act on your own behalf.

The titles of non-retirement assets (e.g. real estate, bank & investment accounts) should be titled in your trust.

Primary beneficiaries to retirement plans could be your trust.

 

Will

A primary purpose for wills for young families with minor children is the naming of guardians for those children.  It is highly recommended that you speak with potential guardians before naming them in your will.

An executor is named in a will to direct the distribution upon death of assets owned in your name as an individual.  Assets passing via your will are subject to the probate process.

If you have prepared a living trust, and to the extent that assets are not titled in your trust and not directed by beneficiary designations, a pour over will directs assets to your trust for distribution.

 

Successor executor(s) and guardian(s) are recommended.

 

 

Implement legal documents with an attorney that specializes in estate planning.