Two of the most frequently cited reasons for not having an estate plan are 1 – insufficient assets and 2 – not being old enough to need a plan. Sadly, this reasoning has caused many families great heartache. The reality is that with life’s ups and downs comes the need for basic estate planning whether you are young and old.
Here are six estate planning tips for singles and couples:
1. Make an Estate Plan for Medical Emergencies
Twenty-six year old Terri Schiavo of Florida certainly did not anticipate slipping into a coma in 1990 and then having her husband and parents fight over her medical care and ultimate wishes for the next 15 years. Planning for medical emergencies is a must for everyone and should include the signing of two important legal documents called a Directive to Physicians and a Medical Power of Attorney so that the person you have chosen will make these decisions for you.
2. Make an Estate Plan for Financial Emergencies
If you are out of the country on business and your spouse is at home trying to sell the house, or if you are in an accident and expected to fully recover but will be in the hospital for a while, then you will need a Statutory Durable Power of Attorney to allow your spouse, partner or some other person of your choice to manage your financial affairs and sign legal documents on your behalf.
3. Make an Estate Plan for an Untimely Death
Planning for an untimely death is important, particularly if you are in a committed relationship and/or have young children. If you fail to make an estate plan, then the state where you live at the time of your death will make one for you and in most situations the plan will not be what you would have wanted had you taken the time to make your own plan. Aside from this, assets titled in your individual name will need to be probated to transfer them into your beneficiaries’ names after you die. Having at least a basic that puts someone in charge of settling your estate and names your preferred beneficiaries and appoints a guardian for your minor children will give your family and loved ones peace of mind during a difficult time.
4. Make an Estate Plan for Your Minor Children
Even if you do not think that you have enough money or property to need an estate plan, you will need to make a plan for your have minor children. If you do not, and you and the other parent of your children both die while the children are still minors, then the children will become wards of the court until a judge can decide who the children should live with until they become adults. In my experience there have been many fights between the grandparents on both sides for the custody of the children. In addition, the control of the minor’s inheritance will be taken over by a court-supervised guardian or conservator. Then, depending on the laws of the state where the minor lives, when the minor reaches the age of 18 or 21 all of the remaining guardianship funds will be turned over to the young adult, free and clear. Not many children of that age will do the “smart” thing with money without further guidance from an adult.
5. Buy Term Life Insurance
When you are young, term life insurance is really cheap and can offer your family financial security if you were to die prematurely. The insurance proceeds can be used for things such as paying off your outstanding medical and credit card bills; paying off your mortgage; replacing your lost income; paying for your children’s care and education; and/or paying for a live in nanny, day care or after school care. Term life insurance is also easy to buy from your property insurer and online, or, if you are offered term life insurance at work, buy it.
6. Don’t Rule Out a Premarital or Cohabitation Agreement
If you are getting married, think about a premarital agreement. If you are moving in with someone without plans to marry consider protecting yourself with a cohabitation agreement. Consider the agreements if one of you is involved in a family-owned business or owns your own business; if either you or your spouse or partner is contributing to a 401(k) or other retirement plan; if either of you will have the possibility of inheriting assets from your family; or already own a residence that will be used as the marital home; or if you are marrying someone who has already accumulated a large amount of debt. A premarital or cohabitation agreement can protect what assets you currently have or significant assets that you expect to inherit, and can also protect you from debts acquired before the marriage.
Everyone Needs an Estate Plan
Estate planning is not just for older or wealthy people. Younger people, especially those with minor children, need to have a will and estate plan in place in order to give instructions to their loved ones to follow in the event of a debilitating accident or untimely death. It’s just common sense.