As a young professional, you might be focused on building your career, paying off student loans, or saving for a first home. While these are important milestones, there’s another crucial aspect that often gets overlooked or that people younger than 40 think they aren’t ready for yet: estate planning.
Despite popular belief, estate planning isn’t just for those who have amassed great wealth or those who are older in years. It’s valuable for anyone who wants to ensure their assets and loved ones are protected, no matter their age or financial status, now and well into the future.
At Lewis & Matthews, P.C., we understand the importance of planning ahead and offer expert guidance to help you navigate the complexities of estate planning. In this article, we offer some perspectives on why estate planning is essential for young professionals along with some practical ways that you can get started today.
Why Estate Planning Matters Now
Rather than asking “why should I worry with long-term planning when I’m just now beginning to build assets,” reframe the question: “Why would I wait to protect myself and my loved ones if unforeseen problems pop up?” Reports vary, but recent data suggests that only 32 percent of Americans have a will in 2024 – down 6 percent from 2023. 1
Taking the time to plan your estate is a crucial step in safeguarding your future and protecting your loved ones, and starting estate planning early can provide significant long-term benefits and help you navigate life’s uncertainties with confidence.
1. Protection of Assets: Even if you’re just starting out, you likely have some assets—be it a car, savings, or investments. Estate planning ensures that your assets are distributed according to your wishes rather than state laws.
2. Healthcare Decisions: Unexpected medical emergencies can happen at any age. Having advance directives like a living will or healthcare power of attorney allows you to specify your medical preferences and appoint someone you trust to make decisions on your behalf.
3. Financial Management: In the event you become incapacitated, a durable power of attorney designates someone to manage your finances, ensuring your bills are paid, and your financial affairs are handled responsibly.
4. Guardianship for Dependents: If you have children, it’s crucial to designate a guardian who will care for them if something happens to you. This decision should be clearly outlined in your will.
5. Avoiding Probate: Proper estate planning can help your loved ones avoid the lengthy and costly probate process. This ensures a smoother transfer of your assets and provides financial support to your beneficiaries more quickly.
Steps to Begin Your Estate Planning
1. Take Inventory of Your Assets: Start by listing all your assets, including bank accounts, retirement funds, investments, properties, and valuable personal items. This will give you a clear picture of what needs to be included in your estate plan.
2. Determine Your Beneficiaries: Decide who you want to inherit your assets. Beneficiaries can include family members, friends, or even charitable organizations. Make sure to update your beneficiaries on financial accounts and insurance policies as well.
3. Draft a Will: Your will is a legal document that outlines how you want your assets distributed and who you want to act as your executor—the person responsible for carrying out your wishes. If you have minor children, your will should also name their guardians.
4. Set Up Advance Directives: Advance directives include a living will, which details your medical treatment preferences, and a healthcare power of attorney, which appoints someone to make medical decisions for you if you’re unable to do so. Thirty-six percent of people aged 30 to 49 have a living will – a ratio that doubles to 72 percent in populations older than 65 years of age.2
5. Establish a Durable Power of Attorney: This document allows you to designate someone to manage your financial affairs if you’re incapacitated. This can prevent financial mismanagement and ensure your obligations are met.
6. Consider a Trust: Trusts are versatile tools that can help manage and distribute your assets efficiently. A living trust can be particularly beneficial as it allows your estate to bypass probate and provides more control over how and when your assets are distributed.
7. Review and Update Your Plan Regularly: Life circumstances change, and your estate plan should reflect those changes. Regularly review your plan and update it after major life events such as marriage, divorce, the birth of a child, or significant changes in your financial situation.
Don’t DIY Your Estate Plan
Estate planning can be complex, and it’s important to get it right. Apparently simple mistakes can be hidden dangers that inadvertently modify or even nullify what you believe to be your stated wishes. Working with an experienced attorney can help ensure that your plan is comprehensive and legally sound. At Lewis & Matthews, P.C., we offer personalized estate planning services tailored to your unique needs and goals. Our compassionate attorneys are here to guide you through each step, providing peace of mind for you and your loved ones as you build a bright and prosperous future.
Resources:
- https://www.caring.com/caregivers/estate-planning/wills-survey/ ↩︎
- https://www.aarp.org/caregiving/financial-legal/info-2019/what-is-a-living-will.html#:~:text=More%20Americans%20making%20living%20wills.&text=18%2D29:%201%EF%BB%BF5%%20(%2D4%20%EF%BB%BFpercentage%20points%20since%202005),(+4)%2050%2D64:%2052%%20(+6)%2065+:%2072%%20(+5) ↩︎
