Picture this: a group of 20-somethings out on a Friday night, deep in conversation. Out of curiosity, you wonder what they’re talking about: last night’s basketball game, fantasy football leagues, workplace gossip, the latest promotions? The one topic you can almost bet they’re not talking about getting a Power of Attorney (POA) drawn up, or what type of trust is best for them.
Estate planning isn’t generally a topic of conversation when people get together, especially if you’re of a certain age. Then again, maybe it should be.
Too many people make the mistake thinking that estate planning is something that takes place years from now, that it’s something their grandparents worry about. That is just the opposite. According to a survey by Caring.com, 78 percent of people under the age of 36 (that’s you, Mr. and Ms. Millennial) do not have a will, POA or other legal documents in place. And they should! (We can’t completely pick on the Millennials. Sixty-four percent of Generation Xers don’t have a will. So this article is for you, too.)
Estate planning has many definitions and interpretations, but the simple explanation is this: an estate plan is a process of organizing your affairs so that if you were unable to care for yourself, or worse, you passed away, your financial house would be in order and not be a burden to your family members.
And why should you have these documents? You’re 25-years-old, carefree, right out of college, not a care in the world. Two common reasons why they hadn’t done this are they hadn’t gotten around to it and they don’t have enough assets to leave to anyone. Procrastination is a poor excuse for not having it done, and the amount of assets (aka, stuff) you actually have may surprise you.
Even though roughly 81 percent of people have a will in place by the time they are 72 or older, not having an estate plan when you are younger can be an unfortunate oversight for a few different reasons.
It’s not a surprise that people in their 20s and 30s wouldn’t have estate planning at the top of their to-do list. After all, the creation of legal documents such as POAs, living wills, last wills and testaments, and potential trusts is a foreign concept to many people, especially those who aren’t married or don’t have children. That may be perfectly fine for their relationship, but it can be a problem under the law. Creating estate planning documents can ensure your partner has the legal rights to oversee your care or estate, if that is what you want.
No matter where you are in your financial life – and age, for that matter – it pays to think about estate planning. If you don’t take anything else away from this article, at least consider getting these three legal documents created:
Health care POA. This allows a designated person to make decision on your health care when you cannot, including life or death decisions.
Financial POA. In case you’re incapacitated, your financial POA will have legal authority to manage your finances without court interference.
Health Insurance Portability and Accountability Act (HIPAA) authorization. Created in 1996, HIPAA regulates the use and disclosure of health information. If you ever find yourself in the hospital, this document gives authorization for doctors and medical professionals to discuss your condition with anyone of your choosing.
It may seem like a financial inconvenience in the short-term (it will cost you to get these documents created by a professional) taking these financial precautions now can ensure that your debts and financial setbacks aren’t transferred to those closest to you. Years down the road, after you’ve settled down with a family and established yourself, you might want to consider a more extensive estate plan, one that might include a living trust, living well and other documents. If so, consult a professional, such as a certified estate planner or an attorney who specializes in estate planning.
In no way does this article presume solid legal advice. It is to serve as a consumer guide in the
complicated world of long-term care and financial strategies. It is best to consult an elder law attorney who can properly advise and draw up the necessary legal documents.