Many individuals are under the misconception that it is only the wealthy among us who need to have an estate plan. However, if you have assets at all, you really should start thinking about an estate plan as a young adult. Every time a significant change in your assets or life takes place, that plan needs to be re-evaluated.
What should be in your estate plan?
For starters, a basic estate plan should include a trust, a power of attorney, a health care power of attorney, and a will. While there are tax benefits to a well thought out estate plan, it should not be the sole driving factor of your planning. For parents of multiple children, it is usually best if parents will a certain amount of money or assets to each child instead of allowing children to divide up assets among themselves. A will without unclear direction can lead to fighting between siblings, especially in the situations where assets need to be sold in order for the children to divvy up the estate.
Name a guardian for your children
Parents of young children should take the step to name a guardian for their children in the event anything should happen to them. Thinking about your own death and leaving your children without their parents can be emotionally difficult, but not nearly as difficult as things could be for the kids if you do not have a plan in place for them to be provided for. Not naming a guardian could lead to the risk of the children being placed into foster care. This is something you should evaluate often to make sure the person or persons you originally chose are still the right fit for the responsibility you are asking them to take on.
Revisit your assets
Many employees set up their employer-sponsored retirement plan and never change the beneficiary. The beneficiary named on the plan trumps any directions that are listed in your will. If you get divorced and later re-marry, your retirement plan could be given to your ex-spouse instead of your new spouse if you failed to change the beneficiary. The same rules apply to life insurance policies, so be sure to update them when necessary as well.
Planning for your demise can be an emotional experience, but doing so can make things easier for the loved ones you leave behind. The only way for you to be certain that your final wishes will be honored is to have an estate plan in place.