If you intend to wait until your golden years to get the ball rolling on the estate planning process, you may already be missing out on an opportunity to protect yourself and your loved ones.
Estate planning has value for people of all ages, and fortunately, more younger adults are realizing that significance; according to a survey from Caring.com, adults between the ages of 18 and 34 make up the only age group not to see a decline in estate planning rates in the past four years.
Start, Plan, Update
If you have a job, a spouse, children, or a bank account, you may already have begun estate planning without even realizing it; those 401K documents you filled out for work required a beneficiary.
With that being said, estate planning isn’t only about what happens after you pass away; a complete plan also specifies what must happen should you become temporarily or permanently incapacitated and thus unable to oversee your own medical or financial decisions.
Without a power of attorney document, those decisions could be made by someone you don’t know or trust; that said, if you’re married, California law dictates that your spouse will receive all your assets unless legal documents specify otherwise.
In any case, getting started with estate planning is not as overwhelming as you may think; completing a few basic items will build the foundation for your plan, and as you gain wealth, your estate planning will grow with you.
Most estate planning experts advise making updates to your plan once a year or whenever a major life event happens, such as buying a home, getting married, or having children.
Estate Planning Basics for Everyone
No matter your age or the size of your estate, there are some basic documents every adult should have in order. These include the following:
Will
Most people understand what a will is and how it works, but just to reiterate, a will explains your final wishes and names a person to oversee those wishes. Parents of minor children, especially single parents, need to be aware that without a will that names a guardian for their children, the court will decide who they will live with.
Medical Directive
Telling your loved ones your wishes may not be enough to ensure they are honored, especially regarding life-saving interventions you may or may not want to be performed on your behalf. A medical directive (or living will) is a legal document that states which types of interventions you give consent to and in what situations they should be applied.
Medical Power of Attorney
Also known as a healthcare proxy, a medical power of attorney (POA) names the person you want to oversee your medical care in case of an emergency. The document authorizes one person to make medical decisions on your behalf, and it may be used in conjunction with a medical directive if you so choose.
Power of Attorney (POA)
A general power of attorney oversees non-medical decisions, such as business and financial decisions. As with a healthcare proxy, the individual you grant POA to should be aware of the responsibility you are giving them and be willing to fulfill the involved responsibilities.
Beyond the Basics
As your estate and family grow, you will need to consider other forms of estate planning, such as trusts. Individuals with assets of $10 million or more will benefit from advanced estate planning techniques, which reduce the amount of taxes beneficiaries must pay.
Start Planning Now
It’s never too early to start planning for the future, and estate planning helps to ensure your final wishes are fulfilled, thus protecting your loved ones and relieving them from the burden of making difficult decisions in the event of your passing.
If you have questions about wills, healthcare directives, or advanced estate planning, the experienced Orange County attorneys at OC Wills and Trusts can help.
