Estate Planning For All Ages

Posted on November 9, 2011

0


Typically, most people think of planning their estates and composing wills as a practice done only later in life. Taking the time to review how property is owned and determine how it will be distributed at death is thought to be necessary only when significant assets have been accumulated or when guardians need to be named to care for minor children. It is certainly wise to engage in estate planning in both of those situations; however, a recent Wall Street Journal article by Rachel Emma Silverman stresses the importance of estate planning at any age. Contrary to popular opinion, she explains that planning is necessary even, and perhaps especially, when one is young and single.

Silverman insists that any individual who is 18 years of age or older should have a basic plan in place to prepare for the possibility of incapacity and to govern the disposition of assets at death. While the average 20-year-old may not have significant assets, even personal possessions and a small checking account qualify as something to pass on.

One concern for many young adults is the effect of student loans on the assets of their estate. It is important to note that federal student loans are discharged upon the death of the borrower, which means that an individual’s assets are not subject to those debts at death and the individual’s estate does not have to pay off any remaining balance owed. This means that you may have more assets to pass on at your death than you thought because your federal student loans don’t count against you for this purpose. (If you have private rather than federal student loans, you should check the details of your specific loan to see how death affects any remaining balance owed at that time.)

Estate planning is also important for those who may have nontraditional family arrangements or desire to leave certain assets to charity. Under most state laws, if there is no will in existence at a death, the order of asset allocation tends to start with parents, followed by siblings, and then “next of kin.” If an individual has a preference for leaving assets or items to an unmarried partner, sibling, or charity rather than a parent, a written will is the only way to ensure that those wishes are honored.

Bottom line: You cannot assume that the defaults under state law will match your wishes for how property is distributed at your death or for who has priority to administer your estate. Also, if you don’t have a will, the person who ends up handling your estate is likely to be required to post bond with the probate court, which adds extra time and expense to the process.

Furthermore, since incapacity can strike at anytime, all adults, regardless of age, should have a power of attorney naming someone to handle your affairs for you in the event you are unable to do so for yourself. All adults should also consider signing an advance directive for health care (or living will) naming someone to make decisions regarding your medical care in the event you are critically ill and unable to speak for yourself.

Whether you’re 20 or 80, there are many reasons to have at least a basic estate plan in place in the case of incapacity or untimely death. Like the old cliché says, there’s no time like the present

Brooke Everley
Everley Law, LLC

Advertisements