One of the most pervasive myths about estate planning is that it is most crucial for the elderly. According to a national estate planning survey, this myth is one reason that the majority of people under the age of 34 do not have a will. But young adults, and especially young adults with growing families, run serious risks without a comprehensive estate plan -- and this is true whether they are have significant assets to protect or are just beginning to build wealth.
Newly-married couples are often surprised to learn how important it is for each spouse to sign a power of attorney to cover circumstances if one the spouses becomes incapacitated. Many believe that if one spouse becomes incapacitated, the other spouse will have the legal authority to act in his or her place, but that is not universally true.
Without a power of attorney, a spouse will be unable to make decisions about the other’s individually-owned assets, including insurance accounts. Furthermore, he or she may be legally unable to sell jointly-owned illiquid assets, such as a car, without going to court. An estate planning attorney can structure the power of attorney so that it is only activated under certain circumstances, such as incapacitation, if that is desired.
As young families grow, naming guardians for minor children becomes the most important estate planning task. Parents should name both a guardian and an alternate guardian. Without a properly executed document naming a guardian, any interested party may apply to the courts for guardianship, and a judge will decide who among them is appointed guardian.
When young families begin to accumulate assets, it may be time to consider setting up a trust to ensure that the assets will not pass through probate. To families with few assets, it may not seem to be worth the expense to set up a trust. But it is important to remember that probate may be even more expensive. Young couples may want to consult an estate planning attorney to discuss the best way to preserve growing assets.
Like many older adults, young adults may feel uncomfortable discussing topics that touch on death or incapacitation. But young families can also look at these preparations as a way to further show love, care and concern for each family member, and that perspective can make the discussion easier.