You’re young, you say. You haven’t saved your first million dollars – or even your first $5,000. You don’t need an estate plan, you tell your parents. After all, you’re just getting started with this thing called adulting.
Accidents strike the young and healthy. So do sudden illnesses. Death doesn’t affect only your grandparents.
And even if your assets are few, don’t you want a say on how those assets are distributed should you die before your time? Don’t you want to entrust someone to speak for you should medical decisions need to be made if you’re incapacitated?
We thought you might. So, just what is involved in an estate plan?
There are several parts to an estate plan, with a will being the most recognizable component. Your will gives directions as to how to distribute those assets at your death. You will name an executor for your estate, and that person will make sure your wishes are followed and do tasks such as filing your final income tax return.
Your estate plan also should have some documentation with which you’re probably less familiar. Those include:
- Power of attorney: That gives another person authorization to represent you when it comes to legal, financial, business or health-care issues. That power of attorney can be temporary, and it can address only specific matters or all matters.
- A living will: This document gives you the ability to tell doctors and your family what medical care you would like if you become terminally ill. A living will takes effect when you become unable to communicate your wishes yourself.
- A health care proxy: The person you designate as your proxy follows the wishes in your living will but also can make decisions if you aren’t terminally ill but instead just temporarily unable to determine your health-care preferences.
- Beneficiaries: Some financial products, such as the retirement account you might have started at your first job, allow you to designate the person who will receive your assets. That person is known as the beneficiary.
Estate planning can be difficult, and it isn’t something to be taken lightly and done with a generic form online. When you are ready to develop an estate plan, you should consult a California attorney with experience in the field.