Though “estate planning” may bring to mind visions of rich families squabbling over the ancestral silver, it isn’t just for the wealthy or older people, financial planners say. It can be beneficial for families with more modest assets and 20- and 30-somethings, as well.
The first time many people start considering creating an estate plan—which can include something as simple as crafting a will, to more complex maneuvers like establishing irrevocable trusts—is when they have children. That’s a good time to do so, says Jessica Majeski, wealth management advisor at Northwestern Mutual. But it can also make sense to do it sooner.
In particular, it makes sense for all adults to have a durable power of attorney and healthcare power of attorney drafted. These legal documents allow an individual to appoint another person to make financial and medical decisions, respectively, on her behalf if she becomes incapacitated or is otherwise unable to do so.
“I have a daughter who is 19, on her 18th birthday I had her sign a healthcare power of attorney,” says Majeski. “Those are really critical documents for any adult to have. One of the biggest misses that I see is that a lot of people don’t think about this. It’s okay until something happens, and then it’s not okay.”
Going a step further and creating a last will and testament may seem like overkill for an 18 year old, but Majeski says it’s important to think about estate planning once you start working or have assets in your own name.
It also makes sense for those without many assets, regardless of age, to create an estate plan in order to ease the burden on their families after they pass. In fact, creating an estate plan that can help your family avoid probate—the costly court-supervised process by which a deceased person’s assets are distributed and their debts are settled—or paying an attorney can actually be more impactful in situations where are only a modest amount of assets to pass on.
“Sometimes it’s a small amount that goes to the beneficiaries, right? And it’s still life changing. If someone deposited $10,000 to $20,000 in your bank account tonight, wouldn’t that change your life?” says Alexandra Mysoor, CEO of Alix, an estate planning platform. “But if they spend an exorbitant amount of money settling the estate, that just takes away from what is possible for them.”
As you get older, your estate plan will grow and evolve with…
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