You recently graduated from college and landed your first job in your chosen industry. As someone in your 20s, surely you are too young to start estate planning, right?
U.S. News & World Report explains why your 20s are an ideal time to lay the foundation for your estate plan. Learn why you do not have to be rich or an older adult to plan for asset distribution.
Decision-making
Your 20s are the perfect time to create your health care proxy and durable power of attorney. These forms name the person you want to make financial and medical decisions for you should you ever become incapacitated. Another reason to create a durable power of attorney now is that if you travel or study abroad, you may need someone here in the States to handle your taxes or other financial decisions. Estate planning documents help you name this individual to save time and aggravation.
Beneficiaries
When you were first hired for your current job, did you notice the option to name a beneficiary for your 401(k) or life insurance policy? Decide who receives your death benefit or assets. Otherwise, expect the state to choose this person for you, which could be someone whom you would never choose voluntarily.
Another aspect of estate planning that requires beneficiaries is your will. This is another decision that the state makes for you if you do not name a specific person. You may want your current partner to inherit your assets rather than your next of kin or parents.
Debts
Account for debts while planning your estate. While your beneficiaries may not inherit your debt, any companies that you owe money to can tap your estate to pay off your outstanding liabilities. When the dust settles, your beneficiaries may not inherit everything that you left for them.