When you are in your 30s, planning for your demise is likely to be at the rock bottom of your list of priorities. But, financial experts suggests that this could be the perfect time to put those plans in place in order to protect your family and your assets in case the unexpected happens.
Before we highlight the necessary moves you are required to make in your 30s, let’s look at what estate planning is.
Estate Planning Explained
Estate planning is definitely not as exciting as planning for a vacation in Bahamas or a picnic on one of those serene and beautiful landscapes. However, even if it is not cable of providing you with the instant gratification you s much desire, this lone plan can help secure your future and the future of those you care about.
Estate planning in a nutshell, is all about making preparations for the transfer of your assets after your death. It consist of plans designed to ensure that you have a say on who inherits your assets. This plan can also be beneficial in the event that you become incapacitated, seriously ill, or unable to communicate.
Moves to make: create these documents
An estate plan without a will cannot be called an estate plan, as a will is the first document you’ll think of when preparing your estate plan. A will is basically a document that contains information regarding how you want your assets to be distributed and managed. It also contains the names of your estate beneficiaries, including the portion of your assets you want each individual to inherit.
If you have minor children, you can as well designate guardians for them in your will in case you and your spouse become incapacitated.
Another component of a well-developed plan is a trust. Trusts are legal setups that hold assets on behalf of a beneficiary or beneficiaries. There are several types of trusts, and the individual setting up a trust can determine how and when beneficiaries receive the assets present in the trust. With a revocable trust- a trust where its terms can be altered or modified without the consent of the beneficiaries- you can escape the expensive and time-consuming probate process. Irrevocable trust, on the other hand, can help restrict exposure to estate taxes.
3. Power of attorney
A power of attorney is an important component of an estate plan, and it will come in handy when you become incapacitated. It is a legal document that allows you to designate an individual who will make important financial and legal decisions on your behalf. Without a power of attorney, the court in your state will step in and select an individual who will be charged with making those important financial and legal decisions on your behalf.
4. Healthcare directives
Healthcare directives are almost similar to a power of attorney. The main difference between power of attorney and a healthcare directives is that, while the former handle your financial and legal decisions, the latter handles your medical decisions. There are two main documents in this category; a living will and a healthcare proxy.
5. A living will
A living will is a legal document that state how you wish to be cater to in the event of your incapacitation. A healthcare proxy, on the other hand, allows you to choose an individual who will make those important healthcare decisions on your behalf.
If you feel that your family member may have different opinion regarding how you want to be catered to when incapacitated, it is best you have these documents in place to make sure that you wishes are adhered to.
6. Select the right beneficiaries
Beneficiaries on life insurance including retirement accounts such as 401 (k)s and IRAs take precedence over what is stated in a will. Thus, if you would like your assets to be given to your spouse or you children, you will want to ensure that your name the right beneficiaries.
Know that you shouldn’t list your minor children directly as contingent beneficiaries as they aren’t mature enough to own property directly until they become adults. You will want to name the trust that will hold the assets for them until they are mature.