You’re never too young for estate planning. Even if you are in your 20s and 30s and expect to live a long time, nobody knows what the future holds. The more you can do to plan for the worst, the more peace of mind that your children and spouse will be taken care of.
Because of your age, your estate plan probably doesn’t need all of the same tools as what your parents or grandparents have. Here are five ideas for estate planning in your 20s or 30s:
- A will. The will is the centerpiece of any estate plan. You use it to designate who will inherit your property after you pass away, and who you choose to be the executor of your estate. As with almost any estate planning document, you can change the terms of your will in the future.
- Deal with your student loans. If you went to college, you likely owe tens of thousands of dollars (if not more) in loans. Depending on if you took out federally-backed or private loans, the lender might forgive the balance if you pass away. But if one of your parents co-signed the loan, the lender might go after them for repayment. A term life insurance policy can help cover this cost.
- Protect your health. When you are mentally competent, you are the one who makes decisions about your health care. But a major accident or illness can take away your ability to understand what is going on or communicate with your doctor. Fortunately, you can create an advance directive, which is a document in which you explain the extent of life-extending treatment (such as being hooked up to a ventilator) you would want in various health emergencies. You can also designate a healthcare power of attorney to represent you and make sure doctors honor the terms of your advance directive.
- Keep your beneficiaries up to date. Assuming you have a retirement account like a 401(k) or IRA, who are the beneficiaries? Now is the time to double-check and make updates if necessary.
- Protect your children. Besides making sure they would be financially comfortable, your estate plan can also designate who would become your kids’ guardians if you and your co-parent are no longer around.
Estate planning can be tailored to every stage of your life. Whether you are just starting your adult years or are near retirement, working with an estate planning can give you predictability and peace of mind.