Basically, as soon as you are an adult, you should have an estate plan in place. It is at this point that your mother and father can no longer speak for you. While that certainly brings some freedom, it also means that if you do not have a plan in place, it can be very expensive. And even though many young adults’ financial portfolio is mostly debt, a good estate plan is still necessary.
The purpose of a good estate plan is that it allows you to maintain control over how your assets are distributed if you pass away. It also designates someone to make decisions for you if you can no longer act for yourself.
So, let’s look at the different documents that are necessary.
1. Power of attorney: If you become incapacitated, someone still needs to pay your bills and handle your finances and property. This document names who you would want to have that responsibility. It may be your parents or your spouse.
2. Health care surrogate: This document is applicable if you become incapacitated and designates who you want to make health care decisions for you.
3. Last will and testament: This document designates not only who oversees your estate, but also who gets your assets and how.
You may be thinking, “What is the big deal if I don’t have these documents in place? I only have debt.” These are some situations that could arise if you do not have these documents in place:
1. Guardianship. The guardianship process is a legal process in which the court decides who is going to make your financial or health care decisions. It is a lengthy and expensive process and the person appointed may not be the person that you would want handling your affairs.
2. Intestate probate. Intestate means that you have no last will and testament. Therefore, when you die, the statutes are going to control how your money is distributed. Yet again, this may not be how you intended for your estate to be distributed. We have had a client whose child passed away. In that situation, the father had abandoned the family and the child had not heard from the father in a very long time. Unfortunately, because there was no last will and testament in place, one-half of the assets had to be distributed to the long-lost father instead of the mother who worked countless hours in the care and support of the child.
Now, let’s assume that you read this article and understood the value of a good estate plan. Next, assume that you got married after your documents are in place, but you failed to update them upon your marriage. If you then became incapacitated, it could be your mother making decisions for you instead of your new spouse. Do you think that may cause a problem? It is also important to keep your documents up to date as your life changes.
Finally, let’s explain the importance of life insurance. If you have minor children or a spouse, life insurance is a great way to provide for their future if you suddenly pass away and they lose your income stream. Also, if your children are minors, then it is important that their money is held in trust until such age that you believe they will be mature enough to handle the money.
As you can see, there are lots of reasons to have an estate plan. Putting your wishes in writing ensures that your affairs are in order for now and in the future.
Stephen J. Lacey, JD, LLM-Tax, is a managing member of the law firm Lacey Lyons Rezanka in Melbourne, Florida. Lacey concentrates his practice in the areas of estate planning, probate, asset protection, elder law, Medicaid planning and trust administration. Contact Attorney Lacey at 321-608-0890 or visit www.LLR.Law.
This article originally appeared on Florida Today: No matter your age or financial condition, have an estate plan