Many people assume that estate planning is only for older adults, or for wealthy individuals who need to make intricate plans for trusts, estate and gift taxes, and business succession. However, it is also extremely important for young adults to think about estate planning and to speak with a Chicago estate planning attorney about creating a will and health care advance directives. As an article in U.S. News & World Report emphasizes, “estate planning isn’t only for the rich or the old,” and “even the young and broke need to be thinking about how their assets will be distributed in the event of a tragedy.”
We will discuss some of the reasons that young adults should consider estate planning in Chicago, Illinois.
Naming Beneficiaries and Drafting a Will in the Event of a Tragedy
Young adults should not be planning for an unexpected death, but they should have estate planning documents in place in the event of an unexpected tragedy. One of the first steps in estate planning for a young adult regardless of income is to name beneficiaries and to draft a will. Even if you have not saved a lot of money or if you are still repaying student loans, you likely have a 401(k) through your employer, and you may even have a life insurance policy.
You should be sure that you have named a beneficiary on all of these accounts. Even if there is not a lot of money in them, the process for distributing the assets can be extremely complicated if you have not named a beneficiary. Further, it could be that you have a long-term romantic partner to whom you are not married. If you die without naming a beneficiary or having a will—if you die “intestate”—then that partner will not be able to inherit or to receive benefits.
In addition to naming beneficiaries, you should also draft a will for some of the same reasons. As we mentioned, if you have a long-term partner who is not a legal spouse, a valid will allows you to leave assets to that person and for that person to inherit your property. Working with an estate planning lawyer can also allow you to draft a small estate affidavit, which can allow your property to pass to another person without going through probate if it is less than $100,000. As the article highlights, “you don’t want your parents to have to go through the probate process for your $5,000 checking account.”
Making Decisions in the Event of Incapacitation
Estate planning is also essential in the event that you become incapacitated and unable to make decisions for yourself. In the event that you are involved in an accident and are temporarily incapacitated—meaning that you do not have capacity to make decisions for yourself—a financial power of attorney can allow another person you trust to handle your finances for you.
It is also important to consider incapacitation with regard to health care. Generally speaking, decision-making documents concerning health care are known as advance directives. A health care power of attorney allows you to name another person to make health care decisions for you if you are unable to do so, while a living will allows you to explain what your medical decisions are in advance in the event that you cannot make a decision for yourself.
Learn More from a Chicago Estate Planning Attorney