According to the law of averages, approximately 1 in 500 people in the United States who are aged 25-44 will die this year. In other words, 499 out of every 500 in this group will be around in 2012.
So why on earth do estate planning attorneys, financial planners, insurance salesmen, etc. recommend that anyone and everyone in this age group spend any time worrying, let alone buying any kind of estate plan, will, trust or life insurance?
Here are 10 arguments why working on your estate and financial planning, even at a young age, will do you great benefit regardless of the long odds.
1. Estate Planning is a misnomer. At least a few of us in this field believe that “estate planning” is a poor name for what we are trying to do. The word “estate” brings to mind huge mansions and millions in stock or land interests. However, one’s “estate” is really just the collection of all his or her financial and personal interests. Leaving advanced instructions for what to do with your assets in case you can no longer control them, be it $100 million or $1, can do a great service for your surviving family.
2. Estate Planning is not just about death. True, a minuscule percentage of people 25-44 will die this year, but how many will become incapacitated? How many have children? How many care for an elderly parent or grandparent? How many like to give to charity? How do these affect their financial plans moving forward?
3. Estate Planning helps mitigate a major risk. Do you have homeowner’s or renter’s insurance? Health insurance? Auto insurance? Lots of others? You pay fees monthly or annually to protect you against the inherent risks in your life without a second thought. Advance planning for your death or disability will afford you and your family a similar protection.
4. What happens if you become disabled or incapacitated? Who will take care of your financial and health-care decisions? Accidents are the highest cause of death for those 25-44. Is it a stretch to wonder what would happen to your “estate” if instead of dying, you became disabled or incapacitated from one?
5. Probate is a pain in the neck. If you die without a plan, likely someone in your family will have to step up on their own time to become your estate’s “personal representative”. This person will have to inventory all your belongings, close all your accounts, pay your bills, give out all your property according to state law (see other potential probate requirements here). These duties are made even more difficult without an estate plan.
6. Your families will lose control of your estate. Here are just some of the things that could happen if you become incapacitated or die without a plan:
- Upon incapacity, the court could freeze your assets until it appoints someone to handle your affairs.
- Without a written living will, doctors will not know if they should “pull the plug” (see Terry Schiavo), despite your spouse or family’s pleadings.
- Without a will, the state will decide where your assets go. Do you know where your assets would go according to your state’s law?
7. If you have minor children, who will care for them? Without leaving any instructions, you will also leave this decision to the state. If you are married, the responsibility goes to your spouse. But what happens if there is a simultaneous death? What if you are a single parent? What if you are divorced and don’t trust your ex?
8. Speaking of kids, should your kids get a lump sum of money at age 18? Without a plan, any funds due your kids when they are minors are held on their behalf by a conservator. Then, as early as age 18, they will receive their whole share outright.
9. Your spouse, parent, sibling, friend can’t “just handle it”. Not everyone close to you can fully understand what it would take to easily handle your matters. Without prior instructions from you, what happens to your pets? Your online accounts? Your hard-drives? Your digital pictures and videos?
10. Bottom Line. We have no idea when tragedy will strike, and unfortunately, this creates an undeniable urgency for all of us. Advanced estate planning can at least give you the peace of mind that you have done all you can to prepare for it.
- Six Estate Planning Tips For Young People (wills.about.com)
- Young, Hip, and Vulnerable – Atlanta Estate Planning Attorney Discusses 4 Reasons That Young Professionals Need an Estate Plan (georgiawillslaw.com)
- Really? A will in your 20s and 30s? (theglobeandmail.com)