Estate Planning Is for the Living: The Importance of Estate Planning for Young Adults

I have to start with a confession: I haven’t completed my estate planning. I think about it a lot. I just haven’t drafted any documents. In my slight defense, we’re a small family firm where my mom and I are usually the ones witnessing estate plans, so even if I drafted them, I would have to find witnesses and a notary. In some ways, since I’m only thirty and have limited assets, I could argue that I don’t need an estate plan. On the other hand, I am concerned about how my very limited assets would be distributed and, more importantly, who would get my cats and dog in the event that something happened to me and my husband.

It’s easy for individuals to look at their assets and think, “There’s really nothing here to plan for.” This is especially true for young adults. In reality, it is important for everyone to consider an estate plan, regardless of age and wealth, because many aspects of your estate relate to how you want to live, and not just what you want to happen after you die.

A vast majority of our estate planning clients are over the age of 60 and have either never had a will or they have a will that has not been updated since their children were minors. While a will is something that most people acknowledge that they need, they usually put off completing one because, well, the concept of death is not one that many want to think about. Most of our clients come in to complete their estate plan because an event in their life has made a will a high priority. The most common reasons our clients seek us out for an estate plan are that they are either young parents, they have been planning an overseas vacation, they have become ill, or they have recently experienced the loss of a loved one. Simply put, no one wants to think about their estate plan until they are forced to.

Estate planning is not just about death. In fact, a majority of an estate plan is about an individual’s life. We typically complete five documents when establishing an estate plan: Will, Trust, Living Will, Healthcare Power of Attorney, and Durable Power of Attorney. Of these five documents, four are active while an individual is alive and, in fact, three are no longer active after the individual has passed away.

The Living Will and Healthcare Power of Attorney lets your family know what your wishes are for life sustaining treatment and allow you to name who you trust to make healthcare decisions for you. When you’re young, you might think that there is no reason to make these decisions or that there would be no need for you to have an agent. However, my cousin turned 18 while in the hospital for appendicitis. Scared and in pain, the doctors turned to her to make decisions because they could no longer talk to her parents. It’s important at any age to name an agent, because you never know when you will be in an accident or just unable to make a decision for yourself.

The Durable Power of Attorney allows you to choose an agent to help you with any financial matters if you are not able to. With access to online banking and other financial services, it may seem unlikely that you would have any need for a financial agent. However, like above, accidents or circumstances may arise that could mean you need to have Financial Power of Attorney. It’s important to note that Durable Powers of Attorney cover all your property, not just bank accounts. For example, they can be important tools for planning for your pets. Pets are property and a situation could arise where someone is tasked with caring for your pet. A Durable Power of Attorney could be necessary to allow an agent access to funds and the ability to make decisions for your pet.

There are many types of trusts that can be used in different situations. They can be beneficial for managing assets to protect government benefits or avoid taxes. They can also be a great tool to keep assets separate from your spouse if there is a need to. They also have the benefit of being used both while you are alive to manage your assets and after you have passed to further protect these assets and/or avoid probate. In my firm, we most commonly use Revocable Trusts for the sole purpose of avoiding probate. By transferring title of property into the trust while the individual is alive, the expense and time of probate can be avoided. While we most often don’t recommend trusts to young couples or individuals who have minor children or may have children in the future since guardianship matters will still be filed, there are still cases in which a trust can be useful for young adults. For example, a trust can be important in protecting children from prior relationships, making sure that they will receive their inheritance. They can also be used to separate marital assets. My husband is not on the title to our house. While he does have homestead rights to the house, I would like to put the house into trust because I would want to ensure that if something happened to both of us, the house would go to my family and not his.

Finally, we come to the Will. A Will does not come into effect until after someone has passed away. It’s hard when you are young to think about dying. It feels like it is very far away, but unfortunately, that is not always the case. There are many reasons to consider a Will, even when you have limited assets. Without a Will, your assets will be distributed in accordance with state law. You may have a specific gift you want to make, an individual you don’t want to inherit your assets, or a wish regarding interment or cremation. A lot of young adults live with their significant other before getting married. You may wish to ensure that they get your personal property or any limited funds you may have. You, like me, may have pets that you want to ensure go to a certain individual or a specific shelter. A Will isn’t just for people with significant assets or funds but can be for anyone who has a specific wish they want to make sure is followed.

My mom tells the story of a client she had who was 91. After sending the client a draft of her estate plan, the client called back and said, “This makes it feel like I’m already dead.” It took her another year to finally come in and sign. Estate planning isn’t just for when you die. Estate planning is most important for when you are alive. It’s important for everyone, regardless of age, to think about their estate plan, so that they can live life to the fullest, knowing that everything and everyone they care for is taken care of.

Deborah Cain is a graduate of Coe College (B.A.) and Marquette University Law School (J.D.). She is an associate with Donna Craft Cain, PC.