Essential Estate Planning Advice for Millennials
The last thing that people tend to think about in their 20s and 30s is estate planning. But planning for the future is incredibly important, even if you’re currently young, single, and childless. And estate planning becomes even more essential when you get married or have kids, regardless of your level of wealth or how many assets you hold. Proper estate planning will ensure that your loved ones will be protected from financial burden if you were to pass away unexpectedly. From creating a will to purchasing life insurance, here are some of the most important steps you can take to plan for the unexpected.
One of the most important parts of estate planning is getting the right insurance. Purchasing life insurance will create a safety net of financial security for your loved ones if you pass away unexpectedly. Even if you don’t have kids at the moment, your parents could be left shouldering your debts, especially if they cosigned your student loans. If you do have a spouse and children, your life insurance policy will replace your lost income so they can still cover their daily living expenses. Even if you decide that you don’t need life insurance right now, this could be a great time to lock in a low rate, since insurance is almost always less expensive for younger individuals.
While you’re looking into life insurance, consider getting burial insurance as well. Burial insurance can also work as an alternative to life insurance if you don’t have dependents who rely on your income. According to LHLIC, burial insurance is meant to cover your funeral and burial arrangements, providing a much smaller payout than traditional life insurance—which also means the premiums are much lower. Your beneficiary can also use your burial insurance to pay off existing debts. Whatever insurance you decide to go with, think carefully about the kind of coverage you need before purchasing a policy.
Make a Will
While making a will might sound like a responsibility for a recent retiree, the reality is that everyone should have a will. You should definitely have a will if you are married, have kids, or have a positive net worth. Even if you don’t own a home or have much money in your savings, you probably have more assets than you think! What would happen to your car, your possessions, and your 401(k) if you die? The value of everything you own can really add up, so make sure your stuff goes to the right people. Without a will, these assets will be distributed among your relatives according to the laws of your state.
Assign a Power of Attorney
Another important element of estate planning is assigning a power of attorney. A power of attorney is a legal document that designates someone to be in charge of making various important decisions for you if you become incapacitated. If something happens to you, your power of attorney will be able to make medical and financial decisions to carry out your wishes and ensure you are cared for. For example, they will have the power to deal with medical bills, access government benefits, sign contracts, and complete banking transactions for you. If you don’t assign a power of attorney, your state will appoint someone to make these decisions for you.
Similar to a power of attorney, an advance directive is another essential document involved in estate planning. Crossroads Hospice explains that your advance directive outlines what kind of care you would want in an end-of-life situation. Your power of attorney will use your advance directive to ensure your wishes are carried out in the event of a tragic accident or unexpected illness. If the worst should happen, having these documents in place can save your loved ones a lot of stress.
Estate planning isn’t just for seniors. What will happen to your loved ones—or your possessions—if you suffer a freak accident? Who will make decisions for you if you become terribly sick? Get these issues sorted out now so that you can rest easy at night knowing everything will be taken care of if the worst should happen. You can’t predict the future, but you can plan for it!