What are you doing reading about estate planning? You’re supposed to out dancing until dawn. But you might as well keep reading; this won’t take long.
At your age, there’s not much need to put a lot of energy into estate planning. Unless your lifestyle is unusually risky or you have a serious illness, you’re very unlikely to die for a long, long time. Still, there are just a few estate planning matters it wouldn’t hurt to think about.
Especially if you’re got some assets you care about, you should write a will. That way you can leave your possessions to any recipient you choose: your boyfriend, your favorite cause, the nephew who thinks you’re cool. If you don’t write a will, whatever wealth you leave behind will probably go to your parents or siblings. Think about it.
Writing a simple will can be easy, quick, and inexpensive. Unless you own unusual assets, you can probably just do it yourself, without a lawyer’s advice; use an online service or buy inexpensive software. The most complicated part is getting two witnesses in a room with you at the same time, to watch you sign and then to sign the document themselves.
Especially for a simple will, you shouldn't need a lawyer. Check out Nolo's online will or Nolo’s WillMaker Plus software. Both make it easy to create a will that's valid in your state, with an interview format and helpful instructions and information whenever you need them.
These are two documents every adult, regardless of age, should have. In fact, you can argue that they’re even more important for young adults than elderly ones.
So what are they?
A living will or advance directive is the document in which you state your wishes for end-of-life care. (Despite the confusing terminology, a living will is a totally different document from a regular will, which is sometimes called a “last will and testament.”) Your document can be as detailed or as general as you wish. For example, you might simply say that you want everything necessary to relieve pain (called palliative care or comfort care) but don’t want to receive extraordinary measures such as CPR in certain circumstances.
A durable power of attorney for health care gives someone you choose the authority to carry out the wishes expressed in your advance directive, and to make other medical decisions as necessary if you can’t. The person you name is called your health care agent, or sometimes your attorney-in-fact for health care, health care proxy, or surrogate. If you’re ever unable to make medical decisions on your own, your agent will have the legal authority to make any necessary health care decisions for you and see to it that doctors and other health care providers give you the type of care you want, as set out in your advance directive.
Why would a young person draw up these documents? Happily, it’s very unlikely that they will need to be used. But if you were in a serious accident—which happens to a few people every day—these documents could be of huge importance. Your family would know what you wanted, sparing them very difficult (and sometimes contentious) decisions. It’s young, healthy people who are strong enough to live a long time with serious injuries (remember Terri Schiavo, who was only 26 when she went into a vegetative state), potentially giving rise to disagreements among family members.
You can make documents, tailored to the law in your state, with Quicken WillMaker Plus.
One more simple step you might want to take is to name beneficiaries for your IRA or 401(k) account. It’s easy—all you do is submit the name of the beneficiary on a form supplied by your employer or the account custodian. (No lawyer required.) Just choose the person you would want to inherit the funds. You can (and likely will, at some point) change the beneficiary later, just by submitting another form.