When Should You Start Estate Planning?
You may think estate planning is only important for people like your grandmother. Maybe for your parents. Definitely not for you.
Here’s the truth: unless you’re a middle schooler reading this right now, it’s probably time for you to have at least some estate planning documents.
Say what?
Hear me out. Estate planning is about way more than writing a will. It covers things like advanced directives and powers of attorney, which are documents anyone could need at any time.
So, here’s the run-down on estate planning depending on where you are in life:
You just graduated high school
Yes, someone who just graduated high school could benefit from an estate plan. In Georgia, anyone over the age of 14 is legally allowed to create a will. And some precocious 15-year olds may want to do that.
I’m not suggesting that every recently graduated student run out to draft a will. However, there are some valid reasons for drafting an advanced directive and a power of attorney.
No one wants to think about having a huge medical emergency as an 18-year old. Unfortunately, it happens. In 2020, college campuses became hotspots for COVID outbreaks. And hospitals have always seen a high number of college students with alcohol poisoning and drug overdoses, injuries from car accidents, and mental health issues.
Learn more: How Old Do You Need to Be to Make a Will?
Here are the two documents you most need:
Financial Power of Attorney
This legal document allows a person to act on someone else’s behalf if they become ill or disabled. If your parent has been doing things like this all along (calling the cell phone company to handle your overdue bill, perhaps), you may not see the need for a document like this.
But once you’re 18 years old, you have a legal right to privacy. And some companies or organizations may require a financial power of attorney to let anyone handle your affairs — even if you’re too ill to do so.
Advance Directive for Health Care
Advance Directives are forms that an individual fills out with their preferences for medical treatment and care. It’s referred to if that individual is incapacitated and unable to provide their preferences at the time.
A person can use an Advance Directive to name someone else (for instance, your parents if you’re a recent high school graduate) as their Medical Power of Attorney, and that person can make medical decisions for them based on the Advance Directive.
Again, you may feel like this is unnecessary if your parents have made medical decisions for you in the past. But under Georgia law, they may need court approval to do so after you turn 18. An Advance Directive and Medical Power of Attorney give them the tools to act on your behalf and according to your wishes.
Learn more: Estate Planning Documents for Your High School Graduate
You just got married
You said your vows, and your love for your spouse is at an all-time high. Although the last thing you want to think about is something terrible happening to either of you, it’s a good time to protect both of your futures with an estate plan.
Here are the documents to focus on:
Beneficiary Designations
We put these first on the list because you probably already have beneficiary designations in place, and it’s easy to forget about changing them. A beneficiary designation tells the manager of an account (like your 401K, your insurance policy, or even some bank accounts) who should receive the value of those accounts in the event of your death.
People who are young and single often designate a parent as their beneficiary, so you may want to contact the account manager for those policies and change the beneficiary to your spouse.
Power of Attorney
You may think that your spouse would automatically be able to make financial decisions on your behalf if you became ill, disabled, or incapacitated. In Georgia, that’s not the case.
For instance, if your spouse were in a car accident and unconscious for an extended period of time, you may need to cover expenses by taking money from a savings account that’s only in their name or even by making a large withdrawal from a joint account. These actions would likely require a signed power of attorney.
Learn more: Do spouses have automatic power of attorney for each other?
Last Will and Testament
Of course, the first thing most people think of when they hear “estate planning” is the will. And yes, you and your spouse should each have one.
If you were to die without a will, your spouse and any children you have would inherit your estate.
So why draft a will?
Well, first things first: you may not want your spouse to inherit your entire estate. Perhaps you really want that silver brooch you grandmother gave you to go to your sister. Or you want to make sure that a portion of your estate goes to your favorite charity.
You may also want to protect your spouse from any interference by your family members by stating your intentions very clearly in writing. A will lets you and your spouse be intentional about how your assets are distributed.
Advance Directive for Healthcare
Just like a college student should have an Advance Directive if they want their parents to be able to make medical decisions on their behalf, you should have one if you want your spouse to be able to act quickly and make the right medical decisions on your behalf. And vice versa.
Filling out a form like this with a new spouse may lead to some difficult but important discussions. Many people haven’t thought about questions like whether they’d want to be kept on life support. Answering these questions in writing before the time arises takes a very painful decision off your spouse’s hands and could help them in dealing with other family members.
While your spouse would be at the top of the hospital’s list of decision-makers either way, fighting among family members about what an incapacitated individual wants and who should make the decisions is not uncommon. An advanced directive helps limit these potential disagreements.
Learn more: Getting Married? Protect Your New Spouse With an Estate Plan
You just became a parent
Many people create their first estate plans when they’re expecting or welcoming their first child into their lives, though as you can see above, there are good reasons to do it before that.
If you have children but no estate plan, don’t wait any longer.
Protect your children (as well as your spouse’s ability to adequately care for your children if you die) by having these documents in place:
Last Will & Testament
Drafting a will allows you to make two very important choices: who will make financial decisions on your children’s behalf if you and your spouse are deceased and who will care for them.
The Guardian of the Estate manages your child’s financial affairs. The Guardian of the Person cares for your child. You may designate one person to fulfill both roles, or you may designate two separate individuals.
Either way, if you don’t make that designation, the court will.
In a will, you can indicate that any assets be held in a custodial account for the children until they turn 18. If you’d like them to be held in trust longer than that, you can set up a trust for their benefit.
Life insurance
Make sure you and your spouse both have life insurance policies and that the beneficiaries are up to date. Life insurance policies can help safeguard you or your spouse’s ability to continue caring for your children in the way you see fit even if the unthinkable were to happen.
Advance Directive for Health Care
If you and your spouse don’t already have advance directives for health care, now is the time to fill them out. Do it not only to protect yourself and your own wishes but to limit the potential pain your spouse might experience if you became incapacitated. Knowing what you wanted will help them get through any difficult decisions.
Power of attorney
Once you’re caring for children, you and your spouse’s ability to seamlessly manage financial issues becomes even more important. If one of you becomes ill or incapacitated, and the other needs access to funds to continue paying for education expenses or putting food on the table, the stakes are high.
Learn more: New Addition to the Family? Time to Update Your Will
You just realized you don’t have an estate plan
Like I said, unless you’re just a kid, it’s never a bad idea to have an estate plan. Even if you don’t have significant assets, you can save yourself and your loved ones from a lot of needless pain by having documents in place that explain what to do in the event of a medical emergency or incapacitation.
We’ve outlined the most basic estate planning documents above. Everyone should have:
- A last will and testament
- An advance directive for health care
- A power of attorney
- Updated beneficiary designations
Some individuals or families may also benefit from creating a trust. If this is all completely new to you, you’re not alone. We work with plenty of clients that are creating their first set of estate planning documents. Check out our video series on the basics of estate planning and read about how to prepare for your first estate planning meeting.
If your estate plan is missing any of these documents, don’t wait until someone you love is rushing around trying to get authority to make a medical decision or wondering who you would have wanted to care for your child. Call us today at (404) 736-6066 or schedule an appointment online.
© Sarah Siedentopf and Siedentopf Law, 2021. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Siedentopf Law and EstateLawAtlanta.com with appropriate and specific direction to the original content.