If you’ve ever used the word “adult” as a verb, chances are you are both old enough to have real responsibilities, and young enough to find them tiresome and daunting. Adulting means going to work, shopping and cooking for yourself, doing laundry, cleaning the house, paying bills…and estate planning.
Estate planning? That is something adults do, but young adults? Estate planning is something you might associate with older adults who have accumulated a lot of wealth, or maybe younger families who want to plan to protect their kids. Do younger adults who may not even be married need an estate plan?
You might be surprised to learn that everyone has an estate plan. If you haven’t made one for yourself, the state you live in has made one for you. It’s called “the law of intestate succession.” Essentially, if you haven’t declared whom you want your assets to go to in the event of your death, state law will make that determination for you. It will most likely be your spouse if you are married, or your parents or siblings if you are not.
You may be thinking to yourself, “Well, that’s fine. I don’t have a lot of money or stuff, and my parents can have whatever I do have. Besides, I’m not going to die anytime soon.” That’s probably true. The chances of your premature death are relatively small. But death, and distributing your property, are not the only reasons to have an estate plan.
Why Young Adults Need an Estate Plan
A much more likely scenario is a sudden injury or illness that will render you incapacitated, perhaps for an extended period. Think a car accident, aneurysm, or stroke. While thankfully still unlikely, if such an event happened to you, you would want to have a plan in place. What would that look like?
You would need to have someone to manage your finances, like paying your bills, managing your bank accounts, making payments on your student loans. That would involve a financial power of attorney. A financial power of attorney can be as limited or as broad as you want to make it, giving a person of your choosing (your agent) the power to manage your financial matters if you become legally unable to. Whether you are incapacitated for days or years (as in the famous cases of Terri Schiavo and Sunny von Bulow), having someone to seamlessly step in and handle your business can prevent financial disaster for you.
If you become incapacitated, of course, there will also be medical decisions to make. You will also need a medical power of attorney, which in Michigan is called a Designation of Patient Advocate, or DPA. Not only does this document specify whom you want to make medical decisions on your behalf, it can prevent family members who disagree about what’s best from fighting with each other when they should be focused on your needs.
Hand in hand with the DPA go your living will and HIPAA authorization. The living will is often confused with the DPA, but it does not authorize anyone to make medical decisions on your behalf. Rather, it provides guidance for your chosen patient advocate about what decisions you would make if you could. This relieves them of the burden of wondering if they made the “right” decision. The HIPAA authorization allows your chosen patient advocate to receive medical information about you that would otherwise be protected by law. Without this authorization, they may not have the information they need to best provide for your care.
Don’t Forget to Create a Last Will and Testament
In addition to powers of attorney, living will, and HIPAA authorizations, of course, are the documents we more commonly associate with estate planning: a last will and testament, and perhaps a trust. Even if the law would provide for your property to go to the same people you would leave it to in a will, a will provides certainty and may expedite the transfer. In addition, if you want to leave something to an unrelated person such as a friend or romantic partner, a will or trust is the only way to do so. Likewise, if you want to leave anything to a charity or organization you support, you will need a will or trust.
In light of all the other “adulting” you have to do, putting off your estate planning would be an easy thing to do. But taking care of this responsibility will give you much more peace of mind than completing your other day-to-day tasks. Yes, the chances you will need to put it into action may be small, but the consequences if you don’t have an estate plan and need one are large. Take a moment to make an appointment with an experienced estate planning attorney. You can always fold the laundry tomorrow.