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Most of us don’t believe that we have an “estate” to pass on to our heirs, and you might say to yourself, “My financial life is simple. All I need is a will.” In fact, you do have an estate. The term simply refers to the assets and responsibilities you leave behind if you become incapacitated or die. Your estate is more than your property, it is also your power to state who will control your health care and finances if you are unable to decide for yourself, or who will take care of your minor children. Here are some good reasons why every adult needs a basic estate plan.
Being a responsible adult means acknowledging the fact that medical care after an accident can involve difficult choices, and understanding your wishes regarding the use of medical technology would be enormously important to your family. If you’re single, you also need to specify who would control your financial and legal concerns if you become incapacitated. Most of these things can be designated in a living will.
Everyone needs to have a will in place. A will is the central document of your estate plan, specifying the distribution of all your assets. Your will can point to other legal documents, such as trusts or businesses, and it is also the place in which you state who should take care of your children, if you have any.
If you’re married, it’s unlikely that you and your spouse would both die at the same time, but estate planning is all about managing the unexpected. If you happen to be the only qualified parent on the scene, designating a guardian for your children is even more important.
If you don’t love the idea that your state government will decide who gets your assets after your death, you should seize the opportunity to express your own wishes. A basic will is a good first step, and additional legal instruments such as a trust can be added if you own real estate, investments or business interests. If you have any family members who need special help, or if you want some of your assets to go to a charitable cause, that can be addressed during estate planning.
As you acquire new family members and responsibilities, your estate plan will need to be changed and updated. The simplest paperwork is available from online sites like Nolo, but once you become a parent and a homeowner, you should work with a lawyer.
Forbes Personal Finance staff writer Deborah L. Jacobs says, “Simple estate planning should be a rite of passage for every 18-year-old, and evolve with wealth and relationships.” Estate planning doesn’t have to be morbid; you can think of it as a way to take good care of the people who are important to you.