Estate Planning Basics for Generation X

Estate planning is not just for the old or wealthy. Everyone can benefit from taking the time to provide their loved ones with some direction about what should happen if they die or become incapacitated.

Many young people put off estate planning, either because they don’t think they need it or because they figure they have a lot of time before an estate plan will become necessary. Unfortunately, this confidence is often misguided. No one can predict the future, and unexpected accidents and illnesses do happen. When someone dies without an estate plan, a lot of important decisions – like where their money goes and who gets custody of their children – are left to the state.

Estate planning is highly recommended for anybody with even modest assets. People with children should consider it mandatory.

Estate planning doesn’t have to be a complex process. Most young people can meet their needs with a few common tools. If you’re creating your first estate plan, schedule a meeting with an estate planning lawyer to discuss the following documents:

Will: A will is the most basic estate planning document. In it, you describe how you want your property and assets to be divided upon your death, and name a personal representative to control the distribution of your estate. If you have children, the will is also where you name their guardian.

Revocable trust: Your attorney may recommend a revocable trust as an alternative to a traditional will. A revocable trust is created by you to hold assets for your (or your spouse’s or other people’s) benefit during your lifetime with provision to give the remaining assets to the person or persons of your choice after your death without having to involve the court in probate proceedings. You can change the terms of the trust anytime.

Living will and health care proxy: These documents come into play if you become incapacitated and cannot explain your wishes. A living will provides direction to medical professionals – for example, about life support and organ donation – while a health care proxy appoints another person to make medical decisions on your behalf.

Powers of attorney: Powers of attorney give another person the power to handle your financial affairs if an accident or illness prevents you from taking care of them yourself. In most situations, banks, credit-card companies and mortgage lenders won’t share information unless there is a durable power of attorney in place.

While these documents will provide a solid start, it is important to remember that estate planning needs to be an ongoing process. You should always revisit your plans after important changes like marriage, divorce, the birth of a child or significant fluctuation in income.

Nobody likes to think about death, but creating an estate plan is the most important thing you can do to protect your family. If you don’t have a plan in place, talk to a New York estate planning lawyer who can help you get started.