Estate planning checklist for young folks
Power of attorney takes care of business
The other piece of bare-bones estate planning is designating someone to take care of your financial affairs if you are unable to do so.
That could even include semesters a student spends studying abroad, according to Hartnett. It's not necessarily always called into duty as a result of tragic circumstances, but a durable power of attorney will allow an agent to sign your name on contracts and financial documents.
"Someone can deal with their (Department of Motor Vehicles) issues on the car they leave behind. There are practical things they can do," Hartnett says.
In some states the power of attorney can be modified to be "springing" or activated upon incapacity -- but that's not universal.
"In Florida, it doesn't spring to life," says Elaine Bucher, a shareholder with the law firm Gunster in West Palm Beach, Fla. "You don't want people getting their hands on it, but if you are incapacitated a court needs to appoint a guardian, which is easily avoided with a simple power of attorney."
The term durable refers to the fact that the document will survive your incapacity -- not the fact that it would remain in force for years and years.
"In almost every state -- it varies -- but most states say that once you sign a durable power of attorney, it is good until you die. It's not that durable," says Langa. "In practice, if they get older than 10 years, you have trouble using them," she says.
What about my stuff?
A simple will should take care of how you would like to dispense with your worldly possessions. Even someone without a home, insurance policies or retirement accounts may have a need for postmortem instructions on the distribution of their stuff.
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Are you a fresh-out-of-college, 20-something still figuring out your next move? You're never too young to think about estate planning.
Preparing for worst-case medical scenarios is necessary, and you can make it happen with something called incapacity planning. Fill out and sign a health care directive or living will. Also, be sure to have a health care proxy and designate a representative to make medical decisions on your behalf.
If you would like your parents to be your agents, you must sign a directive, which will give them authorization to participate in health care decisions, in case you become incapacitated. Your parents will also need Health Insurance Portability and Accountability Act, or HIPAA, authorization to access your medical records.
You may have your whole life ahead of you, but don't forget to plan for the what-ifs.
When someone dies without a will, it's known as dying intestate. With no other plans in place, state laws provide a framework for inheritances. If you want to change the default inheritance plan in your state, you need a will.
"Let's say someone has $100,000 in a retirement plan and hasn't completed the beneficiary form," says Bucher. "The plan typically defaults to the estate. There are no parents alive but this person has a brother and sister that he just can't stand -- that is who is going to inherit -- at least under Florida law," she adds.
If children ever come into the picture, the will is the place to name guardians. You can also step up your planning by establishing a trust.
Even if all you own are a comic book collection and your big-screen TV, a will lets you give to the people you choose. In addition, a health care proxy and a power of attorney constitute good estate planning moves for nearly everyone. At least having them will give you peace of mind before you're resting in peace.