Six Reasons You Need an Estate Plan, Even in Your Thirties

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Like a lot of millennials, I do as much as possible to stay healthy. I work out, eat more salads than doughnuts, and try to only have one drink at parties.

I don’t live this way because I enjoy salads more than Boston creams. I do it so I can live as long as possible. So when the subject of estate planning came up, I realized I’d never thought about it.

You’re probably in the same boat. A recent survey from Better Place Forests found that in 2019, Americans were 12% more likely to have watched a movie or TV show featuring Dwayne “The Rock” Johnson than make any end-of-life plans. And one in ten said they’d rather talk about their sex life than discuss their final wishes.

As uncomfortable as the topic is, it’s important that you put together an estate plan. You never know what circumstances might arise that might make you need it.

What’s in an Estate Plan?

An estate plan is a group of documents that lay out a plan for your family and assets should you become unable to manage them. It’s not just for rich people, either; everyone should have one, regardless of income.

“Lots of people say ‘well, of course, the money will go to my spouse/children’ but it’s the next layer of detail that’s important,” said Steven J Sivak, CFP and managing partner at Innovate Wealth. “I don’t think people realize how specific you can be with the orders and once people do they start to realize they want it to be more elegant than ‘just give it all to x.”

An estate plan doesn’t need to be complicated. It starts with a single document, your will, then you have the option to add on documents as your wishes become more specific.

  • Will: The bedrock of your estate plan. It communicates your final wishes in regard to your assets and dependents. An executor is named to carry out the will and the probate court supervises the executor to make sure they’re carrying out the wishes specified in the will.
  • Living trust: An addition to a will if you want to control how assets are passed on to beneficiaries. A trustee is designated to oversee the trust, allowing your estate to bypass the probate process.
  • Beneficiary forms: These are the forms that will indicate who receives a payout from any insurance policies or financial accounts, including cash or investment accounts, upon your death. They can be accessed directly from the issuer.
  • Durable powers of attorney: Gives someone you choose the power to make medical or financial decisions for you if you’re unable to do so.
  • Advanced health care directive: Also known as a living will, this specifies what actions should be taken for your healthcare and pain management if you’re unable to make decisions.

Related: How to Improve Your Finances Based on Your Enneagram Type

Six Reasons You Need an Estate Plan as Soon as Possible

American millennials are young, healthy, and have an average net worth of less than $8,000. It makes sense they don’t see the need for a will, much less a full estate plan. But there are more reasons than just death and dividing possessions that make an estate plan so important to have.

 

You want to control who has guardianship of your kids

If you don’t designate who you want to take care of your children should you die, the court will decide for you. But if you have a will, that will tell the court who you want to care for your kids. It also gives you the opportunity to leave the guardian money to offset the cost of caring for your children. A trust can go a step further by legally dictating the guardian to use the money for specific child-related costs.

Don’t forget your pets. You can’t leave assets to your pets but you can designate guardianship of them in your will or trust and leave money to their guardian.

You’re more likely to need it in life than death

During the course of your career, you’re three and a half times more likely to be disabled by an accident than you are to die from one.

If you’re incapacitated from an accident for any length of time, you’ll want someone named as a durable power of attorney to make decisions for you. Should your injuries become more serious, your advanced healthcare directive will make sure hospital doctors know how to treat your pain and when to remove life support.

It’s not just accidents that impair people; it can be illnesses, too. “Imagine having a severe reaction to the Coronavirus and the patient is incapable of making their own decisions on healthcare,” Brent Dickerson, financial advisor and owner of Over Coffee Financial, said. “[People] need legal documents to direct their healthcare providers on care, and to appoint, legally, someone they trust to make these life and death decisions on their behalf.”

Related: What Type of Life Insurance Should I Get?

You want to protect your parents

Maybe you don’t have a spouse or kids so you don’t think you need a will. In that case, if your parents survive you, they’ll be responsible for sorting out your estate. It’s a devastatingly sad situation estate planning professionals see all too often.

“This past week, we worked with clients whose young adult son died without a will or trust in place,” estate planning attorney Justin Crain said. “It took the parents more than a year to get access to bank accounts, pay creditors and finally have closure to what was an incredibly painful and heart-wrenching experience.”

This gets more important as your parents get older. Steven Sivak saw this when a client of his passed away without a will and her mother, who was in her eighties, had to commute across the state to handle her affairs.

“[She] had to go across the state to sit in a courthouse and fill out stacks of paperwork. Multiple times,” he said. “[She also] had to find her vehicle, find the title, find a way to drive it. Find a way to get into her house, and figure out where to get rid of all of her stuff. It’s sad, it’s confusing, and it’s a miserable process without documentation.”

You don’t want to go through probate

Probate is the legal process your family will go through to ensure your will is valid and executed properly. This is typically a smooth process if you have a professionally drawn up will, but it can still be long and cost up to 5% of the estate’s value. Without a will, those costs can go up exponentially and the process can become a nightmare.

“Young clients without an estate plan often do not understand the length and complexity of the probate process. During a time of deep grief and mourning, a family member must deal with paperwork, court hearings, and delays in accessing assets,” said Somita Basu, probate attorney at Norton Basu LLP.

Basu has seen her share of probate horror stories, including one where a woman whose father passed without a signed estate plan suffered multiple medical issues from the stress of dealing with his large estate, court delays, and even undiscovered half-siblings.

In another case, a young woman was left homeless when her mother died leaving only a vague handwritten will that was contested in court, leading to the mother’s house being sold.

One way you can avoid probate is by setting up a revocable living trust in addition to a will. A trust is more expensive and complex than a will, but if you have significant assets it may save your family money in the long run.

Related: 7 Types of Insurance That Will Cover Unforeseen Events

You’ll make smarter decisions now

The death of a loved one is one of the most traumatic events someone can experience. Experts recommend delaying certain decisions while grieving because the decisions we make during that time tend to be more irrational and less thought out than the ones we make with a clear head.

By making the decisions about your estate now, while you have time to think through details and seek expert advice, you’ll give your family peace of mind later and they won’t have to make some of those difficult choices.

You’re not married to your partner

Marriage rates are declining but that doesn’t mean people aren’t falling in love and moving in together. The Pew Research Center reports over 18 million couples live together unmarried.

There’s some protection for spouses when their partner dies without a will but unmarried couples don’t have the same benefits. Couples who don’t want to get married need a comprehensive estate plan to protect their partner and any other family members or loved ones you wish to include.

An Estate Plan Isn’t a Death Plan

Estate planning is as important in life as it is in death, and nowadays it’s easy to set up. If you’re not married and you have no children you can start with a free basic will. As you get older, have kids, or begin to acquire property,  you’ll want to expand your estate plan to be more specific.

Comprehensive estate plans used to cost up to $10,000 to establish, but thanks to online companies like Trust & Will, there are now more affordable estate planning options that include all the documents you need. They can also help you determine if you’d benefit from adding a trustee.

It’s hard to think about death and dying but it’s harder to think about the suffering your family will endure without direction after your passing. By establishing an estate plan now, you can protect them in the future.

Author
Jen Smith

Hi, I'm Jen! As a best selling author on Amazon writing about minimalism, spending less, and making more money, my work has been featured in U.S. News and World Report, Yahoo Finance, Money Magazine, and The Wall Street Journal. In 2017 my husband and I finished paying off $78,000 of debt and that's what I help others do here.

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