Yes, you’re young and still growing that nest egg — but there’s much to be gained from cinching your estate plan now. We break down the how and the why.
Even if you don’t (yet) possess the cash-money of Kim Kardashian or the purse strings of Beyoncé and Jay-Z, your family probably needs an estate plan.
Yes, you’re still building up, but there are many benefits to gaming out the unexpected, starting now, says Stefan M.v.O. Wolf, an attorney at Portland- and Vancouver-based law firm Gevurtz Menashe and a young father himself.
“The peace of mind is the biggest benefit,” he explains. “With little kids, we do all kinds of stuff planning for them, making sure they are taken care of and safe and eat the right foods and get the right sleep. Estate planning is also about making sure kids are taken care of.”
Estate-planning attorneys like Wolf can walk you through the entire process (no financial statements or spreadsheets required, promise!) in just a few hours over the course of about a month. Along the way, you’ll confront questions that you’ve either been avoiding (no judgment, we’ve been there) or just haven’t thought to ask about your assets, family dynamics and long-term wishes. (You can also go online to sites like nolo.com and draft up a basic plan on your own, though missing a beat might spell trouble later.)
Herewith, four more good reasons to get serious about estate planning.
Estate plans do more than dole out dollars. An estate plan is a series of documents laying out your wishes in legally binding terms. Most importantly, it names a guardian for your minor children and makes clear provisions for the distribution of your estate. “Estate” might seem a grand term when your “holdings” consist of a house with a mortgage, two aging cars, a smallish retirement account and maybe some heirloom jewelry, but you probably have more assets than you think, says Wolf. A life-insurance policy alone ups the ante considerably: “You get [the policy] set up and hope you never need it and forget it,” he explains, but in the event of your death, “all of a sudden, there are significant assets that need to be dealt with.”
Your 18-year-old kid has zero common sense. We know. You probably don’t even have an 18-year-old kid. But you will, someday, and if the unexpected happens and you haven’t laid things out carefully, that future teenager could have access to their entire inheritance, in cash, on their 18th birthday. Coincidentally, notes Wolf, 18 is also the average number of months it takes for an inheritance to disappear completely — poof! Terrified yet? Don’t be, says Wolf: Simple provisions can ensure that, should something happen to you, that million-dollar life insurance payoff will be doled out S-L-O-W-L-Y, over decades. (You can also stipulate access to funds for things like education or home buying.)
Your wishes are not as straightforward as you think. “My family knows what I want.” Wolf hears this a lot from clients, and it’s not always true, especially in the aftermath of an unexpected death. And let’s get real: Many parents have at least one family member they’d never ever want raising their kids (ever!), though they might not have expressed the sentiment aloud. An estate plan smooths the path by outlining, in stark terms, your exact desires. “People have different ideas about what they think somebody intended or didn’t intend,” says Wolf. “If you have an estate plan in place, it reduces potential conflict and arguments.” And all this goes double for single parents!
A solid estate plan can grow with your family. Separations, deaths, divorces, remarriages, growing kids with ever-changing needs — even if your health and luck hold out, a lot can change over the course of your child-rearing years. Once you’ve got a plan firmly in place, Wolf recommends reviewing it annually with an attorney and adapting it to fit shifting situations. It’s a smart way to ensure children with ongoing special needs are provided for, or to protect an older child struggling with mental health issues or other life challenges. Can we divine what’s ahead for our families? Nope. But we sure can plan.