As we dive right in to 2014, people all across Los Angeles are likely making and trying to stick to some new resolutions, many of which are related to financial management. We want to make more money, save money, invest money and build wealth as a way to be more financially secure for many years. Even people in their 20s are starting to think about their future.
But one thing that people, especially young people, may not consider as they focus on these financial goals is who will manage these assets when they are gone. After all, we make career plans, family plans and plans for dinner, but too many people may not realize how important it is to make a plan for our estates.
Many young people may be working in their first job where they have a retirement account or life insurance policy. They may have also started investing, saving money and looking to buy their first home with a spouse or on their own. Children can also come into the picture. Even though a person’s individual wealth may not be as robust at a young age, there are likely many more considerations to be made than a person may initially think and it can be important to think about developing an estate plan.
For example, a will can be a crucial means of assigning a beneficiary. This document will make it possible for a person to pass on individual property to specific parties. Without a will, it is possible that these decisions will be made by strangers in a courtroom.
Completing a power of attorney is an effective way of ensuring that an appropriate party will be allowed to manage a person’s finances. A young person may want to assign this role to a sibling, parent or other trusted party. If a person is married, a spouse could also take on this responsibility.
The same parties may be considered in a health care directive as well. In the event that a person becomes incapacitated and cannot make medical decisions, it can be crucial to have this document which gives this responsibility to another party.
Our wishes can change dramatically as we age, get married and have children. But even before this all happens, it can be very important for young people to make these decisions for themselves and take control of their futures.
Source: The Star-Ledger, “Biz Brain: Estate planning for a 20-something,” Karen Price Mueller, Jan. 6, 2014