Picture this—you’re a young professional with no children and a relatively small net worth. Maybe you own a home (or maybe not) and most of your money is either in checking and savings accounts or an employer-sponsored retirement plan. Do you really need an estate plan at this point? Yes! Executing incapacity documents should be at the top of young adults’ to-do lists, along with stating their wishes regarding the distribution of their property.
Incapacity Documents
Incapacity documents are legal documents designed to care for an individual and his/her property in the event of an incapacitating illness or injury. Much as you’d like to avoid thinking about it, expressing your wishes for your health care, finances, and property now can help alleviate stress on your loved ones later during a very difficult time. Here are the main incapacity documents you’ll need:
Living Will. Communicates your desire for life support systems in the event of a terminal illness.
Health Care Representative. Appointed to make medical decisions if you are unable to do so for yourself.
HIPAA Authorization. Grants specified family/friends the right to see your medical records.
Power of Attorney. Appointed to make financial and legal decisions for you if you are unable to do so for yourself.
Pro tip: Be sure to share these documents with the representatives named plus your health care provider.
Intestate Laws
If you die without a Last Will and Testament or designated beneficiaries on your retirement accounts or life insurance, you are considered to have died “intestate.” Your assets will then be distributed according to state law. In Indiana, if you are deemed intestate, your assets may not pass to others the way you might think. For example, if you die as a resident of Indiana and are married with surviving parents, three-quarters of your estate passes to your surviving spouse and one-quarter will go to your parents. If you die unmarried with surviving parents and siblings, your parents and siblings will share your estate equally (parents receive a minimum of one-quarter of your property).
If you were to pass today, who would you want to inherit your assets? Your surviving spouse, parents, and/or siblings? If you prefer to have control over who inherits your assets, creating a Last Will and Testament ensures you can dictate how and to whom your assets will be distributed when you pass.
Pro tip: Retirement accounts and life insurance with beneficiary designations are handled outside your Last Will and Testament. Make sure your beneficiary designations stay up-to-date to reflect your wishes!
Summary
Moral of this story: Estate documents aren’t just for parents or grandparents. Incapacity documents are a must, and you should also consider creating a Last Will and Testament. Make sure all beneficiary designations are current and that you share your incapacity documents with the appropriate individuals.
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We have helped our clients answer these questions and more. If you want a clear understanding of your financial future, and need help making changes to reach your goals, schedule a consultation and we can get started.
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