At first, the concept of estate planning for the young seems silly. You might ask, "Why do I need estate planning? I don't even have an estate yet! All I have is a bunch of loan payments to make!"
It is indeed true that in many circumstances, estate planning for young, single adults can be simple compared with planning for older adults. However, this doesn't mean that young singles should ignore the issue entirely. Consider two basic estate planning questions:
1. Do I need a will?
2. Do I need someone to do anything for me if I can't do it for myself?
To will or not to will
All states have laws, called intestacy laws, that direct what happens if someone dies without a will. In most cases, if a single person dies without a will, any assets go to the person's parents. If the parents have already died, then brothers and sisters are next in line and share equally.
If your state's laws handle things the way you want them handled, then you may not need a will. If, however, you want someone else to get part or all of your belongings, then you may have some more work to do. Depending on your wishes, you may not need a will to accomplish your goals. For instance, most financial institutions allow you to set up accounts to designate who is entitled your the account balance after death. These "payable on death" accounts supersede not only state intestacy laws but also the provisions of wills. You can usually change your mind about this decision simply by filling out the appropriate paperwork at your financial institution.
Powers of attorney
Estate planning isn't just about dying. If you are badly injured and can't take care of yourself, proper planning can prevent expensive and dangerous delays. Without proper planning, it is possible that no one will be able to make immediate decisions about medical treatment, and no one will be able to access your bank accounts to pay bills on your behalf.
Fortunately, this planning is simple. Through a power of attorney, you can choose one or more people to act on your behalf. If you wish, you can name one person to help with medical decisions and a different person to help with financial decisions. Most states have specific laws that give you the exact language of an acceptable power of attorney -- often called a "statutory power of attorney" -- and as a result, many hospitals have forms on hand to help people make decisions quickly.
Estate planning for young singles is usually not complicated, but by briefly considering a few basic issues, you can make things a lot easier for the people who love you if something unforeseen does happen.
Are you at a different place in your life from what you're read here? No problem -- our series addresses estate-planning needs for a variety of life stages. Just go back to the beginning and let the links take you where you want to go.
Robert Brokamp of our Rule Your Retirement service had an estate plan before graduating from junior high school. If you need help planning your retirement, take Rule Your Retirement forafree trial run today.
Fool contributor Dan Caplinger welcomes your comments.
