If you pass away, your loved ones should not inherit assets only to find that…
It is common for young adults to consider themselves too young to have an estate plan. Young adults in their twenties and thirties often think they don’t own enough to constitute an estate. However, an estate is the total of all that you own – money, investments, real estate, vehicles, business interests, digital assets (including cryptocurrency), and other personal belongings. No matter how much, or little, you own your possessions need to go somewhere after you die. You may not think you will die young, but if the coronavirus pandemic has taught us anything, it is that life is uncertain. It is a myth that estate planning is just for the rich and the old.
What legal documents constitute an estate plan? Some of the documents may vary depending on your wealth or financial structure; however, everyone should have a will. At the time of your death, everything you own becomes your estate. Your estate will go through a probate process where the court will determine what happens to everything you own that doesn’t have a co-owner or a designated beneficiary.
Your executor will inventory and list your assets in a Surrogate’s Court petition, and notify and pay creditors before distributing the balance to the estate beneficiaries. And all of that activity and information will be out in the open because your will is a public record. If you have a will, the court will use it as a guide in the Will’s probate. In the absence of a will (dying intestate), the court will use state intestacy laws to determine who inherits your assets. But the process is going to be no less public, and sometimes more complicated than probate.
A will designates two very important things. The first is the naming of your executor. An executor is responsible for carrying out the instructions in your will, making payments on any outstanding debts, distributing assets to named heirs, and filing your final taxes. Second, if you have dependents, your will names the guardian and backup guardian to provide care for them. The naming of an executor and guardian for a dependent can only happen in a will.
All young adults should have an advance healthcare directive, also known as a Health Care Proxy in New York. This legal document specify your healthcare wishes if you are permanently incapacitated or for end-of-life healthcare and designate who will make those decisions on your behalf according to your instructions. In addition, it is imperative to include a HIPAA privacy authorization in your advance health care documents. The form permits medical and healthcare professionals to disclose pertinent health information and medical records to your healthcare proxy.
While it may be uncomfortable to contemplate being unable to make decisions for yourself as a young adult, accidental injuries, heart disease, cancer, and strokes, to name a few, are becoming all too prevalent in young American adults. Making plans while you are competent and able is a prudent course of action and can bring you a sense of calm, knowing you have confronted the possibility and have a plan in place.
Some young adults will have enough assets, real estate, or business interests to make a revocable living trust worthwhile. This trust type avoids the probate process, ensuring privacy. There is no limit to the number of times you can amend a living trust. You may change asset distribution or add assets as you acquire more throughout your life. An estate planning attorney can help you determine if your financial situation and age warrant the setting up of this type of trust.
You probably have more assets than you realize. To assess your situation, inventory all of your belongings which typically includes but is not limited to:
- All bank accounts in your name and their approximate balances
- All investments you own
- Any property or real estate you own
- Any retirement plans you have, including pensions
- Any insurance policies you carry
- Any retirement plans, including pensions, you own
- Businesses you own, whether in part or whole
- Valuable personal property such as your grandmother’s wedding ring, a collection of trading cards, or a grandfather clock
- Digital assets such as cryptocurrency, income-generating online storefronts, influencer accounts, or income-producing subscription accounts like TwitchTV
- Include all email accounts, login URL’s including user names and passwords where you receive important communications
- All outstanding debts
Once you realize the scope of your belongings and assets, you can begin formulating your estate plan. First, consider who you want to receive your possessions and think about secondary beneficiaries, especially over time, as early estate planning requires frequent reviews and updates in the event of deaths, marriage, divorce, or the birth of a child.
Once you have an inventory and have begun thinking about who should handle things upon your passing and who you want as beneficiaries, it’s time to sit down with an estate planning attorney. Working with an estate planning attorney is easier than ever now, as COVID-19 increases the use of video and smartphone conferencing that streamlines legal planning. Estate planning attorneys, like us, can create a plan that best suits your situation, even if you aren’t sure what to do. Proper legal documents can save your loved ones from an expensive probate trial should someone contest your will. Even as a young adult it is best to start planning now even if it is just with some basic documents.
We would be happy to discuss your needs in a confidential setting that you are comfortable with – by video, or in person. We hope you found this article helpful. If you have questions or would like to discuss a personal legal matter, don’t hesitate to reach out. Please contact our office at (212) 920-6371.