Surveys find that less than 20 percent of people who are under the age of 40 have estate plans in place. This is a disturbing statistic because many younger adults are the parents of minor children. If you are one of them, where would your family be if you were no longer around?
Action Is Required
All self-supporting adults should have estate plans in place, but it is an absolute must for the parents of minor children. After all, your children are depending on you for everything, and you never know what the future holds. People of all ages pass away unexpectedly every day.
Monetary Considerations
From a financial perspective, life insurance is the ideal income replacement vehicle. Term life insurance is relatively inexpensive for younger people, so this is one potential piece of the puzzle.
Since children cannot handle their own funds, you have to take this into account. A revocable living trust is a device that can be the ideal solution. With this type of trust, you would be the trustee while you are living, so you would have complete control of the assets in the trust.
When you draw up the trust agreement, you name a successor trustee to administer the trust after you are gone. This individual or professional fiduciary would be empowered to manage the trust on behalf of a minor child or children if the unthinkable takes place.
A testamentary trust is another option. This is a trust that is contained within a will, and it would go into effect after your passing.
Guardian Designation
Child guardianship is another matter to address when you are planning your estate. You can designate a preferred guardian in a will, so you need a will for this purpose even if you have a trust.
Incapacity Planning
Younger people sometimes become unable to communicate because of injuries sustained in accidents or devastating illnesses, so incapacity planning is another consideration.
An incapacity plan will start with advance directives for healthcare. A living will is a directive that is used to assert your life-support utilization preferences. To account for other types of medical decision-making scenarios, you can name an agent in a durable power of attorney.
Under guidelines established in the Health Insurance Portability and Accountability Act (HIPAA), doctors cannot share medical information with anyone other than the patient.
As a response, you can give your healthcare agent permission to access your information by signing a HIPAA release form.
If you have a living trust, you can empower a disability trustee to manage the trust in the event of your incapacity. A durable power of attorney for property can be added to name a representative to handle property that is not held by a trust.
Young Adults Enjoy HIPAA Protections
Consider this hypothetical scenario. Your 18-year-old daughter decides to attend college in Chicago, and you live in Petaluma. You get a call in the middle of the night from her roommate saying that she is in the hospital because she was injured in an accident.
The HIPAA privacy protections would prevent doctors from speaking with you about her condition. To address potential situations like this one, you should encourage your young adult children to sign releases that give you the legal right to access their medical information.
We Are Here to Help!
Estate planning should be viewed as an ongoing process. It starts when you are a young adult, and your plan should be adjusted step-by-step as you reach different stages of life.
We greatly value the long-term relationships that we create with families throughout the greater Sonoma County area. When you work with our firm, you will receive personalized attention, and we will always be there when you need us.
Additional Helpful Information: Inherited IRA Rules Altered by the SECURE Act
Need Help with Minor Children & Young Adult Planning in Sonoma County?
You can schedule a consultation at our Petaluma, CA estate planning office right now by calling us at 707-769-9975, or you can alternatively use our contact form to send us a message.
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