Why Young, Single Adults Need an Estate Plan
Imagine that you are 24 years old. College and Graduate School are done, not exactly paid for, but finished all the same. A first job has you feeling empowered. You are still living at home, but you have replaced your red racing car bed with the Slattum bed from IKEA and your Hannah Montana poster has been removed in favor of a pastoral painting picked up in Cold Spring. In other words, you are making adulting look easy. Your phone’s reminders are filled with all the places and restaurants you want to visit as soon as the pandemic ends. There are loads of appetizers that you have yet to photograph and share on Instagram. Friends and more than friends swirl around you. Plus, you just adopted a Pembroke Welsh Corgi puppy.
One Tuesday, an hour before dinner, mom sits down next to you at the kitchen island’s other counter stool while you are enjoying a sparkling lime water. She has that look in her eyes. The look that says she is worried that you have no idea what you are doing and you are about to ruin your life. You meet that look with a perfectly timed eye roll. Not a word has been spoken, but you know what is coming. A pre-emptive strike is necessary in this situation. “Mom, I set up an automatic savings account, I have already talked to H.R. about my retirement plan options and I do plan on finding an apartment…..eventually”. Mom does not blink as she absorbs her child’s words. “You should think about an estate plan, she intones.” You stifle a laugh. “I hereby leave all of my debt and my phone case collection to …Dad!” Silence. Then a fizz and a pop from the sparkling lime water punctuates your sentence.
Is your mom overdoing it? Not really. Setting up an estate plan is not difficult. A Health Care Proxy and a Power of Attorney come in handy in case of a health emergency to simplify decision making. Before the pandemic, this logic would probably fail to resonate. The Covid-19 hospitalizations forced many families to confront their own lack of planning. Without basic advance directives in place, health care facilities and financial institutions may throw up some roadblocks before they authorize a decisionmaker. Even at 24, you have a financial life – bank accounts, credit card, car, retirement account and other personal assets. Someone has to properly handle these responsibilities if you cannot. An unfortunate result would be to recover from an illness then discover that credit card bills remained unpaid and your credit score sunk. A bad credit score will hamper efforts to rent an apartment, buy a car, increase your credit limit or purchase a home. Choosing a reliable agent under a Power of Attorney is a smart idea.
Planning for your mortality is not something most 24 year-olds prioritize, but it lays the groundwork for intelligent financial thinking and organization. One simple thing is to make sure that your financial account beneficiary statements are up to date. Preparing a Will in your 20’s is a wise first step in a very long chain of smart decisions. It can set you on a course to manage increasing complexity in your financial life including property ownership. A Will can also contain a Pet Trust for your dog or cat that can select the person who will care for them and provide money for their care.
Your parents will continue to have a major influence on your financial thinking as your 20’s progress, but certain slices of independence will start to emerge. Estate planning and financial organization should not be put off until your 30’s and 40’s. Good habits established early will bestow advantages that will allow you to live your best life. Contact the professionals at Sloan and Feller for more information on estate planning.