Estate planning is a process that many people don’t begin until they are in their 30s or 40s. Around 67% of Americans don’t have any type of estate plan in place, which indicates that many people don’t understand the importance of having one. Creating an estate plan early in your life can help you prepare for the future, which is why it’s recommended that you ease your kids into estate planning early on.
What Does Estate Planning Entail?
Regardless of how many assets you currently have access to, you have an estate. Your estate is comprised of all items and assets you currently own, which include your personal possessions, home, car, investments, checking and savings accounts, furniture, and life insurance. You can’t take any of this with you when you pass away, which is why you may want to decide how these assets will be distributed after your death.
By making an estate plan, you’ll have full control over who receives your possessions. The documents that are placed in an estate plan typically include precise details on how and when your assets and belongings will be distributed. The right approach to an estate plan can lower legal fees, court costs, and taxes.
There are many different types of instructions that a person puts into an estate plan. For instance, instructions often cover financial affairs and health care if the owner becomes incapacitated before dying. If the individual is unable to work because of an injury or illness, an estate plan can include arrangements about disability insurance. Life insurance and long-term care insurance details are often included in an estate plan as well.
When creating an estate plan, it’s common for business owners to determine how their company will be transferred if they retire, become disabled, or die. Those with minor children tend to name guardians for their care and eventual inheritance.
If loved ones are known to have issues with managing their money, it’s possible to place protections in an estate plan to ensure the money isn’t wasted. Family members who have special needs can also be protected by giving them part of an estate without disqualifying them from their government benefits. Speak with our New Jersey estate planning lawyer to learn more about estate planning.
Talk About Your Estate Plan
If you’ve already made an estate plan, you should think about telling your children what it entails and the role they have in it. Explain every document that’s part of your estate plan. By going over the entirety of this plan, your children should learn about the person you’ve chosen to be your plan’s administrator and who will have the power of attorney for your future health care and financial choices. In the event that you’ve named one of your children to be an executor, they might want to know what steps they’ll need to take if you pass away.
If you have children who are currently younger than 18, speak with them about who their guardians will be if something were to happen to you. Whether your children will live with a grandparent or a godparent, they need to be aware of who will take care of them. When you have adult children, they should know how to find your documents, which include your:
• Power of attorney
• Trust
• Will
• Health care directive
• Online accounts and login details
Help Them Understand How Important Having One Is
Young adults often believe that they don’t need to create an estate plan until they get older. When you only have a small amount of assets to your name, an estate plan may seem unimportant. However, parents should begin talking to their children about creating an estate plan that they can call their own when they’re a teenager. Once an adult enters college or starts a career, they can benefit from having an estate plan.
If a child graduates from college and immediately starts a job where they receive a high annual income with ample bonuses, they might want to know how they can protect this money if something happens to them. Young adults who create an estate plan often appoint a financial power of attorney, which is a type of legal document that gives a person the ability to make financial decisions. It’s also possible to create a durable power of attorney, which focuses on health care decisions.
Creating an estate plan gives you the opportunity to reduce estate taxes and identify who your beneficiaries will be. If you need help developing one, call our New Jersey estate planning lawyer today at (201) 996-1200 to schedule an appointment at our Hackensack office.