Happy 18th Birthday! Time to Start Planning Your Estate
It’s probably safe to assume that most young adults are more concerned about pursuing their education or planning careers than they are about estate planning. The notion that estate planning is only for older adults with substantial assets to pass on to their heirs ignores the importance of having control over all aspects of your life regardless of your age.
The underlying purpose of an estate plan is to give you control over important decisions in your life, including financial transactions and health care, at times when you might not be able to make those decisions for yourself. Advance Health Care Directives and durable powers of attorney are two of the estate planning documents giving you control over key decisions regardless of your age.
What Is Estate Planning, and Why Should a Young Adult Care?
Estate planning is taking steps to ensure your estate passes to your loved ones according to your wishes. It also includes taking measures to appoint someone to make health care decisions in accordance with your wishes when your physical or mental condition has deteriorated to the point where you cannot make those decisions on your own.
If you own a car and have some money in the bank, you have an estate. The word “estate” represents assets that you own regardless of their value. When people die, their estate representing the assets they own is distributed according to their wishes. Two methods an estate plan expresses those wishes are through a will or a revocable trust.
A will is a document prepared by your attorney that includes a statement of your wishes for how the assets you own are to be distributed to your loved ones upon your death. The person carrying out your wishes is the executor you name in the will. A will prevents the state intestate succession laws from determining who receives your assets.
Revocable trusts offer another option for handling your estate upon your death. Assets held in the name of the trust are managed by a trustee during your lifetime and distributed according to your wishes as stated in the trust agreement. You can be the trustee of the trust or name someone else to manage your assets.
Control over Decisions When You Are Incapacitated
Reaching 18 years of age is a milestone because you are legally an adult, which also means your parents no longer have the authority to make decisions on your behalf. Estate planning allows you to designate someone, including your parents, to handle your financial affairs and to make health care decisions on your behalf if you are unable to make them on your own.
For example, if you are unconscious following a serious car accident, you would want your parents to have the authority to discuss treatment options with your doctors and make decisions about them. It can be accomplished through an Advance Health Care Directive, which is a legal document in which you appoint an agent to make health care decisions consistent with the instructions you include in the document.
California law does not recognize an Advance Health Care Directive as granting authority beyond the making of health care decisions. Designation of someone to handle your financial transactions when you are incapable of doing so requires the preparation and execution of a durable power of attorney.
A durable power of attorney designates another person, referred to as the attorney-in-fact or agent, to act on your behalf with regard to financial, business and property decisions. Your attorney-in-fact could handle your banking transactions, handle your mail and take care of other transactions in your place. Durable powers of attorney for estate planning purposes usually “spring” into action in the event of incapacity, rather than being immediately effective. That way, you handle your finances so long as you are capable of doing so and your agent steps in to help in the event you become incapable of doing so.
An Estate Planning Attorney Can Help
An estate planning attorney is a good source of legal advice and guidance for young adults about durable powers of attorney, Advance Health Care Directives, wills and trusts, and other methods of maintaining control over key aspects of their lives. If you would like more information estate planning, contact the trusted attorneys at Magee & Adler. Call us today at 562-432-1001 to schedule an appointment.