You have worked-and continue to work-to provide for your family. Some people around you may have mentioned that you should get an “estate plan,” but you are not sure why you would need to do it right now. You may not feel like you know what it is or how it could benefit you. Regardless of the situation you find yourself in, here or some misconceptions that people may have regarding estate planning.
1. Estate planning is for wealthy(ier) people.
While estate planning is for wealthy people, it is not limited to them. In fact, anyone who is eighteen and older need some form of estate plan. They may have assets of monetary or sentimental value, or the threat of an accident looms over everyone. Everyone thinks about a car, iPhone, or other property, but you also have to think about iTunes, Snap account, and other things. There is no wealth “floor” to need a will, just a desire to control where some assets go.
2. Estate planning is for old(er) people.
Young people often think they are invincible, but there is not real protection for young adults from harm. If anything, young professionals have a strong need for protection as their loved ones may not be financially stable enough to afford a tragedy. This is also exceptionally true for young parents who need to identify a guardian for their children.
3. Estate planning means having a Will.
This is partly true. A will is an important part of an estate plan, but it is not your only option. A will nominates a guardian for minor children as well as beneficiaries of your estate. A will is almost always better than nothing. After you pass, a will goes through probate, which is the process of passing on your assets to your beneficiaries. Colorado has a very efficient and cost-effective probate process, especially when compared to almost all other states.
But a will may not be the only, or even best, part of your estate plan. Some assets, such as an IRA or life insurance policies, use beneficiary designations and are not controlled by a will. Other assets, like a bank account or home, may rely on joint tenancy to pass on your assets, at least to a surviving spouse. Another option is to use a trust to control the passing of all your property, which may line up with your life situation and goals better than other options.
You are not too poor or young to think about estate planning. It can even help you financially as you take more control over your finances, assets, and have a more long-term view than others around you.