Estate planning often conjures images of wealthy families embroiled in disputes over ancestral treasures. However, financial planners emphasize that it is not exclusive to the affluent or the elderly. It holds significant benefits for families with more modest assets and those in their 20s and 30s as well.

Why Estate Planning Matters

The first step many individuals take towards estate planning is often when they have children. As Jessica Majeski, a wealth management advisor at Northwestern Mutual, points out, this is a prime time to initiate the process. But it can also be beneficial to start earlier.For all adults, having a durable power of attorney and a healthcare power of attorney drafted is crucial. These legal documents enable an individual to appoint a trusted person to make financial and medical decisions on their behalf in case of incapacitation. Majeski shares her experience of having her 19-year-old daughter sign a healthcare power of attorney on her 18th birthday. It is a critical document that many people overlook until a crisis occurs.Going a step further and creating a last will and testament may seem premature for an 18-year-old, but Majeski emphasizes the importance of considering estate planning once one starts working or acquires assets in their own name.Even for those with few assets, regardless of age, creating an estate plan can ease the burden on their families after their passing. In fact, avoiding probate or reducing legal fees can have a more significant impact in such situations.“As you get older, your estate plan will evolve with you. It is not a one-time task to be completed only when you accumulate wealth or purchase a home,” Majeski adds.

Basic Estate Planning Tasks

New platforms like Alix are emerging to assist people with their estate plans without the hefty fees of attorneys. However, some of the most fundamental and consequential steps can be done without much external help.One such simple task is naming beneficiaries on financial accounts. This includes checking and savings accounts, 401(k)s, brokerage accounts, life insurance policies, and similar assets. By doing so, the probate process can be bypassed entirely, and inheritors can receive the assets more quickly and with fewer complications.Financial institutions usually prompt clients to name a beneficiary when they open an account, and consumers can also do it through their online accounts. Multiple beneficiaries can be assigned, and the account holder can determine the percentage of assets each heir will receive.Another effective way to avoid probate is to have a joint account with someone else. If one account holder passes away, the other remains in possession, which is particularly useful for spouses or a child caring for a parent.For those without children or a spouse, Gene Farrell, CEO of estate planning software Vanilla, suggests considering extended family members, friends, community organizations, or causes they care about when drafting a will.“Just because you don’t have children doesn’t mean you can’t make a difference. Many charities are grateful to have benefactors include them in their estate plans, but often people don’t think about it,” Farrell says.Even if you don’t have kids or significant assets yet, you may have pets, and more people are including provisions for their pet’s care in their wills. Farrell explains that many individuals set aside money in their trust or will to cover the cost of caring for their pets and name a guardian.In conclusion, estate planning is a crucial aspect of financial management that extends beyond the traditional notions. It offers peace of mind and ensures that one’s assets are distributed according to their wishes, benefiting both oneself and one’s loved ones.