Young people sometimes put off estate planning. If someone is just in their 20s or 30s, it’s natural for them to feel like they have decades left before they’re going to pass away, and they assume they can just do their estate planning later. They still have a lot of time.
This may be true, but keep in mind that a long life is not guaranteed to anyone. This is why it’s often best to make an estate plan early and then update it at key points in life. It’s especially important for young people who have just become parents to consider estate planning.
Choosing a guardian
For one thing, an estate plan gives them a chance to pick a guardian who will take on a parental role and care for their child if they pass away. Even if the unexpected happens, they know their child will have a stable upbringing with a person they have pre-selected—someone they trust, who has agreed to take on this responsibility. This can give parents peace of mind when thinking about their child’s future.
Transferring assets
It’s also worth noting that people generally have to be 18 before they can legally acquire certain assets in an inheritance. If a parent has a net worth of $100,000, they can’t just leave that money directly to their three-year-old child. But they could put those assets into a trust, name their child as the beneficiary, and have the trust hold the assets until the child is older. The trustee could also use the money to help cover the costs of raising the child.
These are just a few things to think about when drafting an estate plan. Be sure you know what steps to take.