Some young adults in California might not have an estate plan. They may assume they do not need one because they are too young or have few assets, but there are many reasons they might need one.
Planning for becoming incapacitated
Estate planning is not just about planning for what will happen after a person’s death. It can also spell out what should happen in case a person becomes incapacitated and is unable to take financial action or make decisions about his or her health care. A durable power of attorney can appoint someone to handle the finances on another person’s behalf while a living will can express a person’s wishes for end-of-life care. A health care proxy can appoint someone to make health care decisions on the person’s behalf.
Planning for assets and beneficiaries
Most estate plans are based around a will, which can appoint a guardian for minors. It may also designate the beneficiaries who will receive assets, but some people may want to use a revocable trust to pass some or all of those assets instead. The creator of the trust, also known as the grantor, can change or revoke a revocable trust. If you do not have a will or trust, the state may decide what happens to your assets.
Some assets, such as life insurance or retirement accounts, are distributed via beneficiary designations, and you should ensure that you remain aware of these as you create an estate plan. These documents override what is in a will or trust, so if you revise your will but not your beneficiary designation, some assets could end up going to an ex-spouse or someone else you do not intend to. There are also certain situations in which you might want an irrevocable trust for the greater protection it can offer against creditors and other threats.