As a professional, I rely on “scientific method” for determining societal views on aging. In common parlance, my “scientific method” is also known as the “supermarket cashier test.” When a person approaches the conveyor belt and eyeballs the cashier, is the cashier’s verbal response a “Hey” or “Sir” (“Ma’am”)? The point in time in which you no longer hear “Hey” consistently at the supermarket is the end of your young adulthood. If you are fortunate, you may hear “Hey” for quite a while. Estate planning does not have to wait for the “Hey” to turn into “Sir” (“Ma’am”).
You are a mad scientist in your twenties, experimenting with career paths, living arrangements and relationships. Estate and financial planning seems like a ridiculous concept when a purchase on the Starbucks app will probably overdraw your account. It is not ridiculous. Once school is finished and you are employed, assets are being accumulated. Expenses, loans, taxes and spending will take a chunk out of your newly acquired resources, but developing a financial and estate plan for savings, investing and asset protection will help. We always recommend working with a financial planner to obtain sound advice. Setting up automated checking account transfers which removes a fixed amount either monthly or by paycheck and sends it to an investment account or interest-bearing account is very important. The amount is removed before any spending is contemplated and it has the ability to grow over many years. Employment based qualified retirement accounts like IRA’s, 401k’s or 403b’s may be offered by your workplace. These retirement accounts will also deduct earnings out of a paycheck to fund the retirement accounts, often with employers matching the deduction amounts. The goal is to save and grow your money even though your peak earnings years are far away. If you wait to save until you have “enough money in your account to comfortably save”……..you will not save.
Investment and retirement accounts usually provide beneficiary forms to complete. Beneficiaries will directly inherit money from these accounts, should you pass away, without going through the courts. In your twenties, a chosen beneficiary may be a parent, sibling or close relative. This process will be your first brush with estate planning. Your next estate planning exposure is usually connected to your first real estate purchase. It could be a studio condominium apartment or a 3 bedroom house. Ensuring that the right person inherits the property if you die requires deed planning, a Last Will and Testament or a Trust.
We take more risks in our twenties. We go places and do things that our older selves may think twice about. With risk and life’s unfortunate turns, situations arise requiring assistance. Part of a young adult’s estate plan is having a Power of Attorney and Health Care Proxy. These documents appoint a person to make financial and healthcare decisions should you be mentally compromised.
An unspoken thread that ties all of this together is the communication and counsel of a parent with their young adult child. Parental advice is usually relegated to the part of an adult child’s brain where annoyances are stored. Estate and financial planning advice should never be minimized. Parents have made the mistakes you are going to make and want you to have more security and less stress. To find out more information on planning, contact the professionals at The Feller Group, P.C. today.