The myth
The word “estate” may bring to mind images of sprawling properties and large family fortunes. On the other hand, a “last will” is often associated with those nearing the end of their life.
As a result, most are under the impression that estate planning only matters to the wealthy and the elderly.
The reality
In its financial and legal use, “estate” refers to everything you own. This includes bank accounts, insurance policies, investments, and properties.
If you own anything at all – whether it's worth millions or thousands – you have an estate. Through estate planning, you get to decide what happens to your belongings when you die or become incapacitated.
Even if you’re still young or don’t have a lot of assets, preparing for the unexpected makes a huge difference for your loved ones.
Part of estate planning is writing a will, which states who should receive your assets and how they’ll be distributed.
If you have minor children, you can identify a trusted guardian for them. Keep in mind that local inheritance laws govern the distribution of assets in a person’s estate.
You can also create a living will to inform doctors and family about the medical or end-of-life care you want in case you become unable to speak for yourself.
Without the right documents, family members may struggle to make critical decisions and settle your affairs.
If you’re just starting to manage your own money, you can ease into preparations by keeping your finances organized.
Tracking your net worth and maintaining an inventory of your assets makes estate planning easier once you’re ready to begin.
You should also maintain a list of beneficiaries on accounts like life insurance and retirement funds. Update your records regularly to factor in life changes, like getting married or having kids.
Verdict: False.
When life takes a turn, an estate plan helps ensure the people and decisions that matter to you are cared for the way you want.
You have reason to think about estate planning if you have treasured belongings, loved ones to look after, and specific preferences about your own medical or end-of-life care.
