What is Estate Planning and Why should I Care about it?
By Logan Young
Estate planning. This is a financial planning component that is often misunderstood and carries a lot of questions… What is it? Do I need to be doing anything now? When should I start developing an estate plan? While this is often a topic and subject that is discussed more as one gets older, it is important for everyone of all ages to have a plan and consider putting certain measures in place.
Broadly defined, estate planning is the process of setting up a strategy that details who will receive your assets when you die. This is why estate planning is generally more discussed as one gets older and closer to death. This topic, though, is more nuanced than just the transfer of assets. Another aspect of estate planning is planning who will handle both your possessions and medical decisions should you become incapacitated. These are the decisions that are more likely to affect college students. No matter one’s age, there are several considerations that should be made relative to estate planning.
The first document that a college student should consider implementing is a health care proxy/medical power of attorney. This document allows someone who you designate to make health care decisions on your behalf in case of incapacity. If you were involved in an accident of any sort that made you unconscious, decisions about your health care would completely be in the hands of the health care providers you are currently under the care of. A medical power of attorney allows you to designate who makes those decisions for you. Once you turn 18, you should consider creating this document to give your parents or someone else you trust the power to make those decisions. Due to HIPPA regulations, health care providers are often not allowed to give your personal information to anyone after you turn 18, even your parents. That is why it is important for a medical power of attorney to be complemented by a HIPPA Authorization Form. This allows the person you designate the ability to request and receive your personal health care information. The medical power of attorney could be useless if the person you designate doesn’t also have access to your medical records and the information about your injury. These documents are fairly easy to create. If your situation is basic, generally it can be done by yourself online. For a more complicated situation, an attorney should be consulted.
Another document to consider implementing is a Durable Power of Attorney. This form allows the person you designate to make a wide range of decisions on your behalf relative to things outside of medical cases. A Durable Power of Attorney or (DPOA) can be very beneficial if you become incapacitated and are unable to make important financial decisions yourself. These can be created in two ways: to become effective immediately or only after you become incapacitated. The person designated as your power of attorney must be thought of carefully and must be someone that is very trusted as they will have access to your financial assets. A basic form of this document can also generally be created online.
The last estate planning document to consider for a college student is a Simple Will. This document outlines how you want your assets distributed in the possibility of death. If you were to die without a will, your assets would be distributed based on the laws of the state. Depending on state laws and your relationships with your family, this could mean that your assets would go to individuals that you do not want and could cause a lot of undesirable tension within a family unit. This document would only be necessary if you have a large amount of assets in a bank account or retirement account. You should also consider implementing this if you own a larger asset such as a car or a personal residence. While this document is more complex, if the disposition of your assets is simple, then this could be created online. A more complicated situation would require consulting a lawyer.
Ultimately, let’s remember Jesus’ command in Matthew 6:19-20, “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal.” May we always remember that our mission on this earth is to store treasure in heaven. It is important that we take care of everything God has given us as we seek to make an eternal impact. Estate planning is a means to display good stewardship over what God has blessed us with.