- Estate Planning
- 6 mins
When most people think about estate planning, they often picture older adults preparing for retirement or elderly individuals securing their legacy by passing down their hard-earned assets to their children, grandchildren, friends, and any other beneficiaries of their choosing. However, this is a common misconception. Estate planning is not just for the elderly—it’s an essential process that new parents and young adults should begin early. Proactively planning for your future not only ensures financial stability but also protects your loved ones in the event of an unexpected tragedy.
Why Young Adults Need an Estate Plan
Many young adults believe that they don’t need an estate plan until they’ve accumulated significant wealth or are nearing retirement age. This couldn’t be further from the truth. Whether you’re fresh out of college, just starting a career, or in the early stages of parenthood, an estate plan is a vital tool that can help you achieve long-term financial security.
An estate plan is just like any other plan. It requires careful consideration, and effort to put it into effect. But just like with any other type of plan, estate planning is fluid and changes as you reach new milestones. Many young adults view an estate plan as a “one and done” activity. And once it is set there is nothing more for them to do. However, an estate plan by design should be updated regularly to ensure that it still complies with where you are in life. This is especially true for new parents. As your family grows, you want the peace of mind that if something were to happen to you and your spouse, that your children would be in the best position possible.
Estate planning for young adults and new parents includes more than just dividing assets after death—it’s about planning for the future, no matter what it may hold. An estate plan will ensure that your wishes are carried out should you become incapacitated, that your children will be properly cared for exactly as you specify, and it will help safeguard your finances as you build your career and wealth.
Key Components of an Estate Plan for Young Adults and New Parents
1. Guardianship and Conservatorship for Minor Children
One of the most important aspects of estate planning for new parents is ensuring that your children will be cared for if something happens to you. Without a Will or other estate planning documents, the court will determine who will take care of your children and manage their inheritance. This process may not align with your wishes, potentially placing your child in the care of someone you wouldn't have chosen yourself. This result would also place an undue burden on your family members, as probating an estate with minor children can be costly, timely, and can result in judicial oversight as to who cares for your children and the manner in which their inheritance will be held until they reach the age of majority (18 in Massachusetts).
By naming a Guardian(s) in your Will, you maintain control over who will care for your children. Not only that, but you can include detailed instructions as to your preferences as to where the children will live, their school system, etc. to minimize the disruption to the daily lives of your children. Additionally, establishing a Conservator ensures that someone responsible will manage your child’s finances until they reach adulthood. This gives the Conservator the power to carefully save and invest the inheritance that you leave your children until they reach an age where they are mature enough to handle the receipt of these assets. This also gives you the opportunity to sit down and have a conversation with the person you wish to select as both Guardian and Conservator so it does not come as a surprise. It is not advisable to spring this duty onto a friend or family member that is unaware of this arrangement beforehand. Since this duty brings with it serious responsibilities, make sure that you discuss your wishes with whomever you name as Guardian and Conservator so they can be as prepared as possible. Especially when you consider that they too will be in a fragile emotional state following your death or incapacity.
2. Trusts to Control Asset Distribution
Trusts are a crucial tool in estate planning, particularly for parents of young children. If you die without a Will, your child could inherit a large sum of money at a young age—potentially as early as 18—when they may lack the financial literacy to manage it responsibly.
Setting up a trust allows you to dictate when and how your child will receive their inheritance. For example, you can structure the trust to release funds at specific milestones, such as graduating college or reaching a certain age. Many of our clients choose to wait until their children reach the age of 25, 30, or even 35 before distributing the trust assets. This ensures that your child receives their inheritance when they are mature enough to handle it responsibly, rather than all at once when they may not be financially prepared. Using a Revocable Trust allows you to maintain full control over these assets during your lifetime. And as the name implies, you can revoke or amend the terms of the trust at any time. As previously mentioned, estate planning is a fluid and ever-changing process. It is very unlikely that the trust terms that you set when you are 35 years old are going to be the same when you are 60 years old. This is why a Revocable Trust is an invaluable tool for new parents to take advantage of. For a full overview of the different types of Trusts and the Pros and Cons of each, please read our legal blog here.
3. Education Planning
Saving for your child’s education is another critical component of estate planning for new parents. Many parents are opting to use trusts to set aside funds for their child’s future educational expenses. By establishing a trust for this purpose, you can outline certain assets to be used exclusively for educational purposes, ensuring that your child will have the financial resources to pursue higher education or trade school even if you are no longer around. Setting up a trust and pour-over Will that names your Guardian and Conservator will solidify your wishes to ensure that you don’t leave the court system to make these decisions for you. It is not uncommon for a Probate Judge to give orders as to how an inheritance will be managed if no Will exists to make this determination for them, which is often done through a UTMA (Uniform Transfers to Minors Act) account. For a full overview of the different types of educational savings plans and how a Trust can help supplement these, please read our full legal blog post here. A Trust gives you full control over both your family affairs and your economic assets, and ensures that your wishes are properly carried out, and your children are set up for success for the long term.
4. Healthcare Directives and Powers of Attorney
Another important part of an estate plan for young adults is setting up a healthcare directive and durable power of attorney. These documents allow you to designate someone to make medical and financial decisions on your behalf if you become incapacitated. Without these documents, your family may face unnecessary hurdles when it comes to making important decisions on your behalf during an emergency.
The Importance of Starting Early
Starting the estate planning process early allows young adults and new parents to protect their growing families and finances. It also enables them to adjust their plans over time as their needs and circumstances change. Estate planning is not a one-time event—it's an ongoing process that should be revisited regularly as you experience life changes, such as marriage, the birth of children, or changes in financial circumstances.
By establishing an estate plan early, you create a foundation of financial security and peace of mind, knowing that your loved ones will be cared for according to your wishes if something happens to you. You’re also setting yourself up for long-term financial success, ensuring that you’re on the right track for retirement and that your family is protected no matter what the future holds.
Estate Planning is For Everyone
Estate planning isn’t just for the elderly or wealthy—it’s for anyone who wants to protect their future and their family. For young adults and new parents, having the right estate planning documents in place ensures that your children are properly cared for, your assets are distributed according to your wishes, and you can enjoy peace of mind knowing that your loved ones are protected. Don’t wait until it’s too late—start planning today for a secure tomorrow. Contact our office today to get started with your free, no obligation consultation.
This blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this blog you understand that there is no attorney client relationship between you and Lane, Lane & Kelly, LLP.
