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You Are Never Too Young For Estate Planning

Estate planning is often associated with middle age or even the retirement years. Millennials, who range in age from 18 to 36, are often too busy managing student loan debt, building careers, and buying homes to give much thought to their mortality. Like other young adults, they may still feel invincible.

On the contrary, these years are the best time to start estate planning. As less traditional family arrangements take over and options expand, you must be prepared in case the worst occurs. If you are younger than 40, here is what you need to do at a minimum for your estate plan and why you should think beyond that.

The Bare Minimum

If you have more debt than assets, never had children, and do not own real estate, it may be difficult to comprehend the importance of a will. There is some truth to this: If you are 24, single, and childless, you likely do not need a large complex estate plan unless you are blessed with early success.

At the very least, start with the bare minimum of estate planning; an advance directive and a power of attorney. Both of these documents are vital for continuing your affairs should you face incapacitation.

Advance Directive

An advance directive outlines your preferences for health care should you be rendered incapable of communicating your treatment preferences. This document appoints a healthcare representative to make these decisions on your behalf and indicates your preferences regarding life-sustaining treatment.

Your health care representative can be anyone you trust with that decision including a parent, sibling, best friend or live-in partner. They will act as your voice when you cannot speak. Before you appoint them, let them know what you plan to do, and perhaps have a conversation regarding your medical preferences.

The advance directive also allows you to limit life-sustaining treatment. Many people prefer not to be kept alive by artificial means if they are rendered permanently incapacitated after an accident or terminal illness. These situations often cause substantial heartbreak not only because of the tragedy involved but also when friends, family, and partners have no idea of your preferences.

You can make this a little easier by making your wishes known through an advance directive. This is a complimentary service when you meet with Diane L. Gruber of Gruber & Associates for estate planning.

Power of Attorney

It is often assumed that if you are incapacitated your spouse, parents or cohabitating partner will handle your affairs for you. Unfortunately, if your accounts and business interests are held only in your name, your helpful loved ones will not be able to access them. This can make it impossible for them to make your student loan payments or even take a pet to the vet.

A power of attorney makes this possible. While you recover from what limits you, the agent you appoint in the power of attorney document can have access to your assets. This allows them to pay your bills and even apply for disability benefits on your behalf. If you do not execute a power of attorney, these tasks become difficult. Depending on the extent of your incapacitation, your loved ones may even have to go to court to appoint a conservator to act on your behalf!

These two documents will help in moments of unexpected developments. However, you should consider a will in case the worst occurs.

Why a Will?

Many young adults fail to execute a will because they focus on what they do not have. They do not own real estate or make a substantial income. Some of you may not have children or even a partner. So, why draft a will?

You draft a will because of what you gained so far in life. Even without a large stock portfolio or a mortgage, there are still items that require care should you meet an untimely demise.

Pets

You consider your pets family but the law still considers them property. Oregon law has slightly backed off from this with court precedent finding that animals have awareness and allowing animal control officers to act on an animal abuse situation with the same urgency as harm to a person. But that does not help your animal from being vulnerable should something happen to you.

Just as you can name a guardian for children in your will, you can also do the same for a pet. You can name your cohabitating partner or a friend who loves your animals. A will also allows you to name a backup guardian in case your primary appointee cannot care for your pets. 

Some people even establish pet trusts to assure good care. You can do this even if you lack assets. Purchase a life insurance policy and make the pet trust your beneficiary. Or if you trust your pet guardian, name them as the beneficiary with the understanding the funds are meant to help them care for your animals.

Basically, establishing a caretaker for your pets in a will assures they are safe if anything happens to you. It also makes the process of rehoming your animals much easier on your family.

Cohabitating Partners

There is a movement away from tradition as more young adults decide to cohabitate before marriage. This can have unfortunate consequences if you pass away.

Unless you marry your partner, they have no rights to your assets after death. The intestate statutes, which dictate the distribution of property when someone dies without a will, do not make allowances for non-married partners. You could be engaged but if you die in a horrible accident the day before the wedding, your partner will still be treated as a non-entity by the intestate proceedings.

This can lead to distressful consequences. For example, let’s say you own a home with a mortgage. If you die, the mortgage holder will liquidate the house to pay off the debt.

If you have a will, you can dictate that the equity from that sale passes to your partner. Even if that is only $3,000, that is still enough for them to find a new place to live. However, without a will, that $3,000 will not pass to your partner. It will first go to any children you have, and if you do not have children, your parents and then to your siblings.

This goes for any property you own, including cars, furniture, and other assets. There is no way you can pass property to an unmarried partner without a will.

Children

If you are a single parent, a will helps you designate guardians for your children. Unless you do so, the court will make this determination.

This is not ideal if you are estranged from your family. Your children may be closer to a friend or your live-in partner. However, the court is more likely to grant custody to family members. Even if you come from a close family, it is likely a particular sibling is better suited to take custody of your children.

Guardianship is another preference that is enforceable only through a will. Even if you do not feel you have any other reason to sign a will, if you have children, this reason alone is sufficient.

Digital Assets

Many millennials appoint “digital executors.” These are people with access to your social media and other online accounts. Their job is to manage your digital assets should something happen to you.

Sites like Twitter and Facebook are notoriously bad at dealing with death. Pages often remain accessible with reminders going out to friends and family about your birthday and other milestone events. Unfortunately, without someone knowing your passwords, it is often impossible to shut down these accounts.

There are other digital assets that could also prove troublesome. If you rent out a room on Airbnb, the platform will continue making that room available for rent until someone shuts down the account. Your family could be at your home grieving and sorting your possessions only for an Airbnb patron to suddenly show up wanting access to the rented room.

Besides these accounts, you likely own Kindle books, iTune music libraries, and maintain subscriptions on Audible or Netflix. Unless you appoint someone to deal with these online accounts, they will likely continue charging bank accounts or accruing balances after you pass away, causing more issues that will delay the closure of your estate.

Other Options

There are other estate planning options that could be relevant to your situation. If your children have special needs or you are a trust beneficiary, you likely need to review your situation and create a more customized estate plan.

Planning now is a good precaution. At the very least, it starts a habit that will make wealth management easier as you become older. To start the estate planning process, contact Diane at Gruber & Associates to schedule a consultation.

Consider an Oregon Pet Trust for Your Furred and Feathered Heirs!

In 2005, Oregon passed a statute that allows the creation of pet trusts. This estate planning tool provides for the care of any animals living with you at the time of your death.

Homeless animals are vulnerable to adverse circumstances. It is not a good idea to assume that a family member will take in your pets should something happen to you. The best course of action is to designate a caretaker for your animals and provide resources to ease the financial burden of good care. That is how pet trusts are effective. Here are answers to common questions about this estate planning tool.

What is a pet trust?

Oregon law defines a pet trust as a trust created to provide care for one or more animals alive during the decedent’s lifetime. Like all trusts, it designates a trustee to manage the resources and make decisions regarding an animal’s care.

Like other trusts, this can be a verbal or written agreement. It does not require court filings unless the trust makes reporting a requirement.

Pet trusts last for the life of your animal or if it covers multiple animals, the death of the last surviving animals. Oregon is unique in this rule as other states allowing pet trusts often cap them at 21 years.

Why would I need a pet trust?

It is difficult to know for certain what will happen to your pets if you die. People who fuss over your animals when they visit may be reluctant to take on full-time care. Also, there are some animals, like reptiles, birds or horses, that require specialized care and knowledge that could be expensive.

The pet trust provides more control. You can appoint knowledgeable people as trustees and caretakers once you confirm they are willing to take on the task. Assets may be diverted to a trust through lifetime gifts or a life insurance designation. Since the trust only authorizes payments related to animal care, you know that your assets will be used for the correct purpose.

Also, consider that your animals are more likely to outlive you now than even 20 years ago. Veterinary medicine improvements and better living conditions help dogs and cats live to be nearly 20. Horses can easily live to 30.

Birds are especially long-lived. A well-kept pet parrot can live past 70 years of age. If you are 55 now and currently have a 12-year-old parrot, that bird may end up meeting your great grandchildren!  

How do I choose my animals’ trustee?

First, you want to choose someone who loves your animals. Many people love animals generally but do not necessarily want to live with them. Just because someone fawns over your dog when they visit does not mean they would adopt your dog should you die suddenly.

A friend or family member who already owns animals is a good option. You can see how they care for their pets and rest assured your animals will receive good treatment. If your animals gravitate towards any of these individuals, ask them if they are willing to take the role of trustee in your pet trust.

Second, you want your trustee to have good judgment and knowledge. While caring for dogs and cats is fairly easy, it becomes more complicated with horses, birds, and reptiles. A friend who visits the barn to stroke your horses’ nose and feeds them carrots is likely not a good caretaker for your equine. However, that best friend at your boarding barn with decades of horse experience is likely very willing to care for your horse, especially if your pet trust provides financial resources.

If you do not know any people willing to take on this responsibility, local rescues and private shelters may be willing to help. The organization can act as a temporary guardian for your animal until they find a new home. During that time, the trust provides resources to assure care during that guardianship.

Can pet trusts provide for my animals if I am temporarily incapacitated?

The best way to provide for animals in temporary emergencies is through a Power of Attorney. This document can be expanded to include animal care along with other financial and household duties.

How do I start designing a pet trust?

Your first step is to collect identifying information about your pets. That includes photographs and descriptions of unique markings. Also, any breed registry certificates and DNA information should be accessible. If your pet is microchipped, include that information too.

Second, describe in detail any unique care requirements including medication or needed routines. Cats and dogs with diabetes require timely insulin shots. Besides medical information, also include a description of favorite activities. Some cats do not enjoy catnip and dogs have their favorite games too. Horses especially have preferences; if your horse likes trail rides but hates horse shows, that is a good thing for a caretaker to know.

Third, choose a trustee and caregiver. In most trusts, this is the same person. But if you have one friend who is better at managing resources while another is great at animal care, this can be two separate individuals. Choose alternates for these roles in case your first choices are unable to serve.

You will want to consider the ages of your trustees and caregivers when you choose them. If you are currently 55 and your parrot is 12, choosing a friend who is 50 is not a good long-term plan. However, if you have a 22-year-old niece who loves your parrot already, appointing her as a caregiver guarantees decades of care. Another option is to give trustees and caregivers the power to appoint successors.

Finally, choose who receives the trust assets once your last surviving animal passes on and the trust ends. Just as with any designation, this can include individuals or charitable organizations.

A pet trust provides peace of mind and good care for your beloved animals in the state of Oregon. For an estate plan consultation that includes considering your animals, contact Gruber and Associates, P.C. today.