When the words “estate planning” are heard, it’s common to think of retirees mapping out their legacy through a will, trust, and other methods of passing on their wealth and assets. You may even think of young parents setting up an estate plan to ensure their children are protected in a worst-case scenario. Most people, however, don’t imagine college students setting up an estate plan. After all, they rarely have any wealth or assets worth passing on, and they typically don’t have dependents who need to be taken care of.
However, college students still need an estate plan in place. Now, during coronavirus, when college students are on campus and at risk, this is more true than ever.
There are several elements of an estate plan:
Most people assume they need all, or most, of these documents in place to have a truly complete estate plan. For some, such as retirees who have a more complicated financial life, that may be the case. However, not everyone needs every document commonly found in an estate plan.
For example, a college student likely doesn’t need a will or trust set up. They don’t have the assets accumulated to warrant a legal document outlining how they wish for their wealth to be distributed.
Instead, college students should focus on two key documents in their abbreviated estate plan:
Durable Power of Attorney
In the event that you can’t make decisions about your assets or your wealth on your own, like in the midst of a medical emergency, a Durable POA designates one person to act on your behalf. This person can sign documents, and help to execute your estate plan.
A college student who we assume is young and healthy could possibly need to enact their Durable POA in the event of a serious accident or health crisis that impairs their ability to make decisions for themselves about their finances. Even if their finances are only small savings or a checking account, it’s still critical to have this person in place.
Healthcare Power of Attorney and Health Directive
Likewise, a healthcare power of attorney helps the incapacitated make decisions about their health and medical treatment. This person can be the same as whoever is named the Durable POA in an individual’s estate plan. A Health Directive is a statement outlining how an individual wants to be treated in an emergency situation when they cannot give consent.
A Health Directive can offer guidelines about whether or not to resuscitate, what medical treatments an individual is comfortable receiving, or when the effort to save their life should be halted (for quality of life reasons, religious beliefs, etc.). A Health Directive makes it easier on a Healthcare POA so that they can make decisions with confidence during an otherwise stressful time.
Even if a college student doesn’t have much accumulated wealth to their name, their money can still be distributed to close relatives to help cover funeral expenses or medical costs in a worst-case scenario. Make sure beneficiaries are listed on your student’s bank accounts and any other financial accounts in their name.
If you are looking for a family-minded estate planning attorney, don’t hesitate to reach out. We are here to help and provide referrals when we can!
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.