Moving away from home is a major milestone in adulthood. For the first time, you might have to secure housing, buy insurance, sign up for utilities, and manage your finances. All of this can feel overwhelming as you simultaneously adapt to a new living environment and possibly a new career.
With greater independence comes more responsibility. Your family may see you off with some parting advice about how to navigate the trials of adulting. One thing they might not have mentioned is the importance of having your legal house in order as you start this new life chapter. This includes having an up-to-date estate plan.
Failure to Launch? Don’t Blame Us.
Young adults today are less likely than young adults four decades ago to have reached several commonly recognized milestones of adulthood, including marriage, financial independence, and living independently of their parents.
In 1980, 84 percent of 25-year-olds were living outside their parents’ home, compared with 68 percent in 2021, reports Pew Research.[1] From 1960 to 2022, the percentage of 25-to-34-year-olds living with their parents increased from 11 percent of men and 7 percent of women to 19 percent of men and 12 percent of women, the latest Census data shows.[2]
While every generation tends to think their times are tough, today’s 18-to-24-year-olds have a strong case. They have had to deal with the COVID-19 recession, high inflation, and “the tightest labor market since World War II,” according to a recent report from the Federal Reserve Bank of St. Louis.[3]
Americans are also living through the toughest housing market in a generation.[4] But despite high inflation, rising interest rates, and worsening housing affordability, there has been a post-pandemic trend toward independent living among young adults. The share of 25-to-34-year-olds living with parents in 2022, although high by historical standards, dropped to 19 percent in 2022—the lowest level in a decade.[5]
Are You Behind on Making a Will?
As a young person, you likely feel invincible and cocooned by youth from thoughts about death. While these thoughts are natural at every age, older cohorts may be more inclined to meet them with action, such as creating an estate plan.
You can be forgiven if you have never heard the term estate planning or only have a vague idea of what it is. Your parents may have skipped over this part of your education because many older adults, like younger adults, do not have an estate plan or do not want to talk about incapacity or death with their children.
At the simplest level, an estate plan is a set of legal tools that governs your assets (everything you own, including your accounts and property) and addresses your healthcare preferences when something happens to you. That “something” could be death. But it could also be a disability that renders you unable to manage your affairs, either temporarily or permanently.
Your odds of becoming disabled are greater than you might think. Most estimate their odds of long-term disability at 1 or 2 percent, when in reality there is a 25 percent chance that somebody in their 20s today will become disabled before they retire.[6]
This is right around the same percentage of 18-to-34-year-olds (24 percent) who have a will.[7] That percentage has increased since 2020, but it is still the lowest of any age cohort.[8] Adults aged 55 and older are about twice as likely to have a will. Overall, only 32 percent of Americans have a will.[9]
What Decision-Making Authority Can You Include in an Estate Plan?
Forty percent of people who do not have a will say it is because they do not have enough assets to leave to anyone.[10]
Even if you are young and have little or no assets, if you own anything at all and care about what happens to your possessions, you should have a will. And if you have minor children or a beloved pet, a will is a necessity because it names a legal guardian for your child (or fur baby) in the event of your death.
A will, which only takes effect when you die, is just one aspect of an estate plan. An estate plan also allows you to nominate other people to make decisions for you if you are disabled or incapacitated.
Thinking about getting sick or hurt can feel low on your priority list, especially when you are young and dealing with the more immediate concerns of moving away from home. But if you value your independence, then you should care about your estate plan because it allows people to act on your behalf with regard to the following types of matters:
- Your finances, such as paying bills, managing bank and retirement accounts, signing checks, filing and paying taxes, selling property, running your business, and acting as your legal representative.
- Your health, including decisions about the type of care you receive in various medical scenarios, including palliative and end-of-life care, and who can access your private medical information.
Financial management in an estate plan is addressed in a financial power of attorney. Health care decision-making is handled with a medical power of attorney. Powers of attorney are tools that authorize someone, known as an agent, to act on your behalf.
- Powers of attorney can be general, granting the agent wide latitude to make decisions for you, or more limited in scope.
- They can also last indefinitely or for a specified amount of time (e.g., for as long as you are incapacitated), depending on state law.
This type of planning is crucial even if you do not own a home or have nothing in the bank.
Without powers of attorney, the court will appoint somebody to make decisions about your finances and medical care.
Family members may have to petition the court to serve as your agents for financial and medical decision-making if you cannot make those decisions yourself. They may not agree about who should serve or what decisions to make. Ultimately, someone whom you would not have chosen might end up with the authority to act for you.
- Instead of, or in addition to, a healthcare power of attorney, you can create a living will that preserves in writing your healthcare preferences as it relates to your end-of-life care.
- Another tool, called a living trust, can be an alternative to a will and can complement your financial power of attorney.
These and other estate planning documents should be discussed with an attorney. Developing a relationship with an estate planning attorney in your youth can put you on a lifelong path to greater financial and personal responsibility.
Who Should Be Your Trusted Decision-Makers?
While you may have moved out of your parents’ home and want to establish and maintain your independence, mom and dad are obvious choices for serving as agents in your estate plan.
If mom and dad are on the other side of the country, travel frequently for work, or may not be immediately available in an emergency for some other reason, consider choosing someone else.
Family members and friends are common choices for agents, but an agent can be any competent and trusted adult, such as an accountant or financial professional.
Whomever you choose, make sure they understand the role and are willing to serve. Being an agent is a huge responsibility, and they can resign or refuse the position. That is why it is important to choose successor, or backup, agents as well.
Is Your Estate Plan on Your Move-Out Checklist?
You are likely to feel a mix of excitement and anxiety when moving away from home to a place that may be far from your familiar support network. You are ready to make new connections, settle into a different routine, and break out of your comfort zone. But are you forgetting about your estate plan?
Part of being an adult is facing uncomfortable realities head on. Planning for what could go wrong, even if it seems like a remote possibility right now, is the only way to ensure that you will be ready if it does happen.
Take greater control of your life today by scheduling a meeting with an estate planning attorney.