What legal documents should I have at different ages?
There are many different types of legal documents out there. And if you’re not a lawyer, it can be really, really hard to figure out what you actually need and what is overkill for your situation. On a related note, I remember going to the RMV to change the title on a car a few years back. I went in, and it turns out I had brought the completely wrong forms to actually accomplish a title change. I remember feeling embarrassed and frustrated that I ended up wasting a whole bunch of time because I had to start the process over. So if I felt like that for something as simple as changing the title on a car, I get it when people say they feel a little confused and lost when it comes to getting their basic legal documents in order.
For the really simple ones, like a healthcare proxy, HIPAA release, and living will, all of which relate to your healthcare decisions. It’s not unreasonable to have these documents in place in your 20s, in particular if you are living at a significant distance from family members who you would want responsible for your care. While it’s unlikely that you may face serious health issues in your 20s, it does happen. And while no one thinks it will happen to them, having these documents can ensure that the people you want in charge of your care can have access to your medical records and be authorized to make decisions on your behalf.
With regards to a durable power of attorney, which gives someone the ability to make financial decisions on your behalf if you are incapacitated, this document is largely useless if you don’t have any financial decisions to be made on your behalf. So if you are just out of college, renting an apartment, and don’t have significant savings or bills, you may not need a power of attorney. Once you start getting to the point where you have significant assets or liabilities, including car loans, mortgages, or any type of investment account that you manage yourself, it’s probably worth having a power of attorney, even if you are unlikely to use it at a young age.
Then we come to the last will and testament. This one is a little more complicated, and it’s a whole matrix worth of questions that you need to ask to make sure you determine whether it’s a good idea for you to have a will. We’ve actually put together a whole piece on this very question, so I’d steer you in that direction so you can get a comprehensive look as to how you should think about your specific situation. In general, the more complex your situation and the more people who depend on you for their well-being, the more likely it is that you need a will.
Trusts represent the most complex legal work that most families will deal with, as the potential upside afforded by more complicated trust planning typically benefit larger estates and estates that are more likely to have to deal with a passing at some point. Because most people in their 20s and 30s simply do not have the level of wealth, nor high concern with passing away in the near future, younger people often do not need to consider trust planning. However, if you are younger and happen to have a larger estate for one reason or another, or if you have health conditions that imply a higher mortality rate at a young age, trust planning may be something you need to consider, despite it typically being reserved for people in their 40s or older.
With all of these documents, it is important to look at your specific situation and your specific concerns before making any decisions. Consulting an attorney can be a worthwhile expedition, even though attorneys can be expensive. If you don’t have much to worry about, the cost of the attorney likely exceeds the benefit you may get from them, but as your estate grows, the potential for mistakes grows as well, in both the size and number of potential issues. Your need for legal work will grow alongside that, and working with a licensed attorney can help to make sure you address most of the issues present in your situation.