Estate planning is often regarded as something that only elderly, well-off people need to think about, but this is not the case, says fiduciary expert David Knott of Private Client Trust, who has the following advice on estate planning for young adults.
“An estate is everything you own. It's your bank accounts, cars, personal possessions, furniture and property, if you own any. It includes jewellery, electronics, family heirlooms, musical instruments, collectables, memorabilia and even digital assets, such as a website or social media accounts."
Usually, young adults have few assets and a small capital base, but they often have liabilities and commitments that older people will have outgrown, says Knott.
It is important for young adults with few assets and possessions to draft a will and have an estate plan, because they can become the victim of an unexpected accident or illness that renders them incapacitated or takes their life, he says. "Your will speaks for you when you no longer can."
When people marry and have children, they become conscious of the long-term obligations of educating children, and paying off a mortgage bond and other debts, while ensuring that their partner and children are provided for if they were to die suddenly. It is at this stage of your life that you need the services of someone who can advise you on life and risk assurance, says Knott.
The adviser should ensure that adequate life cover is purchased to cover outstanding debts and future maintenance obligations, and provide liquidity in the estate, he says. He or she should also verify that you have adequate medical scheme cover, and if not, that you take out cover for dread disease, disability and loss of earnings. This is particularly important if you are self-employed.
“As you get older, your estate grows, and so your estate planning may become more complicated as you factor in dependants, business ventures, more valuable assets, a possible second marriage, and so on. At this time, it is essential to have a sound, comprehensive and clear will to ensure that the needs of your loved ones will be looked after," says Knott.
“Estate planning is not just for Baby Boomers or those in Generation X. Even Millennials can benefit from creating a solid estate plan. Millennials who have not yet taken these important steps are encouraged to seek the advice of a fiduciary expert who can help them to create a comprehensive estate plan that meets their needs and wishes,” he says.