Adult Starter Kit

Most adults between the age of 18-25 (and often even older than that) don’t put much thought into estate and financial planning. Ramsey Law wants to introduce these tools to people at these young ages because they offer basic protections we all need and can provide a big leg up on future financial security.

The Basics

People you need in your life ASAP:

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• Financial Advisor: this person is key to future financial success. The sooner you start working on your financial future, the better. An ideal advisor will have a lot of experience, compare products offered by different companies, check in with you at least once a year, and demonstrate that they have your best interests in mind, not their own.
• Estate Planning Attorney: this person can ensure that you and your family are protected in the event of incapacity or worse. A common misconception is that you have to have a lot of money or property to need a Will and Powers of Attorney, but everyone needs some basic protections and it is often people of more modest means who benefit the most from the cost-saving measures these documents can offer. A Power of Attorney is far less costly than a guardianship. Probate with a Will is not nearly as expensive or time consuming as probate without in most cases. A good estate planning attorney can also advise on probate avoidance options (such as adding beneficiaries to bank accounts, vehicles, and real estate), and, just as importantly, whether those options would simplify matters or make things worse in each individual’s situation. There are plenty of resources out there for low or no cost estate planning, but you often miss out on the invaluable experience and advice of an attorney who is experienced in probate law. Probating a poorly drafted Will done online or by someone who thinks they understand the law can be far more expensive than the cost of using a knowledgeable estate planning lawyer to draft the documents.
• Business Attorney: if you have or plan to start a business, a business attorney can ensure your documents (formation, contract, etc.) are set up properly, that you are maximizing liability protections available under the law, and, if you have partners, that your interests are protected.
• Insurance Agents: having a good health insurance agent, home/auto insurance agent, and, if needed, commercial insurance agent, are crucial to protecting your assets and saving money on rates. Often these agents specialize in certain areas, so you may have 3 different agents, but being able to call or text someone’s direct line, instead of calling an 800 number, will make your life so much easier and also ensure you have the RIGHT AMOUNT of coverage.
• CPA/Tax Preparer: this isn’t necessarily something you need to file your tax return on your minimum wage job (there plenty of services that will prepare tax returns for free under a certain income level), but after graduation, you want someone who knows all the deductions. If you are in school, it is important to talk to your parents about taxes to determine if they will report you under their tax return (they can often take advantage of much larger deductions).

Documents You Should Consider

• Durable (Financial) Power of Attorney: appoints agents who can assist with or handle your finances if needed. This is most commonly used in the event of a temporary or permanent incapacity (e.g. bad car accident) or when it is more convenient for the agent to communicate with your bank. Financial institutions and most third parties will not disclose financial information or allow the people you trust to access your accounts without this document. It is only effective during your lifetime and is not a substitute for a Will.
• Medical Power of Attorney: appoints agents who can make medical decisions for you if you can’t make them for yourself. Generally, family members will have difficulty obtaining medical information and making decisions for someone who is unconscious or incapacitated. Additionally, having one official decision-maker (versus the whole family arguing over the best options for care) can provide for better care, less conflict, and allow medical professionals to focus on what they do best.
• Directive to Physicians: specifies preferences regarding extraordinary life support measures in extreme circumstances where recovery is not expected (takes the burden of the decision off the family if you feel strongly about withholding or continuing support).
• Declaration of Guardian: specifies who you would or would not want to serve as your legal guardian if you become incapacitated.
• Appointment of Agent for Disposition of Remains: specifies agent(s) who will handle final arrangements (particularly important if the individual prefers cremation or next of kin would not agree).
• Last Will: specifies how you want your property to pass and who will be in charge of administering your estate when you pass. This is particularly important if you would leave behind accounts or insurance without beneficiaries, real estate, a spouse, children, or expect that your family would not get along. A Will is also helpful if the person has unclaimed funds, a paycheck or employ.