Estate Planning For Young Adults Singles And Married Couples?

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Why Do Young Adults Need Estate Planning?

Many young adults believe estate planning is only for the elderly or wealthy, but that’s a dangerous misconception. Regardless of your net worth, having a plan in place ensures your wishes are honored and your loved ones are protected if something unforeseen happens. For singles, this means designating beneficiaries for accounts and assets, and appointing someone to manage your affairs if you become incapacitated. For married couples, it’s about protecting each other and ensuring a smooth transition of assets. A comprehensive plan provides peace of mind, knowing your hard-earned possessions will go where you intend them to.

The core components of a basic estate plan include a will, durable power of attorney, and healthcare directives. These documents work together to address both financial and medical decisions. A will specifies how your assets should be distributed, while a power of attorney allows someone you trust to manage your finances if you’re unable to do so yourself. Healthcare directives outline your wishes regarding medical treatment, including end-of-life care.

Without these documents, the state will decide how your assets are distributed, which may not align with your preferences. This process, known as probate, can be time-consuming, expensive, and emotionally draining for your family.

What Happens to Digital Assets Without a Plan?

Digital assets – everything from social media accounts and email to cryptocurrency and online businesses – are often overlooked in estate planning. However, they can represent a significant portion of a young adult’s net worth. Without specific instructions, accessing these assets can be incredibly difficult, even for a designated executor. Service providers like Google, Facebook, and Coinbase require specific legal documentation to release account information.

California’s Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) (Probate Code § 870) provides a framework for accessing digital assets, but it requires specific language in your will or trust to be effective. Without RUFADAA language, your executor may be legally denied access to your accounts, potentially leading to lost assets and frustration for your loved ones.

It’s crucial to create a digital asset inventory and include clear instructions in your estate plan regarding access and distribution. This includes usernames, passwords, and contact information for relevant service providers.

What’s the Difference Between a Will and a Trust?

A will is a legal document that outlines how your assets should be distributed after your death. It must go through probate, a court-supervised process that validates the will and ensures your assets are distributed according to your instructions. A trust, on the other hand, is a more complex legal arrangement that allows you to transfer assets to a trustee who manages them for the benefit of your beneficiaries. Trusts can avoid probate, offering a faster and more private transfer of assets.

For young adults with relatively simple estates, a will may be sufficient. However, for those with more complex assets or specific wishes, a trust may be a better option. A revocable living trust offers flexibility and control, allowing you to modify the trust terms as your circumstances change. It also provides a layer of protection against potential creditors.

The choice between a will and a trust depends on your individual circumstances and goals. It’s important to consult with an experienced estate planning attorney to determine the best approach for your situation.

How Often Should I Review My Estate Plan?

Estate planning isn’t a one-time event; it’s an ongoing process. Life events such as marriage, divorce, the birth of a child, or a significant change in financial circumstances can all necessitate a review of your estate plan. It’s generally recommended to review your plan every three to five years, or whenever a major life event occurs. The April 1, 2025 implementation date is a critical trigger for review, as new laws regarding AB 2016 and Small Estate limits do not apply retroactively to deaths occurring before that date.

Changes in tax laws can also impact your estate plan. For example, the Federal Estate Tax Exemption is now permanently increased to $15 million per person effective January 1, 2026, due to the averted OBBBA “Sunset.” This means you may need to adjust your plan to take advantage of these changes. Staying informed about current tax laws is essential for maximizing the benefits of your estate plan.

Regularly reviewing your plan ensures it continues to reflect your wishes and provides the protection your loved ones need.

What are the Benefits of Having a CPA Involved in Estate Planning?

As both an Estate Planning Attorney and CPA with over 35 years of experience in San Diego, California, I’ve seen firsthand the benefits of integrating tax planning into the estate planning process. A CPA can help you understand the tax implications of your estate plan and minimize potential tax liabilities. This is particularly important when dealing with assets that have a step-up in basis, such as real estate or investments.

The step-up in basis allows your beneficiaries to inherit assets at their current market value, potentially avoiding significant capital gains taxes when they eventually sell them. A CPA can help you value your assets accurately and ensure you’re taking full advantage of this benefit. They can also advise you on strategies for minimizing estate taxes and maximizing your legacy.

Furthermore, a CPA can assist with trust funding and asset retitling, ensuring your assets are properly transferred to your trust. This is a critical step in avoiding probate and ensuring a smooth transition of assets. In San Diego, we frequently encounter complex family dynamics and business ownership structures, where a CPA’s expertise is invaluable.

What is a Small Estate Affidavit?

If your combined probate assets (excluding the AB 2016 residence) are below $208,850 (effective April 1, 2025), you may be able to use a Small Estate Affidavit to avoid formal probate. This is a simpler and less expensive process than probate, but it has limitations. For real property valued under $69,625, such as vacant land, a Small Estate Affidavit can be used. However, it’s important to note that this process may not be suitable for all situations.

The affidavit requires specific information about your assets and beneficiaries, and it must be filed with the court. It’s crucial to ensure the affidavit is properly completed and filed to avoid potential legal issues. A qualified attorney can assist you with preparing and filing the affidavit.

Distinguish between a Small Estate Affidavit (for real property <$69,625, e.g., vacant land) and AB 2016 (Probate Code § 13151).

What is the Petition for Succession?

For deaths on or after April 1, 2025, a primary residence up to $750,000 qualifies for a “Petition for Succession.” This is a streamlined probate process designed for smaller estates, but it still requires a Judge’s Order, not just an affidavit. It’s a more formal process than a Small Estate Affidavit, but it’s less expensive and time-consuming than traditional probate.

The petition requires specific documentation about the estate, including a list of assets and beneficiaries. It’s important to ensure the petition is properly completed and filed to avoid potential delays or complications. Other non-real estate assets must remain below the separate $208,850 limit to qualify.

A qualified attorney can assist you with preparing and filing the petition.

What is Prop 19 and How Does it Affect Estate Planning?

Prop 19 impacts the transfer of property tax bases between parents and children. Heirs can only keep a parent’s low tax base if they move into the home as their primary residence within one year, and the home’s value stays within specific limits. This can have significant tax implications for beneficiaries who inherit real estate.

It’s important to understand the requirements of Prop 19 and plan accordingly. A CPA can help you assess the potential tax liabilities and develop strategies for minimizing your tax burden. For example, you may consider gifting the property to your children before your death to take advantage of the parent-child exclusion.

Understanding Prop 19 is crucial for maximizing the benefits of your estate plan and protecting your family’s financial future.

What is the FinCEN 2025 Exemption?

As of March 2025, domestic U.S. LLCs are exempt from mandatory BOI (Beneficial Ownership Information) reporting; however, executors of foreign-registered entities must file updates within 30 days to avoid $500/day fines. This is a significant change for business owners and estate planners.

It’s important to understand the requirements of the FinCEN 2025 Exemption and ensure your LLC is compliant. A qualified attorney can assist you with filing the necessary reports and avoiding potential penalties. This is particularly important for estates with foreign-owned businesses.

Staying informed about current regulations is essential for maximizing the benefits of your estate plan and protecting your family’s financial future.

What is RUFADAA and Why is it Important?

Without specific RUFADAA language in a Trust or Will, service providers like Google or Coinbase can legally deny an executor access to digital accounts. California’s Revised Uniform Fiduciary Access to Digital Assets Act (Probate Code § 870) provides a framework for accessing digital assets, but it requires specific language in your will or trust to be effective.

It’s crucial to create a digital asset inventory and include clear instructions in your estate plan regarding access and distribution. This includes usernames, passwords, and contact information for relevant service providers. A qualified attorney can assist you with drafting the necessary language to ensure your executor has access to your digital assets.

Protecting your digital assets is essential for maximizing the benefits of your estate plan and ensuring your wishes are honored.