5 Financial Documents You Should Have Drafted Before Your 30s
While many Americans spend their 20s living day-to-day in a relatively carefree manner, approaching 30 years of age can potentially bring a new set of life goals, such as buying a home, starting a family and advancing your career.
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At 30, you’ve likely already started thinking about your financial future, but you still have a long road ahead of you. As you enter your 30s, there is some financial paperwork that you should legally create.
As Care.com noted, there are four legal documents that every adult should have drafted, regardless of age. These include a will, a living will and financial power of attorney. Let’s take a look at these, as well as other important documents you should have established before you turn 30.
What Financial Documents Should You Have Before You Turn 30?
1. Last Will and Testament
A will is a legal document that outlines instructions for what should happen to your assets after your death. Without creating a will and designating beneficiaries, your state’s laws will dictate how to distribute your assets, and your estate may have to pay a death tax. Bear in mind that your will expresses your estate wishes at the time you craft it, but it should be reviewed and updated throughout your life.
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2. A Living Will
According to the Mayo Clinic, a living will, also known as an advance directive, is a document that outlines what medical interventions and financial decisions you would or would not like used to keep you alive (or performed) in the event of potential death, permanent unconsciousness or the inability to make decisions about emergency care on your own.
3. Power of Attorney
Trusting powerful authority to family members and licensed professionals will give you peace of mind as you begin a new chapter in your life. But you never know when you may become incapacitated and unable to make legally binding decisions on your own.
Power of attorney (POA) is a legal document through which you appoint someone a grant of authority to make those decisions, whether financial or health-related (a health care proxy). If POA is durable (as opposed to temporary), it will remain in effect until you revoke it or become incapacitated for any reason.
4. Insurance Documents
If you own a car and a house, insurance is mandatory and highly recommended, respectively. Mortgage lenders will require home insurance to protect your property and personal belongings. Having adequate health and life coverage insurance is something to think about as you enter your 30s, especially if you’re already married or have a family.
5. Child Protection Plan
Time flies. One day you’re running around free and easy like a kid, the next you’ve got one. Although it’s common to state guardianship directives in your will, a separate child plan provides an extra layer of protection. As the Peters and Associates law firm wrote — via KTNV Las Vegas — a child protection plan “allows you to name short-term guardians if you’re ever sick and unable to care for your children temporarily.”
Additionally, “Having a guardian named in your Last Will & Testament is not sufficient to prevent your child(ren) from spending time in the care and control of Child Protective Services under these types of situations,” Stouffer Legal, specialists in estate planning and elder law, stated.
It goes without saying that you should keep all these types of documents in a safe place along with any other important legal papers you store — mortgage forms and property deeds, tax returns, employment retirement plans, birth certificates and important personal, health and financial documents.
If you don’t have these legal documents drafted yet, that’s okay. You still have a lot of time to think about them. However, life’s major events and tragedies have a way of happening without notice. Having your financial and estate-planning intentions legally bound and organized will ensure your loved ones aren’t left scrambling if you become unable to communicate your wishes or pass away.
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This article originally appeared on GOBankingRates.com: 5 Financial Documents You Should Have Drafted Before Your 30s
