Unfortunately, it's entirely possible to die young. The leading cause of death for millennials is accidents or unintentional injuries. Wouldn’t you want to spare your family members the added stress of locating your financial accounts or bearing responsibility for your debts at the same time they are dealing with your death? Here are four simple steps to protect your loved ones:
- Check the beneficiaries on all your accounts. You probably can go online and change account beneficiaries. Let your beneficiary know what he or she is inheriting and where the account is located. Something like, "Hey, you'll be inheriting my 401(k) and here's the information on the sponsor of my company plan," would be good. You can also put beneficiaries on your bank accounts and other investment accounts with Payable on Death (PoD) and Transfer on Death (ToD) designations. Review your designations periodically for any updating after major life events like a marriage, the birth of a child, or divorce.
- Try to Avoid Probate. Probate is where the authenticity of your will is determined, your debts and taxes are paid, and your heirs are given your belongings according to your wishes in your will. Placing beneficiaries on accounts keeps that money out of probate while saving you unnecessary fees because the money goes directly to your beneficiary.
- Get a basic will! Creating a basic will is relatively easy and inexpensive. Your will should detail who is to receive various assets and should also provide guardianship for children and care for your pets.
- Consider life insurance if you have co-signed student loans. Student loans may be a real curse, but it can quickly be transferred to your parents if they co-signed on a private loan. Federal student loans are usually discharged in the event of the death of the borrower, but private loans aren't always discharged. If your parents or anyone else co-signed on a student loan with you, you should have life insurance that at least will cover the loan. Set up the life insurance policy with the person who co-signed on your loan as the beneficiary. You also should have both life insurance and a will if you have children or other dependents who rely on your income.
This kind of planning can be awkward, but get over it. Even if you have only a few hundred dollars in a savings account, those funds should land in the hands of your family and not in probate. Take the time to be prepared for the worst case scenario.
Reference: Forbes (May 31, 2016) "Here's How To Financially Prepare For Your Death While You're Still Young And Unmarried"