On Mondays, we post a question and answer from a reader. This week's question is about estate planning for someone who is young and single. If you have a question, post it in the comments section.
QUESTION: I am 30 and single. I have a home, with a mortgage and a car with a car payment. I do not have any children. Do I have to have a will? What about life insurance? If so, who should I leave my estate to? My parents?
ANSWER: Estate planning is helpful for anyone. It becomes more complex with a family and wealth. Your situation is fairly simple right now, and the estate planning solutions are, too. First, if you die without a will, state statutes will decide who gets your estate. Basically, a court will supervise the sale of your stuff, pay off any outstanding debts, then pass along the remainder as specified by state law. Probably to your parents.
With a will, the process is similar, but you could specify other beneficiaries if you want. A friend, perhaps, or charities of your choice. You can also nominate who you'd like to oversee the liquidation process (called an executor or personal representative).
Life insurance is different. The beneficiary of a life insurance policy is determined by contract. So, you decide who gets the money in event of your death when you buy the contract, and you can change it in the future. That money will be paid to them directly upon your death. Importantly, the main reason to have a life insurance policy is to care for people who are financially hurt by your death. If you have no children, and your parents don't need assistance, you probably don't need life insurance.
Today, your needs are simple, but they aren't likely to stay that way. As your assets and responsibilities grow, so will your estate planning needs. You should revisit this issues every few years and as life circumstance changes. When you marry of have children, I'd advise a visit with an attorney.