Estate planning sounds like something that should only concern senior citizens. After all, it’s a system of making sure that your assets wind up in the hands of your beneficiaries as quickly and easily as possible. And who has an estate these days? The word implies plenty of wealth.

But the fact of the matter is that estate planning is just as important to the young and the less-than-wealthy as anyone else. For one thing, estate planning these days can include the documents that state how you want your medical and financial affairs handled if you’re incapacitated. For another thing, estate planning is just as useful as an insurance policy: it gives you a way to make sure that your family is taken care of in a worst case scenario.

Incapacitation and Powers of Attorney

A ‘power of attorney’ is a document that appoints someone to make decisions in circumstances where you can’t. It can be for relatively simple situations: if you’ll be undergoing anesthesia for surgery, it’s common practice to have sign a power of attorney allowing a relative or friend to make medical decisions for you while you’re under. If you plan out your power of attorney in advance, though, you’ve got more options on how you can limit or divide your power of attorney. In case of accidents, you can also make sure that the person you want making decisions for you will be in charge — rather than the person who legally gets the responsibility (typically a spouse or parent) if you don’t have a signed power of attorney already in affect.

With estate planning, you can also set out directives about how you want to be cared for if you become ill. Living wills and advance directives can help you make sure that you get the type of care you want, no matter what. However, the laws regarding advance directives can vary significantly by state, so you’ll want to be aware of your options in your home state.

Planning Around Children

If you have children, especially young ones, it’s crucial to put at least some sort of estate planning into place. At a bare minimum you can state which friend or relative you want to care for your children in the event you cannot. Depending on who you expect to care for your children, you may also want to set up your estate so that money will be available to cover your children’s needs.

Tools like trusts can make a major difference in how much of your estate may go to taxes, as well as how safe the money you leave to minor children. However, it’s important to consult with a lawyer who can help you through the specifics. If you expect any trouble in how you plan to set up your estate, or you have a blended family, it can be doubly important to work out problems with your estate — long before you can’t make decisions on the matter.

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It may sound morbid, but it’s true: if you’re working on getting your personal finances in order, it’s time to make a will. And every time your personal finances go through a major change, you need to update your will. If you buy a new house, if you have a child, if you pay off all your debt (and that does include mortgages and student loans) — your personal finances are the key constraint to what sort of documents you need to protect your estate.

I’ve heard people — especially young people — ask what a will has to do with personal finances. Odds are that you’re not entirely alone in life: you may be married, have parents, siblings, children, none of whom are going to know where to start tying up your affairs. Furthermore, depending on what you plan to do with your assets in the long run, personal finance and estate planning go hand in hand. If you plan to help out specific family members — usually children, but the laws allow for other relatives as well — you may want to consider setting up a trust or other vehicle to reduce taxes or other personal finance issues.

Having a conversation about estate planning can feel a bit strange — after all, most personal finance gurus tell you to focus on earning money so that you can enjoy life, not think about everything that can go wrong. But talking with your loved ones about how you want to handle your estate is a good first step. You may also want to talk to a financial planner or a lawyer — the laws involved are fairly complicated. Even if you feel competent in doing your own taxes, you may want professional help for estate planning.

There are some issues to consider when planning your estate, beyond how you choose to handle your assets. Decisions that are going to affect your finances, such as your health care and which family members should receive power of attorney if something happens to you, should also be considered. Think about a situation in which you were temporarily incapacitated: do you want a judge to pick one of your relatives to handle your finances, or do you want to pick that individual? If you care, you should take care of that issue sooner rather than later.

I know that the entire thought of planning in the extreme long-term seems morbid at best, but it’s worth taking care of in the near future. And there are ways to make long-term planning pay off in the short-term, if you’re willing to investigate your options.

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