Estate Planning Basics for Young Adults: The Documents You Need Now

Estate planning is not just for the wealthy or the old. If you have a bank account, investments, or people who depend on you, you need these four documents now. A basic estate plan takes under an hour and costs under $200.

Nobody in their 20s or 30s wants to think about estate planning. It feels morbid, unnecessary, and like something for rich old people with mansions and trust funds. It is none of those things.

Estate planning is simply deciding what happens to your money, your accounts, and your medical care if something happens to you. Without these documents, your family faces legal headaches, court proceedings, and potentially losing access to your assets for months or years. According to a Gallup survey, only 46% of American adults have a will. Among adults under 30, it is less than 20%.

Your estate planning checklist

Document 1: The will

A will states who gets your assets when you die. Without a will (“dying intestate”), your state’s laws determine who inherits your property, and it may not be who you would choose.

What a will does: Names who receives your assets (bank accounts, investments, personal belongings), names a guardian for minor children, names an executor who manages the distribution process, and can specify funeral preferences.

What a will does NOT do: Override beneficiary designations on 401(k)s, IRAs, life insurance, and HSAs — these pass directly to the named beneficiary regardless of your will. Avoid probate — a will must go through the court-supervised distribution process, which can take months and cost thousands.

Who needs one: Every adult with any assets, debts, or dependents. Both spouses need separate wills. If you have children, naming a guardian is non-negotiable.

Document 2: Financial power of attorney

Names someone to make financial decisions on your behalf if you become incapacitated (serious illness, accident, mental incapacity). Without it, your family must petition a court for conservatorship — expensive, time-consuming, and public.

“Durable” is critical. A regular power of attorney expires if you become incapacitated. A durable power of attorney remains in effect — this is the type you need. Your agent can: pay your bills, manage bank accounts, file taxes, manage investments, handle insurance claims, and make real estate decisions.

Who to name: Someone you trust completely with your finances. Name an alternate in case your first choice is unavailable.

Document 3: Healthcare power of attorney

Names someone to make medical decisions for you if you cannot make them yourself. This is separate from the financial POA. Your healthcare agent can: consent to or refuse treatment, choose doctors and hospitals, access your medical records, and make end-of-life decisions based on your wishes.

This is the most urgent document for young adults without dependents or significant assets. If you are in a serious accident, someone needs legal authority to make medical decisions immediately. Without this document, a hospital may default to whoever presents themselves — not necessarily the person you trust.

Document 4: Living will

States your preferences for end-of-life medical care: whether you want life-sustaining treatment (ventilator, feeding tube, CPR, resuscitation) if terminally ill or permanently unconscious. Guides your healthcare agent and prevents family disagreements.

Specify: Whether you want CPR if your heart stops, mechanical ventilation, artificial nutrition and hydration, aggressive treatment vs comfort care only, and organ donation preferences.

Beneficiary designations: the most overlooked step

Your 401(k), Roth IRA, Traditional IRA, HSA, life insurance, and some bank accounts have beneficiary designations. These pass directly to the named beneficiary when you die, bypassing your will and probate entirely.

This is critical: If your 401(k) beneficiary is your ex-spouse from 10 years ago, they receive the entire balance when you die, even if your will says everything goes to your current spouse. Courts consistently uphold beneficiary designations over wills.

Action items: Log in to every financial account and verify beneficiary designations. Name primary AND contingent (backup) beneficiaries on every account. Update after every major life event: marriage, divorce, birth of a child, death of a named beneficiary. Never leave beneficiary fields blank — the account defaults through probate or to the plan’s rules, rarely the outcome you would choose.

How to create these documents

Online legal services (most affordable, sufficient for most young adults):

• Trust and Will ($159 to $599): Will, power of attorney, and healthcare directive in one package. State-specific guided questionnaire.
• FreeWill (free for basic will): Free will creation supported by nonprofit partners. Simple and quick.
• LegalZoom ($89 to $249): Will, POA, living will. Option to have an attorney review for an additional fee.

Estate planning attorney ($500 to $2,000 for a basic plan): For complex situations: business ownership, blended families, property in multiple states, estates above $13.61 million, or if you want to set up a trust to avoid probate.

When to update your estate plan

• After marriage or divorce: Update wills, beneficiaries, and POAs immediately
• After birth or adoption of a child: Name a guardian, update beneficiaries
• After buying a home: Add the property to your estate plan
• After moving to a new state: Estate laws vary by state; documents may need updating
• Every 3 to 5 years: Review even if nothing major has changed

Frequently Asked Questions

I am in my 20s with no kids and few assets. Do I really need an estate plan?

Yes, at minimum for two documents: a healthcare proxy and a living will. These are not about money — they are about who makes medical decisions if you are in an accident and unable to speak for yourself. Without them, a hospital may ask whoever presents themselves, and a court may need to get involved in time-sensitive situations. At minimum, also check and update beneficiary designations on any 401(k) or IRA you have open. A basic will through FreeWill takes 30 minutes and is free. The full estate plan — will, financial POA, healthcare POA, living will — takes under an hour through an online service and costs under $200. Do it this weekend.

What is the difference between a will and a trust?

A will goes through probate (court process). A trust avoids probate and can provide more control over when and how assets are distributed — for example, children receiving inheritance at 25 instead of 18, or assets being managed for a beneficiary with special needs. Trusts are more complex and expensive to set up ($1,000 to $3,000+) but offer significant advantages for larger estates and specific distribution preferences. For most young adults with under $500,000 in assets and straightforward family situations, a will plus well-maintained beneficiary designations achieves most of the same goals without the cost and complexity of a trust.

Does my spouse automatically inherit everything?

It depends on your state’s laws and how assets are owned. In community property states (California, Texas, Arizona, and others), spouses generally inherit community property. In common law states, the spouse’s share depends on whether you have children and what the state’s intestacy laws say — in many cases, children may receive a share that was intended for the surviving spouse. A will ensures your spouse receives exactly what you intend. Joint accounts and accounts with your spouse named as beneficiary pass automatically. A will is especially important for assets held in your name alone.

What happens to my student loans if I die?

Federal student loans are discharged upon death — your estate and family do not inherit them. Private student loans depend on the specific lender’s policies. Some private lenders discharge loans on death; others may pursue the cosigner (if there is one) or file a claim against the estate. The estate would not typically be pursued beyond its actual value for most borrowers. If you have a cosigned private loan and a cosigner is still living, the cosigner may be held responsible. Check your specific lender’s policy if this is a concern for your family.

What is probate and how do I avoid it?

Probate is the court-supervised process of distributing your estate after death. It validates your will, pays creditors, and distributes remaining assets to heirs. It typically takes 6 to 18 months, is a matter of public record, and can cost 2 to 5% of the estate in legal and court fees. You can avoid probate by: naming beneficiaries on all financial accounts (they pass directly, bypassing probate), holding property jointly with right of survivorship, creating a revocable living trust, and using payable-on-death (POD) or transfer-on-death (TOD) designations on bank and investment accounts. For many young adults with straightforward assets, proper beneficiary designations alone avoid probate for the majority of their wealth.

Can I write my own will without an attorney?

In many states, yes — either through an online service or a handwritten (holographic) will. However, DIY wills have specific execution requirements (witnesses, notarization rules) that vary by state. An improperly executed will is worse than no will because it creates a false sense of security while being potentially unenforceable in court. Online services like Trust and Will, LegalZoom, and FreeWill generate state-specific documents that guide you through proper execution requirements. These are reliable for standard situations. Handwriting your own will without an online service is the riskiest DIY option and is not recommended. An attorney is warranted for complex situations: blended families, business ownership, property in multiple states, or estates above $1 million.

How often should I review my estate plan?

Review your full estate plan (all four documents plus beneficiary designations) after every major life event: marriage, divorce, birth of a child, death of someone named in the documents, purchasing a home, significant change in assets, or moving to a new state. Also do a calendar-based review every 3 to 5 years even if nothing major has changed — estate laws evolve, your financial situation shifts, and relationships change. The most common problem is an estate plan that was complete at the time but was never updated: ex-spouses still named as beneficiaries, outdated guardianship designations for children who are now adults, or powers of attorney naming people who have since died or become estranged.

The bottom line

Estate planning is not about death. It is about protecting the people you love and ensuring your financial life is handled according to your wishes. Four documents plus updated beneficiary designations cover the essentials for most young adults.

A basic estate plan through an online service takes under an hour and costs under $200. Use the checklist above to track your progress. This is the most important financial task most people keep putting off.

Related reading:

• Making sure your accounts are set up correctly? Read our 401(k) guide and IRA guide — both include guidance on beneficiary designation best practices.
• Wondering if you need a financial advisor for this? Read our financial advisor guide — estate planning complexity is one of the clearest cases where professional advice adds value.
• Planning for the full financial picture? Read our financial goals by age guide — estate planning fits into the broader decade-by-decade wealth building framework.