Estate Planning for Millennials
By: Sam Skorepa
92% of adults under the age of 35 do not have a Will.
That is a staggering statistic, collected during a 2011 Harris Interactive survey, which begs the question – Why?
There are many reasons why you may not engage an attorney to draft an Estate Plan. Cost, lack of assets, and no spouse or children are some of the rationales I have heard in the past. However, in my experience, young people most commonly say they do not feel they need a Will and Estate Plan because of their age and station in life. In reality, nothing could be further from the truth and, in most instances, those are the very reasons why young people absolutely need an Estate Plan. My goal with this post is to dispel some of the common misconceptions about Estate Planning and provide insight specifically for the benefit of Millennials. If you’re not a Millennial, don’t stop reading. Read and then forward to all your Millennial friends.
You’re not immortal.
No one likes to think about death, especially Millennials who are more concerned with making plans for their future. But death is a reality, and as difficult as it is to come to terms with, dying young and ill-prepared is an all-too-common reality. Instead of ignoring your mortality, the better approach is to confront it and plan accordingly. Individuals in their 20s and 30s are going through many life changes (first job, marriage, house purchase, kids, etc.), so Estate Plans can be very general in nature, but that does not lessen their importance. You should make it a priority to ask yourself the difficult questions, share those thoughts with your loved ones and family, and engage a professional to prepare the necessary documentation. This not only protects your wishes but also protects your loved ones from having to make difficult decisions under tragic circumstances with no idea what you would have wanted.
Who’s going to look after your kids (assuming you have them!)?
For Millennials with children, have you discussed who will look after and care for your children in the event of an unexpected illness or death? This is perhaps the most important reason for parents with young children to have an Estate Plan and there are a lot of things to consider. Which of your family members are best suited to care for young children? Are they willing to step into this roll? Should your kids be removed from the comfort of their environments and school to an unfamiliar place? Included in your Estate Plan will be clear provisions for your choice as guardian of your children. If you do not have an Estate Plan, the state and court system will determine what is best for your kids without any direction from you in a process, which can breed disharmony among your surviving relatives. The need to protect your children and your loved ones with carefully thought out planning cannot be overstated.
Keep your family from worrying.
As I alluded to several times above, an Estate Plan is just as beneficial for your family as it is for you. Having a plan in place and discussing the impact your Estate Plan will have during an illness or after your death is extremely helpful in relieving some burden from your loved ones who will be forced to make tough but necessary decisions in the absence of an Estate Plan. Sharing your Estate Plan will also temper any expectations from your family. In selecting an Executor of your Estate, or Agent for medical or healthcare decisions, choose individuals you can trust to carry out your wishes as instructed. Many individuals choose their spouse or children to serve in these roles, however, Millennials may not have either. In that case, choose a parent, sibling, or close friend. Choosing a neutral trusted party may also avoid the appearance of favoritism or remove the potential for family strife. You almost certainly would not want to leave these decisions up to chance, or possibly having someone appointed by the court who will not honor your wishes.
What about your property?
“What property? I am in my mid 20s and rent an apartment, I don’t have anything to distribute!” I hear that response quite frequently. But what about retirement assets or group life insurance provided through your employer? How about your personal property, including your car, home furnishings, and digital assets (more on this later)? Maybe you are an owner in your family business or maybe you have a non-traditional family. Regardless of the amount of assets you have, clearly identifying who you want to receive what is critical. Absent an Estate Plan, those decisions will be left up to the State and Court system, in which case your assets may end up in the hands of someone other than those you intend. If you are an owner in the family business, an Estate Plan can provide a solution allowing the family business to pass to the next generation. Whatever your situation is, having an Estate Plan will help to avoid costly conflict among your beneficiaries to determine what your intentions were.
Digital Assets? What are those? As Millennials, our online footprint may be larger than any other generation. Believe it or not, things like online music, photos, videos, email, account information and passwords, online businesses, PayPal and Bitcoin currency, etc. are assets that need to be addressed. You might be asking yourself, do these really count as assets or what value could they possibly have? A 2011 McAfee study answered those questions and found that the average online user has more than $37,000 in unprotected assets. Protecting those assets and providing access to those assets should be discussed and included in your Estate Plans.
It isn’t that costly (when considering the benefits).
Estate Plans are individualized and the cost can vary depending on your assets (both amount and type), family situation, and wishes. However, basic Estate Plans (which are most typical for Millennials) can be relatively inexpensive, especially when you consider the benefits. Having an Estate Plan will provide peace of mind to you and your family in the event of a tragedy, a time when clarity is paramount.
Now that I have convinced you of the benefits of having an Estate Plan, here is a list of documents and things to consider before engaging a professional to assist with your individual Estate Plan:
Documents that make up a basic Estate Plan:
- Financial Power of Attorney
- Healthcare Power of Attorney
- Living Will
- Think about who you would leave your assets to if you were to pass away tomorrow. That could be your family, friends, or charitable organizations.
- If you have children, speak with the other parent and jointly decide who you would like to become guardians of your children in the event you both unexpectedly pass away.
- Choose individuals or a Bank and Trust Company that you trust to serve as Executor and/or Trustee of your assets.
- Once you have a plan do not keep it a secret. Discuss the plan with your family and more specifically those individuals that you name who will be responsible for making medical or financial decisions in your place.
Sam practices primarily in estate planning, probate & trust administration, and real estate law at Lane & Waterman, and was recently named partner. Learn more about his work at https://www.l-wlaw.com/attorneys/samuel-j-skorepa/.