According to Caring.com, less than 30 percent of millennials have estate plans in place. You may say this makes perfect sense because millennials are between 25 and 40 years of age, and people simply do not pass away when they are this young.
Indeed, the life expectancy in the United States is 78 years, and an early death is unlikely from a statistical standpoint. At the same time, there is a strong probability that you will not total your car, but you carry insurance to protect yourself even though the odds are in your favor.
Protecting your own interests is one thing, but when you have other people relying on you, the situation is magnified. One thing that many people overlook when they think about estate planning for millennials is the fact that many of these people are the parents of dependent children.
An estate plan becomes an absolute must as soon as you have a spouse or a committed domestic partner, and the stakes are even higher when you become a parent.
The first order of business when you are planning your estate as a millennial will be the nomination of a guardian for your children. You can do this in a simple will, and your nominee would be empowered by the court unless there is some type of red flag in their background.
Most families need two incomes to make ends meet. If one parent dies suddenly, the emotional trauma can be amplified by financial devastation if there is no income replacement vehicle in place.
To account for this, you should carry enough life insurance to ensure your family’s well-being if the unthinkable takes place. The cost should not be a source of concern, because term life insurance is not very expensive if you are relatively young.
There is also the matter of an asset transfer arrangement that will allow for the management of assets on behalf of minor children. If you are using a will, you can include a testamentary trust that would be created after your passing. The trustee that you name in the document would manage the asset in the trust until the children reach the age of majority.
You can alternately use a revocable living trust as the centerpiece of your estate plan, and the same dynamic would exist with regard to the trustee.
A living trust is actually a very effective estate planning tool that will probably be appropriate for the rest of your life. If you establish this type of trust, you would be the trustee while you are living, so you would control the trust and have access to the assets at all times.
You can include a spendthrift provision that would protect the assets from the beneficiaries’ creditors after you die. If you want adult beneficiaries to receive limited distributions on an incremental basis to prolong the viability of the trust, you can set those terms.
Another living trust benefit is the avoidance of probate. When a will is used as an asset transfer device, it is admitted to probate, which is a costly and time-consuming legal process.
Every estate plan should include an incapacity planning component, and advance directives for health care will be part of the equation. You should have a living will to state your choices regarding life-support utilization, and you can add organ and tissue donation designations.
Situations can also arise that are not related to the use of life-support, and you can name a representative to make decisions on your behalf in a durable power of attorney for health care.
Because of a provision contained in the Health Insurance Portability and Accountability Act (HIPAA), medical professionals cannot release health care information to anyone other than the patient.
As a response, you can sign a HIPAA release to give the the representative permission to access the information.
To account for financial matters, you can empower an agent to act for you in a durable power of attorney for property. If you have a living trust, you can name a disability trustee to step into the role if you become unable to manage your own affairs.
Attend a Free Workshop!
We are conducting some workshops over the coming weeks that are going to cover some compelling topics. There is no charge, but we do ask that you register in advances so we can reserve your seat.
To see the dates and obtain registration information, click the following link: Naperville, IL Estate Planning Workshops.
- Roth IRAs Can Be a Great Planning Strategy: Advanced - September 28, 2021
- It’s Important to Have a Coordinated Estate Plan - September 23, 2021
- Longevity Statistics Put Long-Term Care into Perspective - September 21, 2021