Seventy-eight percent of millennials do not have a will or an estate plan. Youth rarely considers their mortality. But, facts are, young people do indeed die, though young people see less of that than their grandparents. And let’s face it, if you’re in your 20’s or 30’s, the notion of creating an estate plan seems curiously anachronistic. That would be something your grandparents would worry about.
The truth is, many young people are financially cautious because they carry significant student debt, which is perhaps the real reason for delaying major purchases – and another reason why they don’t have an estate plan. A young person with, say, $40,000 in student loans might think he has nothing but debt to leave behind and no real assets.
So, when it comes to millennials, there are other factors involved that tend to make them avoid an estate plan. Though they’re postponing marriage and home purchases, don’t assume it’s because they’d rather spend money on exotic travel locations, buying pets, and vintage memorabilia.
But, reality has a way of changing attitudes and beliefs. Marriage, a first child, and homeownership can change a young person’s ideas about financial and estate planning. And, even when we’re in our 20’s and 30’s, friends and parents can and do pass away. Events of that magnitude can have a deep impact a person’s view of their mortality.
A word of caution: in many states, the estate of a person with no will is decided by the courts. And I assume that’s not what you want.
So, if you’re in your 20’s or 30’s, here are several important points to consider.
Plan For The Unexpected: Get That Will & Estate Plan Set-up
– Draft a will, or set-up a trust with the appropriate representatives or executor named.
– Draft a durable power of attorney who can make decisions on your behalf should you become unable to do so. It’s also important to have a health care advance directive which provides guidance for your medical care if you aren’t able to communicate for yourself.
– Draft your beneficiary designations. This includes the disposition of 401(k) plans and life insurance. Don’t underestimate the value of these assets.
In most cases, student debt might be forgiven at the time of death. But, be aware that federal loans are treated differently from private loans. In many cases, once the debt has been discharged, the estate becomes a positive asset value.
Make a list of your assets. Don’t forget that each one has important emotional, aesthetic, and monetary value.
– Real estate, jewelry, vehicles, and all the items in the home
– Life insurance policies
– Retirement accounts
– Family memorabilia
– Designate what happens to a pet and who is to take the responsibility.
This is one of the most complex areas of estate planning and goes beyond the scope of this article. Still, I urge all my clients to set-up a detailed digital assets estate plan. This will help family members and the executor understand the extent of your digital assets and how to access them. Conduct a complete inventory of all your digital assets. List every email account, social media account, online bank accounts, YouTube, Amazon, CD, DVD, music and video libraries, etc. For more information, read my blog post about digital asset estate planning.
It might not be a pleasant thought to consider your mortality. But, by setting up a well-planned estate plan now, you will have established a legacy for your family, friends, and loved ones. You win. They win.
Let me know how I can help.