Why Estate Planning is Essential for Millennials
Millennials currently make up one fourth of the US population and are projected to soon surpass Baby Boomers as the nation’s largest living generation. Millennials also represent more than one quarter of the U.S. workforce with this number expected to grow to over fifty percent by the year 2020. Millennials are set to inherit or otherwise acquire over $30 trillion in assets in the coming decades - something they should plan to protect!
There is some disagreement on how to define a “Millennial”, otherwise known as Generation Y. Some sources agree that Millennials are the generation born between 1982 and the early 2000s; other sources define a Millennial as someone born as early as 1978 or as late as 1985. Regardless of the generational cutoff date, Millennials are those who are in their twenties or thirties at present.
There is often a misconception that estate planning is only necessary for those of us who have a lot of assets, have young children, or the very wealthy who are planning to help minimize potentially adverse estate tax consequences through complex documents. Estate planning is essential for Millennials too!
Many Millennials are just starting their careers and have sizable student loan debt. They may or may not be married, have children, own real estate, or own other tangible assets. The purpose of estate planning for Millennials isn’t to plan for their sizable estates. Instead, it is meant to ensure that if they pass away unexpectedly or if they are so badly incapacitated they cannot decide for themselves, that their wishes will be followed.
Millennial estate plans should include:
A Will. Even if a Millennial doesn’t have much, they still probably own something, be it a bank account or two, a vehicle, life insurance, or digital property like blogs, websites, or social media accounts. A will allows you to direct where these items are intended to go. For Millennials with children, a will also provides a mechanism by which to name a guardian for minor children.
A Health Care Directive. A health care directive summarizes your treatment preferences in case you are so badly hurt, you cannot make decisions for yourself. A health care directive also informs your loved ones of your wishes in case of incapacity so you don’t have a situation where your family is at odds with your significant other over how aggressive your medical treatments should (or should not) be.
A Financial Power of Attorney. A financial power of attorney ensures that you have someone you can trust to make financial decisions on your behalf if you are unable to do so. A financial power of attorney can also be a valuable tool if you are traveling and unable to pay bills or complete other financial transactions while away.
These documents are simple and relatively inexpensive to prepare. Executing a properly prepared estate plan sooner rather than later can provide Millennials with freedom and control over their affairs, along with peace of mind for their loved ones.