Blog | Generational Money

Estate Planning for Millennials. [Yes, you need a plan.]

It’s time to change the perception of estate planning. It’s not just for the rich, or the Boomers, or the family of five down the street. Estate planning is something millennials, and really all legal adults, need to consider.

Like many other millennials, you may be busy focusing on work and paying off student loans, delaying marriage, having kids, or buying a home. But one thing you shouldn’t put off any longer is the bare essentials of an estate plan.

Even if you’re single, healthy, and your financial net worth is in the red, you’ll want to put a few legal documents in place to protect you and your future. 

Then you can continue focusing on debt elimination, building your wealth, protecting your family, and creating the legacy you want to leave behind.

You might hear many big words or legal speak when the topic of estate plan comes up. But we’re breaking it down so you can start working on your plan today. 

So what is estate planning?

millennial woman holding and viewing a document

Estate planning is not just simply deciding what happens to your estate (all of your assets and possessions) after you die. As a part of financial planning, it includes protecting your money and health and providing for your family.

Equally important, it’s also about making and controlling medical, financial, and other life and death decisions while you can. This ensures your values and beliefs, life lessons and fondest memories, final wishes, and more are known. It also means they’ll be followed and passed on to your loved ones. 

So, no matter your age, job title, or size of your bank account, you’ll want to be familiar with the pieces and process of estate planning. It’s not a one-and-done task. Instead, it’s something that you’ll need to revisit as you age and experience life events such as marriage or parenting.

You might try setting aside the term ‘estate’ and instead think of the process as life planning to help wrap your head around all that it can encompass. 

  • Protecting you and your family through your lifetime and beyond
  • Accumulation of assets to provide for a well-lived life and a secure retirement
  • Building generational wealth and creating a legacy.

What if you don’t plan?

Failing to plan could instead leave you with unmet dreams, empty bank accounts, medical treatments that go against your beliefs, and no control of your finances. It could also mean no say in how your money and property are distributed to others.

Why else should millennials care about estate planning?

Because one day, you may find yourself managing a massive responsibility for someone else. A parent or other family member’s medical treatment, finances, or estate may fall upon you to handle when they become severely ill or injured and suffer from incapacitation or pass away. Understanding the what, why, and how of it can benefit you greatly.

Elements of an estate plan

Here’s a brief overview of the tools you can use to protect yourself and others in your estate planning.

Essentials:

  1. Living Will and Medical Power of Attorney, aka Advance Healthcare Directive – appoints a representative to make medical decisions for you when you’re unable to do so yourself. And documents any of your thoughts about the medical care you would or would not like to receive, i.e., CPR and other life-sustaining measures.
  2. Financial Power of Attorney – names an agent to manage your money, perform financial tasks, and make crucial financial decisions for you during a time when you cannot do so yourself. This may be due to incapacitation from an injury or illness, military deployment overseas, or another matter that leaves you unable to handle your financial affairs.
  3. Prenuptial Agreement – a legal contract made before marriage, between you and your partner, detailing what happens to your property and assets (and liabilities) if you divorce or when one spouse passes away. A Postnuptial Agreement is similar but is created after you are already married.
  4. Last Will and Testament – provides instructions regarding who’ll inherit your money, property, digital assets, and personal possessions upon your death. It includes things like how much each person should get and when they should receive it, whether your estate might owe any taxes at your passing and how they should be paid. A will also names the guardian of any minor children, and details how your pets are to be cared for after you die.

Aside from the list of legal estate planning documents above, some other instruments come into play when it comes to providing protection, determining who gets what of your assets, and guiding your loved ones when you’re gone.

  • Life Insurance – a purchased contract providing a financial payout to a named beneficiary or heirs upon your death.
  • Disability Insurance – short or long-term income protection coverage payable to you if you’re unable to work for income due to a disabling injury or illness.
  • Beneficiary forms – name beneficiaries such as spouses, parents, siblings, adult children, charities, etc., and determine which beneficiary will receive certain types of benefits under your insurance policies, retirement accounts, annuities, trusts, wills, etc.
  • Transfer-on-Death, TOD – allows you to designate someone else to take over ownership of stocks, bonds, real estate, or other investment and financial accounts if you pass away.
  • Payable-on-Death, POD – designates payees for your bank or credit union accounts in case of your death.

Important: The items named above trump what’s written in a will. So it’s worth double-checking (even triple-checking!) that the right individuals are listed on these forms to make sure a life insurance policy payout doesn’t go to an ex-partner. Or to ensure your new spouse isn’t unintentionally locked out of your checking and savings account. 

Bonus elements:

  • Legacy or Ethical will – is your chance to leave behind more than a bank account or life insurance check. Through an ethical will or legacy letters, you can share the non-physical parts of yourself. Who you are and how you lived your life. Tales from your life experiences and where you’ve journeyed. The lessons you’ve learned, how you made a difference in the world, and your hopes and dreams for future generations. You can start this now and add to it over the years.
  • In Case of Emergency Information – a considerable document that spills all the beans…or almost all of them. In it, you’ll share with your partner, sister, or most trusted friend, the bank you use, where you pay the light bill, and what to do with your social media accounts and other digital assets, i.e., photos in the cloud and email accounts. You’ll want to provide the who, what, where, why, and how to manage your household if you no longer can.
  • Trusts – while not necessary for everyone, when your estate grows in size or your personal life becomes more complex, you may want to add a trust document to your plan. They can provide more control and protection for assets. Trust also bypass the probate process, maintain privacy, reduce taxes on estates, and more. Contrary to what you may have heard before, they are not just for the wealthy. Single individuals, blended families, business owners, pet owners, parents of children with special needs, and others use trusts to manage their estates during and after their lifetimes for various reasons. 

Starting Your Planning

No matter if you DIY parts of your plan or use an estate planning attorney, there are some initial tasks you’ll need to check off. (When it comes to estate planning, we do recommend at least consulting with an attorney before you DIY, as laws vary from state to state, can be complex, and are subject to change.)

  1. Establish your life and estate plan goals. What do you want to accomplish? Who do you need to protect? What do you want to leave behind? How will you live your legacy?
  2. Inventory your assets, liabilities, digital accounts, prized possessions, life and disability insurance policies 
  3. Decide on your beneficiaries and heirs and update your beneficiary designations on forms and TOD or POD accounts.  
  4. Determine who you want – and ask if they’re willing – to act on your behalf in financial, medical, and estate matters. And who you would like to be the guardian of your children.
  5. Make notes about decisions for your health care directives – a living will and power of attorney (aka advance health care directive), financial power of attorney, and your last will and testament.
  6. Consider other common documents and parts of the estate planning process, such as a prenuptial agreement or a trust.
  7. Investigate experienced estate planning attorneys in your area and DIY and digital estate plan resources such as Trust & Will, LegalZoom, Nolo, and Everplans. Be sure and check with your employee benefits department to see if you’re eligible for any discounts on legal services.

Accomplishing these tasks will help you navigate the basic estate plans you’ll find online and also prepare you to discuss a more comprehensive estate plan or other estate planning issues with a lawyer.

Begin planning today

You’ll find several estate planning articles here, grab free planning checklists here, or check out the new book Estate Planning 101, From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning.

Evaluating insurance coverages, updating beneficiary designations, preparing your power of attorney documents, and creating an essential will, catapults you into adult life.

Once you have a proper estate plan in place, you can get back to focusing on building your net worth and making a difference because you know everyone and everything is protected. That’s priceless.

Article written by guest contributors Vicki Cook and Amy Blacklock, coauthors of Estate Planning 101 and cofounders of the award-winning personal finance website Women Who Money.

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