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5 Estate Planning Considerations for Millennials
The Millennial generation is the largest generation in the U.S., with a population of about 73 million. The generation encompasses individuals born between the years of 1981 and 1996, which now puts the oldest Millennials well into their 40s. No longer the youngest generation, a sizable cohort of Millennials have now gotten married, had children, bought houses, started businesses, and obtained inheritances. Economists are also planning for a so-called “Great Wealth Transfer,” through which Baby Boomers — the wealthiest generation — will pass an estimated $84 trillion to younger generations by 2045. Given that Millennials are in the process of building significant wealth and are poised to continue doing so, now is the time for them to start making plans for their estates, and our Springfield estate planning attorneys can help.
Action Items for Creating an Estate Plan
1. Use Trusts for Probate-Free Transfers
Trusts are one of the most common and versatile estate planning instruments available. With a trust, the person who creates the trust (the grantor) transfers money, property, and other assets to another person (the trustee) to be held and managed for the benefit of one or more third persons (the beneficiaries). Through the trust instrument, the grantor leaves specific instructions on how the trust is to be managed. Trustees, in turn, are legally obligated to follow the grantor’s instructions and to act in the best interests of the trust’s beneficiaries.
Trusts offer a number of benefits, including:
- Avoidance of probate — a potentially costly and time-consuming process required for the administration of wills
- Distribution of assets to beneficiaries in installments rather than in a lump sum
- Protection from creditors
- Customization of how your wealth is distributed
- Minimization of certain taxes
- Preservation of eligibility for needs-based government benefits
There are many different types of trusts, but all are split into two primary varieties: revocable and irrevocable. Revocable trusts allow the grantor to make changes to the trust at any time after they are created, while irrevocable trusts generally disallow modification after creation (although there are exceptions). While irrevocable trusts are less flexible than revocable trusts, they offer certain benefits that revocable trusts do not. A Springfield estate planning attorney can help you decide which type of trust is right for you and your family.
2. Also Consider a Will
A last will and testament (typically known as just a “will”) is a basic estate planning document that gives the person who creates it (the testator) near-total control over the distribution of their estate upon their death. While wills are one of the most comprehensive estate planning documents available, they generally are less flexible than trusts, and they are required to go through the probate process. However, if you have children, you may name a guardian for your children in your will (more on planning for children below).
3. Plan for Incapacity
An estate plan is not only about what happens to your assets when you pass away. It also encompasses what you want to happen to your body and your assets while you are alive but unable to communicate your wishes due to incapacity. As such, one of the most fundamental components of a comprehensive estate plan is a durable power of attorney. This is a document that allows you (the principal) to delegate certain powers to another individual (the attorney-in-fact) to make decisions for you if you are unable to do so. Powers of attorney can encompass financial matters and healthcare matters. These instruments are referred to as “durable” because they continue in force even if you become incapacitated.
Regardless of your age, you might also want to consider executing a living will (also known as a “physician’s directive” and “advance directive”). This document allows you to specify what type of medical care you do and do not want to receive in the event that you become terminally ill or incapacitated. For example, it can encompass issues such as whether you want to be placed on a mechanical ventilator, feeding tube, or other forms of artificial life support.
It goes without saying that you should choose a person you trust to serve as attorney-in-fact in both financial and healthcare matters; our Springfield estate planning attorneys can help you identify ideal candidates.
4. Plan for Your Children
If you have children, your children will play a central role in your estate plan. At the most basic level, ensure that your estate plan makes adequate provisions for your children by naming them beneficiaries in your trusts and/or will. If your children are minors — as most children of Millennials currently are — you should also name a guardian for them in your will. A guardian is a person or persons you designate to care for your children in the event that you and the children’s other parent die or become incapacitated at the same time and are no longer able to care for them. Please contact a Springfield estate planning attorney for more information about estate planning for young families.
5. Don’t Forget Your Digital Estate
Your estate encompasses much more than your physical assets. As the first generation to have grown up in the internet age, Millennials often have extensive digital estates in addition to their physical estates. A digital estate encompasses passwords, email accounts, bank accounts, social media profiles, photos and videos, text messages, blog posts, domain names, cloud storage accounts, cryptocurrency keys, and virtually all other assets that make up your online life. Millennials should consider appointing a “digital executor” in their estate plan to handle their digital assets.
Plan for Your Future Now With Help From a Springfield Estate Planning Attorney
It is never too early to start to plan for your and your family’s future. To get started on creating an estate plan that works for you, please contact a Springfield estate planning attorney at LifeGen Law Group by calling 417-823-9898 or using our online contact form.