5 Things Every Millennial Should Know About Estate Planning

When most people in their 20s or 30s think about estate planning, they assume that is something that their parents or grandparents should be worrying about. “I don’t yet have significant savings, let alone an ‘estate’ to plan for” is the common refrain. However, estate planning is about so much more than the post-death disposition of your assets. Millennials might be surprised just how important estate planning can be, even if you are still young and early in your career. Here are five things every millennial should know about the import of estate planning:

1. Estate planning doesn’t just plan for death – it makes sure your loved ones have the requisite legal authority to help you if you’re sick.

Once you turn 18, unless you have designated someone with the requisite legal authority to make medical decisions for you or represent your financial and legal interests, there may be nobody who can legally assist you if you fall temporarily or permanently ill. Powers of Attorney are documents that come into play when a person is incapacitated and cannot make decisions for themselves. And they are an essential part of every estate plan. There are two types of power of attorney – the Health Care Power of Attorney (also called an Advanced Medical Directive) and a Financial Power of Attorney. These documents appoint a surrogate or agent to act on behalf of an incapacitated individual. Most people – particularly the young and healthy – do not plan on becoming incapacitated. However, sometimes the unforeseen happens and by making sure you have powers of attorney in place, you can have peace of mind that if something were to happen to you, and you were not able to talk to a doctor or pay your bills, you picked the person who can do that for you.

2. You can make it easier for your loved ones to manage your affairs if you become sick.

What if you are sick and your Agent acting under a financial power of attorney needs to pay your bills until you recover? How will your Agent know what your bills are? After all, printed and mailed account statements – let alone checks – are often a relic of the past. Online statements and bill pay is the new normal.

As previously mentioned estate planning is an opportunity for you to review your accounts and your holdings. You will already be thinking about beneficiary designations on file for these assets. You can also use this as an opportunity to organize information about these holdings and accounts.

We encourage our clients to write down your account usernames, passcodes, and other account information and leave a copy with your important documents in a safe place. Or use a password manager and leave information about how to access the password manager with your documents. Create and review your legacy settings on Apple, Google, Facebook, and other platforms. If something were to happen to you, this will allow someone access to your accounts and make sure to cancel all the streaming services that are automatically debiting your bank account during a period when you’re not able to binge your favorite show!

3.  Estate planning is a time to revisit those early career beneficiary designations.

If you’ve ever had a job that offered a pension plan, retirement plan, or disability plan with death benefit, you likely filled out a beneficiary designation form and didn’t even know it. The beneficiary designation designates the individual who will receive the proceeds of an account or asset should you die. In essence, a beneficiary designation acts as a will for a specific account or asset. And notably, the beneficiary designation will trump the terms of your Last Will and Testament if the two are in conflict with respect to a particular asset.

When we work with young clients in estate planning, we review all existing assets and accounts. And we ask clients to look into their beneficiary designations on file. Many of our clients, young and old, have long-ago beneficiary designations still attached to accounts and assets. And for our younger clients, these beneficiary designations may well be from a time before they had a family of their own. It is not uncommon, for example, for a young employee in their first “real world job” to identify a parent or sibling as the pay-on-death beneficiary of a retirement or pension plan. But what about when that young employee grows and takes on a life partner or marries? What about when that young employee has children of his/her own? Has that beneficiary designation been updated? As part of estate planning, you will be encouraged to consider your beneficiary designations for each and every asset and ensure they are consistent with your current estate planning objectives.

4.  Estate planning permits you to select who will be a guardian for your children if you cannot parent.

Perhaps the most critical element of a Last Will and Testament is that it offers you the opportunity to nominate a guardian of your children if you cannot parent the child. This alone is incentive enough for many young families to add estate planning to the “legal to-do list” even if their financial holdings are still modest. Even if you are just thinking about having children or are unsure, you can nominate a guardian for your children or future children in your will.

5. YOU CAN CHANGE IT ALL!

One of the greatest reasons young clients are reluctant to engage in estate planning is the concern that they are locked into these documents. That couldn’t be further from the truth. Powers of Attorney and a Last Will and Testament can be changed in whole or in part at any time in the future.

Maybe you need to update your documents to accommodate a new significant other or spouse in your life.  Maybe you need to update your documents to reflect the birth of children into your family. Maybe you decide that the person you nominated as the guardian of your children in your will is a bit kooky when it comes to their own children. Maybe you’ve come to realize that your parents who you have named as your Health Care Surrogate or Financial Agent are rapidly aging and they aren’t the most appropriate to rely upon any longer.

You aren’t locked into the estate planning documents you have created forever. We recommend to our clients – young and old – to periodically review their planning documents to make sure that it still matches with your life. And the good news is that if changes are required, it can usually be done at a much lower cost than developing an entirely new set of documents.

Are you a millennial who would like to learn more about estate planning? Do you have a millennial in your life who could benefit from some basic knowledge about estate planning? Reach out to estate planning attorney Liz Farley at lfarley@bulmandunie.com or (301) 656-1177 x316 for a free consultation.