Young people often underestimate their assets and don’t realize how useful an estate plan can be — even for those who’ve recently graduated.
Between transitioning from college to the workforce and paying down student debt, estate planning is pretty low on the list of millennial priorities. According to Caring.com, 78 percent of Americans under the age of 36 do not have a will or trust in place. Estate planning is often thought of as something parents do to provide for their children when they’re gone, but there are many reasons estate planning is also important for people who haven’t started a family. Here’s why it’s important for young people and what it entails.
Why Millennials Need an Estate Plan
Estate planning is important at a young age age, in case of an unexpected illness or accident. Having a power of attorney in place to make decisions regarding finances, and having a living will to specify medical preferences if you’re unable to do so are two reasons why millennials should have an estate plan in place. More millennials than ever live with long-term partners, but aren’t married, according to a U.S. Census Bureau study. In some of these situations, it makes sense for the partner to be designated as a power of attorney, rather than having decisions automatically relegated to a family member.
A big part of estate planning is naming a beneficiary. Many young people haven’t had time to accumulate much wealth, but things like life insurance and 401(k) programs can still be designated to someone, such as parents or siblings. Young people’s lives are constantly changing as they forge new relationships, so it’s important to keep beneficiary designations up to date. For example, if you put a friend as your beneficiary, but you recently got engaged, you may want to update it to include your partner’s name.
How Millennials Can Benefit From Estate Planning
While it’s true that millennials haven’t had time to build up huge savings, they often have more assets than they think. Work-sponsored retirement accounts and life insurance policies, cars, jewelry, electronics, inherited items and digital assets are all part of a person’s estate.
If there’s no will in place, family members will often choose what to do with items such as a nice camera or an inherited necklace. If you know you would prefer a family member or friend to inherit these items, a will is the best way to make sure your wishes are met.
Digital assets, which includes everything from social media to online banking, are an important thing to consider, too. Make a list of all your accounts, along with usernames and passwords, and give a trusted family member access to this information. Be sure to also name a digital executor on your will, someone who can make decisions on your assets based on the instructions you’ve included in your will.
Pets are another big area where estate planning makes sense for millennials. You love your dog, and want to make sure it finds a home with someone who will love it just as much as you do. Don’t leave it up to courts or family to decide who gets to care for your beloved pet.
Between finances, medical decisions, prized possessions and pets, there are plenty of reasons for millennials to think about estate planning now, even if they don’t think they need it. It’s always better to be prepared. If you start learning how to manage your estate now, you’ll be more adept at the process when you’re older. The attorneys at Anselmo Lindberg & Associates can tell you more about why estate planning matters for millennials, and get you on track to a more organized, secure future. Contact us today.