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Estate Planning for Millennials: Your Post-Grad Checklist

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.

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Getting into Real Estate in Your 20s

What younger generations should consider before buying their first home

While millennials aren’t buying at the rate previous generations were at their age, they still contributed $514 billion to the housing market last year, and are the largest group of homebuyers in the United States, according to Zillow. While some young people aren’t buying homes because of affordability issues, others are looking at a home as an investment. If you’re in your 20s and hoping to buy a home, whether for investment reasons or otherwise, here are some things to keep in mind.

Preparing to Make the Investment

There are a few things all young people should think about before buying their first home. Start with a stable career in a location where you want to live, minimal debt, and prepared for the differences between renting versus owning, including being mentally prepared for the tough parts of owning a home, like mowing your own lawn and handling any needed repairs. Having a solid nest egg of savings is a step in the right direction. However, if you’re struggling to pay down debt, your financial efforts should go toward bringing debt down and your credit score up before thinking about a mortgage. One exception is student loan debt, which doesn’t typically count against you when buying a home.

Building Equity

The Washington Post reported that 85% of millennial buyers viewed their home purchase as a good financial investment. Millennial buyers are also looking into more affordable neighborhoods, which because of their investments could become expensive, more desirable neighborhoods in a few years. In the post-recession climate, many millennials are approaching real estate as a way to build wealth, without the risk.

Apply for a Loan

If you’re ready to buy in a certain area, get to know the market and figure out what you can afford. Start by getting prequalified for a mortgage so you have a realistic idea as to budget. This mortgage calculator from Bankrate can help you see what monthly payment you can realistically afford. Next, LendingTree can help you shop around for different lenders to see who has the best rates.

People in their 20s might want to consider an FHA loan, where they only have to put 3.5% of the purchase price down on a home. FHA loans are issued by lenders who are federally qualified, and they’re insured by the Federal Housing Administration. That insurance helps lenders offer a better deal, and enables those who can’t make large down payments to still be able to buy a home.

Buying a home is a big investment, but for those who feel settled and are financially prepared, it can make more sense than renting. If you think you’re ready to purchase a home in your 20s, the lawyers at Anselmo Lindberg & Associates can help walk you through the process.