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Estate Planning for Millennials: Don’t Take Unnecessary Risks

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Estate Planning for MillennialsMillennials, or Generation Y, are now between 25 and 40 years old. According to a survey by Caring.com, less than 30 percent of Americans in this age group have estate plans in place.

While it’s true that people in their 20s, 30s, and 40s don’t usually pass away, it happens every day. In light of this reality, estate planning is important for everyone, estate planning for millennials with families is absolutely essential.

Let’s explore estate planning for millennials in detail so you can go forward with a foundation of good information.

Child Guardianship

One of the most critical aspects of estate planning for millennials with children is naming a guardian. If something were to happen to you and your spouse, who would take care of your children?

By naming a guardian in a will, you can ensure your children are cared for by someone you trust. This decision gives you peace of mind knowing that your children will be in good hands if the unexpected occurs.

Financial Security

Most young married individuals contribute financially to their families, so the loss of one income can have a devastating impact. This potential scenario should motivate you to take action if you don’t have an estate plan.

Life insurance is a vital component of financial security. Term life insurance is particularly affordable for millennials, as premiums are based on age and the risk to the insurer is minimal.

Life insurance can replace lost income, ensuring your family remains financially stable even if you’re no longer there to provide.

Revocable Living Trust

Your estate plan should include a way to transfer your assets. This can be done through the utilization of a revocable living trust.

A living trust allows you to act as the trustee while you are alive, with a successor trustee managing the trust after your death. This arrangement can be particularly useful if you have minor children, as the successor trustee can manage assets until the children reach adulthood.

If you choose to use a simple will, you can include a testamentary trust. This trust is created after your death and allows the trustee to manage the trust for minors until they can handle their own finances.

Incapacity Planning

Estate planning isn’t just about preparing for death; it’s also about planning for potential incapacity. Without preparation, the state could appoint a conservator to act on your behalf.

This would make you a ward, which is not a very appealing prospect. You can avoid this by designating representatives in advance through durable powers of attorney. These documents remain in effect if you become incapacitated.

You should have two powers of attorney: one for property and one for health care. These documents allow you to appoint agents to manage your financial affairs and make medical decisions on your behalf.

The Health Insurance Portability and Accountability Act (HIPAA) restricts doctors from sharing medical information without patient consent. To ensure your health care representative can discuss your medical condition with your doctors, include a HIPAA release in your estate plan.

For financial decision-making, if you have a revocable living trust, you can name a disability trustee to take over if necessary. This ensures your finances are managed according to your wishes, even if you’re unable to do so yourself.

Final Thoughts

Estate planning is not just for older generations. Millennials have families, financial responsibilities, and potential incapacity to consider. Creating an estate plan addresses these issues and provides peace of mind.

Child guardianship, financial security through life insurance, and careful asset transfer planning are all vital components. Additionally, incapacity planning with durable powers of attorney and HIPAA releases ensures your affairs are managed by trusted individuals if you cannot do so yourself.

By prioritizing estate planning, you protect your loved ones and ensure your wishes are followed. Don’t leave your family’s future to chance. Take the necessary steps to create a comprehensive estate plan today.

Let’s Get Started!

You can call us at 707-769-9975 to schedule a consultation at our Petaluma, CA estate planning office, and you can alternately send us a message through our contact page.

 

 

Bridget Mackay
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