No kids, no house, no major assets? That doesn’t mean you don’t need to start planning for the worst-case scenarios. No one likes to think about something happening to them, but preparing ahead of time can make your life and the lives of those effected so much easier. If you are a millennial but already have kids or significant assets, estate planning should not be avoided. You don’t need a lavish estate to start planning, you simply need a few things. The CGS Team is sharing some information on what millennials can start doing to plan for their estate. Remember that any will or document you set in motion can always be changed.
In the Event of Incapacity
When you’re young, the most likely event is that of incapacity, not death. This could be an injury on the job or an injury from an accident that leaves you incapable of taking care of yourself and your expenses. In this case, the following documents are recommended:
- Power of Attorney for Health Care – This allows the designated person to make health care decisions for you when you cannot. This includes life or death decisions.
- “Durable” Financial Power of Attorney – A regular Power of Attorney ends at incapacity, but a “durable” power of attorney stays place after. It gives a designated person legal authority to manage your finances without court interference.
- HIPPA Authorizations – Gives authorizations to certain people of your choosing for doctors to discuss your medical conditions with those people.
In the Event of Death
While no one is guaranteed another day of life, the likelihood is low for millennials. This doesn’t mean that thought shouldn’t be given. Since most millennials are just starting out on their net worth journey and don’t have much, a simple will can do the trick. The will determines who your assets/belongings should go to. It also determines who can take over your financial decisions. If a will is not created and you pass away, the legal system will decide where your belongings go. This may not be what you want.
Protecting Your Loved Ones
Although it may be a financial inconvenience for you now, there are financial precautions you can take to ensure that your debts and financial setbacks aren’t transferred to your children or those closest to you. Disability insurance is a great option, since disability is more likely at a young age than death. Disability insurance consistently provides you with a certain percentage of your income in the event of incapacity or disability.
This is extremely important if you are the primary source of income for your family. Life insurance is another great option. If you know that your family cannot afford funeral expenses (which can run up to $10,000), a small life insurance policy can help ease that financial burden. Be sure to check your employer benefits, as some companies offer complimentary life insurance.
Related: CGS Podcast Episode #47: Estate Planning with Attorney Crista Hermance
No one likes to think of death or hardship, but it is inevitable. Planning for such events should be done at any age, regardless of how much stuff you actually have. Have you set out a will or trust? What was your experience? Do you have life or disability insurance? Share your thoughts on the importance of such items for young people, we want to hear! Leave a comment below to reply.
5 thoughts on “Estate Planning for Millennials”
I never thought of estate-planning until my dad unexpectedly passed away at a relatively young age without a will. The process is still going on to this day and the law is not how my dad would have wanted things (but how do you prove that?) I now understand the importance of having something in place that says what you want to happen with your things, should you have anything of value. Although I’m young, I do have my wishes laid out.
I’m so sorry for your loss <3 <3
I’m so sorry for your loss as well @baileythebookworm It’s something you never expect to happen, and when it does with no plans laid out, you have to deal with legal issues on top of grieving. My father passed 3 years ago and it hurts to this day, so I know you must be really sad right now. Sending positive wishes your way. <3
Thank you <3 It's definitely been a rough year. There's no easy way through it – I just keep moving forward, and some days that's enough.
My husband died 6 months ago Wednesday, and I cannot emphasize enough how important this article is. He left no will, no instructions, no paperwork that was helpful – and he was an attorney. I never thought that I would be dealing with funeral expenses or estate planning at 26, and I have been fumbling my way through it while coping with my loss at the same time. I wouldn’t wish this experience on anyone.
Thinking about death is never pleasant, but making sure your information and wishes are clear can be an incredible gift in the event that something happens.