Proper estate planning is essential for managing finances and ensuring that a person’s assets and final wishes are handled correctly upon passing. While often associated with older generations, estate planning for Millennials is important. Learn about the benefits of estate planning and find out why it is not just for the wealthy or older adults. If you would like to learn more about these estate planning options, please consider scheduling a consultation with Shepherd and Long, PC, by calling (865) 982-8060.
How Many Millennials Have an Estate Plan?
Born between 1981 and 1996, Millennials have faced a combination of financial challenges unique to their generation, characterized by a perfect storm of student loan debt, a tough job market, and unequally distributed recovery from a massive early-career recession. As a result, Millennials have been less proactive regarding long-term financial planning than their parents’ generation, especially estate planning. However, estate planning is not only for older adults or the wealthy, but is a vital step for anyone who wants to take care of their loved ones and ensure that their wishes are followed.
Despite having fewer assets than other generations, as highlighted by the United States Government Accountability Office, Millennials need estate plans in place for much the same reasons as other Boomers, Gen Xers, and others: to secure their right to pass the assets they do have on to the beneficiaries they choose. Regardless of the size of an estate, if someone dies without creating a valid Last Will and Testament, their assets may be subject to intestate succession laws, resulting in a distribution they might not have approved. Additionally, the absence of designated guardians for minor children or appointed decision-makers for healthcare and financial matters can create confusion and disputes during incapacity or after death.
What Are the 5 Components of Estate Planning?
While a Will is a foundational estate planning document, estate planning for Millennials involves assessing various aspects beyond stating a person’s final wishes. As the American Bar Association outlines, estate planning involves making strategic arrangements to transfer property and assets to family members or other beloved individuals. A comprehensive estate plan incorporates the following five key components:
A Will is the cornerstone of any estate plan. However, this is not the only step in the process. With a Will, an individual can clearly outline their wishes to distribute their assets after passing. A Will can specify which beneficiaries will receive which assets, including:
- Personal belongings
Additionally, a Will allows individuals to name guardians for their minor children, ensuring their care and well-being.
Power of Attorney
In estate planning, it is essential to designate a trusted person with a power of attorney. This document grants them the authority to make financial and legal decisions on the principal’s behalf in the event that the latter becomes incapacitated or unable to handle their affairs. A power of attorney ensures that someone responsible and knowledgeable can manage financial matters, pay bills, and make legal decisions. The person named for power of attorney should be reliable, trustworthy, and willing to manage all aspects of the estate.
A healthcare proxy is another crucial component of an estate plan. Unfortunately, the principal may become incapacitated, causing them to be unable to make their own decisions. A healthcare proxy designates another individual to make medical decisions on behalf of the principal if this person is unable. The proxy ensures that the individual’s healthcare preferences are respected and allows the appointed representative to advocate for their wishes regarding medical treatments and end-of-life care.
A Living Will, also known as an advanced healthcare directive, allows individuals to express their healthcare preferences and decisions regarding life-sustaining treatments and end-of-life care. This document provides clear instructions to healthcare professionals and loved ones, ensuring the individual’s desires are respected in critical medical situations.
Trusts are legal arrangements that facilitate the management and distribution of assets. By placing assets in a Trust, individuals can designate beneficiaries to receive those assets upon their passing. Trusts offer benefits like privacy, flexibility, and potentially reducing estate taxes. They can significantly benefit individuals with substantial assets or complex family situations.
Including all five components in an estate plan helps to ensure comprehensive financial, legal, and healthcare coverage. Each component plays a unique role in safeguarding an individual’s interests, providing for their loved ones, and ensuring their wishes are respected throughout their lifetime and beyond. Consulting with an experienced estate planning professional can help Millennials understand these components in detail and tailor their estate plan to their specific needs and circumstances. If you would like to learn more about estate planning for Millennials, please get in touch with Shepherd and Long, PC.
What Is the Most Common Form of Estate Planning?
With the various estate planning tools available, the form most commonly utilized is the Will. A Will serves as the foundation of an estate plan, allowing an individual to:
- State their intentions for asset distribution
- Designate guardians for minor children
- Name an executor to oversee the administration of their estate
Despite its importance, many Millennials have yet to create a Will, often due to misconceptions surrounding the necessity of estate planning at their age.
What Are the Four Major Components of a Will?
The complexity of a Will may vary somewhat, depending on the extent of the estate, the number of beneficiaries, and whether there are any minor children for whom a guardian must be appointed. With this in mind, however, a Will typically consists of at least these three essential components, with one more in case of testators who are parents to minor children:
This person, named in the text of the Will itself, is responsible for carrying out the instructions outlined in the will. They manage the estate’s administration, including distributing assets, paying debts, and fulfilling legal obligations.
These individuals or organizations are named in the will to receive specific assets or a portion of the estate. The executor is responsible for ensuring that the individuals named receive the assets assigned to them once the estate has completed the probate process.
This section outlines how the individual’s assets, including property, investments, and personal belongings, will be distributed among the beneficiaries. Outlining asset distribution helps to ensure that there are no parts of the estate left out of account once the Will has been probated.
If the individual writing the Will, known as the testator, has minor children, the will typically designates a guardian to care for them in the event of the individual’s death. If the parent of a minor child is leaving some or all of their assets to a minor child, then the Will should also designate a person to be the financial guardian of the estate until the child attains their majority. This individual may be the same as the person named to be the child’s legal guardian, but it is also possible to name separate people to raise one’s child and to care for their inheritance.
Consult With a Tennessee Estate Planning Attorney Today
Despite increasing awareness of the need for estate planning for Millennials, a significant percentage of people in this group still lack the necessary documents to protect their assets and ensure their wishes are fulfilled. Creating a comprehensive estate plan can help protect your loved ones and the assets you hope to leave them. Engaging in estate planning at a younger age can provide peace of mind and safeguard your financial future. If you would like to learn more about estate planning benefits in Tennessee, please schedule an appointment with Shepherd and Long, PC, by calling (865) 982-8060.