Will and/or Trust
Millennials may not have accumulated as much wealth as older Americans, but it is important for them to make sure that their assets will go to the family members or loved ones they have chosen at their death. If they do not have a will or trust, their assets will pass to the person designated by the state intestacy statute, which may not be the person they would want to inherit their prized possessions and money. In addition, if they are married and have young children, they need to take steps to ensure that their spouse and children are provided for. A trust is often the best solution: If their spouse inherits their money and property outright under a will and the spouse eventually remarries, it could go to the second spouse instead of their children. In addition, the inheritance will be vulnerable to claims made by the spouse’s creditors. A trust can avoid these results by allowing to choose who receives their property and money, as well as the timing and size of the gifts the beneficiaries receive.
- Pet trust: Many millennials, especially those who live in large urban areas, are choosing either to delay having children or to remain childless. Many of those childless millennials adopt pets who become as beloved and doted upon as if they were children. Those clients, especially if they are single, should consider a pet trust to provide for their pet’s care if something happens to them. This can include if the client dies or is physically unable to care for the pet themselves. The pet trust can not only specify a caregiver for their pet, but also provide care instructions and set aside funds sufficient to care for the pet’s needs (medical care, grooming, exercise, etc.). If a substantial amount of money is being left for the benefit of the pet, an additional person can be appointed to solely manage the money.
- Charitable remainder trust: Millennials are well known for being socially conscious and wanting to make a positive difference in the world. If a millennial want their money and possessions to support a charitable cause when they pass away, they may be interested in establishing a charitable remainder trust, which enables them to benefit from a stream of income for their own life, with the remainder of the assets in the trust going to a charity they have selected upon their death.
Planning for Student Loans or Credit Card Debt
As the cost of college tuition continues to increase, the level of debt millennials have begun their adult lives with is startlingly high. The average student loan debt of adults aged 25 to 34 is $33,000 per borrower. Federal student loans typically are forgiven upon the borrower’s death, but the estates of borrowers who obtained private loans can be pursued by those lenders. In addition, high credit card debt is prevalent among millennials. Life insurance sufficient to cover income tax on the cancellation of debt in the case of a federal student loan, or to cover the debt itself if a student loan is owed to a private lender or if money is owed to a credit card company, may be a good solution for millennials who are concerned about the burden their debt could place on their loved ones upon their death.
Millennials have typically amassed a much greater quantity of digital assets than members of previous generations. These assets may include social media accounts, blogs, photographs and videos, financial accounts, and email accounts, among many others. A comprehensive list of these of these assets, which may be among their most prized possessions, as well as the accompanying usernames and passwords, and instructions for their management, is essential to ensure that their wishes are honored if they pass away or become too ill to manage them on their own. Depending upon an individual’s wishes, they can appoint a separate person to wind up (or continue managing, e.g., in the case of a blog) these assets and accounts, or they can choose to have their executor or trustee handle this aspect of their estate. The list, which can be incorporated into their other estate planning documents by reference, should be stored in a secure place along with their will and/or trust.
Powers of Attorney
- Medical power of attorney: Young adults may not realize that their parents no longer automatically have the right to make medical decisions on their behalf if they become too ill to make them or if they are unable to communicate their wishes. Even if they are married, their spouse still needs to be properly designated using a medical power of attorney in order to make decisions for them. It is also important to designate a trusted person to act on their behalf if the spouse is unavailable. If they fail to designate a trusted person to make medical decisions for them if, e.g., they are in an automobile accident and are unconscious, a court proceeding may be necessary to appoint someone to fill that role. Millennials should also consider completing a living will spelling out their wishes regarding medical treatments they want–or don’t want–at the end of their life or if they are in a persistent vegetative state.
- Financial power of attorney: Another document that is essential for an individual’s care if they were to become unconscious or too ill to make their own financial decisions is a financial power of attorney. It allows the person they have named to pay bills, take care of their home, manage their accounts, and make other money-related decisions. Even for individuals who are married, a financial power of attorney is important because any bank accounts or other property that are not jointly owned cannot be managed by the spouse without it—unless the spouse goes to court and asks to be appointed as their guardian, causing unnecessary stress in an already distressing situation. A financial power of attorney can also be helpful for those millennials who do a lot of international travel and may occasionally need someone to handle financial matters while they are out of the country.
Many millennials may be mindful of their estate planning needs, however they are waiting until they are older with more established careers and families to take any action regarding their planning. Regardless of whether they have accumulated much money or property, an estate plan is crucial, not only for the well-being of their families, loved ones, and pets, but also to put plans in place in case they become ill or are severely injured and cannot make medical and financial decisions for themselves. It is beneficial for millennials to educate themselves (or with the assistance of a financial advisor) about the benefits of planning ahead and the increased stress and heartache that their loved ones will likely face if they become incapacitated or die without a comprehensive estate plan.
As always, we are here to guide you through the decisions of estate planning for individuals of any age. If you or a friend or loved one are considering estate planning for the first time, or are in need of updating an existing plan, please do not hesitate to reach out to us by phone at (617) 716-0300 or by sending us a message to set up a time to discuss this with you.