Most millennials will establish an estate plan at some point in their lives. Usually, this is prompted by a significant life event. This may include the birth of a child, the death of a family member, or even purchasing a new home.
These life events are all excellent reasons to consider estate planning. However, many people delay the process due to fear or a lack of time.
You Don’t Know What Will Happen
Many financial advisors recommend starting an estate plan when you become a legal adult. This can be as simple as setting up a savings account to pass on to loved ones or charitable causes when you die.
Millennials are also more likely to want to establish trusts, which hold and manage assets for the benefit of beneficiaries upon their death. These assets can be more complicated and require special attention, as they often come with tax implications that must be considered.
Millennials should think about a power of attorney to allow someone else to make financial and medical choices on their behalf if they become disabled, in addition to creating trusts and wills. While many stereotypes surround millennials, there is no question that they are a significant and growing segment of the population, and they must start planning early and regularly.
You Don’t Know Who Will Take Care of Your Children
When you have children, a significant focus of estate planning is naming guardians to care for them after your death. While this seems like a simple task, it can be complicated. Guardianship can be passed on to siblings, lifelong friends, or even extended family members, which makes it essential to make sure you choose the right person.
Without a will, the courts will name a personal representative to manage your affairs, which may not be who you would have preferred. Additionally, your assets may be distributed according to state law, which could result in a big tax bill for your loved ones.
Best estate planners in Sacramento can help you avoid some of these problems, so it is essential to start thinking about it early. Many individuals do this following a significant life event, such as marriage, childbirth, or losing a loved one. It is always best to consult an experienced attorney if you need help figuring out where to start. They can assist you with creating various documents, including trusts and power of attorney.
You Don’t Know How to Transfer Your Assets
When creating an estate plan, deciding how your assets will be transferred in case of death or incapacity is crucial. Millennials are at a point in their lives where they can make these decisions and set up a plan that meets their specific needs.
For instance, a power of attorney enables you to name a person who, in the event of your incapacity, will be able to handle your finances and legal matters. A living will can also be made, which outlines the kinds of medical care you do or do not want if you are in a persistent vegetative state.
This generation is inheriting wealth at an unprecedented rate, but many need to learn how to pass along that wealth properly. Without an estate plan, your assets may be subject to unnecessary taxes and expenses under state law when distributed to your heirs. You can avoid these issues by creating an estate plan and implementing your plans. Whether you have a small or large wealth, the time to start is now.
You Don’t Know How to Protect Your Assets
Millennials face different challenges and opportunities regarding estate planning than their Gen X and Baby Boomer parents. Despite these distinctions, they must yet construct crucial estate planning papers like a will and trust. This process ensures your wishes are fulfilled during your death or incapacitation.
Many people are inspired to create their plans after experiencing a life-changing event, such as becoming a parent or losing a loved one.
Millennials must also consider their digital assets, including social media accounts, personal photo archives, and online bank account information. Creating an estate plan with a power of attorney will allow millennials to designate someone to manage their digital assets and ensure they are protected after death or incapacitation.
You Don’t Know How to Protect Your Assets from Taxes
While the thought of estate planning might be a little uncomfortable, it’s essential to understand how a will and other documents can help protect your assets from taxes. This is especially true for millennials who may inherit significant wealth from their baby boomer parents.
Furthermore, millennials should consider establishing a living trust to manage their assets while alive.
Many millennials are part of what’s called the “sandwich generation” and are caring for both their children and their aging parents. This increased level of responsibility, in addition to high student loan debt and housing costs, makes estate planning an important consideration. Millennials should speak with an expert estate planning lawyer to learn the best ways to safeguard their assets from the IRS to reduce taxes.