Estate Planning for Millennials, Part 2
At Phelps LaClair, with offices in Chandler, Mesa, Phoenix and Scottsdale, we know that every generation has specific concerns and values that need to be addressed with custom, well-designed estate plans. We recently posted an article on estate planning for millennials. In that blog post, we discussed the three big estate questions concerning assets, family and incapacitation. In this post, we want to go a bit further and address estate planning situations that may apply to millennials more than Gen-Xers or Boomers. For us, millennials speak to the future.
Protecting your partner
It seems to be a trend that many millennials are marrying much later than previous generations, if they marry at all. In Arizona, if a childless married person dies intestate (without a will), the assets in the estate will go to the surviving spouse. If the deceased is unmarried but living with a partner, even in a long-term committed relationship, the partner will inherit nothing. The estate will instead go to surviving parents, siblings or other close relatives.
However, if the estate plan includes a will or trust, then the partner can be named as a beneficiary, and will receive whatever has been designated to him/her in the will or trust. In addition, the partner can also be named in both a durable and financial power of attorney. This gives them the authority to make decisions on your behalf if you become unable to make them yourself.
If you are unmarried with children, you will want to name a personal and a financial guardian for them. A trust will ensure that the persons named will have the same rights as parents in raising the children. With a trust, you can also specify at what age and in what manner the children will receive their inheritance. Without a trust, probate court will name a guardian for you. This could be a person that you would not have chosen or desired. A trust provides protection for those you love.
There are financial instruments and accounts that need a beneficiary designation if you want the proceeds to go to specific people, charities or causes. Life insurance policies require a named beneficiary. Retirement and bank accounts often need a named beneficiary as well. Stocks and bonds, along with other investment funds, should also have named beneficiaries. Without a named beneficiary on these accounts, the assets will go through probate and may be distributed contrary to your wishes and values. An excellent way to bypass this possibility is to include these financial accounts in a living trust, where you can be sure that the assets will go to the beneficiaries you have named.
Someone recently said that millennials own the internet. That’s not true! They may be more comfortable using the internet to interact with people, do business and find entertainment, but all of their content on social media must be protected from unauthorized use by others. When a millennial dies, what happens to all of the photos, videos, music and blog posts they have created? What about the apps they have purchased, or airline miles and points they have accrued? Did they have royalties from tech assets or patents? If they were an entrepreneur with a monetized web presence, what will become of the business they left behind? These are all assets with value that should be a legacy left to others. It’s not strictly a millennial problem, but it is wise for millenials to create an estate plan that includes these digital assets.
Millennials are great savers. Seventy-one percent of millennials participate in a 401k plan. Twenty percent of them put 15% of their paycheck into their 401k. With company contributions added to this, many millennials are on track to retire as millionaires. But millennials are also great consumers of debt. Credit card and student loan debt are like millstones around the necks of many millenials. What happens to the debt when a millennial takes his/her last breath? The creditors will come after the estate. Yes, the federal government forgives a decedent’s student loans (at present), but private loans generally are not forgiven. A wise estate planner will suggest purchasing sufficient life insurance to cover the debt, so that the beneficiaries of the estate will not have to pay it off.
Phelps LaClair is a second generation estate planning firm creating estate plans for 40 years. Yes, we do have millennials on staff! We understand the needs, hopes and desires of this great generation. And we also understand the intricacies of estate planning specifically for millennials. You don’t have to be a millennial to use our services, but if you are, come in to see us to discuss your future. Your first consultation with us is free. There is no time like the present to plan for the future.