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Adults in the U.S. now span five generations, ranging from Gen Z (1995-2012) to the Silent Generation (1945 or earlier) – with Millennials, Gen X, and Boomers in-between. Each generation has a unique value system, especially with money.
It’s not surprising that the concept of estate planning is not top of mind for younger generations; First, it’s not top of mind for most adults. Only 40% of Americans have even a basic will in place! Second, during your 20s and 30s, people are busy - with school, careers, building wealth, starting families...Falling ill or dying simply aren’t on the radar.
You may have heard a parent or grandparent talking about their estate plan in passing. They might have mentioned having a will or dropped hints as to who will inherit their prized family heirlooms, such as the antique clock in the living room. Absent a formal introduction to the importance of estate planning, it’s easy to fall into the misconception that estate planning is reserved for the gracefully aging, the married, or the ultra-wealthy. However, an estate plan is about much more than what will happen to your assets and personal property when you’re gone. One perk of an estate plan is that it benefits and protects you while you’re still alive by providing important clarity to some of life’s most personal decisions. All adults, regardless of age, marital status, or net worth, should have one. Here are reasons why:
Your Health and Wellbeing
People don’t realize (or they may forget) that due to privacy laws, after we turn eighteen, our parents have no right to our medical information unless we have authorized it. So, if you’re hospitalized, your parents will not be privy to your medical condition. With an estate plan, there are documents that will allow parents, siblings, spouses, or even your best friend to have access to your medical information if an emergency occurs. Beyond being kept in the loop, an estate plan can also allow for a person or persons of your choosing to act on your behalf if you become mentally or physically incapacitated due to illness or accident. The representatives can be named to represent your medical and financial interests.
For those with children, having a plan in place is an absolute must. Estate planning documents will determine who you trust to care for your minor child(ren) if incapacity occurs or premature death. Having a guardian in your estate planning documents will allow a smooth transition of finances and care for your child while also enabling you to make specific decisions regarding their life. For example, through clever estate planning tools, you can decide where they will live, where they will go to school, and even set aside funds for them to do things like travel or take gymnastics lessons.
Special Needs & Caregiver Planning
Having a comprehensive estate plan in place is important when planning for the long-term care of a child or other family member with special needs. A study by the National Alliance for Caregiving (NAC) and AARP indicates that one in five Americans are considered family caregivers. While we typically think of caregivers as being middle-aged or older, in 2020, the Stanford Center on Longevity reported that over ten million Millennials and Gen Zs were serving as caregivers to family members. Many caregivers find they have no choice but to sacrifice jobs, put their education on hold, and sometimes relocate to fulfill caregiving duties. Proper estate planning is the only way to ensure that caregivers, younger ones will have the support they need to manage their responsibilities and that the dependent will be adequately cared for if/when the primary caregiver is no longer available.
In a 2020 study by GoDaddy, 30% of Millennials responded noted having have a small business or side hustle. And Gen Z is rapidly becoming known as the most entrepreneurial generation ever, with 62 percent indicating they have started—or intend to start—their own business. As a business owner, you are always planning your next move. At some point, you will no longer be involved in the business, whether by choice or by fate. Another lesser-known component of estate planning is business succession planning. Business succession planning involves making logistical and financial decisions about who will take over or inherit your business upon retirement, death, or disability.
Culturally, Gen Z and Millennials are establishing themselves as a very philanthropic cohort. They strongly believe in making an impact by supporting charitable causes and organizations and want their employers to as well. A survey conducted by Fidelity Charitable showed that Millennials give more than twice as much of their money and time to charitable causes than Baby Boomers or Generation X. If you want to give your money to charity, then having an estate plan in place is something to consider. There can be highly advantageous tax benefits to making charitable gifts.
Having grown up in the Digital Age, it’s understandable that Millennials and Gen Z have more of a digital footprint than any generation before. Google Analytics showed that digital currency, specifically Bitcoin owners, are overwhelmingly Millennials and Generation Z. In fact, people from 18-40 years old dominate the cryptocurrency market with a 94% market share. And younger adults aren’t just investing in meme coins; they’re buying digital art and virtual real estate as well. “With great opportunity comes great responsibility,” said Spiderman. (Not exactly, but close enough.) With these niche assets hiding in a digital wallet, thinking about where they are, where they should go, and the tax implications of your loved ones receiving these assets is important. The laws haven’t caught up yet, but they will.
It’s not just the digital currency you should be looking at either. It’s the social currency. Instagram, Facebook, Twitter, and even your iPhone can all become a part of your “digital estate.” By naming someone as your Personal Representative, you can designate someone you trust power over things like deactivating your online accounts and transferring photos from your virtual albums. Having these provisions in place will protect your privacy and make the already tedious estate administration process a little bit easier on the ones you love.
Protecting Your Pets
According to a survey by YPulse, a leading authority on Gen Z and Millennials, 76% of 20–38-year-olds own pets. Many of these "pet parents" consider their pets as their kids. Unfortunately, the law doesn’t see it that way. Estate planning can help provide for your animals after you’re gone through using “pet provisions” in wills and creating pet trusts. These provisions allow you to dictate where you want little Lucky or Fido to go, and exactly how much funds you want to allocate towards their care. You can even throw in a little something extra for the person with the honor of taking care of your pet after your death.
The Bottom Line
Having an estate plan is the best way to provide security for yourself, your family, causes important to you, and, yes, even your fur babies. Estate planning may feel like something you can put off, but illness and accidents don’t discriminate. Incapacity can happen to anyone at any time, leaving life and death decisions in the hands of a court or someone you don’t trust. The only way to ensure those awesome responsibilities will be managed by someone you trust, in the way you would have intended, is to have the proper legal documents drafted in advance.
Contributed by Faith Harrington, Esq - Associate, Frost Law