Estate strategies are for more than the elderly. In fact, the earlier anyone prepares their estate strategy the better.
Why Would a Millennial or Younger Generation Want an Estate Strategy?
1. Assist with the Transferring of Assets
You may ask yourself why a will is important if you don’t have much to pass on. A will is not just about transferring assets. It can be used to accomplish other tasks, such as naming who should manage your social media accounts once you’re gone or inherit items you’ve accumulated, like collectibles, your car, or home.
2. Plan for Burial Expenses
Funerals can be expensive, and if you don’t have the savings to meet those costs, that burden gets shifted to others. Having a plan in place can help with burial expenses down the road.
3. Create a Medical Directive
This important document states your wishes for end-of-life care. In the case of an unfortunate accident, a medical directive provides instructions about the level of care you want, e.g., palliative care only.
4. Set Up Durable Power of Attorney for Health Care
In the event that you are unable to make medical decisions for yourself, this gives the individual of your choice the legal power to act as a health care proxy for you.
These are just four reasons why an estate plan can benefit more than just the elderly. For example, a medical directive and health care durable power of attorney can ensure that you are provided the level of care consistent with your wishes. They can also prevent family discord in the event of differing opinions.
Estate Planning Considerations for Parents
An estate plan that simply leaves assets to children may not always be the best course of action. If you’re a parent, below are four questions to ask yourself so you can design your estate strategy wisely.
1. Can They Handle It?
It’s possible that children may receive an ample inheritance before they’re ready to manage it. It may be overwhelming to receive a large sum of money at a young age. An effective way to time the distribution of an inheritance is to set up a trust tied to age or accomplishments.
2. How Much Should You Pass to Your Children?
Some parents may have no concerns about passing most of their assets on to their children. But those who fear a large inheritance will hamper ambition and productivity may want to consider clearly stating the amount their children are to inherit and leaving the remainder of their estate to charity.
3. Should Assets Be Equally Distributed?
While treating all children equally in an estate plan may be the ideal, parents might have valid reasons for making exceptions. A child of modest means may have more need for a large inheritance than a child who already has substantial assets or who is active in a family business. Parents may want to withhold an inheritance from a child who’s already in financial difficulty or displays behavioral issues.
4. Naming an Executor
A parent’s first choice may be to name an adult child as estate executor or trustee. However, parents should consider whether that person has the skills, time, and expertise to perform an executor’s or trustee’s duties. And parents should also consider family dynamics and whether leaving one child in charge of siblings’ money would create problems.
All in all, creating an estate plan is for more that just the elderly. We realize that estate planning is not the most exciting topic to talk about, but you and your loved ones will be thankful to have a plan in place.
