Estate Planning for Millennials and Generation X

Estate Planning for Millennials and Generation X

Estate Planning for Millennials: How to Protect Your Partner, Young Children, and Aging Parents

If you’re in your 40s or just celebrated your 50th birthday, your daily life has a variety of challenges. Career advancement, planning for retirement, raising teenagers, caring for aging parents—you’re so busy that the thought of getting your affairs in order hasn’t even crossed your mind. However, estate planning for millennials is crucial to caring for the people you love now and in the future. 

Let’s explore special estate planning considerations for adults born in the 1970s and 1980s, including the documents you should have in place now and the ones that will protect your loved ones in the years to come.

TABLE OF CONTENTS

Millennial Estate Planning Spans Three Different Generations

Whether you consider yourself a Millennial or Gen Xer, you might find that another moniker describes you even more accurately: the sandwich generation. These are middle-aged adults facing the dual responsibilities of caring for aging parents and providing for their own families. 

How your passing will affect your:

  • Parents. Aging parents are a major concern for Millennials long before the estate planning process. A recent AARP study found that over 70 % of family caregivers are Generation X, Millennials, or Generation Z. The average age of a caregiver to a Medicare beneficiary is 44 years old, making it increasingly likely that your parents will need your help in the near future.
  • Partner. Millennials don’t place the same priority on marriage as previous generations. They may choose to stay single, have long-term partners, or have children without marriage. While there are countless ways to make a family, legal protections haven’t kept pace with changing attitudes toward marriage. Without a wedding certificate, unmarried partners lose a lot of protections that are automatically granted to spouses.
  • Kids. Do you know who would raise your children if you suddenly passed away? If you haven’t expressly stated your wishes in a legal document, this decision could be left to the courts—impacting your kids’ well-being for the rest of their lives.

Special Estate Planning Considerations for Millennials

Your Last Will and Testament is the foremost document on our estate planning checklist. It’s where you decide who gets what and appoint someone you trust (your executor) to handle things. Your executor, often a spouse or trusted family member, will gather your assets, sort out taxes, distribute what you’ve left behind as per your wishes, and ensure everything’s done by the book. It’s a big responsibility, so choosing someone reliable is key to making sure your affairs are handled just the way you want them to be.

While creating your Will, you should carefully consider:

Your Minor Children

There’s no greater need for a parent than to protect and provide for their children. Unfortunately, few parents with kids under 18 realize what can happen if they are suddenly incapacitated. 

Without proper legal documentation, your children could be placed in the care of the Florida Department of Children and Families (DCFS) for days on end until a suitable guardian is found. They could be ordered to live with a court-appointed guardian—or worse, each child may go to separate guardians. It’s not an exaggeration to say that your kids could be deprived of their siblings and have their medical and educational decisions made by someone designated by the court. 

There’s also the risk of financial mismanagement by court-appointed guardians, putting your children’s future financial security at risk. Finally, your children may be forced to navigate inheritance disputes and legal battles when they come of age.

Solution: Kids Protection Plan®. Our estate planning documents include a comprehensive protection plan for your minor child(ren). A KPP goes beyond guardianship: it provides the resources the guardian needs to care for your child and outlines your wishes for major decisions in their lives (such as where they will live and where they will go to school).

A KPP also protects your child from the moment of your passing by naming a standby guardian. This trusted adult can pick your child up from school or house them until their permanent guardian arrives, preventing your kids from spending even a second with someone you don’t know or trust.

Your Nest Egg

At this stage of life, you’ve likely built up significant wealth through savings and investments. If you were to pass away tomorrow, your estate would have to go through probate—an expensive court process that delays the distribution of assets. It also places a significant tax burden on your loved ones.

Solution: Living Trust Your estate may be better off with a Revocable Living Trust than an ordinary Will. Upon your death, control of trust assets immediately passes to your successor trustee. Assets held in Trusts pass outside of probate, minimizing estate taxes and allowing your loved ones to get their inheritances quickly. Let’s not forget that a living trust works for you during your lifetime—a Will does not.

One of the primary advantages of a trust is its ability to shield your assets from creditors and legal claims. By transferring assets into the trust, parents can protect them from potential threats such as lawsuits, divorce, creditors, and predators. This also helps safeguard your children’s inheritances, preventing the next generation from losing everything you left them through divorce or overspending.

Your Past

Your life experiences and circumstances significantly influence your estate plan, especially when it comes to inheritance. If you’ve purchased real estate, gotten divorced, or have grandchildren or stepchildren, you may need to look over old documents. The wrong name on the dotted line can cause considerable trouble for your heirs.

Solution: Update Beneficiaries. Past relationships, such as previous marriages or familial conflicts, can inform next-of-kin and beneficiary designations. Review the listed beneficiary on all of your documents, including your payable-on-death accounts, title to your home, and powers of attorney. Remember: Any asset with a named beneficiary passes outside of probate, so double-checking the name of your executor isn’t enough!

Your Business

Millennials are working longer than in previous generations, with retirement planning farther away. If you’re an entrepreneur, executive, partner, or business owner, you’ll need someone to take over your financial affairs if you’re temporarily incapacitated—and permanently take over your business interests when you’re gone. Without a durable power of attorney, your family could face the daunting task of petitioning for a court-appointed guardian to handle your assets on your behalf. 

Solution: Financial Power of Attorney and Succession Plan. Your Financial Power of Attorney empowers a trusted individual to step in and manage your affairs if you suffer an unexpected accident or health event. This ensures that your assets are properly managed for your benefit and that of your family during your incapacitation. Creating contingency plans for unforeseen circumstances.

Business owners also need to think about what will happen to the company that lives on after them. Our extensive business succession experience means never having to worry about your family losing everything you have worked hard to build.

Your End-of-Life Wishes

Many millennials have lost a parent or seen friends pass away prematurely. These experiences and your family health history are likely to have informed your decisions about end-of-life medical care. However, if you haven’t written them down, your family will be in the dark if you develop a health condition.

Solution: Living Will and Healthcare Power of Attorney. Your Living Will outlines your medical treatment preferences in case of incapacitation and names an agent to communicate those instructions to your healthcare providers. A Healthcare Power of Attorney authorizes a person you trust to make medical decisions for you when you cannot do so yourself.

Your Digital Assets

From social media to cryptocurrency, our lives are increasingly lived online. Millennials and Generation Z have over a 90% share in the Bitcoin market, and own diverse digital assets such as software and virtual real estate. Your website, Instagram, Facebook, TikTok, and devices all make up your “digital estate”—and these assets need careful management after your passing.

Solution: Digital Executor. State laws are rushing to catch up with digital assets. As a result, your Personal Representative might not be able to access your digital estate due to privacy concerns. Your Will should make it clear who will act as your Digital Executor and the extent of that person’s control over your digital wallet and online assets. You should also check your platforms and web hosting service to see if you can designate a legacy contact.

Your Debts

Into every life, a little debt must fall. However, Millennials and Gen Xers are more likely to be paying off student loans or high credit card bills in addition to mortgages and car payments. Even if you’re managing your debt on your current income, your family would instantly lose those resources if you passed away. Would they be able to pay the bills and maintain their lifestyle if you were to die in your prime earning years?

Inside Info: The entire probate process, which is how a will is made valid by a court, is designed to get creditors paid first, then the remaining assets pass to your heirs. 

Solution: Life Insurance. Term life insurance can provide enough to pay off your mortgage, removing a significant financial burden on your survivors. Your spouse and children can stay in the family home and are spared the stress and expense of downsizing. If your mortgage is paid off, these insurance proceeds could go toward a child’s college education or help them buy their first house. Term life insurance premiums are less costly than lifelong policies, typically costing a few dollars a month.

Inside Info: Life insurance is one of the most flexible tools available to planners. It’s important you work with an experienced agent who talks you through the various types of insurance, available riders, and flexibility in the contracts. It’s not enough to just show you an illustration!

Your Parents

If your parents don’t have an estate plan in place, now is the time! Long-term care costs, particularly those associated with nursing homes and assisted living facilities, can quickly deplete an individual’s savings. This can cause even more problems if your mom needs care but your dad doesn’t (or vice versa).

Solution: Irrevocable Trusts. Irrevocable trusts can make sure your parents have the resources they need during their lifetimes while preserving assets for future generations. For example, spousal lifetime access trusts (SLAT) protect a well spouse’s assets and income from a beneficiary spouse’s gross estate. In addition, irrevocable life insurance trusts (ILIT) protect insurance proceeds from judgments and creditors. 

Your Legacy

Hopefully, you want to pass down more than just material wealth. You may have valuable life lessons, family traditions, and personal values to impart to future generations. You might have already started documenting your family history or recording your life experiences for your loved ones, but is it enough? How can you continue to benefit your family—and the world—long after you’ve left it?

Solution: Legacy Planning. Estate planning isn’t just about distributing your assets; it’s an opportunity to leave a lasting legacy that reflects your values, passions, and priorities. Our legacy planning sessions consider your values and resources to find the best philanthropic outlet. Whether it’s supporting causes that are dear to your heart, funding scholarships, or establishing a charitable foundation, your estate plan can make a positive difference in the world for generations to come.

Let Us Create Your Personalized Plan

Unfortunately, those who pass away relying on a 30-year-old Will or an outdated estate plan may be no better off than someone who died intestate. As individuals enter middle age, they often experience significant life changes, such as marriage, having children, and the acquisition of more substantial assets. These milestones require a reassessment of your estate plan.Since multiple generations are relying on you, it’s especially important to involve an estate planning lawyer. Our legal team can prepare your documents and “test drive” your plan to ensure that every provision works as intended. Email us at [email protected] today or schedule a 15-minute call to see how we can help.