In this post, we discuss the hows and whys of the most critical items Millennials should consider in regards to your estate planning.
Estate planning is important for everyone. Though some may think that an estate is something that only older or wealthy people have, the fact is, everything that you own is part of your estate.
If you don’t have a will and plan what happens to your estate if something should happen to you, the government and the court system will make those decisions.
Establishing an estate plan allows you to decide what happens to all of your assets and possessions, even your pets.
For obvious reasons most people, millennials or otherwise, would rather make these decisions themselves.
Millenials should plan for unexpected
As a young adult, it’s easy to think that you still have decades of time ahead of you for estate planning.
The thing about the unexpected is that it only happens when it is unexpected. Unfortunately, even young people can be involved in accidents or become incapacitated. We probably all know someone who has passed away at a young age.
No one expects to be incapacitated, but unfortunately, it does happen. If it does, there are several documents you will need.
The first is a durable power of attorney (POA) that identifies who will make financial decisions on your behalf if you are unable to do so.
The second is a health care advance directive (including a living will) that will outline your instructions for medical care if you become unable to communicate or manage these yourself.
These documents will include a last will and testament and the establishment of a trust (either revocable or testamentary).
For younger people, your life insurance policy and 401k programs may account for the bulk of your assets, so it is important to keep your beneficiary designations up to date.
We advise parents of children to have a durable power of attorney and health care advance directive for all their children once they reach the age of 18. Generally, the parents will be designated initially, but you have the right to designate whomever you wish.
Default estate laws in Illinois
All states have default laws specifying where assets will go by default when there is now will or estate plan.
If you are married, your estate will go to your spouse. In Illinois, if unmarried Millenials die without a will and have no children, the property ascends the family tree to their surviving parents and siblings. If you have two brothers and two sisters, they would each receive 1/6 of your estate and each parent would receive 1/6 of the estate.
If you are an unmarried Millennial without a spouse or children and want to select which of your siblings receive your estate or designate a significant other as a beneficiary instead of your parents, you must specify that choice in the appropriate legal documents.
The selection of an executor of your will or a personal representative is a decision you should make when your will is drafted. Most people would prefer to make these decisions themselves rather than the default laws of the state making the decisions for them.
Oftentimes, younger millennial individuals are surprised about the number of assets they actually have. It’s very common to be focused on things such as student loan debt and income rather than the asset side of your balance sheet.
Your assets may include:
- 401K and retirement accounts
- Life insurance policy
- Family and collector memorabilia
- Real estate and property
- Vehicles, boats, jewelry, electronics, home furnishings
- Digital assets, social media accounts, websites, photos
Millennials may be the first generation who all have to deal with the issue of what happens to their social media accounts when they pass away. Should they be maintained? Should they go offline? That decision should be up to you, but since this is still a relatively new area, there may be default rules you are not aware of.
How Millennials should plan their estate
Estate planning doesn’t have to be a painful process. The important thing is to begin working on a plan. Millennials, like all adults creating an estate plan, can view it as a series of multiyear plans. Every few years or after major life changes, it can be reevaluated and updated.
We hope it’s something you will put some consideration into.
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