Estate Planning For Millennials: Why You, Or Your Children, Need To Start Planning Now
Estate planning is not an easy conversation for anyone, particularly young adults with a lot a life ahead of them. However, young adults may have some of the most important non-tax reasons to plan. This article highlights just a few of them.
Protect Minor Children
Maybe most importantly, a will allows you to name a guardian over your minor children in the event of your death. If you pass away with minor children but without a guardian appointed, the court system is going to decide who should take care of your kids for you. Although the court may choose the person you had in mind, there is a chance it won’t. That’s why the best practice is to get a will in place, select a trusted guardian to raise your children, and rest easy at night knowing what will happen to your kids if tragedy strikes.
You may also need to implement a Temporary Medical Power of Attorney for Minor Children. With this document, if you go out of town and leave your minor children with family members or friends, you can sign this document to grant such family members or friends temporary authority to make medical and dental decisions for your children, if necessary.
Dispose of Your Assets in Accordance With Your Wishes
If you pass away without a will or trust to direct the disposition of certain assets, generic state “intestate” laws will determine who receives that property. For example, Nebraska law generally provides that if you pass away and are survived by a spouse, and the two of you had children together, your spouse will receive the first $100,000, and only one-half of the rest of the intestate property. The remainder will go to your children upon your death. Or, if you pass away with a spouse but without children, and are survived by parents, your parents will receive that other one-half. If you want your spouse to receive all of your property, you need a will or revocable trust to state your intentions and override these intestate rules.
A will or revocable trust also allows you to make charitable contributions upon your death, leave mementos to certain friends or family members, and direct who should take care of your beloved pet after you are gone (and maybe leave behind a little cash for Fido’s care).
Recognize Debt Doesn’t Always Die
Estate planning is a good time to check in and make sure you have enough life insurance and that the proper beneficiaries are named. If you have debt with a cosigner, not all institutions will let your cosigner off the hook upon your death if you do not have enough assets to satisfy the liability.
Take Control of Your Health Care Decisions
It is important to implement a Health Care Directive/Power of Attorney to name someone to make health care decisions for you in the event you become incapacitated, and to outline what medical care you want to receive. By planning ahead, you can direct in advance to not remain on artificial hydration and nutrition in the event you are in an irreversible coma, and you can make sure you don’t place your family members in the difficult position of making that decision for you. This document can also express your desire to donate your organs upon death.
Make Things Easy on Your Loved Ones
Estate planning is not just for your peace of mind. Even if the default state law directs your property exactly as you want, you don’t have any children to provide for, and you are debt-free, estate planning can make things easier on the loved ones you leave behind. For example, implementing a revocable trust can help avoid a process called “probate.” Probate is a process where a deceased person’s estate goes through court, but this process may be avoided with proper planning (such as implementing a revocable trust). Trust administration is typically less expensive, more private, and faster than probate. This is because during your life your property can be titled in your revocable trust, rather than your own name. Then, upon your death, the Trustee that you select (which can be a parent, spouse, trusted friend, or any other person or institution you want) will administer your trust. By having this trust in place, you can remove the added headache of probating your estate for your grieving family members.
Additionally, our practice at McGrath North is to provide you with forms to help you collect all your important information for whomever you select to administer your trust or estate. You can use these forms to direct what type of end of life celebration you’d like, whether it’s a traditional funeral, a party, or a small family gathering. Additionally, with these forms, you can leave instructions for raising your minor children after your death, keep a list of key financial advisors to contact, provide details on insurance policies, retirement accounts, etc., and organize all your usernames and passwords in one place.
Estate planning is easy to put on the back burner for young people and families, with hopes it won’t be needed any time soon, and hopefully, that is the case. However, it is important to plan for the unexpected. An estate plan can be drafted to suit your needs for quite some time, and can be easily changed alongside major life events. Whether you want to implement an estate plan to carry out your personal wishes, or make things easy on the family members you leave behind too soon, contact a member of McGrath North’s Tax and Estate Planning Group to create your estate plan.