Millennials are now reaching the age where an estate plan is essential. After all, the older generation is not reaching 40, buying homes and starting families. When these major life activities occur, estate planning is a must, but how are Millennials choosing to plan their estates? And, are there other options they are not using?
What are the primary motivations for estate planning?
According to the publication, Trust & Will, the most common reason Millennials decided to plan their estates was having a child. Researchers surveyed about 23,000 people, aged 25 to 44. Next, they cited the death of a family member, buying a house and then, an increase in income and net worth. Plus, many are now caregivers to elderly family members, demonstrating how important estate planning can be for both those alive and after they pass.
How do they plan?
Most (about 75%) use a will-based estate plan. These types of estate plans solve most (but, not all) estate planning issues. They can allow for the appointment of guardians to care for children and pets. A will can also name beneficiaries and dictate how many assets should be distributed to them. It can also help transfer property and accounts to those same heirs, along with personal property and items of sentimental value. However, this is a one-time document that is meant to wrap up an estate quickly.
Additional options
Only about 20% of Millennials utilize a trust, but for many older Millennials and those with larger estates, they really should be using trusts. Trusts allow estate planners much more control of their estates post-death and maximize tax savings. For example, with just a will, planners can give a lump sum to a guardian to care for the children.
However, there is no oversight of those funds or strings attached to them. With a trust though, many sources of funds, estate funds, life insurance, annuities, etc. can flow into a trust for the benefit of your children. A trust administrator can approve funds for the guardian, based on your express wishes, and then, pass those funds directly onto the children when they become adults (also, based on your wishes). Trusts can also be set up to make periodic charitable contributions in your name, or for any other purpose.
Takeaways
For our Mount Holly, New Jersey, readers, the biggest takeaway from this post is that estate planning is more than just a will. Of course, if you do not have an estate plan, you should begin estate planning ASAP, but even for those with a will-based estate plan, now is the time to revisit that plan to see if there is a better way to do what you want.
