If you’re a millennial (born between 1981 and 1996 or so), your estate planning needs will most likely be different from those faced by older generations.
For this reason, it’s often wise to seek out millennial-specific advice when it comes time to create your estate plan.
In this guide, we’ll take a quick look at a few unique circumstances that millennials will face when planning for the future.
However, keep in mind that only an experienced attorney who has reviewed your entire case can provide actionable advice for what you “should” do in any situation.
Always consult with an attorney or a financial planner before drafting any important documents for your estate.
What is Estate Planning?
Estate planning is the process of arranging for the management and disposal of your estate after your death.
Your “estate” is composed of the entirety of your property at the time of your death.
This can include real property, like a house or condo, as well as personal property, such as a car, furniture, cash, or bank accounts.
Comprehensive estate plans will usually cover several strategies for minimizing the impact that taxes and other outside influences can have on the transmission of your estate to your loved ones.
Put simply, estate planning is the act of preparing for the distribution and care of your estate.
For this reason, there is no single cookie-cutter “plan” for you to follow, since the contents and organization of your estate plan will greatly depend on your current situation and your plans for the future.
When it comes to millennials, for instance, estate planning trends that have been popular for previous generations begin to break down due to shifts in societal norms.
As a few common examples, millennials currently have record-low marriage rates, they tend to collect large quantities of digital assets that must be accounted for, they have large student and private loans, etc.
The list goes on an on.
Most importantly, though, is the fact that all millennials are now legal adults.
For these reasons (and more), it’s important for you to start planning for your future, and for the futures of those who rely on you.
Who needs an estate plan?
The quick answer is that every adult needs an estate plan, though the complexity of that plan will depend on each person’s individual situation.
For example, even people with small estates (with a net worth of less than $50,000) can benefit from a basic will that lays out their wishes on paper.
Remember, the whole point of an estate plan is to plan for the distribution of your estate after your death.
In this way, simple estates can get away with as little as a basic will, while more complex estates might need trusts and a plan for the distribution of assets such as businesses or real estate.
Basic Estate Planning Goals
When you’re planning out your estate it’s often wise to think of a list of goals or wishes first, and only then think about how you’ll mark down these goals on paper.
For example, “I need a will” is less helpful than “I want to make sure my spouse is secure should something unexpected happen.“
In general, there are four broad estate planning “goals” that you should consider:
- “I want to avoid the normal intestate succession process.“
- “I want to empower and protect my partner.”
- “I want to protect my dependents (and pets).”
- “I want to account for specific problems like digital assets and student loan debt.”
You can meet the first goal by creating a will that distributes your estate to your loved ones.
The other three, however, are a bit more nuanced, and may require the assistance of an attorney to complete.
We’ll outline the basics of these three goals below.
However, please remember that it’s always wise to consult with an experienced estate planning professional before you draft and sign any important documents.
I Want to Protect My Partner
It’s a statistical fact that millennials view marriage differently than previous generations.
Shifting careers, changing goals, and different ideas of marriage mean that many millennials are either putting off marriage or simply not marrying at all.
However, while millennials are less likely to marry than previous generations, they are more likely to cohabitate with their romantic partners.
Because of this, it is becoming increasingly common for millennials to adjust their estate plans to provide protections to their partners in ways that were historically offered only to spouses.
In a legal sense, for example, spouses obtain certain rights from the date of the marriage, such as the right to make medical decisions in an emergency and the right to automatically “inherit” joint property.
Unmarried partners, however, hold none of these rights.
For this reason, it’s often wise to protect the interests of your partner by assigning important legal roles to them in your estate planning documents.
Wills and Trusts
As one common problem, you should remember that the Virginia Code assigns no inheritance rights to cohabitating partners during the probate process.
There’s no such thing as a “common law marriage” in Virginia, so your partner is basically just a roommate as far as the law is concerned.
Put another way, if you don’t specifically name your partner as a beneficiary in your will or trust, or if you die before creating one, your partner will likely not be entitled to any of your property.
To take one basic example, if you and your partner own a home together (and you do not have a will), your partner will not inherit your half of the property upon your death.
Instead, your portion of the property will pass through the intestate succession process, and will go to the person who inherits your estate.
Basically, by drafting a will or setting up a trust, you can ensure that your partner receives a fair share of your estate after you pass.
In a similar fashion, it’s often wise to name your partner as the beneficiary on important financial accounts.
For example, you could name them as the beneficiary life insurance, or you could assign them as the beneficiary for “pay on death” accounts such as retirement or investment accounts.
Since these pay on death accounts generally override the instructions outlined in your will, it’s smart to keep them updated with the most recent information for your partner.
Durable Financial Power of Attorney
In some cases it may also be beneficial for you to name your partner as your power of attorney.
Essentially, this means that they would be able to act on your behalf when it comes to financial and legal matters.
Note, however, that such a designation gives your partner a great deal of power over your life.
For this reason, it’s usually only a good idea to assign a power of attorney in extreme circumstances, or in cases where you make the power of attorney temporary or contingent on other circumstances.
Medical Power of Attorney
While documents such as an advance medical directive (a “living will”) can help you communicate your healthcare wishes in the event that you cannot do so yourself, assigning a medical power of attorney can help you give decision-making power to a trusted individual.
In this context, your partner must be legally named as your health care proxy to make medical decisions on your behalf in the event of an emergency.
Often, these plans will be laid out in a larger medical emergency plan, usually within an advance medical directive or similar document.
Again, you should keep in mind that assigning someone as your power of attorney gives them immense power over your life.
Only do so if the circumstances necessitate it, or if an experienced professional recommends it as part of a larger strategy.
I Want to Protect My Dependents (and Pets)
If other people rely on you, such as children, siblings, or aging parents, it’s often wise to buff out your estate plan with strategies for how you’ll protect them after your passing.
For example, it’s often wise for individuals who have siblings with disabilities to set up disability trusts that can assist with basic care.
Similarly, you could make a tax-saving trust to ensure your children receive a larger portion of your assets after your death.
Regardless of your specific intentions, the basic “gist” of the situation is that there are several ways for you to protect the interests and rights of your dependents after your death.
Create a Trust
As one common solution that we haven’t covered yet, you can use a trust to create a more detailed set of instructions for how your property will be used after your death.
This is especially relevant if you have a great deal of wealth or other large assets to account for (such as a small business).
Put simply, a trust can distribute funds to specific beneficiaries (such as your spouse or your children), for a specific purpose (such as to take care of your pet or as a donation to a charitable cause), or at the discretion of the trust’s manager (usually an attorney or family member).
There are many different types of trusts, each with their own advantages and disadvantages, so it’s usually a good idea to discuss your options with a lawyer before you commit to any particular type.
Consider the Utility of a Will
In addition to trusts, wills are also a useful way to protect the interests of your dependents.
For example, you could name a personal guardian who could care for your children in the event of your death.
Similarly, you could give your beloved pet to one of your friends, or you could leave your prized book collection to a local museum or university.
Basically, you should remember that wills are far more than simple documents that say “I leave my house to my brother,” and in fact have several practical uses as well.
For example, a common statement that appears in articles like this one is “millennials have more debt than any other generation, you should account for this in your estate plan!”
While this is an interesting (though quite sad) point to consider, it doesn’t really offer any actionable advice for how to resolve this issue.
As one possible solution (and as recommended by the Virginia Bar), it’s usually wise to inventory your liabilities in your will so that your estate’s executor can more easily distribute your assets to the right people.
Then, your dependents can either choose to take on these debts (such as a mortgage) or let them resolve as part of the probate process (such as if you have significant private loan debt that will more than deplete the estate).
Other Things to Consider
Finally, there are a few other important notes that you should take into account when planning out your estate.
While tips such as transferring the rights to a creative work or leaving money to a charity are common, the most important factors to consider are (1) what you’ll do about any remaining student loan debt, and (2) how you’ll address the ownership of various digital assets.
Take Care of Student Loan Debt
As more people attend college every year, the number of millennials with student loan debt increases.
This is especially true as record-high numbers of students enroll in graduate and other professional programs that add additional debt burdens.
While most federal student loans are forgiven on death, private loans will often pursue your estate for any amounts owed, draining your estate of its assets.
For this reason, and as noted above, you should take particular care to account for any outstanding debts in your estate plan, especially if those debts are privately held.
Address Your Digital Assets
More than any previous generation, millennials have grown up in an increasingly digital world.
Because of this, millennials have amassed a large number and variety of digital assets.
For example, social media accounts, apps, website domains, electronic data, airline points, digital revenue sources, and more are all assets that you should account for in your estate plan.
However, planning for digital assets is a new and evolving area of law, so it can sometimes be hard to find accurate and up-to-date information.
For this reason, it’s usually smart to speak with an attorney if you have any questions about your digital estate.
At the barest of minimums, you should keep a list of important accounts (preferably with the login, contact, or recovery information included) in a secure place so that they can be included in your estate.
Since most millennials are now legal adults, it’s important for them to properly prepare for the future by making estate plans.
It’s impossible to know what the future will hold, so it’s often wise to make a plan in advance so that you can prepare yourself and your loved ones for the unexpected.
By speaking with a financial advisor and/or an attorney, you can help ensure you’re covered in the event of an emergency or unexpected set-back.
Most importantly, a well-made estate plan can help give you peace of mind and the freedom to live your life to the fullest without having to worry about how your loved ones will be taken care of after your passing.