A recent survey by senior-living focused website Caring.com, quoted in USA Today, revealed that 78 percent of Americans under the age of 36 don’t have a will or trust in place. But even with youth on their side, the millennial generation needs to be planning for the unforeseen. If most would consider the following three issues, they’d be off to a good start:
- Incapacitation provisions: No one expects to be incapacitated, but it can happen in an instant. You’re better protected when it does by having at least two documents. The first is a durable power of attorney (also known as a power of attorney for property) that identifies who will make financial decisions on your behalf. The second is a power of attorney for health care (including a living will and HIPAA authorization) that outlines preferences for medical care, including when to turn off life support.
- Death documents: These include a last will and testament and, for many, a living trust (which can help avoid probate court involvement).
- Beneficiary designations: Keep these up to date for important assets including life insurance and retirement plan assets, for example 401(k) plans and individual retirement
accounts (IRAs).
Many millennials assume they don’t have assets worth protecting yet, but simply don’t know the range of assets that need to be addressed for a proper estate plan. These include:
- Retirement account assets
- Life insurance policies (both personally owned policies and policies purchased through or provided by an employer)
- Real estate, vehicles, boats, jewelry, electronics and home furnishings
- Family memorabilia. These are often quite important items, although
they may not have a high degree of monetary value - Pets
- Digital assets, including a complete list of accounts and passwords
What if you don’t have the proper estate planning documents in place? What are the risks? Typically, default rules may apply, and you may not agree with the default rules. For example, if you are an Illinois resident and you are survived by a spouse and one or more descendants, your spouse will receive only one-half of your estate, and the other half goes to your descendants – which becomes trickier if your children are minors.
For issues that are covered by durable powers of attorney and health care advance directives, the default for a minor is that a parent (or parents) makes decisions on their behalf. But past the age of 18, it will be necessary for parents to get a court order appointing them as guardians if such documents aren’t in place prior to the onset of incapacitation.
In many states, if unmarried individuals with no children die without a will, regardless of their age, the estate reverts to parents. If you are an unmarried individual without a spouse or children and want to select siblings or a significant other rather than your parents, you should specify that choice in the appropriate documents.