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Millennials And Estate Planning: How To Get Started

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Millennials And Estate Planning: How To Get Started

This article is part of an ongoing series about the importance of end-of-life care planning at all ages. Check out part one of this installment here.

Not only are Millennials not talking about end-of-life care with their parents, according to the American Bar Association, "Statistical studies show that 55 percent of Americans die without a will or estate plan."

Source: Infograph by Virtual Attorney

In order to save your loved ones completely avoidable additional pain and legal hassles, take the time to begin your estate planning today.

Estate Planning 101

First and foremost, when you begin discussing end-of-life care, it is essential to understand the documents involved.

  • Wills: Your will outlines who will be in charge of your estate at the time of your death. Designating the executor of your will is just the first step.
  • Living Trust: The "preferred" method of transferring assets upon your death, a living trust can help your loved ones avoid probate when you pass away. Trusts typically contain personal property and documentation indicating what should happen to these assets once you've died.
  • Durable Power Of Attorney: This document ensures a person of your choosing has the authority to make decisions regarding your life if you are "incapacitated" or unable to make decisions on your own. This includes financial and legal decisions.
  • Health-Care Proxy: Similar to the durable power of attorney, your medical power of attorney has the authority to make medical decisions on your behalf if you are unable to make these decisions yourself.
  • Advanced Health Care Directive: This form allows you to list your healthcare preferences; it can be used in conjunction with your health-care proxy to ensure that decisions regarding your medical wishes are enacted as closely to your wishes as possible.
  • HIPPA Release Form: When dealing with medical issues, another hurdle that can be prevented by preemptive preparation is a HIPPA release form. This form allows those people listed on your advanced health care directive, in addition to your health-care proxy be allowed to access your healthcare information so they can deal with matters on your behalf should you be unable to.
  • Tax Documents: We've all heard of "death and taxes," but how familiar are you with "taxes in death"? That's right. Death, while inevitable, doesn't stop taxes. Even once you have left your physical body, your essence can be taxed. While the majority of taxpayers do not meet the requirements (and therefore do not have to worry about federal estate taxes), it is important to be aware of their existence. While the "magic number" so to speak is $5.25 million + as taxable by estate taxes, there are some exceptions. Certain types of property may be considered part of your estate by the government, such as life insurance policies, pensions, retirement plan funds and past sizable gifts. Furthermore, some states have a state death tax in addition to federal estate taxes.

Why Now Is The Best Time To Plan

If you don't plan now, and the unimaginable becomes reality, your loved ones will face legal obstacles, hurdles and battles that could have been avoided. By simply taking one afternoon to talk to your legal advisor, personal planner or lawyer, you can help your loved ones avoid unnecessary costs, financial duress, legal headaches and additional pain.

Always be prepared for the worst. Don't take on a pessimistic outlook toward life, but as a way to ensure you enjoy life to its fullest, make sure you and your loved ones are covered in case the unthinkable occurs. "Nearly everyone has an opinion on what they would want to happen in worst-case medical scenarios, but few make it official with incapacity planning, as it's known in the estate planning biz. To plan for the worst, experts recommend that everyone fill out and sign a health care directive or living will and designate a representative to make medical decisions with a health care proxy," Sheyna Steiner said, co-author of "Future Millionaires' Guidebook."

Image Credit: Public Domain

Posted-In: American Bar Association end-of-life care estate planning Fidelity Investment millennialsEducation Personal Finance General

 

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