Estate planning? Really?
Yes, really. It’s no one’s favorite topic and can be uncomfortable to think about. No one wants to imagine a worse-case scenario or simply not being here anymore. And it’s really difficult to think about when you’re so young and just revving up to the best years of your life.
But stop and think for a moment: what would happen to your assets if you were to pass away? What would happen to your family, or your loved ones?
This is why estate planning is important, even for Millennials. If you have a hard time thinking about it, consider the topic from a new perspective. Estate planning isn’t about expecting the worst. It’s about protecting the people you care about and making sure the assets you’ve worked hard to earn are used in a way that you approve of, no matter what.
To understand more about this subject and how it relates to Gen Y, I chatted with Rebecca Geller from Geller Law Group. Rebecca helps families with estate planning in the D.C. area as well as small business owners across the country with their trademarking and intellectual property.
Do Millennials Really Need to Worry About Estate Planning?
The biggest question for most Millennials revolves around understanding what estate planning actually is, and whether or not you need it. Like life insurance, the idea of estate plans is one we usually associate with older — or wealthier — individuals. Aren’t 20 and 30 somethings way too young to worry about something as stuffy, serious, and sometimes morbid as an estate plan?
According to Rebecca, you may need to look into estate planning because you likely have more assets than you realize. “People don’t really know what estate planning is,” she says. “I avoid using [that term] because most of my clients tend to shy away from it. In reality, everyone has an estate.”
So, who specifically needs to seriously consider estate planning? Rebecca suggests that anyone with assets needs to set up an estate plan. However, it’s especially important for families with children need to look at setting up wills and trusts. You also need to consider issues of guardianship for your children.
Without an estate plan, a probate court will decide what happens to your financial assets and any minors in your care if you were to pass away. Estate planning allows you to make your wishes clear and helps ensure they’ll be followed after you’re gone.
That doesn’t mean all you single guys and ladies are off the hook. You have assets, too! You need to think about who you’re leaving your belongings and money to, and estate planning can help make sure those issues are covered.
Rebecca also explained that each state has different laws about how estates are taxed. You’ll need to work with a lawyer that is licensed in your state.
No, Having a Will Is Not Enough
If you already have a will set up, that’s a great start. But it’s not a complete estate plan. You need to ask yourself: do you want to make the decision of who inherits your assets or do you want the government to make that decision for you?
Again, if you don’t take care of estate planning, what happens to your assets — and even your children if you have any — is determined by a judge in a courtroom. Rebecca warns that no one wants to subject their heirs to probate. It’s very public and it makes you extremely susceptible to scams.
Probate can take years and is a huge pain for any of your loved ones that survive you. But it’s the legal process that will occur if you only have a will (or haven’t done any estate planning at all). Take the time to learn more about writing a will and busting the myths surrounding these documents.
The Right Time to Consider an Estate Plan
Most people start thinking about estate planning when they have their first child. But as explained above, that’s not the only reason to take care of this responsibility that comes with being an income-earning adult in the real world. When you start acquiring assets, you need a plan in place to protect what you’ve earned.
There are some other special circumstances that should also get you thinking about making an estate plan. Rebecca says if you’re a married couple (with or without children) and one spouse is not a US citizen, you need to create a plan to protect each of you should one of you unexpectedly pass away because there are strict rules about non-U.S. spouse’s inheriting assets. Trusts need to be set up in this circumstance. The same goes for blended families, or families with a special needs child.
And if you’re a business owner or entrepreneur, you have some important questions to ask yourself. What happens to your business upon death? Who’s taking care of that? What is your brand worth to you?
Side note: As a small business owner you need to understand the value of protecting your intellectual property. Trademarking is the ability to own that name and brand. That gives you the legal protection to protect yourself and what you’ve built, so that others can’t start a business with the same name, logo or tagline. (Here’s a great video that Rebecca did on MSNBC on this subject.)
How Millennials Can Develop Their Estate Plans
Okay: you’re convinced. Even though you’re young and healthy, the responsible and smart thing to do is to take care of your estate planning — not necessarily just for you, but in order to protect your loved ones and ensure your assets aren’t used in a way you would disapprove of should anything happen to you. But how do you take the next step?
Can you get away with creating a will using one of those legal sites online? It’s not a smart choice or a good option for consumers. These documents can be a waste of money because courts often ignore them. Save your money by skipping these services, and don’t download legal forms from the Internet.
Legal issues vary by state and won’t hold up in court. It’s really important to hire an estate planning attorney to help you with this. On finding the right attorney or lawyer, Rebecca says, “the best way is to ask for referrals from financial advisors.” (Yes, she really said that!) So if you’re already working with a financial planner or CPA ask them who they recommend in your area. Interview a few lawyers to find the person that’s the right fit for you.
While thinking about estate planning isn’t an easy subject, it’s one of the best gifts you can give your loved ones.