Caring.com has been conducting annual surveys to measure the estate planning preparedness of American adults, and they break it down to age groups. In the most recent survey in 2021, just 26.8 percent of people between 18 and 34 had estate plans in place.
Surprisingly, the next oldest group was even less prepared at 22.5 percent. There was a 10 percent increase for participants in the 18 to 34 group, and 45 percent of these people stated that the COVID epidemic motivated them to take action.
Many people think that estate planning is something that is only relevant to senior citizens, but in reality, it is more important for younger families. Millennials are the parents of most dependent children, and young married couples usually rely on two incomes.
On the other hand, for the most part, the children of senior citizens are grown and self-supporting. Seniors should certainly have plans in place, but the potential for absolute disaster is greater for unprepared people that have children depending on them.
Estate Plan Basics
The best way to proceed from an estate planning perspective will depend on the circumstances, and this is why it is important to work with an attorney to create your plan. This being stated, there are some components that are necessary for everyone.
First, you need an income replacement strategy. Life insurance can provide a solution, and term life is surprisingly affordable for younger adults. Whole life insurance is more expensive, but it accumulates a cash value, so it is an investment of sorts.
A minor child cannot handle their own financial affairs, and you have to consider this when you are planning your estate. You could use a revocable living trust as the centerpiece of your estate plan, and the trustee that you name the document would administer the trust after your passing.
They could manage the resources that have been set aside for a minor child until they reach the age of majority. We should point out the fact that you do not lose control of assets that you convey into a living trust while you are living because you would act as the trustee.
It is also possible to use a testamentary trust to name someone to manage assets on behalf of a child. This is a trust that is contained within a will, and it would not be created until the testator passes away.
You should also account for possible incapacity when you are planning your estate, because a devastating accident or illness can take away your decision-making capacity.
A living will is an advance directive for health care that is utilized to state your life support preferences. You can go down the list with regard to your feelings about all different types of life-support, and you can include your organ and tissue donation and comfort care medication preferences.
To account for medical scenarios that are not directly related to the use of life-support, you can add a durable power of attorney for health care. You name an agent to make decisions on your behalf in this document, but you have to include a HIPAA release to give them access to your medical records.
On the financial front, you can name a disability trustee to step into the role in the event of your incapacity if you have a living trust. A durable power of attorney for property can be added to name a representative to manage assets that are not held by a trust.
Attend a Free Webinar!
You are here because you are looking for information about estate planning, and we are offering an ideal opportunity to build on your knowledge. Attorney Barry Zimmer is conducting a series of webinars over the coming months, and you can learn a lot if you attend one of these sessions.
There is no charge, and you do not have to leave your home or office to join us, so this is a great way to invest some spare time. Plus, people that stick with us until the end of the presentation will qualify for a free one-hour virtual consultation.
To obtain more information, visit our Cincinnati Estate Planning webinar page and follow the simple instructions to register so we can reserve your spot.