“Do you have an advanced health care directive?” asked the nurse at the emergency department in Mammoth, Calif., a question required by law to be asked of all patients admitted.
“I am actually the only Millennial that probably does,” I responded, laughing.
I explained to the nurse that I had previous experience working for a law firm that specialized in estate planning, so I was already aware of the benefits associated with such a document.
The Millennial generation, between the ages of 18 to 29, may feel invincible, but experts say they should be giving consideration to their financial and medical responsibilities.
Here are the top five reasons for Millennials to start thinking about estate planning:
You have the control. Estate planning gives an agent control over your assets, as you would want them carried out. An advance health care directive is a written document that answers questions about the care you want to receive from doctors if you are unconscious and who should make that decision on your behalf.
“It helps you provide financial security and it insures that property and tangible assets are distributed to the beneficiaries you want them to and not governed by the state,” said Kyle Attarian, a wealth manager at PlanCorp in St. Louis.
Debt can pass to your estate too. Millenials with student debt can leave that debt to their successors.
“You would want the right person to pay off your debt and not have your family left to pick up the pieces for you,” said Nicole M. Marro, senior counsel for Bond, Schoeneck & King, a law firm in Rochester, N.Y. “If you have a will you can select the person to do that and you can include people who are not legal heirs or cut people out. By doing an estate plan you are controlling the disposition of your assets.”
A federal student loan could be washed away depending on what state you live in, but in other cases a family member might be responsible for private loans.
Some assets such as life insurance might not even cover that debt since they don’t go through your estate. That’s why it’s important to fill in beneficiary designations on life insurance policies and for your 401(k).
“You would want the beneficiary of that plan to be the same as under your will,” said Marro. Otherwise you might have terrible income tax consequences, she said.
At 18 you are a legal adult. “Parents are not entitled to information without some planning,” said Jim Oliver, CPA and president of Jim Oliver and Associates and Financial Advisors in San Antonio. “If [a child] were disabled [the parents] would need a power of attorney to sell their car in order to pay for health expenses.”
If something were to happen, your parents may not be able to step in and help because legally you are an adult and they are not responsible any longer for medical and financial decision-making.
You want to avoid unexpected costs now and later. Probate can be expensive. If you don’t have an estate, or an asset isn’t part of your estate, the court decides how to distribute the estate. This can be lengthy, public and very expensive. Simple planning can help you avoid the pain of this process.
In order to save on fees now, ask a law firm for an associate’s time, since they bill less per hour than a partner or senior attorney. Make sure you pin down an hourly rate early on.
Also, know the answers to the important questions ahead of time. Time is money and most attorneys have their own questionnaires, so ask ahead about what items to bring or what information you should know coming into the meeting with them.
Every state has its own laws regarding estates and not all forms are created equal. If you choose to go online, make sure to select a form that is correct for your home state.
Digital assets are becoming more relevant. “Millennials have the greatest risk of digital assets and digital estate planning is going to become very relevant to them,” said Catherine M. Seeber, principal, senior financial advisor at Wescott Financial Advisory Group in Philadelphia. “There is going to be a need for language in their wills that give inheritors rights to digital assets.”
These are no longer the days of snail mail and file cabinets. A collection of photos may no longer exist bound in an album. Instead they may appear as a digital collection on sites like Facebook.
Events like marriage, divorce, winning the lottery and losing your job can all mean that your estate plan has to be reconsidered, but starting early and staying on top of the planning will make sure that you have a voice in your own financial and medical decisions if you become unable.
“There is no sooner time to start planning than now,” recommends Attarian. “It is about emphasizing control while you are above ground and before you are gone.”