What Do Millennials Need to Know About Estate Planning?
According to data CNBC published last year, the average millennial between the ages of 25 and 34 has less than $1,000 in savings. Just 20 percent of these “older millennials” have saved $10,000 or more. But, whether you are just starting to save or you have already purchased a home and have a healthy sum in your retirement account, it is important to protect what you have earned in case something goes wrong.
Yes, we’re talking about estate planning. Despite what many people seem to think, it is never too early to prepare an estate plan. Regardless of your savings and your family circumstances, you will benefit from putting a plan in place. This is because:
- The laws that apply if you die without a will are not particularly favorable, and they vary from state to state;
- If you have children (now or in the future), you will want to provide them with as much family and financial stability as possible;
- If you get sick or injured, you will want to be able to maintain control over your medical care; and,
- As you save more over time, it will become increasingly important for you to have an estate plan, and you do not want something to happen before you have the opportunity to plan ahead.
So, you need an estate plan. What else do you need to know?
5 Tips for Thinking About Estate Planning in Your 20s and 30s
1. You Can Start Simple
While you can build your estate plan with revocable trusts, irrevocable trusts and various other estate planning tools, you can also start simple. In fact, a simple, carefully-considered plan will serve most younger people’s needs while also providing the flexibility to adjust to changes over time.
2. There are Forms Available, But You Need to Be Careful about Preparing Them on Your Own
While you can find plenty of free “form” estate planning documents online (including forms available from the Texas Department of Health and Human Services), you need to be careful about preparing these documents on your own. They can become legally-binding once you sign them; and, if you have made mistakes or overlooked certain issues, they could very easily do more harm than good.
3. You May Want to Consider Life Insurance
If you have dependents and you don’t have a lot of savings, life insurance may be a good option for building your estate plan. Life insurance plans are available on the open market, and some employers offer life insurance as a benefit to their employees.
4. There are Many Reasons to Have an Estate Plan
As we have discussed previously, there are many reasons to have an estate plan. If you haven’t prepared an estate plan because you don’t have much in savings, you are overlooking some of the most-important aspects of the estate planning process.
5. You Don’t Need a Lot of Information to Get Started
Finally, while preparing an estate plan involves making some important decisions, you don’t need a lot of information to get started. The key is simply to get started, and then you can fill in the blanks as you work through the process.