It's Never Too Early to Plan Ahead
It occurred to me that most of what I say in these pieces is directed toward my contemporaries rather than our children and grandchildren. The former are certainly the prime consumers of estate planning, but young people and their families are at risk if they figure they can wait another 30 years to bother with it.
For starters, whether they're single or married people, without some planning they don't have anyone who's legally in a position to help out if something befalls them unexpectedly. If they get injured while riding a mountain bike or catch mono at college, they may expect their parents (if they're single) or their young spouse (if married) to jump in and deal with the situation. The trouble is, if they're at least 18, they're adults in the eyes of the law and not even their closest family members can act for them without official papers. Those could be guardianship appointments from the probate court - a cumbersome and expensive option to be avoided - or designations as health care agents in an advance directive and as financial agents under a durable power of attorney. There was a reason their parents executed those documents and the same reason applies to the younger generation, even though the reason may be an accident rather than a stroke or dementia.
Another reason for some Gen Y or Millennial planning is that without a will, the State will decide who receives their Google stock options - and their kids - because a will is where those designations would be made. If they're single, the law says it's parents first, then siblings, but it certainly wouldn't be a live-in partner or close friend or a worthy cause they wanted to support. If they're married, the spouse would get it all if there are no children, but if children are in the mix, they would get a share of everything and then at 18 would be entitled to spend it on whatever is most important to a person that age - probably not growth-oriented mutual funds.
In order to prevent that likely spending spree, young parents should probably consider the same kind of trust their parents have. It would keep their kids from receiving anything outright at 18 and provide for the funds to be held and used for the children until, say, they get through school and have learned a little more about growth-oriented mutual funds.
Although young parents may say, "Why bother with all that planning when we can barely pay for Netflix?", they're probably worth more than they think. They may have IRA's or 401k's that they can't touch now but would be a nice nest egg for the children, and they may have group life policies provided by their employers. Even if they don't have much of that, though, they could likely qualify for low-cost term life insurance that would be payable to the family trust and provide enough for care of the kids by the designated guardian and still leave some funds for college or any other worthwhile pursuit.
So the takeaway here is that planning isn't just for coupon-clipping Baby Boomers. It's also for Gens and Mills of all designations - and whatever the next generation will be called!
Posted 04/24/2019 Estate Planning
For starters, whether they're single or married people, without some planning they don't have anyone who's legally in a position to help out if something befalls them unexpectedly. If they get injured while riding a mountain bike or catch mono at college, they may expect their parents (if they're single) or their young spouse (if married) to jump in and deal with the situation. The trouble is, if they're at least 18, they're adults in the eyes of the law and not even their closest family members can act for them without official papers. Those could be guardianship appointments from the probate court - a cumbersome and expensive option to be avoided - or designations as health care agents in an advance directive and as financial agents under a durable power of attorney. There was a reason their parents executed those documents and the same reason applies to the younger generation, even though the reason may be an accident rather than a stroke or dementia.
Another reason for some Gen Y or Millennial planning is that without a will, the State will decide who receives their Google stock options - and their kids - because a will is where those designations would be made. If they're single, the law says it's parents first, then siblings, but it certainly wouldn't be a live-in partner or close friend or a worthy cause they wanted to support. If they're married, the spouse would get it all if there are no children, but if children are in the mix, they would get a share of everything and then at 18 would be entitled to spend it on whatever is most important to a person that age - probably not growth-oriented mutual funds.
In order to prevent that likely spending spree, young parents should probably consider the same kind of trust their parents have. It would keep their kids from receiving anything outright at 18 and provide for the funds to be held and used for the children until, say, they get through school and have learned a little more about growth-oriented mutual funds.
Although young parents may say, "Why bother with all that planning when we can barely pay for Netflix?", they're probably worth more than they think. They may have IRA's or 401k's that they can't touch now but would be a nice nest egg for the children, and they may have group life policies provided by their employers. Even if they don't have much of that, though, they could likely qualify for low-cost term life insurance that would be payable to the family trust and provide enough for care of the kids by the designated guardian and still leave some funds for college or any other worthwhile pursuit.
So the takeaway here is that planning isn't just for coupon-clipping Baby Boomers. It's also for Gens and Mills of all designations - and whatever the next generation will be called!
Posted 04/24/2019 Estate Planning