Estate Planning Essentials for Millennials

Surprisingly, many young professionals have no estate plan.  Because it is never too early to begin planning for your needs, here is a synopsis of what you should know, even if your highest earning years are still to come:

• Know beneficiary designations.  As a young professional, you likely have access to a retirement plan at work, and may have assets outside of that in an individual retirement account.  It is important that you revisit who is listed as a beneficiary on each of these accounts.
• Life insurance.  Group coverage through the workplace is not enough, since it is generally not portable and may not be enough to sustain a surviving spouse and children.  Look at obtaining individual life insurance policies, especially if you are getting married or having a child.
• Create a health care proxy and power of attorney.  Although you may not want to even think about the possibility of becoming incapacitated, it is crucial to know who will make medical decisions on your behalf if you can no longer do so.  “For singles, it’s even more important to consider who’s going to have your health care power of attorney.  Even a plain old power of attorney is very valuable.  You don’t have to be about to die to have one.”
• Draft a will.  If you have assets, you probably have an idea of where you want them to go in the event of an untimely death.  Without a will, intestacy laws could settle your estate in a manner you did not intend. 
• Federal and estate taxes.  If your assets fall below the 2015 estate tax exemption of $5.43 million, you may face a slew of taxes from the state in which you reside because those estate tax exemptions are lower.  It may be a good idea to consider trusts amidst the local tax environment.

See Darla Mercado, Don’t Ignore Estate Planning for Millennial Clients, Investment News, Dec. 3, 2014.

Special thanks to Cale Cormier for bringing this article to my attention.