A new study says that when it comes to things like end-of-life trusts and financial plans, most millennials aren’t as concerned as maybe they should be.
In spite of the possibility that nearly half are in line as part of the “Great Wealth Transfer,” many are more concerned about how to balance caring for both children on one side and their aging parents on the other, not to mention a ragged housing market. All of that leads to one thing: building their wealth for future generations is a challenge.
The study from Trust & Will, a digital estate planning and settlement platform, asked 15,000 millennials about their end-of-life and estate planning preferences. An unexpectedly high number of millennials – 62% – don’t have a will or trust; and more than half – 56% – couldn’t answer the question of what would happen to their assets if they died without an estate plan.
The darn-if-you-do, darn-if-you-don’t position is unfortunate because millennials want to pass on their wealth. Out of the overwhelming number of Trust & Will’s millennial members who had children (73%), 74% say it is important to them to leave their children some sort of financial cushion.
What is it that millennials need help with? Communication!
Despite these pressures, millennials are their own generation and, as such, prioritize things differently than their baby boomer parents. For one thing, they put estate planning over everything else – protect their assets, provide for loved ones (including pets), and express their own wishes for end-of-life arrangements. Millennials are also leaving a mark through charitable contributions, with many including donations in both their budgets and estate plans.
What millennials need to do, though, is get out of their way about not wanting to communicate their end-of-life plans with their families or parents, suggests Mitch Mitchell, associate counsel at Trust & Will. “Millennials still need to learn what their parents' estate plans are and if they even exist,” he told ConsumerAffairs.
Mitchell contends that being part of the “Sandwich Generation” – the phase of life where they’re taking care of both growing children and aging parents – is more than your typical millennial bargained for. Their “double duty” in taking care of their own expenses and duties as well as making sure their parents are in good shape, is a lot.
“Most importantly, have a conversation with your family about what your plans are. Be honest and set realistic expectations with your family. You might not have a lot, or anything to pass along - just be sure that you're communicating that effectively,” Mitchell said, speaking to millennials.
“Set aside funds for your own health and end-of-life needs, if you can. This will greatly reduce the burden on your remaining family members after your passing. The average funeral costs $8,300 in the U.S., so you might also consider more affordable and eco-friendly green burials or cremation as alternative options.”
Where should millennials start?
While this sandwich generation might not be what most millennials bargained for, both sides of the coin need to be addressed. Ashley Eneriz, finance editor at ConsumerAffairs said that the first step is to start with your parents.
“You need to know both what you will be inheriting as well as what long-term care plans are for aging parents. If parents do not have their estate planned out in a way that covers exaggerated and expensive health conditions, it will eat away at the inheritance and add more financial strain on millennials,” Eneriz advises. “Additionally, millennials need to be aware of any tax bills or surprise bills they will inherit – i.e. if your parents have a reverse mortgage, that balloon payment will be due upon their death.”
On the other side of the coin, Eneriz thinks millennials need to ensure that they are leaving financial protection behind for their children, even if they feel like they don’t have anything to pass down.
The easiest place to start could be a term life insurance policy, simply because applying for a 15- or 30-year term insurance plan is going to be more affordable for someone in their late 30s than waiting until their late 40s to apply.
“In the event of your death, you want there to be enough funds to cover your spouse and children financially. This means that your insurance payout should be able to cover funeral costs, several years of mortgage or rent payments, debt repayment and even future expenses like your child’s college fees,” Eneriz said.
Estate planning is not as hard or expensive as it sounds
Once you have the first two steps handled, it is time to sit down with an estate planner or trust attorney. Whether it’s Trust&Will or another online estate planning service, what seems like a daunting task can fit into your otherwise busy life these days.
“Additionally, check with your employer’s benefits to see if you can opt for legal coverage, which will also cover the costs associated with using a trust attorney,” Eneriz commented. “Estate planning is essential even if you don’t have a mansion to pass down. You will need to name guardians for your children and any other individuals you will need to care for full-time, as well as direct how certain funds, such as your life insurance policy or retirement funds can be used.”
