If you were born between 1981 and 1996, you’re a millennial, part of the “most racially and ethnically diverse adult generation in the nation’s history,” according to the Pew Research Center.
Members of this cohort are a highly sought-after demographic, driving culture and conversations around the world. You are business owners, thought leaders, influencers, heads of families, and massively powerful consumers — and therefore it’s time to create a comprehensive estate plan to protect your loved ones and your hard-earned assets.
Many younger adults believe that estate planning as part of a larger financial strategy is only for the wealthy or the elderly, but that’s no longer true. Regardless of age or net worth, everyone should have a plan in place. Let’s take a closer look at the process, how to get started, and how it can benefit you.
What is Estate Planning?
It’s simply a matter of consulting a professional advisor and making decisions about what will happen to your assets and property after you pass away. It involves creating legal documents such as a will, trust, power of attorney, and medical directives. These documents will help ensure that your assets are distributed exactly how you would prefer and that your family or dependents are taken care of and all details have been handled.
Generally speaking, a well-thought-out plan has 5 components regarding your taxable estate:
An experienced family law advocate can help you understand these elements and gather all of the documentation you need to succeed.
Why Do You Need an Estate Plan?
→ Protect Your Assets
Millennials are now the largest demographic group in the U.S. workforce. Many of you have accumulated assets such as savings accounts, retirement accounts, investments, and real estate. If you’re not prepared, these assets could be distributed based on Illinois state law, rather than your wishes.
Many consumers in this age group also own digital assets of value, like social media influencer accounts, cryptocurrency, non-fungible tokens, and other virtual products. In Illinois, the Revised Uniform Fiduciary Access to Digital Assets Act, 755 ILCS 70/1 et seq., explicitly permits an executor or trustee to access and manage a decedent’s accounts, if the decedent had authorized that access. A strong and professionally-crafted plan can also help protect these types of assets and ensure that they go to the people or organizations that you select.
→ Protect Your Family
Having an estate plan can help protect your family in the event of your unexpected death or incapacitation. For example, if you have minor children, you can name a guardian in your will to take care of them if something happens to you. You can also create a trust to provide for their financial needs until they reach adulthood.
→ Avoid Family Conflict
Without an estate plan, your loved ones may have to go through a lengthy and expensive probate process. Probate is the legal process of settling your estate and distributing your assets after your death. If you do not have a will or trust, your assets will be distributed according to state law, which may not align with your wishes. This can cause family in-fights and lead to lengthy court battles. Avoid these issues and make sure that your assets are distributed in the way that you want them to be.
→ Plan for Incapacity
Estate planning is not just about what happens after your death. It also involves planning for the possibility of incapacity. Incapacity refers to a situation where you are unable to make decisions for yourself due to illness or injury. With an estate plan in place, you’ll appoint someone you trust to make medical and financial decisions on your behalf if you become unable to deal with legal paperwork.
→ Save on Taxes
An Illinois resident who dies with property located in Illinois may be subject to income tax, the federal estate and gift tax, and the Illinois estate tax. With an estate plan, you can minimize or eliminate these taxes, ensuring that more of your assets go to your loved ones and less to the government.
A credit shelter trust is a specific estate planning tool that allows couples to reduce or avoid estate taxes when passing property to their heirs (typically, their children). This irrevocable trust is funded with all or part of a person’s estate and supports a surviving spouse, but because it’s managed by a trustee, it doesn’t add to the taxable estate. After their passing, it can be transferred to the remaining beneficiaries without any estate taxes being levied.
How to Get Started
This process is an essential part of your overall financial strategy that everyone should consider, especially those who are considered Millennials. With it, you can protect your assets and your family, and avoid hefty tax burdens and expensive court conflicts. You can also plan for incapacity, medical emergencies, and who will care for your minor children should the unthinkable happen.
Don’t wait until it’s too late to protect your loved ones and your assets. Reach out to an experienced and compassionate family law attorney who can help you develop a comprehensive plan that meets your unique needs and goals — call or email us today!
