Estate Planning Essentials: March 2017
The new monthly Chambliss Estate Planning Essentials brings you legal developments and other trends of vital interest in the world of estate planning. This post is brought to you by Leah McElmoyl and other members of the Estate Planning Practice Group of Chambliss Law Firm.
I’m Not Too Young for That – Estate Planning for Millennials
Was 1987 really 30 years ago? Why, yes, yes, it was. And, yes, this year many millennials, including myself, will be saying goodbye to their twenties. In other words, millennials are practically all grown up, and they need to do some estate planning.
Of course, you can’t just tell a millennial to do something without explaining what it is and why it is needed.
Estate Planning Overview
Estate planning involves preparing legal documents, determining beneficiaries, and titling assets – all to ensure your property and wishes are properly taken care of. For most people, estate planning documents typically include the following:
- Last Will and Testament
- Power of Attorney
- Health Care Directive
Last Will and Testament
Commonly referred to as a “will,” this is the document that says what happens to your property after you pass away.
I hear you – you are probably thinking “What property?” Property distributed under your will can include not only your car, house, retirement accounts, and life insurance proceeds, but also your pets, social media accounts, iTunes library, digital photos, and other “stuff” like your smart phone, jewelry, those expensive leather boots, Xbox games, Pokémon collection, etc. Under a will, you may specifically designate someone to take ownership and care of your pets and someone to take ownership and care of your digital assets.
If you happen to be married and/or have children already, you most definitely need a will for two primary reasons:
- Under your will, you may designate a guardian for your children in the event both parents pass away before your children reach adulthood. The guardian decides where your minor children live, where they go to school, what sports or other activities they participate in, what religion they practice, if any, what news channels they watch, etc. This person can but does not have to be one of your parents; it could be your sibling or close friend. In any event, it is best to appoint someone both parents can agree on.
- Under your will, you may designate a trustee to manage your assets (life insurance proceeds, retirement accounts, real estate, etc.) for the benefit of your child. For example, DO NOT leave your life insurance proceeds outright to your sister expecting her to take care of your children. Your child will have no legal right to benefit from that money, and a wide variety of unforeseen things could happen (e.g., your sister’s husband could run off to Cancun with the money and his new girlfriend). Instead, leave life insurance proceeds to a trust for your child under your will and appoint your sister as trustee.
Durable General (Financial) Power of Attorney
Commonly referred to as a “Power of Attorney” or “POA,” this document allows you to appoint someone to act on your behalf with regard to your financial and business matters in the event you become incapacitated or for whatever reason are unable to act for yourself.
For young millennials, this means that once you turn 18, your mother can no longer act on your behalf – only the person you appoint under a power of attorney can legally do so. So if you want your mother to be able to talk to the college’s financial aid office, you need a POA appointing her to do so.
Health Care Directive
Commonly referred to as a “Living Will” or “Advance Directive,” this document or set of documents (explained further below) is intended to do two things:
- set forth your wishes for how you want to be treated in the event you are nearing the end of life, and
- appoint someone to carry out those wishes and make other medical and health care decisions for you if you are unable to speak for yourself.
Traditionally, these two goals were accomplished in two separate documents, known as a health care power of attorney and a living will. However, in recent years, many states, including Tennessee, Georgia, and Alabama, have developed a state-specific form to combine the functions of a health care power of attorney and living will into one short, easily accessible form, known as an advance directive or advance care plan. Whether you have a health care power of attorney and living will or a state-specific advance directive is often determined by your specific situation, your state of residence, and your preferences. These forms can be customized by an attorney to fit your individual wishes.
An advance directive is probably the easiest estate planning document for the general public to access, but it is likely the last document on the mind of any millennial. It is difficult for us to imagine where we will be in five years, let alone at the end of life. It seems so far away. Well, so did 30 when I was 18. We know how that turned out. So think about it. Write it down. Update it when you change your mind – kind of like updating your Instagram bio.
Give Yourself Peace of Mind
Whether you are a millennial or a parent or grandparent of a millennial, estate planning is important to you and your family. Your estate plan may, in fact, be very simple, but I can assure you that without a plan at all, the process that follows in the event of an unexpected death or disability will be far from simple. Peace of mind is always worth an uncomfortable conversation.