Myths and Frequently Asked Questions: Planning for Millennials

Myth #1. I do not need an estate plan because I do not own much.

An estate plan concerns more than what happens to your accounts and property at your death. A comprehensive estate plan allows you to name individuals to make financial and medical decisions for you if you cannot manage your affairs while alive. In some states, it also allows you to enumerate your end-of-life wishes related to the administration of nutrition and hydration. 

A comprehensive estate plan will also include tools for you to nominate a guardian to care for a minor child if you and the other legal parent are both deceased or otherwise unable to care for the child. Although it is just a nomination, it is your opportunity to voice your wishes. 

If you do not create an estate plan, your loved ones will have to rely on the state's default plan created for how to take care of you if you are unable to manage your medical and financial matters during your life and how to wind down your affairs after you pass away. The state's rules may not align with your goals, but you will have no say in how things proceed if you do not have a proactive plan.

Myth #2. Estate planning is for older adults.

Everyone needs an estate plan to ensure their wishes for their money, property, and care are known and honored as much as legally possible, regardless of their age. No one can predict if they will become incapacitated and end up unable to manage their financial affairs or make healthcare decisions during their lifetime, and nobody knows when they will die. You should not wait until you are a certain age to create an estate plan—you can prepare one now based on your current circumstances. It is like a life insurance policy that you hope you will never have to use, but will give you peace of mind to have in place. As you age and go through significant life changes such as getting married or divorced, having a child, or moving to a new state, you can update your estate plan to accommodate these events.

Question #1. What happens to my employer-provided life insurance policy if I forget to fill out the beneficiary designation?

If you do not fill out the beneficiary designation on a life insurance policy before you die, the death benefit will be distributed according to the policy's default rules, which may distribute the proceeds to your spouse or heirs (as defined by the agreement or applicable state law) or to your estate (which will require your loved ones to go through the costly, time-consuming, and public probate process). In other words, how the death benefit is distributed will be based on someone else's assumption about what you would have wanted. Therefore, you need to designate a beneficiary on all life insurance policies so you can make your decision known and avoid subjecting the proceeds of your policy to the probate process

Question #2. Who should I name as the beneficiary of my retirement account?

There are many options for naming a beneficiary of a retirement account. You can name an individual (such as a spouse, child, or other loved one), a charity, or a trust that benefits a loved one. The rules regarding how the retirement account must be distributed upon your death vary based on the type of beneficiary you designate. We can help you understand your options and name a beneficiary that meets your goals and objectives.

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