Meeting the Unique Estate Planning Needs of Gen X and Millennials

By Melissa A. Pezzino, Esq.

Estate planning is often perceived as a task for older adults or those with substantial wealth. However, Generation X (born roughly between 1965 and 1980) and Millennials (born between 1981 and 1996) are increasingly recognizing the importance of securing their future amidst unique life circumstances, evolving financial landscapes, and societal trends.

Health Concerns and Mortality

Recent years have brought heightened awareness to health challenges affecting Gen X and Millennials. Despite their association with youthful vigor and technological savvy, these generations face rising rates of chronic diseases such as diabetes, heart disease, asthma, arthritis, mental health problems, high blood pressure, and cancer.^[1]  Alarmingly, data shows an increase in excess deaths—beyond expected norms—linked not only to chronic conditions but also accidents, suicides, and substance-related issues.^[2]  This underscores the urgency for comprehensive estate and health care planning for younger generations.

With substantial intergenerational wealth transfers anticipated—approximately $30 trillion over the next few decades from Baby Boomers to their heirs in North America^[3] —Gen X and Millennials are poised to inherit and manage significant assets. Planning ahead is crucial to ensure these transitions are managed efficiently and in accordance with personal wishes.

Essential Components of Estate Planning

Estate planning encompasses a variety of legal and financial arrangements designed to manage assets and personal affairs during one’s lifetime and beyond, as well as in the event of incapacity. It typically involves drafting documents such as wills, trusts, powers of attorney, and health care directives that outline one’s wishes regarding:

• Asset Distribution: How your property, investments, and personal belongings should be distributed among beneficiaries.
• Guardianship: Who will care for minor children or dependents if something happens to you.
• Healthcare Decisions: Your preferences for medical treatment and end-of-life care.
• Financial Management: How your finances and investments should be managed if you become incapacitated.

Prioritizing estate planning offers numerous benefits, including:

1. Protecting Your Loved Ones: Estate planning allows you to designate beneficiaries and ensure that your assets are distributed according to your wishes. Without a will or trust, state laws (intestate succession) dictate how your estate is divided, which may not align with your intentions and could lead to disputes among family members.
2. Minimizing Estate Taxes: Proper estate planning can help reduce the tax burden on your heirs. Techniques such as gifting, establishing trusts, and leveraging tax exemptions can optimize the transfer of wealth while minimizing taxes.
3. Avoiding Probate Delays: Probate is the legal process of validating a will and distributing assets. A well-crafted estate plan can help streamline probate proceedings, potentially saving time and costs for your beneficiaries.
4. Planning for Incapacity: Estate planning includes documents like powers of attorney and health care proxies, which designate individuals to make financial and medical decisions on your behalf if you become unable to do so.
5. Preserving Family Harmony: Clear instructions and provisions in your estate plan can prevent conflicts and misunderstandings among family members, ensuring that your wishes are respected and minimizing the likelihood of disputes.

Gen X and Millennials have unique estate planning needs that differ from previous generations.

1. Digital Assets and Online Presence

Unlike previous generations, Gen X and Millennials have grown up in the digital age, where much of their personal and financial information exists online. This includes social media accounts, email accounts, digital photo libraries, cryptocurrency holdings, and more. Estate planning should encompass provisions for managing and transferring these digital assets after death or incapacitation. This may involve providing instructions to the Executor on how to access and handle online accounts.

2. Blended Families and Complex Relationships

Many Gen X and Millennials have complex family structures due to divorce, remarriage, cohabitation without marriage, or having children from previous relationships. Estate planning becomes crucial in ensuring that all family members, including stepchildren or unmarried partners, are provided for according to your wishes. Clear directives in wills or trusts can prevent disputes and ensure equitable distribution of assets among beneficiaries.

3. Securing Ongoing Care of Pets

Pets hold significant importance to both Gen X and Millennials, often referred to as the "pet parenting" generations.  For many, pets are cherished members of the family, and ensuring their well-being after one’s passing is a critical aspect of responsible ownership.  This may involve creating a trust for pets as part of an estate plan, ensuring their ongoing care and well-being after their owner's passing. This legal arrangement allows pet owners to designate funds specifically for their pets' care and appoint a trustee who will manage these resources according to detailed instructions. By establishing a trust, owners can provide financial support for their pets' veterinary expenses, food, grooming, and other necessary needs, thereby ensuring that their animal companions receive the same level of care and attention they enjoyed during their lifetime. This proactive approach not only offers peace of mind but also safeguards pets from potential uncertainties and ensures they continue to live comfortably in the care of trusted individuals.

4. Entrepreneurship and Business Ownership

Both Gen X and Millennials are known for their entrepreneurial spirit and increasing participation in business ownership. Estate planning for business owners involves succession planning, ensuring continuity of operations, and providing for family members who may inherit or take over the business. Establishing trusts or buy-sell agreements can facilitate smooth transitions and minimize disruption in the event of death or incapacity.

5. Philanthropic Goals and Social Impact

Many Gen X and Millennials are passionate about making a difference in their communities and supporting causes they care about. Estate planning can include provisions for charitable giving, establishing donor-advised funds, or creating foundations to support social causes. These options allow individuals to leave a legacy that reflects their values and contributes to positive social impact beyond their lifetime.

6. Health Care Directives and End-of-Life Preferences

Advance directives and health care proxies are essential components of estate planning, particularly for Gen X and Millennials, who are currently facing increased health concerns.  These documents outline preferences for medical treatment, end-of-life care, and appoint individuals to make health care decisions if they become incapacitated. Clear communication of these preferences with loved ones ensures that personal wishes are respected during critical health situations.

Getting Started

To effectively navigate these complexities, consulting with estate planning professionals—such as attorneys and financial advisors—is essential. They can provide guidance tailored to individual circumstances, ensuring comprehensive plans that safeguard assets and uphold personal values.

Estate planning is not solely about managing finances—it’s about securing your legacy, protecting loved ones, and providing peace of mind amidst life’s uncertainties. By addressing these unique needs and preparing proactively, Gen X and Millennials can confidently shape their futures and leave a lasting impact according to their wishes.