Why Gen Z Should Be Thinking About Estate Planning

While Gen Zers are still quite young (approximately ages 12 to 27), many of them are working and building assets . As such, they’re poised to think about protecting those assets through estate planning, even though that may seem like a long way off.

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“The unexpected can happen at any age, and estate planning can protect you, your assets and your loved ones from the fallout of an unexpected accident, medical event or other emergency,” said Betsy Simmons Hannibal, senior legal editor with Nolo .

The sooner you plan for how you want to disburse your assets after you’re gone, the better, even if you’re still building yours. Experts explained why Gen Z should be estate planning and how to do so .

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It’s Like a Form of Insurance

Although Gen Zers are young and don’t need to be perseverating on end-of-life issues, it still makes sense for them to plan for the unexpected Hannibal said.

“For young people, estate planning is like rental insurance or putting on your seatbelt — these are things we do not because we expect something bad is going to happen but because we know that the possibility of bad things happening exists, and we want to protect against them,” she added.

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To Direct Who Gets Your Employment Sponsored Benefits

For the Gen Zers who are already working and receiving benefits through their employers, such as a 401(k) or other retirement plan, a health savings account (HSA) and so on, they’ve already got assets that may outlive them. Setting a beneficiary for these accounts is very important and can be done with an estate plan, according to Chad Gammon, a CFP with Custom Fit Financial .

Gammon said that in most cases, Gen Zers are likely establishing parents or siblings as their beneficiaries to start. But future relationships, marriage and possible children may motivate them to change those beneficiaries at a future date.

“Life at 23 is different than when they’re 32. A lot of life could happen between that time and so they just need to remember those major life changes and relook at their beneficiaries.”

To Protect Digital Assets and Currency

Additionally, Gammon said that Gen Z may be more likely to have digital assets than their older peers.

“They could be making sure that they have some of this written out for digital currency and for crypto and their digital wallets. I know a lot of younger people who have different intellectual property (such as TikTok or YouTube videos). That would probably be an area that could really resonate with this generation, making sure that they protect their digital assets,” he said.

Additionally, because many types of digital assets have complex access requirements, Hannibal reminded that an estate plan needs to transfer not just the assets but the information to access them.

Lastly, she pointed out that there are many digital assets that either do not have value or that you do not have the right to transfer — for example, your social media accounts, your Apple music, your Google Drive, etc.

“These cannot be left through your will or living trust,” Hannibal said.

Instead, you may just need to leave login and account information to your beneficiaries.

Writing a Will Can Avoid Probate for Loved Ones

If you don’t have a will or anything written down about how you want your assets disbursed, your estate can potentially get caught up in probate, lingering in the court system and costing your loved ones more time and money to sort out, Gammon said.

Additionally, he explained that not only is it low cost to write a simple will, but it can also help Gen Zers map out their investments.

“It can make them have to plot out things like, what are my retirement accounts? Do I have a brokerage account? Do I have a savings account, a checking account?”

To Safeguard Your Health Wishes

An important part of estate planning is also about protecting the most valuable asset of all: you.

“[E]state planning is not just about who gets our stuff when we die — it’s about who will make medical and financial decisions for us if we cannot speak for ourselves,” Hannibal said.

Gammon said wills can not only lay out how you want to be cared for should you get ill or have an accident, but establish things like power of attorney or a healthcare proxy to carry out your healthcare wishes. Having a written plan for your healthcare also saves loved ones from having to make tough calls; they simply have to follow your wishes.

Having Less Makes Estate Planning Easier

Gen Zers who don’t have many assets may think there’s no need to estate plan, but Hannibal pointed out, “The less you have, the easier it will be to make your estate plan.”

She suggested that most people should make a will, regardless of the value of their assets.

“If you don’t own much you don’t need a living trust to avoid probate. However … everyone should have healthcare directives and a financial durable power of attorney to make sure that someone you trust will have the authority to manage your health care and finances if you are unable to manage them yourself.”

She explained the three things you should have at minimum in an estate plan:

• A will: You need a will to name an executor and to make basic decisions about who should get what of your property if you die; if you want to keep particular items private from certain people; or establish guardians of minor children.
• Healthcare directives: You need two documents to protect your medical wishes which fall under the umbrella term “healthcare directives”: someone to make your decisions for you, which you establish via a medical power of attorney, and your stated healthcare wishes, made clear via a living will (or declaration).
• Financial durable power of attorney: In this document, you name someone you trust (your “agent”) to take care of your financial matters when you can’t take care of them yourself. You can use this document to give a general power over all aspects of your finances, or you can be very specific.

How To Get Started

For people with relatively simple circumstances, straightforward wishes and limited funds, making an estate plan with an online tool can be reasonable choice, Hannibal said.

“Before you choose one, spend some time on different websites to get a sense of what each company has to offer — for example, what documents will you get and how much information do they provide to help you fill them out?”

If you have more significant assets, and the money to pay for one, at some point you might look into an estate planning attorney. Either way, don’t leave estate planning for an emergency.

This article originally appeared on GOBankingRates.com : Why Gen Z Should Be Thinking About Estate Planning