Jenny Rozelle, Host of Legal Tea
Current Trends - Estate Planning for Young Adults - Episode 94
Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle. Welcome back for another episode of Legal Tea! Today’s topic is a current trend … on this type of episode, we dive into something going on in the current time or that I’ve stumbled across on the news or social media, that is pertinent to my little estate and elder law world. So, I recently stumbled upon an article that is linked in the source links for this episode that is titled, “More young adults are creating Wills because of COVID-19, Inflation, Survey says.” I was intrigued because I was like, “Why would inflation cause young adults to do estate planning?!” Anyway, we’ll get to that in a few, but generally speaking, this episode will be about that article – why young adults are doing estate planning more than ever right now – AND what I, an estate attorney, consider to be a solid estate plan for young adults. So, let’s dive in…
A survey was conducted by Caring.com, who partnered with YouGov, and they surveyed over 2400 adults about a variety of things estate planning-wise. The primary objective of the survey really is about 1) who is doing estate planning and 2) why someone has decided to do estate planning … or why not. Interestingly, the 2023 survey found that 3% MORE Americans have an estate plan in place compared to 2022. So, there was actually a RISE in people doing estate planning, generally speaking, which yay! That’s awesome, right? If we further drill into this, the survey found that 63% more YOUNG ADULTS, specifically, now have estate planning documents compared to 2020. By the way, how they define (and I’ll go by their standard for sake of this episode), how they define young adult is someone between 18 and 34 years old.
So, in two years, it jumped 63% for young adults. If you’re a numbers person, 16% of young adults had an estate plan in 2020, versus 26% in 2023 of young adults have an estate plan. That’s fantastic. So, inquiring minds want to know … WHY the jump? Well, lucky for us – the article dives into that a little bit. One reason is … inflation. The survey found that 1 in 4 say that “inflation has caused them to see a greater need for an estate plan.” Which, to be honest, when I first read it, I was like, “Why would inflation, where people are concerning about spending money, have a positive effect of the number of people doing estate planning?!” I guess that’s why we always have to be learning, have to be growing – because the article really helped me understand different perspectives on this.
So, as the article states, basically people are thinking about and worried about their financial future – and their beneficiaries’ financial future. That, if times are grim, that they want to do anything they can do from an estate and financial planning perspective to protect their beneficiaries’ inheritance. That makes sense now. I can totally see that. Though, by far the overwhelming response to the question of “Has inflation changed your view of the importance of estate planning?” the answer was “no.” 60% of respondents said that inflation had no impact on how they viewed the importance of estate planning. While some felt inflation DID cause them to want to do estate planning, this piece (the part where most people said inflation didn’t sway them either way) really doesn’t surprise me either.
Another thing that the survey mentions that young adults specifically cited as to why the increase in estate planning was media coverage. The survey found that 1 in 4 Americans aged 18-34, that’s that young adult age they’re using, were motivated by media coverage like an online article or influencer post to get a Will. Two things on this topic – first, I can attest that this is true. I have a friend who actually runs a blog called TwoTwentyOne (hi, Chelsea!) that she’ll occasionally give my office shout-outs on her social media page, like Instagram, where she has over 30,000 followers. Anyway, we’ve actually gotten people that have called us from her – and converted to paying clients (to do an estate plan). So, thanks Chelsea for the shout-outs, and that’s a perfect example of what this is talking about. The second thing to mention on this topic is current events that the media covers. Sadly, so sadly, some young adults even specifically referenced mass shootings, and the coverage that they get, as a reason to get planning done. That’s so sad. I hate that. Ugh.
I found all the survey results really interesting, and as an estate attorney who happily helps young adults and young families with estate planning, hearing there’s a rise in young adults getting their estate planning done makes me happy. I think where the disconnect happens is that young adults often KNOW they should have some type of estate plan, especially young adults with kids, but they often fail to take the next step – to actually get a plan done. Actually, according to the survey, 64% of Americans think having an estate plan is important – but only 34% of Americans actually have one in place. From the survey, in the last three years, we’ve seen an increase in young adults, specifically, that DO take the next step, so let’s hope it continues!
I was talking to someone on met on Twitter recently – she’s an estate planning attorney in Chicago named Lauren Kaplan with Kaplan Estate Law, LLC. Anyway, we were talking about how many young families don’t do estate planning for likely a few different reasons: 1) Time – they’re busy and especially with kiddos running around, tine is precious. 2) They don’t know what they don’t know – They KNOW they should probably have an estate plan done, but they don’t know what kind of plan, they don’t know who to ask, etc. And finally, 3) Cost. They usually know that “you get what you pay for” so free online documents are probably going to be no-good, and they don’t want to jeopardize having bad documents – but seeing an attorney is maybe an expense they don’t want to take on at the moment.
Well, with time and cost, I think at some point, young adult have to proactively prioritize estate planning – most of us are always busy and most of us don’t love paying lawyers for fun. So, I guess what I mean is that young adults simply need to make the intentional choice to say “I’m going to get my estate plan done” … and then act on it. I really can’t help you with that one! Though, what I CAN help you with is maybe that second reason I think some young adults don’t do estate planning – which is the “I don’t know what I don’t know.” That, they often recognize the need to do an estate plan, but they don’t know what kind of plan and/or don’t know who to work with. Hey, I can be helpful with that one – hence this episode. It’s for you!
So, when I think of young adults, I am reminded of the phrase, “Keep it simple, stupid.” K.I.S.S. right? I hope you’ve heard of that saying before and you’re not offended! Anyway, getting something in place is better than nothing. It’s kind of like car shopping – there are Honda Civics – good cars and faithful – and there are Corvettes – good cars, faithful, and a little fancier than the Civic, right? If you pick the Civic, that’s fine; And if you pick the Corvette, that’s fine too. Just depends on how much you’re wanting to spend! That’s a great metaphor for estate planning, really. When I think of young adults, I primarily think of a basic plan consisting of a Health Care Representative/Power of Attorney with Advanced Directives, Financial Power of Attorney, and a Last Will and Testament. That’s my Honda Civic. It’s better than having no car, right? But it’s still a dang good car. Compare that to those same three documents, AND add on a Revocable Living Trust. That’s going to my Corvette. So, let’s dive into both…
So, the biggest difference between the plans is a Last Will and Testament versus a Revocable Living Trust. I know, I know – so many people hear the word “trust” and they’re like, “What?! I don’t think I have enough money for a trust!” Rather than looking at it from “how much money you have” you need to look at it from a “what am I trying to accomplish? What is my goal” standpoint. With a Will, to make the terms of the Will “come to life” is going to require a court process called probate – which is a process that will take extra time and money to get through after you pass away. I bring this up because, especially young adults with kids, I see them want to provide a specific distribution pattern for their kids if they, the parents, were to pass away too soon. What I mean by that is I see them want to say “My kid gets X% at 18, Y% at 25, and Z% at 30” or some type of setup like that. Well, to make that happen means we need assets actually flowing through the Will – which a Will is going to have to be taken through that probate process.
This leads me to “why” some young adults and young families end up doing the “Corvette” package – those same basic document, but ADDING on a Revocable Living Trust. I see individuals and families do this type of plan usually to ensure a specific distribution pattern and plan happens (like kiddos inheriting at 18, 25, and 30 in that past example) AND to avoid the probate court process. Trusts, so long as your assets are governed by the trust, will avoid the probate court process. What I mean by the piece about “so long as your assets are governed by the trust” is a VERY important process called “trust funding.” Funding is the process of changing title and ownership of assets (like your house) to the name of the trust … AND changing beneficiaries (like brokerage accounts, life insurance, etc.) to be the trust. What that accomplishes is that if something happens to you, those assets are either IN the trust already or dump into the trust at your passing – and so long as the trust is governing, those assets are going to pass free of the probate court process.
So, that’s what I mean by the Honda Civic versus Corvette – is either BETTER than the other? I’m not sure how I’d answer that, honestly. If someone is coming to a conversation about estate planning thinking “I just want to do something basic and cost-effective” then maybe the basic Will package (the Honda Civic) is most appropriate -or- if someone comes to the conversation thinking “I want to do estate planning … and I want to do the absolute best package I can possibly do to help my family and/or kids EVEN if that means spending more than doing just the Will” then maybe the Trust package (the Corvette package) is better for them. It’s really up to them – and honestly, EITHER is better than nothing.
Alrighty, I’m out of time, friends, so let’s wrap this episode up -- next week’s topic is on estate planning of the rich and the famous – on that episode, we’re going to dive into what happened estate-wise following the passing of the super well-known track star, Florence Griffith Joyner. Her estate taught many that after doing your estate plan, you kind of need to setup your Executor for success – and that means they need to know where your estate planning documents even are. We will dive into that next Tuesday, Legal Tea Listeners, as I dive into her estate – Talk to you then and stay well!