as it seems, many of your young professional clients — have no estate plan
whatsoever. It's never too early to
begin sketching out the basic estate plan for your millennial financial
planning clients. Here's a round-up of what they should know, even if their
highest earning years are still to come:
Know your beneficiary
designations: A young professional probably has access to a retirement
plan at work, and he may have assets outside of that in an individual
retirement account. Further, there might be a group life insurance policy
available at the workplace. It's important that the client revisits who's
listed as a beneficiary on each of those accounts.
Talk about life
insurance: Group coverage through the workplace doesn't cut it, as
it's typically not portable and it may not be enough to sustain a surviving
spouse and children. If your client is getting married, start talking about
obtaining individual life insurance policies, ideally as term coverage. The
birth of a child should jump-start that discussion, too.
Create a health care
proxy and power of attorney: The last thing any young person wants to
talk about is the possibility they may be incapacitated. And unlike the issue
of life insurance, you don't have to wait for your client to get married or
have a child before having this discussion.
Draft a will: Maybe
your client isn't a multimillionaire yet. If she has assets, she probably has
an idea of where she wants them to go in the event of an untimely death.
Without a will, state intestacy laws kick in, and the estate could be settled
in a manner the decedent didn't intend. If there are children, clients use the
will to declare who has guardianship over them.
Wills also help avert litigation when naming an executor,
because nobody wants a legal brawl among family members, especially after
Discuss federal and
state estate taxes: Young clients whose assets fall below the 2015
estate tax exemption of $5.43 million might still face a whole slew of taxes
from the state in which they reside because those estate tax exemptions are
lower. In New Jersey, the estate tax exemption is at a much more tangible level
of $675,000 — a home, two cars, and healthy 401(k) and IRA balances can get a
professional married couple close to that amount. Even if it isn't time to talk
about trusts, it's good to keep these clients aware of the local tax
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