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Estate planning for young people: Why Generation Z and Millennials should write a Will

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For young adults, the thought of what happens when you die is typically not at the forefront of their minds, especially thinking about what will happen to their assets such as superannuation and life insurance policies; however, the COVID pandemic has bucked this trend and has caused a shift in the mindset of young adults and more Australians now starting to plan for the future and value the importance of preserving their wishes. Attwood Marshall Lawyers Wills & Estate Paralegal Talliah Meakin discusses why all Generation Z and Millennials should have some form of an estate plan in place, no matter their age, health status, or financial situation.

Introduction

For young adults, the focus is usually on embarking on a chosen career path, building wealth, starting a family and finding their way in the world. Death can seem like a far-off abstraction.  However, the reality is that no one ever knows what the future holds. Health issues and unforeseen accidents can occur at any time.  This highlights why not having an estate plan is risky, almost like riding a motorcycle on the highway without wearing a helmet.

Generation Z (born 1995-2009) is the largest generation ever, comprising around 20% of Australia’s population and almost 30% of the world’s population, many of whom are now above 18 years old.  Most of them have probably never considered having their estate planning organised.

In the past, there has been a common misconception that because you are young, you don’t need a Will, and because you are young, you have no real wealth and nothing to leave behind.  This is not the case.  What many young Australians do not understand is everything that belongs to you forms part of your estate, including motor vehicles, and personal possessions. Then there are also non-estate assets that can hold substantial value such as superannuation and life insurance policies.

With many Gen Z’ers investing earlier in life compared to those that came before them, the percentage of Gen Z’ers that have had some exposure to stocks and other investment strategies is much higher than previous generations.

We are also at a time when millennials are in a position to inherit trillions of dollars as the largest intergenerational wealth transfer in human history is set to take place.  

The COVID perspective

New research has found that from a sample of more than 1,000 Australians, 70% had not yet prepared a Will.  The survey also noted a 127% increase in traffic to Finder’s guide on how to create a Will since January 2020.  In times of crisis, putting a plan in place for the worst-case scenario, doesn’t seem unnecessary after all.  The recent survey also revealed that 34% of respondents disclosed that they would be inclined to create a Will if they became ill or were diagnosed with a terminal illness. 

Another annual survey conducted by Caring.com showed that nearly 1 out of 2 younger adults (18-34 years) were prompted by COVID-19 to engage in estate planning.  Additionally, the number of young adults with a Will has increased by 63% since 2020.  In 2021, 18 – 34-year-olds were, for the first time ever before, more likely to have a Will than 35 – 54-year-olds.

Despite the COVID-19 pandemic, the overall prevalence of estate planning hasn’t substantially changed since 2020, and there needs to be more education out there to warn all age groups of the pitfalls of not having a valid Will in place, no matter how old you are or how much money you have to your name.  Simply put, an estate plan is about deciding what you want to happen with your assets after you die and making sure you don’t leave your family and friends, or a judge, with the burden of deciding what they think you would have wanted.

Estate Planning 101

Estate planning is essentially documenting your wishes for what is to happen to your assets when you die.  An estate plan can help give you comfort knowing your assets will be distributed according to your wishes. These could be assets of significant monetary value or even priceless assets that hold sentimental value that you want someone special in your life to have. 

A crucial part of estate planning is making a Will.  Estate planning also involves nominating beneficiaries to receive your superannuation, appointing a Power of Attorney, and documenting your wishes around medical treatment and who will manage your affairs if the unexpected happens and you lose the capacity to make personal, financial and medical decisions for yourself. 

Having an estate plan in place ensures your loved ones are looked after following your death and removes the likelihood of family disputes and arguments arising. In the event you lose capacity, having a document such as an Enduring Power of Attorney in place can ensure that you receive the kind of medical care and treatment you want if you can’t advocate for yourself. 

What happens if you die without a Will?

When you die without a Will, it is referred to as dying intestate. 

Dying without a Will can extend and complicate the process of administering your estate quite drastically.  It also means that your wishes will not be considered, and those you intended to be beneficiaries of certain personal belongings may not inherit them at all.  This makes the process much more difficult for your loved ones, who are already grieving.

What’s involved in making an estate plan?

It doesn’t have to be a difficult process, and many people are surprised as to how straightforward the process is. The best approach is to engage an estate planning lawyer who will be able to gain an understanding of your unique family and financial circumstances, and what documents you should put in place to ensure your wishes will be fulfilled.  Rather than take a risk with a DIY Will or a free Will offered by the Public Trust Office, which is prepared by a public servant and not a legal practitioner, you should always engage a suitably qualified lawyer who practices in this complex area so that they can ensure your Will  be upheld and that you effectively mitigate the risk of anyone contesting the Will after you are gone. Getting it done right from the start will save time and energy, prevent issues arising, and effectively secure additional tax and financial benefits for your beneficiaries. 

Several important matters should be considered in your estate plan:

1. Create a plan for your Superannuation 

Your Will doesn’t cover superannuation.  Superannuation (Super) is held in trust by your superannuation fund trustee, meaning you do not personally own it like you do other assets, such as a house or jewellery.  Because of this difference, you will need to nominate a person (or persons) as your super beneficiary and ensure this nomination is kept up to date, generally superannuation nominations need to be reviewed every three years.  A super beneficiary receives the proceeds from your super account after you die.  Nominating a beneficiary gives clear instructions to your super fund about whom you want to benefit from this asset, which they are bound by.

There are a few types of nominations available:

  • Binding nominations: this is a written direction to your super fund trustee, setting out how you wish your funds to be distributed and meets all the essential legal requirements to allow the payment of specific amounts of your Super to the people you nominate.  It is generally valid for a maximum of three years and then lapses, so ensure you keep this up to date!
  • Non-binding nominations: this is a written guide indicating your wishes of the distribution of funds after your death and while your wishes will be considered, ultimately the trustee retains the discretion to distribute to the deceased’s estate or dependants. 
  • Non-lapsing binding nominations: a written direction to you Superfund trustee expressing how you wish your funds to be distributed after you die.  If permitted by the trust deed, these nominations, usually remain in place forever, unless you cancel or replace a non-lapsing binding nomination with a new nomination.
  • No nomination: if no nomination is made, your fund’s trustee will determine whether to pay your superannuation to your estate or whom they deem the most suitable person as a beneficiary.

Who are eligible to be nominated as a beneficiary for your Super? 

  • Your current spouse (whether you are married, in a de-facto or same-sex relationship)
  • Your children aged between 18 and 21 years (every Superfund has different terms, so it’s important to check yours specifically)
  • Anyone who is financially dependent on you at the time of your death 
  • Your estate or legal representative (the reason you would nominate a legal representative, or your estate is so you could then nominate other beneficiaries via your Will)

2. Safeguarding your assets 

A current and up to date Will is essential to ensure that your assets are distributed as you want them to be.  Assets such as your home need to be included in your Will to determine who will inherit this when you die.  If you have young children, you will want to consider who you will appoint as their guardian.

Then there is also the issue of digital assets. If you have a social media account, have a following or earn an income on channels such as YouTube or Instagram, or even want someone to know how to manage your email accounts, and what to do with electronic files saved in your cloud storage, these digital assets can also be dealt with in your Will. It is just as important to plan for digital assets when completing your estate plan, as it is physical assets.

It’s important to speak with an estate planning lawyer to understand what tools you would benefit from putting in place. There are key events that take place in your life that should also trigger you to update or review your Will and estate plan, including if you get married or have children, if your financial circumstances change, if you buy a property, or if someone in your life dies that you have nominated as a beneficiary or executor in your Will.

3.  Making sure someone you trust will advocate for you  

Having a plan in place if the unexpected happens and you cannot advocate for yourself (or do not have the capacity to do so) is incredibly important.  An Enduring Power of Attorney allows you to appoint someone to make personal, medical, and financial decisions on your behalf. 

When we are young, we tend to be fearless, and have this concept that “it will never happen to me”. But unfortunately, the unexpected can happen to anyone at any time. Whether it be being involved in a motor vehicle accident, suffering a severe head injury at work from a fall or workplace accident, or suffering from a stroke, the reality is, these are all possibilities that can throw our lives off course.

The chance of having a stroke seems like an impossibility for many young people who may have a false sense of security that this simply won’t happen because they are “too young”. It is true that the risk of stroke does increase with age, however, young people do suffer from strokes, and it is estimated that 10 to 15 per cent of strokes occur in people 18 to 50 years old, according to a study published in the Stroke Journal in February 2020.

An Enduring Power of Attorney allows you to appoint a loved one who will automatically have the legal authority to advocate on your behalf and take over managing your personal, medical, and financial affairs in the capacity you direct them to.  Without this document in place, your mother, father, brother, sister, or closest confidant cannot simply step in and take control of your affairs to help you.

Additionally, by having this document in place you are providing them with clear instructions and guidelines around what you want to happen and how you want to be treated. This can help them immensely when making important decisions that impact you. They will know how you would want them to handle your assets, finances, and even what kind of medical treatment you prefer to receive. You can include extremely detailed instructions about your preferences in an Enduring Power of Attorney and appoint one or multiple people to make such decisions on your behalf. It really is about knowing that someone you trust will have your back and will step in to help you if you can no longer take care of these things yourself. Think of it as an insurance policy, to ensure you have a decision-maker ready to step in to help you in your time of need.

Attwood Marshall Lawyers – We’re ready to help you plan for the future

By having an estate plan in place (even when you’re young) you can protect your assets and take some of the burdens away from your family who you ultimately will leave behind.

Whether you want to ensure your spouse, partner, child, or other loved one is looked after once you are gone, or if you want to leave a lasting legacy to a charity or have someone take over your digital assets or plan for business succession, there is a lot to consider!  By having an experienced estate planning lawyer guide you through the process, you can ensure you have all your bases covered and you put a plan in place that is as unique and personalised as you are.

Attwood Marshall Lawyers have one of the most experienced Wills and Estates departments in the country, and our friendly team are passionate about helping people document their wishes to give them peace of mind.  The process does not have to be overwhelming and is more simple than you may realise! 

To understand what documents you may need to put in place for your estate plan, call our Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071 anytime.

You can also make an appointment with any of our lawyers by visiting our website and using our online booking app. Our lawyers are available to meet with you at any of our conveniently located offices at CoolangattaKingscliffRobina Town CentreBrisbaneSydney, or Melbourne.

Read more:

Young or old; everyone should have a Will and an Enduring Power of Attorney!

LGBTI rights in challenging Wills: The issues LGBTI community face in estate planning and estate disputes

Do It Yourself Will Disasters: The difference between a DIY Will and a professionally drafted Will

Including a charity in your Will can help you leave a lasting legacy

 

 

 

 

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Talliah Meakin Administrative Assistant

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