Why Does Your Generation Need an Estate Plan?

In a recent online article in Financial Advisor Magazine, Seth Kaplan and Joshua Goldglantz tackle the issue of estate planning from an interesting angle: by addressing planning issues unique to Generation X (those born between the early 1960s and early 1980s).

The article makes a number of interesting points, but it’s safe to say that the issues presented in the article will continue to apply to younger generations as well, especially Generation Y (born between the early 1980s and the early 2000s), frequently also referred to as “millennials.” The lifestyles of Generation X and their younger cohorts have lead to unique considerations beyond traditional estate planning concerns, such as inheritance and probate. And it should come as no surprise that the bulk of these issues stem from our increasing reliance on technology.

Kaplan and Goldglantz refer to Gen Xers as having a “virtual afterlife,” referring to the digital footprint of our interactions that live on the cloud, and will remain there into infinity. These include tweets, blogs, and other social media posts, but also include private interactions that may contain sensitive information. Kaplan and Goldglantz discuss how Facebook is dealing with privacy in regards to deceased profiles:

Social media websites generally have strict privacy policies and often do not allow access to the accounts of users who have passed away. Facebook, for example, when notified of a user’s death, may “memorialize” the user’s Facebook page, but may not allow the family access to the account.

While there is a benefit to letting families use their dearly departed’s profile as an online memorial, Facebook is forced to make a tough decision between respecting the wish of the grieving family, and honoring the promise of privacy it made to its user before they passed. Facebook is contractually bound to protect its users’ private data, and there is no provision in the contract that terminates the agreement when the user dies. [1]

Beyond social media and privacy issues, the increased digitization of our lives can complicate the financial side as well. Arranging the financial assets of a deceased person without an estate plan is complicated enough, but at least there is the benefit of a paper trail. If bank statements are still coming in the mail, that should at least provide a clue to unknown accounts. But as younger generation move toward online banking, the paper trial becomes digital. Beyond online bank accounts, website domains and digital currency such as Bitcoin are all assets in their own right.

Just like Facebook, most email providers have privacy policies that protect their users past their death, but there are certain provisions that can facilitate the transition of electronic assets. Gmail, for example, allows users to name a beneficiary who can access their account when they die. It’s only a start, but once a beneficiary has access to email, there’s little more they need to track down and take care of other virtual assets.

Setting up an electronic beneficiary takes little effort, but it can save mountains of trouble for your loved ones if you die. Likewise, the amount of effort required to establish a basic estate plan pales in comparison to the difficulty that can befall one’s family if no planning is in place. A sudden death, or a family member becoming mentally handicapped, can cause a destructive court battle that can tear a family apart. If you have children, a lack of planning places their care in the hands of the court, and their inheritance may be crippled by estate taxes, or wiped out by costly probate battles. Even without a second generation to care for, there are many positive ways your estate can be passed on to your friends, loved ones, or a charitable organization. But without a plan, intestacy laws in your home state may make the plan for you, and it most likely won’t line up with your wishes.

Beyond the “virtual assets,” these are the basic estate planning considerations that everyone should consider, be they Generation X, Y, or Z, and regardless of the shape or size of their family.