Estate planning should be done as soon as people begin earning and have assets, because it is concerned with bequeathing assets to beneficiaries after you die, via a Last Will and Testament or a trust. In other words, it doesn’t apply only to Gen Xers, but to people beginning their first jobs and accumulating their first assets through the end of life.

But let’s be realistic: Many of us put off Wills and trusts until later in life – when our thoughts may turn to retirement and other senior-citizen-type issues. It’s even more common to put off the other main component of estate planning, which is planning for illness or incapacitation, when you may not be able to communicate your wishes. This part of Gen X estate planning includes designating powers of attorney for both financial and medical affairs so that someone is authorized to carry out your wishes and see to your affairs. It also includes advance directives regarding your desires for medical care. 

In other words, Gen Xers are precisely at the age where, if they don’t have an estate plan, their thoughts may be turning to later life issues. If you don’t currently have an estate plan, you should. Plus, if you do have one, it may be time to update it.

We can’t underscore the importance of an estate plan enough. There is a law in all 50 states that deceased people cannot own property. When you die, and we all die, your survivors need to know what to do with your property. Your Last Will and Testament will tell your survivors and the courts how to distribute your property. 

When an individual passes away, their estate goes through probate, a legal process designed to settle their affairs, such as determining outstanding debts. If you leave a written estate plan, the probate process is much faster, easier, and less expensive. Without a written estate plan, probate can take months or even years – and in the interim, your loved ones may not have access to your assets.

In addition, without a clear sense of where you want your assets to go, there could be arguments among your family, friends, and business partners (if applicable) about what you would have wanted, leading to potentially costly legal battles and acrimony. 

Wills and estate plans can also provide specific instructions for guardianship of your minor children, including their education. In addition, because Gen X is the sandwich generation, often caring both for their parents as well as their children, you can leave specific instructions for how you want your parents cared for.

So if you haven’t put together an estate plan yet, how do you do it? How do you update it? Here’s a brief checklist.

1. Make a list of all your assets

Both Wills and trusts are designed to bequeath your assets to beneficiaries after your passing. So the first thing you need to do is make a list of all your assets. This includes financial assets, such as bank accounts, retirement savings, investments, houses, and cars. It also includes personal property. Don’t forget to include business assets if you have them, and digital assets, such as cryptocurrency or a business website.

2. Make a list of all your liabilities

Generally, liabilities that exist at your passing will be paid out of your assets. So to realistically bequeath your assets, you need to know your liabilities as well, so you know roughly the amount of assets that will be deployed to pay them. Do not bequeath an amount of assets you are not likely to have once outstanding liabilities are paid.

3. Make a list of all potential beneficiaries

Next, make a list of all potential beneficiaries. Include all family members you may to receive your assets, as well as friends. If you want to include charitable institutions or other organizations as your beneficiaries, include them.

4. Determine your bequests

Then, review these lists to determine the bequests you’re comfortable with. In other words, to whom or what institution do you want to give your assets? What is a fair and reasonable distribution of your assets? When determining bequests, use percentages (as opposed to dollar amounts) since no one can fully determine the amount of assets they will leave behind or what the value of those assets will be. Asset prices may fluctuate and your estate may need to utilize some assets to settle your affairs. 

5.Draw up a Will or trust

Once you know your assets, liabilities, and potential beneficiaries and their division of them, it’s time to actually draw up a Last Will & Testament or a trust. (You can have both, if you prefer.)

It’s advisable to use an attorney both to draw up a Will or trust and to guide you through the process. They can explain the differences and counsel you about the best choice for your situation.

Trusts are often used to make the disposition of assets smoother since trusts don’t go through probate. Assets are put into a trust, which is then managed by a trustee. You can use trusts also for various special purposes, such as protecting property from creditors, providing for disabled family members, and ensuring that family members receive assets in a graduated time frame (should they be young or be thought financially irresponsible). 

6. Set up an advance directive for medical care

Once your Will or trust is done, it’s time to turn to planning for medical end of life. An advance directive is designed to let family members and medical professionals know your wishes for treatment. Do you want your life prolonged with mechanical life support, for example? Do you want to be resuscitated? Under what circumstances?

7. Set up Powers of Attorney

As indicated above, people who are designated as having a Power of Attorney are legally allowed to make decisions for you should you become incapacitated through an accident or illness. Everyone should have both a medical power of attorney and a financial power of attorney. You can name one person for each, or the same person can do both. 

Discuss your wishes with the person you want to designate, so they are aware of when the power of attorney will start and when it will end.

8.Leave your records in order

Your financial power of attorney will need to know where your financial records are. That person may, for instance, have to pay bills while you are incapacitated. 

Make a list of your bank accounts, savings accounts, and investment accounts, with account numbers and passwords. You should also leave a record of any insurance policies. Some people like to leave a list of their wishes for funerals or memorial services, along with their wishes for burial or cremation. 

Be sure that at least one family member (or your power of attorney) knows where these records are located. If it requires knowledge of a password, a key, or a combination, make sure that the appropriate person knows it. Estate documents & financial records should be stored in a secure, fire proof, water proof manner. Do not store in a bank safe deposit box, as the document granting your attorney-in-fact authority to access the box will be locked inside the box, preventing them from accessing the documents.

How a Financial Advisor in Tennessee Can Help

Many people think of estate planning documents as the province of attorneys. But there are reasons to go to a financial advisor first. The attorney will only be concerned with legal issues and charge a large fee. But if you come to us at Sapiat Asset Management, we are concerned with legal issues, but also concerned with taxation issues, ease of administration, and more importantly, family dynamics. Once we talk through everything, we’ll make our recommendation to your attorney, who then draws up the documents. There is no extra charge for this service from us. It is included in what we do for you.

Sapiat: Your Generation X Financial Advisor in Tennessee

While no one likes to think of estate planning, it’s essential for Generation X’s peace of mind and the peace of mind of their loved ones. Sapiat Asset Management handles estate plans as part of comprehensive financial planning and works with your attorney. We are Generation X financial advisors and a fiduciary fee-only financial advisory firm located in Greeneville, Tennessee. Contact us today for more information on estate planning.