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Why young adults need to be a part of your estate plan

How can I help my kids or leave a legacy?

Ever since they were born, your children have been a consideration when making important decisions. Just because they now are grown—in college or on their own—is no reason to stop that way of thinking, or planning. When it comes to managing your affairs, you need to get them involved as early as possible.

In general, there are three questions you need to answer when estate planning:

  • How much will be left in my estate?
  • What happens to that money?
  • Who do you want making that decision?

When you have adult children, there may be a fourth you want to consider:

  • How can I help my kids or leave a legacy?

To address this last question, it should be understood: Everyone’s path in life is different. But let’s assume your adult children have familiar goals: finishing college, getting married, starting a family, doing their own estate planning. If you are planning to help them along the way, make sure you have a good idea what they need and how you can best provide financial assistance.

Taking the right steps now can make things a little less complicated in the future. Here are some things for you to consider:

Where to put your money: Maximizing the money you can leave for your loved ones, while lessening the tax burden is typically the reason why people do estate planning. Ask yourself this: Does my current portfolio provide tax benefits and manage risk to my assets?

A product like permanent life insurance not only provides tax-deferred cash value growth, your beneficiaries can also get a typically federal income tax-free death benefit when you pass—a sum possibly much larger than you could save on your own—as long as the premiums are paid and as long as the policy is structured properly. And a product such as whole life is substantially less affected by the volatility of the securities markets because its guarantees are tied to the claims-paying ability of the issuer of the policy.

What are your wishes for your medical care: A long-term condition can take a large toll on your retirement finances, not to mention how much you can help your offspring. But with proper planning, you can protect all you’ve worked for and get the quality care you want. That’s why now may be the time to look into long-term care insurance or a chronic care rider on your existing permanent life policy. A Chronic Care Rider may cost you more in premiums, but this may be an opportunity for your adult children to contribute a little bit now—to protect their inheritance for later.

There may also come a time when you won’t be able to make important decisions about your medical care. Who do you want making those decisions? It’s best to get that in writing now, before it’s too late. Creating a living will can help make sure your wishes are carried out.

Assigning beneficiaries: This may seem pretty straightforward, but depending on their situation, it may make more sense to assign someone other than your adult children as beneficiary. This may be due to taxes or other financial or personal situations. Speak to a tax professional to see what arrangement would work best for your circumstances.

Create a packet with all your important information: The last thing you want when something happens is for your loved ones to have to scramble around, looking for vital information about your care and your estate. The Globe and Mail suggests having everything in order and in one place so things are in place when you pass.1

Here is a short list of items to have ready:

  • All estate documents including a copy of your will, powers of attorney, and living will
  • A list of your financial accounts, such as bank, investment and credit card accounts and authorization to access them
  • A list of all the benefits your family members may be entitles to, such as life insurance pensions, plus who to contact and how to access them when the time comes
  • A list and description of your debts (such as a mortgage, line of credit or loans) and your major assets (home, other real estate investment and any collectibles such as art or jewelry that have substantial value).

Finally, you know you’ve always taught them to do the right thing. The greatest benefit to including your adult children in the discussion early on will help them better understand what they can expect and what they will be expected to do. There’s no better way to prepare them for their own future then by serving as an example of how to handle their affairs, so their family will be prepared when it’s time to plan their own estate.

Neither New York Life Insurance Company nor its agents offer tax or legal advice for your personal circumstances. Please consult your tax or legal advisor to find out whether the general information in this article would or would not apply to your personal circumstances.

1 “How to communicate your estate plan,” The Globe and Mail, February 20, 2014, http://www.theglobeandmail.com/globe-investor/investor-education/investor-education-fund/wills-and-estate-planning/how-to-communicate-your-estate-plan/article16953765/.