Conventional wisdom casts trusts, wills, and estate plans as the exclusive domain of the ultra-rich. Supporting this notion, data reveals that two-thirds of Americans lack an estate plan, a figure that climbs higher to 80% among Gen-Zs. However, Matt Watson, CEO of the all-in-one financial management app Origin Financial, offered a compelling counter-narrative to this trend when I spoke to him recently.
Watson said there are two primary barriers that are deterring younger generations: a lack of understanding of the consequences of not having a will or trust in place, and the absence of a cost-effective and simple method to create an estate plan that could justify its expense.
Yet, in spite of these barriers, Watson has noted a significant shift in recent months: in 45% of the tens of thousands of planning sessions that have occurred between Origin’s members who are either millennial or Gen-Z that were advised to create an estate plan. Most of them went ahead and did.
This signal an unmet demand for estate planning among younger demographics. It also reflects the same finding stated in a recent study from Trust and Will that found that Gen-Zers and Millennial are the quiet leaders in estate planning.
Creating A Will And Trusts Despite Having A Meager Net Worth
The surge in estate planning among Gen-Z and millennials, many of whom may not consider themselves wealthy, is driven by several factors:
- Digital Assets: Younger generations often possess significant digital assets, including cryptocurrencies, online businesses, and social media accounts, which require careful management and protection.
- Health and Pandemic Awareness: The COVID-19 pandemic heightened awareness around health crises and the importance of having arrangements in place for unforeseen circumstances.
- Family Dynamics: Modern family structures, including blended families and partnerships without marriage, necessitate clear directives to avoid potential disputes.
- Philanthropic Desires: Many young people wish to allocate portions of their estate to charitable causes, requiring formal arrangements to ensure their wishes are followed.
- Financial Prudence: There’s growing recognition of the importance of financial planning, including estate planning, as a component of personal financial management.
Why Should You Consider Setting Up An Estate Plan
A study of people’s finances in 2021 revealed that “financial illiteracy” cost Americans an estimated $352 billion that year alone. Basic mistakes like not having a trust, can mean the difference between leaving a legacy for your children, or giving half of it to the government. It’s often the simplest steps that yield the greatest returns, and with GenZs proactively creating estate plans, we have some hopeful signals that a prosperous future lies ahead.
By taking proactive steps in estate planning, you can ensure that your assets, regardless of their size, are distributed exactly as you wish, offering a sense of control and protection over what you’ve worked hard to accumulate.
One significant advantage of this approach is the avoidance of probate—a process that can be both time-consuming and costly for your beneficiaries. Furthermore, estate planning allows you to make necessary provisions for your care and the management of your finances in case you become incapacitated, ensuring that decisions made on your behalf align with your preferences.
Another key aspect of having a solid estate plan is the minimization of family conflict; by clearly stating your wishes, you can help prevent misunderstandings and disputes among your loved ones after you’re gone.
Lastly, in today’s digital age, securing your digital legacy has become an essential part of estate planning. Providing clear instructions for the management or deletion of digital assets, such as social media profiles and digital currencies, ensures that your online presence is handled according to your wishes.
How To Create An Estate Plan, Easily
Origin Financial has innovated a solution with the introduction of an “estate plan” document creation feature within its app, which launched on April 11th, 2024. This feature democratizes the process, enabling anyone to devise a legally-binding estate plan at the mere click of a button (or a few clicks to be more accurate).
Origin is able to do this because their app is where their users track money in and out, invest, plan, and file taxes. They have so much data on each user that creating an estate plan is as simple as pulling data about the user’s assets they already have into a semi-customized template. This underscores something important: when you have 7 apps to manage your financial life, each of them becomes a lot of work.
According to Watson, “Estate planning is an essential step in anyone’s financial path. Estate plans are not just for the affluent; Certified Financial Planners concur that they are vital for everyone.” This underscores the importance of democratizing access to such crucial tools. Thankfully companies like Watson’s are filling the gap and are making it possible for everyone to have access to estate planning.
In conclusion, the movement among younger generations to embrace estate planning reflects a broader understanding of its value, not only for asset distribution but also for ensuring wishes are respected in unforeseen circumstances. With new technologies making it easier than ever to create an estate plan, there’s no reason to delay in setting up your own.
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