Millennials are often inundated with student loan debt, high housing costs, and other financial obligations. And while it might seem like the last thing on their minds, millennials should actually be considering getting a living trust. Millennials are often a very tech-savvy group, as well as the most educated generation in history. This is why it may seem surprising that estate planning is something that many millennials often do not consider. While it is not required to have a living trust, it is something that all adults should consider, especially if they have any assets or property that they wish to be protected.
In an era where technology gives instant and easy access to financial advice, young adults are often skeptical of traditional financial advice. They’ve been known to avoid 401(k)s, invest in cryptocurrency, and start side hustles instead of following a less volatile way of saving. So when it comes to estate planning, it’s no surprise that many young adults think they don’t need a living trust — or any kind of trust, for that matter.
But what exactly is a living trust, and do millennials really need one? How practical is a living trust and can young adults utilize this tried and true estate planning tool?
What is a Living Trust?
A living trust is a legal document that allows you to transfer ownership of your assets to another person or entity. You can use a living trust to manage your property during your lifetime and after your death. Unlike a will, which only takes effect after you die, a living trust becomes active as soon as it’s signed. This means that if you become incapacitated, your chosen trustee can step in and manage your affairs according to your wishes.
A living trust can be revocable or irrevocable. A revocable trust allows you to change the terms of the trust or revoke it entirely. An irrevocable trust cannot be changed or revoked. Living trusts are often used to avoid probate, which is the legal process of distributing a deceased person's assets.
Why Do Millennials Need a Living Trust?
Millennials are often saddled with student loan debt and may not have the time or money to invest in estate planning. A living trust can help them keep their assets safe and secure, and it can also help them avoid probate. Probate is a court-supervised process that can be expensive and time-consuming, so a living trust can save millennials a lot of hassle.
A trust can also help millennials protect their assets from creditors; specifically, an irrevocable trust. If a millennial has a lot of debt, creditors may be able to seize their assets if they die without a living trust. An irrevocable trust can help shield assets from creditors, and it can also help minimize taxes. Setting up any sort of trust can provide peace of mind for millennials, and it can help them protect their hard-earned assets.
Aside from debt, if you own cryptocurrency, you may want to consider creating a living trust to help manage it.
There are two main methods of transacting cryptocurrency – centralized and decentralized. Centralized methods involve a central authority, such as a bank or government, while decentralized methods do not. Cryptocurrency transactions can be made using either method, but each has its own advantages and disadvantages.
Cryptocurrencies are often described as being decentralized because they are not subject to government or financial institution control. This means that there is no central authority overseeing the currency, and transactions can take place between individuals without the need for a middleman. Currently, probate has no jurisdiction over decentralized assets; although the laws revolving cryptocurrency are gradually being discussed and developed.
While cryptocurrencies are often thought of as electronic cash or virtual tokens, they can also be held in trust structures. This means that, like other assets such as stocks or real estate, cryptocurrencies can be used to help fund and protect your estate. The trustee would be able to manage the cryptocurrency in the trust and can be a good way to ensure that your cryptocurrency is used according to your wishes, even if you are not able to manage it yourself.
This protection isn't limited to just cryptocurrency — a trust can help provide even better protection for centralized assets, whether tangible or not.
Safeguarding Side Hustles
Finally, millennials are known for their tendency to invest in “side hustles.” There are all sorts of businesses that millennials are starting these days. From side hustles to full-fledged small businesses, this generation is full of entrepreneurs. And there are all sorts of reasons why millennials are drawn to entrepreneurship.
For many millennials, one appeal of entrepreneurship is the ability to be your own boss. They want to create something they're passionate about and call the shots when it comes to their business. For other millennials, the appeal of entrepreneurship is simply the opportunity to make more money. They see starting their own business as a way to achieve financial independence and security.
Of course, one thing that often gets overlooked with these young business owners is making sure said business is properly secured. One option is to create a trust. This can be especially beneficial for a millennial small business owner.
There are several types of trusts that can be used for businesses, including LLCs and corporations. Creating a trust can help to protect these assets and ensure that the business is able to continue operating even if the owner is no longer able to do so.
A trust can also be part of an estate plan. This can provide peace of mind knowing that your business will be taken care of according to your wishes in the event of your death or incapacity.
Is a Living Trust Right for You?
So, do millennials need a living trust? While there may be various answers to this question, there are always circumstances to consider where a living trust may be particularly beneficial for young adults. If you're young and don't have many assets, you probably don't need one now, but should still consider it since it's better to be prepared than to have nothing at all. As we all progress through our professions and accumulate property and wealth, our financial situation will naturally develop, so it is worth considering having a trust created sooner rather than later.
If you are still unsure about whether a trust is right for you, it might be a good idea to speak with an attorney or financial advisor to get more personalized advice. Remember, there is no one-size-fits-all answer when it comes to estate planning, so make sure you do what is best for your unique situation. If you’d like more information about estate planning or any other aspect related to it, contact AmeriEstate Legal Plan, Inc. We are a national network of estate planning attorneys and other professionals who would be happy to help you.