What happens to an estate worth millions of dollars that suddenly finds itself up in the air, without an owner or beneficiary? A lot! Family feuds. Lawsuits. Internal chaos. Most people don’t begin to talk about or think about estate planning when they are at the height of their professional careers. It does happen, however, that many young professionals neglect to think about their finances in a long-term capacity and may approach their later years realizing that they haven’t quite thought out their financial futures and that of their families.
Here at Sovereign CPA, we help people with estate planning and other financial planning. Considering the future of your finances is not for those just a few years from retirement. The earlier people begin to consider the echoes of their equity, so to speak, the less likely it is for that hard-earned money to find itself in the wrong hands. Many young professionals today might not consider the implications of their financial planning, so we thought we’d take a look at why it matters in all stages of life.
Famous Stories of Unplanned Estates — Where Does the Money Go?
What do Jimi Hendrix and Amy Winehouse have in common? If you are a fan of popular music, you might agree that they were both behemoth talents who rocked the music world. They were both popular and successful with their respective generations. They both died at 27. They both lived a life of fame, and some might say excess. Both died tragic deaths. And yes, both died without having planned an estate or will, despite being worth millions and millions of dollars.
Hendrix died in 1970 at the ripe age of 27 and the height of his rock and roll stardom. His death was a blow to the millions of fans who considered Hendrix one of the best guitar players of his time. The fight over his estate went on for about 30 years. Since 2002, his sibling’s feuded over the estate and it wasn’t until Al Hendrix (Jimi’s father) died and left the sister in control of the estate.
Amy Winehouse’s story was equally as tragic. An unstoppable talent, Winehouse took the British pop scene by storm and soon exploded in America. When she died in 2011, her estate totaled $4.66 million after debts and taxes, according to the Associated Press. Winehouse did not leave a will and her parents ended up taking her after-tax assets. Her controversial ex-husband made a claim in 2019 for $1.4 million saying that he was with the singer in her most productive stage and was even an inspiration for a song. Most people familiar with the contentious relationship between the two would likely cringe at the idea that he would get this much of her cash. The claim has not yet been adjudicated.
Financial Planning Considerations for the Younger Generation
Of course, most people have not made millions of dollars by the time they are 27 and most people do not expect to leave this world so soon. Nevertheless, securing your loved one’s future is something most people are interested in. The millennial generation is quite underserved in the financial sector, though their financial futures are on the line.
We’ve compiled a couple of things that younger people might consider when maybe brushing the subject of estate planning, a basic financial plan, or even a will. It is unlikely that anybody in their 20s and 30s will have or could have an estate planned out, but beginning with simple plans can set them up on the right path.
Here are a couple of things to consider:
Protection of an Unmarried Partner. Many millennials are waiting longer to get married or they’re simply putting off marriage. Regardless, they may still be involved in a committed relationship which means they want to legally protect the other person in case anything happens. Marriage creates these default legal protections, but simply living with someone might not. People can name their unmarried partners in important legal roles, including:
- Financial power of attorney
- Medical power of attorney
- Will or trust
- Beneficiary designations
Protection of Dependents. A little financial planning and estate planning can ensure that your loved ones who depend on you are taken care of in the event that something happens. If you have children, you can name a specific person as their legal guardian.
Protect Wealth. Even though an estate might not be in the millions, it’s still important to ensure that whatever wealth one has accumulated is not lost to taxes or goes straight to the government. Many young professionals have accumulated a good amount of wealth through tech, other lucrative careers, or even receiving an inheritance. A good plan will point to how any property or assets will be distributed in the event that something happens.
Financial Planning is Security Planning
Although many young people still working might not often think about the state of their financing in the future, it’s never too early to begin with basic financial planning, wills, or estate planning. All of this is to protect you and your family. Sovereign CPA reaches out to people of all generations looking to secure their financial future and make smarter decisions early on. Connect with a financial professional today.