The uncertainty of the past year due to the COVID-19 pandemic has been a wake-up call for younger investors to realize the importance of estate planning and how it can play an integral role in managing and preserving assets in an era of unpredictability.
As the pandemic continues to weigh on the economy and potentially significant tax and social reforms loom, helping young investors see that it is never too early to create an estate plan has never been more important.
Start the Conversation
For many young investors, the pandemic has caused a shift of their financial goals. Many now see the need to take control of their finances and make solid plans.
Is your client considering a career change, rethinking their housing situation or becoming interested in impact investing?
While many young people may have previously considered estate planning something to address later in life, that has changed. Many now see that having a carefully thought-out estate plan is the key to building and maintaining generational wealth.
For advisors, now is the time to encourage younger high-net-worth clients to plan for the future.
Organize Intentions
An estate plan that inadequately reflects your client's intentions is not a good plan, so getting their financial goals organized is the most important next step.
Ask the question, "what do you actually want to do with your estate?" For most investors, four simple options form the broad outline of what they can do:
- Spend it.
- Give to heirs.
- Donate it to charity.
- Pay in taxes.
Get a Plan in Place
Having an estate plan in place, even if it is a simple will and revocable trust, is of profound importance in case something occurs before a detailed estate plan is completed. Many younger investors fail to consider how disability or medical directives can come into play at any stage of life.
Details can be refined over time, but young HNW investors need to have the large building blocks of their plans in place to avoid the risk of subjecting their estates to public disclosure of assets (probate) or an inefficient distribution of capital.
Roll With the Changes
Communicating how today's low-interest-rate environment affects estate planning and philanthropy is important for young HNW investors. The devastating impact of the pandemic has driven the social justice movement and increased awareness of the need for philanthropy and charitable giving.
For many young entrepreneurs and the next generation of family business owners, social accountability is a business imperative. Employees and consumers have higher expectations of companies to drive social change through their culture and values.
