KNOWLEDGE CENTER: Generational and gender differences in approach to estate planning [Column]

Since the start of the pandemic, our lives have changed in a variety of ways, from increases in telemedicine and working from home to virtually learning. The new normal has become, well, normal.

The pandemic has also created a greater awareness around estate planning, from the very young to those who are advanced in years. Every estate plan should include a will, powers of attorney and an advanced medical directive, or living will. The inclusion of a trust(s) and other strategies will vary depending on the complexity and size of one’s wealth.

Let’s explore the differences in estate planning through the lens of different generations and gender.

Baby Boomers (1946-1964)

Well into the late stages of their careers or in retirement, baby boomers, along with the preceding silent generation, own and control the biggest share of wealth. Over the next several decades they are positioned to leave behind trillions of dollars to the next generation (The Great Wealth Transfer). Given the enormity and complexity of their wealth, they are the most likely to incorporate trusts as part of their estate planning to mitigate federal estate taxes, maintain control, and provide for future generations. The most charitable of all generations, baby boomers give generously to nonprofits (gifting cash, appreciated securities, etc.) and their children and grandchildren through annual gift tax exclusions ($16K annually). Baby Boomers often seek legal advice from experienced estate planning attorneys typically recommended through their CPA’s, financial advisors, and/or real estate agents.

Generation X (1965-1980)

During this growth, with the majority being in mid to late-stage careers, Gen Xers are the sandwich generation, stuck between the demands of raising their own children while simultaneously caring for their ageing parents. With minor children in tow, their estate plans will include guardianship and the adequacy of life insurance coverage. Guardianship typically defaults to grandparents in the event both parents pass away. However, Gen Xers must consider the financial and health condition of their parents in assuming guardianship responsibilities. Life insurance is critical at this stage as it provides a means of lifestyle maintenance for their surviving spouse and educational expenses for their children.

As the primary beneficiaries of The Great Wealth Transfer, many will not only inherit additional wealth but will serve as power of attorney and executors of their parents’ estates. This generation is likely to use a combination of online resources and reputable attorneys when developing their own estate plans independent of their parents.

Millennials (1981-1996)

Also known as Generation Y and now the largest generation with the youngest members being age 26, many millennials are just starting out, growing their careers and creating families, and may feel they are either too young or don’t have enough assets to consider estate planning. However, estate planning at this stage is just as critical. In 1990, then 26-year-old Terri Schiavo went into cardiac arrest, eventually leading to her being in a persistent vegetative state. Unfortunately, Terri had no estate plan in place, specifically an advanced medical directive or living will. As a result, a court battle between her husband and parents ensued and lasted nearly 15 years before her death. Younger members of the millennial generation are likely to seek and create estate plans solely through online mediums.

Gender

Statistically, women outlive men by an average of five years and in some cases even longer depending on a relationship’s age gap. This makes it more likely that women will have the final say regarding the passing down of family wealth. Despite this phenomenon, women (specifically baby boomers) have often taken a hands-off approach to estate planning with sole reliance on the plans created by their husbands. However, younger generations of women have taken a more active role in their estate planning as they are now marrying later in life, if at all, earning more and building their own wealth. Women across all generations should take a more active role in their estate planning to ensure it meets their individual needs and circumstances. Education in not only estate planning but also the nuances of their estate plan will only strengthen their position over the long term.

Regardless of generation or gender, estate planning is of great and equal importance to everyone.

Donald Lyons is a wealth strategist with Bryn Mawr Trust. With 20 years of experience in wealth management, he provides high net worth clients with fiduciary and investment management services. Donald is a Certified Financial Planner as well as a National Social Security Advisor. He holds a master’s degree in business administration from Pennsylvania State University and a bachelor’s degree in business administration from Temple University.

 

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