Benefits of Estate Planning for Today’s Young Adults
Traditionally, the transition from adolescence into formal adulthood has been marked by certain milestones: moving in with one’s partner, engagements, weddings, and the first purchase of a car or house, for example.
Today, however, as Dr. Steven Mintz notes in this Psychology Today article on modern adulthood, the journey to achieving adult status is “far slower and much less uniform” than it was in previous generations.
The Canadian Encyclopedia reports that in recent years, the average age of first marriage in Canada is close to 30 years old for women, and 32 years old for men. This contrasts sharply with the 1960s and 1970s, when young people in Canada were more likely to marry between the ages of 23 and 25 years old.
Similarly, while the average young adult in the sixties could expect to achieve such “emblems of adulthood” as home ownership, marriage, children, and a stable job by around the age of 24, far fewer young adults in the 2000s will have attained these markers by this same period. According to Statistics Canada, 54% of men and 43.4% of women in Canada have never married by their early thirties. In Mintz’s article, he notes that rates of childbearing, homeownership, and even car ownership for young adults have also distinctly declined from those of past generations.
Notably, many of the traditional adulthood markers relate to asset accumulation – whether it’s the paycheque associated with a steady and lucrative job, or an investment in a home or vehicle, for example. With fewer millennials travelling down these conventional paths to adulthood, and arguably having fewer assets to their names, should today’s young adults be concerned with formulating a plan for their Estate?
In my view, the answer is yes. This blog will address three of many reasons to set up an Estate Plan as a young adult today.
- Your assets can be distributed to the beneficiaries of your choice, instead of being determined by Intestacy
In Ontario, Part II of the Succession Law Reform Act (the “SLRA”) governs how one’s assets will be divided if a person dies “intestate” – namely, without a Last Will.
As many young millennial adults are unmarried and without children, I will focus on subsections 47(3)-(11) of the SLRA. These subsections delineate how an estate will be divided if one dies without a will and has neither a spouse nor children (notably, common law spouses are not included as a “spouse” on intestacy). These rules can be summarized as follows:
- If the Deceased has no spouse and no issue, the estate goes to the Deceased’s surviving parents, equally.
- If there are no surviving parents, the estate goes to the Deceased’s siblings equally (and if a sibling has predeceased, that sibling’s share goes to their respective children).
- If there are no siblings, the estate goes to the Deceased’s nephews and nieces equally.
- If there are no nephews or nieces, it goes to the next of kin of equal degree of consanguinity – in some cases, distant relatives can end up inheriting from the estate, despite otherwise having no relationship with the Deceased.
- If there are no next of kin, the estate escheats to the Crown.
Making an estate plan empowers a party to decide specifically to whom their assets – of both financial and sentimental value – will go.
Importantly, and as we have blogged on previously, any unpaid debts of the Deceased, in addition to the expenses and liabilities of the estate (e.g. funeral expenses, taxes, legal fees, etc.), are a first charge on the assets of the estate, and must be paid by the estate before assets will be distributed to beneficiaries.
- You can choose who will manage your assets, limited or not
By way of a Last Will and Testament, one can appoint an Estate Trustee (or Estate Trustees) of their Estate. Among many other critical duties, the Estate Trustee is responsible for securing the assets of the Estate; settling any of the of the Deceased’s debts and taxes; ensuring the Deceased’s assets are distributed in accordance with the Deceased’s wishes; and, often, tending to funeral arrangements.
When a person dies intestate and an Estate Trustee is not appointed, the process of the administration of their Estate becomes much more onerous, potentially more expensive, and can be significantly delayed. By executing a Will which appoints an Estate Trustee, one can ensure that a responsible and trustworthy person, who is up to the task, will give effect to their final wishes and manage their estate effectively after death.
- You can document your intentions for your intangible, digital assets
This recent Globe and Mail article sums it up succinctly: neglecting to plan for one’s online assets can create “huge headaches” for executors, especially in light of Canadians’ “expanding digital footprints”.
In addition to those online assets which have true financial value – such as cryptocurrency, Paypal accounts, and some loyalty rewards programs – many digital assets, like Facebook or Instagram accounts, can have significant personal and sentimental value. By stating one’s preferences for digital assets management in an estate plan, one can better ensure that their wishes for these assets are honoured, and potentially reduce conflicts between loved ones that might otherwise arise in this respect. The Globe and Mail cites Facebook profiles as a prime example:
” … some loved ones may want a family member’s Facebook profile to remain active after they pass away, for remembrance; while others might want to delete the account, for closure.”
If this article has inspired to start your estate planning process, we encourage you to meet with a trusted Estates Lawyer to assist with your planning needs.
Thanks for reading!