How Millennials Will Impact the Future of Estate Planning

Nobody has a crystal ball, but it’s certain that the American landscape is changing and the change is driven by the Millennial generation. Millennials are changing attitudes, workplaces, work ethics, what’s acceptable and what’s not. They’re driven more by technology than relationship. They see things from a different perspective than previous generations.

And as Millennials come of age, what does that mean for the government, the economy, and the family? Estate Attorney Steven Andrew Jackson provides some perspective.

Millennials by Age

The American Millennials are adults born between the years 1981 and 1996 (ages 23 to 38 in 2019. Those born from 1997 on are considered part of another generation). They often refer to my Generation, mid-fifties and up, as the “Sandwich Generation”. This being “because the adult kids won’t leave and their parents don’t die”.  Only people in this Generation laugh at that.

You may ask, “Why is this important?” It factors into Estate Planning now and it will factor into the Estate Planning in the future as they will be the next Generation to do investing, running of government agencies, industry and to do Estate Planning. It will impact how they handle their inheritances.

Millennial Report Card

As of 2019, the Millennials are not faring well especially the older Millennials who are approaching their forties.  Overall, they are approaching middle age in worse financial shape than every living generation ahead of them, despite a decade of economic growth and the lowest unemployment in forty (40) years. The Millennials have failed to match every other generation of young adults born since the Great Depression. They have less wealth, less property, fewer home purchases and have fewer children.

According to a recent study from Deloitte, the average Millennial’s net worth has fallen under $8,000.00, down 34% from the average net worth of previous Americans ages 18-35.

Net Results

Since they are unemployed or underemployed, they are paying less into the Tax and Social Security System than the Generations before them. Those funds are used to support the Generation ahead of them receiving Social Security, plus pay other entitlement benefits, and help fund the operation of the myriad of Federal Government and State bureaucracies.

My clients used to pass on in their seventies. Now they live into their nineties due to better health care and other factors.  This is important because it means there will be more people needing care longer than was expected in previous generations.

How Millennials Work

The Millennials of today are slower to find TRADITIONAL career paths and many will move from town to town and job to job more frequently than previous generations.  Many will choose to work in the service industry, such as in hotels, restaurants or bars and then move again.  Millennials are more of an “Experience Generation”. They value going places and seeing things more than acquiring assets and the responsibilities that go with assets.  They do not advance in careers in the traditional ways prior generations have done.  They also do not start families, buy homes or have children in the same traditional ways of the past.  Millennials are changing the status quo and these generational changes will have future impacts on everything from financial services, healthcare, government and more.

Education and Lifestyle:

Education looks different for the Millennials than the Generations before them. The traditional College and Graduate schools may not be a way to a better career, especially in the Technology Field where many can work from home, get training and move up to the next level of pay and responsibility through certifications.

Another interesting piece of the Millennials, and the Generation after them, is that they may be permanent renters. They will often rent where they live because they move so often. They use more public transportation, and may even rent motor vehicles, as opposed to purchasing one.

Many Millennials are having children later at the age of 35 and up, if they have them at all. Today’s Millennials at age fifty will have children who are just becoming adults when they move into their elderly years. This is because the Millennials started so late in their lives to have children.

None of this is necessarily a negative indictment to success in life.  Like many generations before them, the generation following is usually responding to what they observed from their parents.  Many millennials watched their parents and/or were impacted by the big recession of 2008 when those who are 38 today would have been in their mid-twenties.  They witnessed their parents lose the homes they purchased. They witnessed parents losing their investments and businesses and jobs.  They witnessed their hard-working parents having to go back to work and never enjoying their lives.  As much as people want to judge the Millennials, they are simply responding to the lifestyle they witnessed.

As in any family, there are siblings that succeed and those that seem to never leave the nest although both may have been raised with the same conditions.  However, for Millennials there appear to be two distinct types – from one extreme to the other – Motivated vs. “Basement”.

“Motivated Millennials” versus “Basement Millennials”:

“Motivated Millennials”:

From many stories from clients, you hear that one of their Millennial Adult Children is very motivated. That may include that they are very good with technology and the Web in conveying and selling ideas, services, and products. They also may be highly motivated to work for themselves. Many do not see a traditional employer in their future. They create their own product or service based upon what they find as a need that matches up to their own skill set. They will move swiftly in and out, of a product and service, and modify the services and products that they are providing by changing quickly. They can adapt to the market quickly. Again they are often selling their wares and services through the internet as opposed to any other means.

Some are very dedicated to their trade and have a very specific desire to advance their skill set. Many may have a five-year plan, a ten-year plan, or even a twenty-year plan. They may have clear ideas of where they want to go and move daily in the direction of those goals.

The “Motivated Millennials” will also work hard on their ability to socialize and communicate. They can be very good in person with their people skills and may communicate well in writing.  Especially if they are in a service type industry that relates to being able to sell that service to others.

“Basement Millennials”:

As many stories that you will hear of that “Motivated Millennial” Adult, you will hear the version of the “Basement Millennial”. That is the Adult who is living in their Parent’s basement, or as in the comedy movie “Failure to Launch”, they never leave their Parent’s home. They have no desire to move out of their Parent’s home and pay their own rent and utilities.

Studies show that there are more adults living at home with their Parents now than at any time since World War II.

Although the Millennial Adult is living at home with their Parent, they may be very motivated in regards to their sports, video games, activities, travel, and “experiences”.  They may seem not motivated at all to earn an income. They do not want to pay their own rent, provide for their transportation, or take care of their own needs in any way. They may appear to be still want to be taken care of like a five-year old child rather than the fully grown adult they are.

There was a recent study that showed that Retired Seniors that have an Adult Child living at home are 49% more unhappy than Seniors who do not have an Adult Child living in their home.

As previously stated (“Blended Families Adult children – Grandchildren” – Blog #5) this may be regardless as to how the Adult Child was raised. Whether the Parent was lenient or not. This may be something also to do with what is in that Adult Child’s “Wiring”.

Earlier this year there was a National News story about a young man in his 30s who lived in his Parent’s home and his Parents had to go to Court and to have him evicted. The son’s position was that his Parents did not give him proper notice and that he shouldn’t have to leave his Parent’s home even though he was fully healthy, fully able to work, and college educated.  He was just not motivated to work at all. The Parents did succeed in the eviction and the Adult Son did have to move out.

The “Motivated Millennial”, who may be the brother or sister of the “Basement Millennial”, has no idea why their sibling does not “get in gear”.  They often will say, “they have always been lazy”. I have heard that more than once.

You will also have situations where this can be a point of conflict between later marrying Spouses. One of the Spouses does not want to “carry” or “pay the expenses” of an Adult Child who refuses to work. We discussed this in the “Blended Families Adult Children – Grandchildren – Blog #5. The conflict between the Seniors is where one may be happy to have the company of the Adult Child who chooses not to move into the Adult World, while the other Senior wants to live their own life and experience things, but they are unable to do so while they are paying the expenses of the fully capable Adult Child who chooses not to work.

What is the Impact?:

All of this is to say that Millennials are a very unusual, non-conforming, non-traditional Generation. The younger Generation behind them seems to be trying to advance their opportunities and create resources to provide for them and their experiences. The Millennial Generation seems to have a large portion of that group that chooses not to advance themselves, but have no excuse not to.

This can cause conflict whether it is with their motivated Millennial Sibling, or with their Senior Parent who remarries.

The Millennials are a large segment of the population and will have a big impact in the future on the Social Security System, Medicare and Medicaid Systems and other services of the Federal and State Government as many of them are not providing tax revenues by not working or being underemployed.

All of this to say is that the Millennials will have a big impact on investments, the economy, estate planning, and how they create wealth. What they do with their inherited wealth and whether or not they “get in gear” as they move further into middle age, is yet to be seen.

We will watch and see how these Adults act as they push farther into the Middle Age.

Tough Talks:

These are some of the Tough Talks that we have with Senior Clients and Advisors of Senior Clients. All of these issues can affect how a Senior lives their life and their ability to pay their own expenses as they move later in their life. This may also impact a Couple as they “find love” later in life and desire to join into a Marriage or Partnership, and the resulting changes to their Estate Plans.

They are all tough issues that need to be addressed with Seniors as they look to join together as a couple, as they look at their investments, paying their overhead expenses, and in doing their Estate Planning to pass down their remaining wealth to the next Generation.

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