In recent years, the millennial generation has begun to redefine the landscape of estate planning, bringing fresh perspectives and unique challenges to an industry historically dominated by older generations. As trust officers and heads of trust departments at banks and trust companies, it’s essential to understand these shifts to better serve this growing demographic. Millennials, now aged 27 to 42, are approaching estate planning with caution, driven by financial pressures and family dynamics that differ starkly from previous generations.
The Millennial Financial Dilemma
Millennials have faced significant economic challenges throughout their lives. Many entered the workforce during the Great Recession of 2008, only to encounter the economic fallout from the COVID-19 pandemic just over a decade later. These dual crises have made financial security a moving target for millennials. A recent study by Trust & Will reveals that 81% of millennials are watching their finances more closely than ever due to the unforgiving economic realities they face. Many millennials report feeling financially insecure, with 55% citing the housing crisis and rising mortgage rates as major hurdles preventing them from buying homes. This uncertainty delays life milestones like homeownership, which in turn can delay estate planning.
In light of these pressures, millennials are taking a pragmatic approach to their finances. They recognize the importance of estate planning, especially as they enter middle age. According to a Forbes report, while most millennials don’t yet have a will or trust, the number of individuals thinking about creating one is growing. This presents a significant opportunity for trust departments to engage and educate this generation on the value of having a comprehensive estate plan in place.
Knowledge Gaps and Estate Planning
One of the main reasons millennials are slow to adopt estate plans is the knowledge gap surrounding the process. The Trust & Will study found that 56% of millennials are unfamiliar with what happens to their assets if they die without a will or trust. This lack of understanding extends to a general unfamiliarity with the estate planning process itself. Although 81% of millennials believe having a will is important at this stage in their life, only 36% have actually put an estate plan in place.
This gap in knowledge is compounded by a lack of communication with older generations. Only 58% of millennials report discussing estate planning with their parents. In fact, 34% of millennials are unsure whether their parents even have an estate plan. This communication barrier represents an opportunity for trust departments to play an educational role, helping millennials bridge the gap between intent and action. Webinars, workshops, and content targeted at explaining estate planning basics could be invaluable in guiding millennials through this unfamiliar territory.
Family Dynamics and the “Sandwich Generation”
Millennials are increasingly becoming known as the “sandwich generation,” caught between caring for their children and their aging parents. This dual burden of responsibility can strain finances and complicate estate planning. According to the Trust & Will study, 58% of millennials say that their position in the sandwich generation will affect their ability to pass on wealth to future generations. This is a critical consideration for trust officers working with millennials, as many of these individuals may need to plan not just for themselves, but also for their dependents and parents.
Moreover, millennials are starting families later in life, and for many, having children is the primary trigger for creating an estate plan. Trust & Will reports that 73% of their millennial clients are parents, and that a large share of those who create estate plans do so to ensure their children are cared for in the event of their death. Trust officers should be aware of this and tailor their services to the needs of millennial parents, offering solutions that focus on guardianship and future financial security for their children.
Digital Legacy and Changing Preferences
Unlike previous generations, millennials have grown up in a digital age, and this affects their approach to estate planning. Estate plans are no longer just about property and finances but also about what happens to one’s digital assets and online presence. Interestingly, one in three millennials prefers to have their social media accounts memorialized rather than deleted after their death. As trust officers, it’s important to incorporate discussions about digital legacies into estate planning conversations. Whether it’s digital currencies, social media profiles, or cloud-based documents, millennials need to know that these assets can be protected and managed within an estate plan.
Additionally, millennials are more open to leveraging technology in estate planning. According to the study, nearly one-third of millennials expressed interest in using AI tools to help them create wills. This tech-savvy approach presents an opportunity for trust companies to integrate digital tools and platforms into their services, offering solutions that align with millennials’ preferences for convenience and efficiency.
Philanthropy and a Personal Touch
Another defining characteristic of millennials is their growing commitment to philanthropy. Research shows that millennial charitable giving has increased significantly, with 54% of the generation incorporating charitable donations into their estate plans. This is a sharp rise from previous years and reflects the generation’s values. Trust departments should be prepared to assist clients in incorporating philanthropic goals into their estate plans, whether through charitable trusts, donor-advised funds, or other mechanisms that allow millennials to leave a lasting impact.
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Finally, millennials place a high priority on personalization when it comes to estate planning. Many want to ensure that even their pets are taken care of—83% of millennial pet owners have assigned a guardian for their animals in their estate plans according to the Trusts and Wills study. This attention to detail highlights the need for trust departments to offer customizable estate planning solutions that address the unique needs of each client.
Conclusion
As millennials continue to shape the future of estate planning, trust departments must adapt to meet their needs. With financial challenges, family dynamics, and digital legacies influencing their decisions, millennials require a comprehensive and modern approach to estate planning. By educating and engaging this generation, trust officers can build lasting relationships and provide valuable services that will help millennials secure their financial futures and protect their loved ones.
