While many Americans would prefer to put the memory of the recent recession behind them, it's important to understand that the economy is finally showing signs of recovery. To illustrate, the housing market has rebounded to a large extent, consumers are spending more and the unemployment rate is improving.
Of course, now that the economy is improving, it means that people are back to earning more money. In particular, experts indicate that many young people who work in the technology sector are now earning rather sizeable amounts of money.
While this is certainly commendable, experts indicate that many of these young people are unmarried, have no children, and are relatively uncertain or uncomfortable with the notion of estate planning.
"People don't like to talk about death. If you add on top of that they do not have a child who would be a natural heir, they really don't want to deal with it," said the head of private wealth at a large brokerage firm.
However, what they appear to lack in uncertainty or comfort regarding estate planning, experts say they more than make up for in terms of charitable intent.
Specifically, many of these young people want to follow the example set by Microsoft's Bill Gates, Facebook's Mark Zuckerberg and billionaire businessman Warren Buffet in pledging their wealth to a worthy cause. Furthermore, like these luminaries, they don't want to wait to do this until after they've already passed.
"For me, I'm not going to be giving away that kind of wealth, but I take value from donating to charity now and not when I'm dead," said one 37-year-old software engineer.
In order to accomplish this objective many of these young tech workers are being steered toward things like donor advised funds.
Offered by charitable foundations or large financial institutions, these funds are structured much like a mutual fund except with a charitable intent, and enable the donor to dictate to whom and how they want to give (now versus later, one-time donation versus ongoing distribution, etc.). Here, the primary advantages of donor advised funds are that they save donors from complicated fees and paperwork, while presenting immediate tax advantages.
While it's certainly important for these young people to ensure that their charitable wishes will be honored, it's also equally important for them to consider other vital aspects of estate planning. For example, they may want to consider executing a living will outlining their wishes concerning end-of-life care and/or a durable power of attorney granting a designated person the power to make financial and legal decisions in the event of their incapacity.
To learn more about these and other estate planning options, people of all ages should consider speaking with an experienced legal professional.
Source: Reuters, "Estate planning for the young, rich and childless," Beth Pinsker, June 2, 2014