By Jason Snyder, Esq.

As the largest living generation in the U.S.—making up 22 percent of the population—and collectively having lived through several “once-in-a-lifetime” crises, the millennial generation has been forged into some of the most adaptable planners to date. 

From setting personal and professional goals, managing and interacting with their finances and investments, to purchasing their first homes and starting families, many in this group are committed to planning further into the future than ever before.

Despite this, 41 percent of individuals ages 18-34 have never discussed estate planning with anyone. While grim, this number did see some downward motion in part due to the COVID-19 pandemic, as 32 percent of adults under the age of 35 said they only engaged in estate planning due to the pandemic.

So, with these numbers, are millennials right in thinking that they do not need estate plans? What are some of the most common concerns that millennials have when looking to plan their futures? While it’s impossible to capture all aspects of an estate plan in a single article, below is a brief snapshot of why estate plans might be the logical next step for any millennial looking to secure their future.

Broadening our scope, just 33 percent of Americans have a will or living trust, despite the fact that more than 50 percent believe estate planning to be at least somewhat significant. One in three respondents, when asked why they don’t have a will, said they don’t have enough assets to leave behind. 

The notion that “I don’t have enough assets to make it worth it” is one of the most common reasons that millennials don’t want to pursue making some sort of estate plan. This notion doesn’t appear to be changing anytime soon, as the fears of ever-growing inflation still weigh heavily on the American populous—no more so than for millennials. According to a New York Times survey, nine9 out of 10 U.S. adults are concerned about inflation.

By Bill Canty

Asset location pertains to the types of investment assets that are best held in various types of accounts. Asset location is a tax minimization strategy that matches various types of investments with the type of account best suited for that type of investment holding. 

Asset location is about strategically holding investments in accounts where you are likely to achieve the highest after-tax returns. This includes taxable investment accounts, tax-deferred accounts such as a traditional IRA or 401(k), or tax-free accounts which are usually Roth accounts. 

Due to the nature of dividends, interest, or capital gains connected with certain types of investments, it might be most tax-efficient to hold them in one type of account versus another. This is the essence of asset location. 

While it is not always possible to align your entire portfolio in a perfect fashion in terms of asset location for each holding, it does make sense to pay attention to this when deciding which investment holdings fit best into your various accounts. 

The following types of holdings can be well-suited for a taxable account: 

• Municipal bonds or mutual funds holding muni bonds. The interest on these bonds is exempt from federal income taxes, and in some cases from state taxes if they are issued by an entity in the state in which you reside.

• Individual stocks that you plan to hold for a year or more. After this time period, any capital gains from the sale of the shares will be taxed at preferential long-term capital gains rates.

• Equity index ETFs. Due to the passive management of these types of equity funds, they tend to throw off fewer capital gain distributions than actively managed equity funds or ETFs.

• Tax-managed ETFs, mutual funds, and separately managed accounts. These are mutual funds, ETFs, and SMAs that are managed to specifically limit capital gains and other taxable distributions.