This blog was written by Sierra Nunno
While many young people cling to the acronym YOLO, which stands for ‘you only live once,’ the truth is YODO… you only die once. Ideally, upon death, our wishes are carried out according to plan and we rest peacefully. But what if there was no plan in the first place?
The Covid-19 pandemic has forced young Canadians to confront an uncomfortable reality – we aren’t prepared to die. Not in the ‘we have lots of life left to live!!’ sense, but rather, we have no plans in place in case we face an untimely death. According to a 2018 study by the Angus Reid Institute, about 50% of Canadians had done some form of estate planning prior to the pandemic. Between the ages of 18 and 44 though, only 15% of respondents had, on aggregate. Most notably, of the portion that responded they hadn’t done any estate planning, 25% believed they were ‘too young’ to worry about it, and a further 23% felt it ‘wasn’t worth their time because they didn’t have enough assets.’ These objections are likely rooted in a financial view of estate planning and fail to consider the myriad of other components that form a comprehensive plan.
Considering the ‘too young’ objection; there is no magical age when estate planning should commence. Estates aren’t homework with a looming due date. Though the likelihood of dying is certainly lower amongst young adults, Covid-19 has proved that youth isn’t the impenetrable suit of armour we once thought it was. Pandemic aside, accidents can happen, and it’s important to be prepared in case of emergency. Ask yourself: If a serious illness or catastrophe left me incapacitated, what would happen? In a moment of immense emotional distress for loved ones, being tasked with making health decisions on your behalf can be unbearable; especially if your wishes are unknown to everyone in the room. This is where personal care directives enter the chat. Often overlooked and underappreciated, personal directives are arguably the most relevant component of estate planning for young people. A personal directive is a legal document that helps guide your care if you lack capacity, and therefore cannot make your own health decisions in the future. Amongst other things, you can designate an agent to make personal decisions for you, specify instructions regarding what medical treatments you would or would not want, and name someone to care for your minor children. Preparing a personal directive as part of a comprehensive estate plan provides peace of mind for you, and your loved ones, in case tragedy strikes. Anyone and everyone over 18 should have one. If you’re in a jurisdiction like Alberta with a Personal Directive Registry, you should also register one.
Now to turn our attention to the second objection, lack of assets. Traditionally, when young people think of ‘estate planning’ they picture a gated Bridle Path home filled to the brim with gold bars (trust me, I was one of these people). While there are certainly families with substantial bequests to plan for, the average Canadian family has a net worth of about $330,000. Further, the average Canadian under 35 has less than $50,000 of individual net worth. Connecting the dots between estate planning and substantial net worth is common, even if substantial net worth is not. The imaginary association between estate planning and sizeable asset ownership is a stumbling block though. We simply can’t believe we have enough to plan for. In reality, there is no threshold a household must surpass to start planning; it can be done for any amount of assets. Drafting a will, designating beneficiaries, and naming a power of attorney are all components of estate planning that can be completed no matter how large or small the estate. The aforementioned aspects become especially important when children or other dependents enter the mix. A properly drafted will is important to ensure your assets transfer according to plan, and take the path of least resistance.
All-in-all, estate planning isn’t the scary monster under the bed that young adults think it is. Covid has sparked a number of life and death related realizations, acting as a catalyst to drastically improve estate planning. The 18-24 year-old demographic exhibited 100% growth in planning efforts in 2021 versus five years prior, dwarfing the elder demographics’ progress. The realization that estate planning is multifaceted should continue to fuel an upward trend. Detaching oneself from the idea that estate planning is solely for the wealthy is the key to understanding its merits at a young age. While the benefits are intangible for now, proper planning can make a major impact at the end of our lives. You only die once, the motto is: make sure your plan is ready!