by Lloyd McAlister with the assistance of Ashley Ray
Estate planning is not a single, one-size-fits-all document or decision made at the end of life; it is a long-term strategy shaped by an individual’s life. As lives change, plans adapt to fit new needs and desires. There are many influences that impact an individual’s life, but one critical factor is family. When guiding clients in planning the future of their assets, our estate planning lawyers consider the developments occurring inside the family unit. For instance, changes in generational characteristics, family demographics, and family structure have led to transformations in estate planning and trust management.
Each generation’s characteristics have been shaped by the unique circumstances and trends of the world they’ve grown up in. The Boomer Generation, individuals born from 1946 to 1964, have had different experiences than the Millennial Generation, individuals born from 1982-2002. For example, a defining question for a Boomer may be, “where were you when President Kennedy was shot?” but a defining question for a Millennial may be “where were you on 9/11?” Technology has also been an impactful force on generations. For instance, a Boomer could probably describe when their family got its first television, but a Millennial would be more apt to remember how old they were when they got their first iPhone. One influence that has influenced all generations is the increase in life expectancy. From 1970 to 2010, the US life expectancy increased gradually from age 68 to 75 for men and from age 75 to 80 for women. Between the years of 1990 and 2010, the percentage of the global population over 65 steadily increased, while the population under 5 steadily decreased. It is projected that from 2015 to 2050 the global population over 65 will increase from 8% to over 16%, while the population under five will remain fairly constant at 7%.
These and other trends have shaped how the individual generations make decisions, balance work and life, and raise their children. The Boomer generation’s parental model usually includes a breadwinner and a breadserver. Instead of children being taught to strictly obey adults, like the children of past generations, children accommodate adults. This generation is generally optimistic, competitive, and lives to work. Decision making shifted from being command and control to consensus based. For the Boomer generation, competence and expertise come before self-esteem. In contrast to the previous generations, Gen X, which includes individuals born between 1965 and 1981, has a parental model of two breadwinners. Additionally, children frequently teach adults. Gen X is skeptical, suspicious of authority, and focuses on achieving a work/life balance. Decision making is pragmatic, independent, and impatient. Self-reliance and validation lead to self-esteem. Like Gen X, the Millennial generation features two breadwinners. Adults generally accommodate and consult children. This generation is optimistic, has a delayed adulthood, and is collaborative. Decision making is net-educated and networked. This generation works to live. Self-esteem generally precedes competence. All of these generalized traits have developed from each generation’s unique circumstances.
Changes in generational characteristics have corresponded with changes in family demographics. According to data from the U.S. Census Bureau, over the last 75 years there has been a steady decrease in the percentage of married households and a steady increase in the percentage of non-family households. Notably, from 1995 to 2015, married households decreased from around 58% to 50%. Additionally, from 1996 to 2016, the number of unmarried couples without children increased from around 3 million to over 8 million. Couples are also waiting longer to get married. From 1985 to 2015, the median age for a first marriage increased from 26 to 29 for men and from 22 to 28 for women. Instead of marriage taking place right after courtship, the increasing social norm is for marriage to occur after cohabitation, attainment of financial security, and the birth of children.
Generational differences and shifting demographics have impacted the structure of the archetypal family unit. It has been said that “[t]he demographic changes of the past century make it difficult to speak of an average American family. The composition of families varies greatly from household to household.” Troxel v. Troxel, 530 U.S. 57, 63 (2000). Families come in all shapes, sizes, and configurations. For example, according to the Pew Research Center, one-out-of-six American children live in a blended family. Additionally, 40% of American adults have at least one step-relative in their family. The Census Bureau reported that in 2013 the composition of American families was: 35% traditional, 34% modern (blended, multigenerational, etc.), and 31% households without children.
The above developments of the family unit have led to a recasting of the traditional estate planning paradigm. Planning has evolved from being hierarchical and oriented towards the nuclear family to being more humanistic and sensitive to family structure. Additionally, instead of individuals being predominantly focused on financial wealth, a holistic understanding of family wealth has developed. A further change is that grantor intent is becoming more flexible, aspirational, and better conducive to beneficiary engagement. The transformations to the family have led to a reconsideration of how families do their planning. For prior generations, estate planning was a decision made before mortality, and the decision would be disclosed to family afterwards. However, contemporary families usually begin the planning process with family dialogue between the spouses and their children. The plan is then designed, implemented, and then concludes with family disclosure.
While estate planning decisions are being formulated, strategic issues must be addressed that involve considering the context of the American family. According to Hugh McGill from Northern Trust Company, the major questions that must be addressed are:
· “How and to Whom will Financial Wealth be Allocated,
· How will Trusts Evolve for Modern Families,
· Are There Limits to Longevity, and
· How will Modern Families Collaborate and Make Decisions.”
It has been estimated that, as of 2009, 68% of adults had no will, 11% had a self-drafted will, and 20% had a will drafted by an attorney. To ensure you have an effective plan tailored to your family’s unique needs, please contact our office. We will be happy to guide you through the dynamic world of estate planning with special attention to the people and purposes important to you.
