According to a new survey, only
42 percent of U.S. adults currently have estate planning documents such as a
will or living trust. For those with children under the age of 18, the figure
is even lower, with just 36 percent having an end-of-life plan in place.
“I think many Americans avoid
setting up a will because they simply don’t want to think about their death,”
says Texas-based financial coach Craig Dacy. “However, setting up a will not
only takes care of your loved ones financially, it can save them a lot of
emotional stress after you’re gone.”
The study, conducted in January
by Princeton Survey Research Associates International, asked 1,003 adults
whether they currently have estate-planning documents in case of their death,
as well as the reason why not (if applicable).
Forty-seven percent of survey
respondents without estate documents said, “I just haven’t gotten around to
it.” This is unsurprising to experts, who say an aversion to end-of-life
planning is not only rooted in fear but also procrastination.
“This is the ‘I’m going to live
forever’ theory. No one literally thinks that, but we all want to believe we
are going to live until our 80s or 90s so we don’t think we need a will right
now,” says Debbi King, author of “The ABC’s of Personal Finance”. “This isn’t
true, of course. We all have an expiration date and no one knows exactly when
it will be. The best thing you can do for your loved ones is have a will now.”
Age and assets are the greatest barriers
As one might expect, older
Americans are the most likely demographic to have an estate plan in place.
According to the survey, 81 percent of those age 72 or older have a will or
living trust. However, that percentage declines significantly with younger
people.
A staggering 78 percent of
millennials (ages 18-36) do not have a will. Even more surprising is that 64
percent of Generation X (ages 37 to 52) doesn’t have a will, and nearly half of
respondents in the 53 to 71-year-old age group (40 percent) said they don’t
have one.
The problem, say experts, is
twofold. First, younger Americans are generally unconcerned with their own
mortality, which perpetuates the misconception that a will isn’t necessary
until later in life.
“Young adults don’t expect
something bad will happen to them, and if it does, they expect their parents to
step in,” says estate-planning veteran Jack Hillis, president of Hillis
Financial Services. “Additionally, wills are generally associated with the
passing of a grandparent at that stage in life. At the age of 18 you’re
thinking about your whole life in front of you, not what would happen if your
life ended.”
What’s more, Hillis says baby
boomers are aware that they should have a will in place, but planning for a
possible tragedy is an uncomfortable process that forces people to answer some
tough questions.
“At the age of 50 you still don’t
envision the end of your life, so most will continue to put off the process as
long as they can,” says Hillis. “And that’s unwise.”
Secondly, younger Americans tend
to have fewer assets than their older counterparts, which feeds into the false
impression that a will is only needed for those with substantial wealth or
complex finances. In fact, the survey found that 29 percent of those without a
will said it was because they “don’t have enough assets to leave anyone.”
“It’s so important to have a will
regardless of age or assets, because not only does it allow you to make the
decisions about what you want but it also makes it much easier on the loved
ones you leave behind,” says Jody Giles, author of “Missing Pieces Plan:
Providing You and Your Loved Ones Peace of Mind,” which helps people plan for
the end of life. “Even if you don’t have the wealth of Steve Jobs or Prince,
what you do have means something to somebody. Regardless of the amount of
‘wealth’ you are passing on, let it be handed over based on your wishes, not
your state’s laws.”
Estate planning attorney Matthew
Underwood explains that the whole purpose of a will is to tell a court how to
distribute your assets in a special proceeding called probate. The purpose of
probate is to give a public notice of death and allow creditors to file claims
against the estate. Whatever is left after the creditors are paid goes to the
beneficiaries. In the absence of a will, the particular state’s laws of
succession direct how property gets distributed.
“In other words, if you don’t
have a will, the state has one for you,” says Underwood. “Regardless of how old
you are or how much wealth you have, would you rather have government officials
dictate where your property goes or would you rather decide that for yourself?”
If you have children, a will is critical
One of the survey’s most surprising
findings was that just 36 percent of those with children under 18 have an
end-of-life plan in place. This is a potentially devastating oversight.
“I cannot stress enough the
importance of having a will if you have children,” says Giles. “If you have
children you need a will, if for no other reason than the sole purpose of
naming guardians. Selecting someone to care for our children if something happens
to us is not what anyone wants to consider, but it’s imperative that we do. If
you don’t nominate guardians in a will, a judge will decide who should take
care of your kids after you die.”
The importance of a health care power of attorney
The Caring.com study also asked
respondents whether or not they have a health care power of attorney, which
appoints a specific individual to make medical decisions for you if you’re
incapable of doing so.
A health care power of attorney
is more common than a will or living trust, with roughly 53 percent of U.S.
adults having granted someone this legal authorization, according to the
survey.
However, demographic disparities
play a role here as well. While 83 percent of those over 72 have a power of
attorney in place, only 41 percent of millennials can say the same. Again,
experts say you should not wait until you’re a senior citizen to get yours in
order.
“Perhaps even more importantly
than a will, everyone over the age of 18 should have a power of attorney,” says
Underwood, who points out that once a child turns 18, his or her parents are
legally cut off from making some very important decisions.
“I’ve heard stories of kids going
off to college or traveling abroad and then getting sick or hurt,” says
Underwood. “When the parents call the hospital to find out what’s going on, the
doctors won’t even talk to the parents because the student did not have a
health care power of attorney.”
You can work with a lawyer to set
up a health care power of attorney and an advanced health care directive, a
document that sets out your medical preferences.
Is estate planning complicated or expensive?
Broadly speaking, the complexity
and cost of setting up a will or living trust depends on how complex your
circumstances and assets are. But generally speaking, a qualified lawyer can
draft a simple will and power of attorney for less than $1,000.
“For individuals with modest
wealth and straightforward wishes, a simple estate plan can be prepared quickly
and inexpensively,” says Ashley Case, an Arizona-based tax and estate-planning
attorney. “Some factors that tend to complicate an estate plan include multiple
marriages, children from different relationships, certain business assets, a
higher net-worth, and complex wishes regarding distributions.”
Click here for the
original article from Caring.com.