What Keeps Most Americans from Getting Their Estate Plans Done?

According to findings from a 2016 study conducted by WealthCounsel called the Estate Planning Awareness Survey, only 40% of Americans have a will and only 17% of Americans have a trust in place to protect their families.

Interestingly, the study sought to find out why more American’s do not have their families properly protected. The main disconnect appears to stem from a few misunderstandings and confusion about estate planning. In fact, 74% of respondents to the survey answered that estate planning is a confusing topic.

Nearly half of the respondents claimed a belief that estate planning is only for the wealthiest people in America. And “49% say their assets aren’t worth enough for them to even consider having an estate plan.” The study also reported that only 3% of participants mentioned the word trust as a fundamental tool in the estate planning process, believing that this type of planning is reserved just for the ultra affluent. And lastly, 61% believe that a will is sufficient to meet their estate planning needs.

I can say that my personal experience with prospective clients over the years is not unlike the results of this study. Many clients that call the office to book an appointment use the words “will” when describing what they think they need help with.

Now, I cannot claim to know what the best center-piece estate planning document is in every state in America, but in California, I think it is safe to say that for most, the estate plan that is centered around a revocable trust is the preferred method. 

This is primarily because the probate process in California is expensive, time-consuming and open to public inspection (therefore lacks privacy). But even in states where probate is less onerous to engage in, it still makes a lot of sense to go with the trust option due to its privacy, lack of court supervision required and its flexibility as a vehicle to transfer wealth at death. Oh and did I mention that we can protect beneficiaries from their future divorcing spouses, creditors, predators, and bankruptcy Trustees through a properly drafted trust?

The study further highlighted that a lot of people are not even aware that guardians for minor children and putting a series of people in charge of your health care are other features of a lock solid estate plan. In fact, only ….“58% of baby boomers say that estate plans can be used to establish personal healthcare directives”.

WealthCounsel also says that their survey “finds that substantial gaps in knowledge exist around three major areas: health and family; courts and conflict; and business and tax implications”. As this relates to health and family, 71% of respondents were unaware that a guardianship nomination can be utilized to designate a guardian for minor children in the event there is an incapacity or death of both parents. And less than half of respondents expressed that they understood that estate planning could be used to express their personal healthcare decisions (for example, expressing an intent to prolong life or not to prolong life in the event of an incapacitating event).

The study did highlight however that millennials were way more unaware with regard to this option to include healthcare decisions in an estate plan than baby boomers.

Another interesting finding was that more than half of those who have a trust established did so specifically to reduce family conflict. And “more than half of respondents said they would feel more successful if they created an estate plan.”

In the end, the study highlighted that more than one-third of respondents didn’t believe they had enough in the way of assets to worry about having an estate plan, 29% said they are not wealthy enough to be worried about it, and a quarter of respondents have not spoken to family members about creating an estate plan because they don’t like talking about or thinking about their own death.

There certainly is more room for improvement for trust and estate planning professionals to share the true benefits and values associated with doing good estate planning. We need to come together and make it very clear to the general public how to create a sound estate plan and what its true benefits are.