More Than Half of American Adults Don't Have a Will
This article originally appeared on Caring.com.
Let’s face it—end-of-life planning isn’t fun. The topic can seem morose, depressing -- maybe even a little scary. But it’s also a critical aspect of managing your assets and protecting your family, which is why it’s surprising that nearly 6 out of 10 Americans are unprepared for the inevitable.
According to a new Caring.com 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 can not 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.”
How to Get Started
Understand the basics of estate planning.
Know what to expect from a trusts and estates attorney.
Consider what to include in your will.
Learn how to set up an advanced healthcare directive.