A recent survey shows that two-thirds of Americans have not done estate planning.
Think Advisor reported on a survey conducted by a financial services firm that revealed good news and bad news about Americans and estate planning. In the article “Americans, Even Advisory Clients, Have a Big Estate Planning Problem: Survey,” the firm Edward Jones found that two-thirds of those with an advisor have not discussed estate goals and legacy plans. That’s the bad news. The good news is that 77% said estate and legacy strategies are important for everyone, not just wealthy individuals.
Most people do understand how a properly prepared estate plan puts them in control of what happens to the people that matter most to them, including minor children, their spouses, and partners. It also indicates that they recognize how estate planning is necessary to protect themselves. That means having documents, like Power of Attorney and Medical Health Care Power of Attorney.
However, knowledge without action is meaningless. That is the part that is worrisome.
Without a will, the state you live in writes one for you, deciding who gets what, when they get it and whose in charge. You set the table for family disputes and high administrative costs. The entire affair becomes a public document that anyone can look at. Nosy neighbors, creditors, and relatives all having access to personal and financial information is not something anyone wants to happen. However, by failing to plan, that’s exactly what happens.
The survey of 2,007 adults showed little sense of urgency to having legacy conversations. Only about a third of millennials and Gen Xers said they’d spoken with their advisors about the future.
Surprisingly, only 38% of baby boomers had done so—and they are the generation most likely to need these plans in place in the immediate future.
Where do you start? Begin with the beneficiary designations. Check all investment accounts, bank accounts, insurance policies, and retirement accounts. Most, if not all, of these financial documents, should have a place to name a beneficiary, and some may permit a secondary beneficiary to be named. Make sure that you name a person you want to receive these assets and that the person named is still in your life.
The beneficiary designation is more powerful than your will. The person named in the beneficiary designation will receive the asset, no matter what your will says. If you don’t want an ex-spouse to receive life insurance policy proceeds, make sure to check the names on your life insurance beneficiary designations.
Meet with an estate planning attorney to create an estate plan. If you haven’t updated your estate plan in three or four years, then it’s time for an update. It’s equally important if you should become incapacitated, and you want someone else to make financial and medical decisions on your behalf, to have up to date Power of Attorney and Health Care Proxy forms.
Reference: Think Advisor (September 16, 2019) “Americans, Even Advisory Clients, Have a Big Estate Planning Problem: Survey”