Decline in Estate Planning Among Older Americans Raises Concerns
Recent research highlights a troubling trend among older Americans: a declining number are writing wills. This decline in estate planning has far-reaching consequences that extend beyond the individual. It creates significant challenges for their surviving loved ones.
The attorneys at The Law Firm of Brown & Jensen discuss the downward trend in estate planning among older Americans. Plus, we offer insight on why you should get started despite the common challenges.
How much has estate planning dropped among older Americans?
The Center for Retirement Research at Boston College published an analysis in August. According to the analysis, the percentage of households with wills or trusts among those over 70 has dropped from 70% to 63% between 2008 and 2018. The underlying causes of this decline are tied to the evolving demographics of older Americans.
The changing face of older America is a pivotal factor in this trend. Seniors are now more diverse than ever. A growing number of Black and Hispanic individuals are now in this age group. These diverse populations are less likely to leave a will or receive an inheritance.
Gal Wettstein, a senior research economist at Boston College, has noted that this issue disproportionately affects non-Hispanic Black and Hispanic individuals.
The scholarly analysis concludes in 2018. However, more recent surveys suggest that the decline in estate planning continues. One of them is the 2023 Wills and Estate Planning Study by Caring.com. This study discovered that the percentage of Americans over 55 with wills decreased from 48% to 46% between 2020 and 2023. This trend implies that more older Americans are either delaying writing wills or forgoing them altogether.
Various analyses show that 15% to 46% of American wealth is inherited. When individuals fail to create a will or trust, the responsibility for asset distribution falls upon local courts. This is where problems often arise.
What's causing the drop in estate planning among older Americans?
Consider the family home, often the most valuable asset within a household. When the last surviving parent dies without a will, state law often divides the property among surviving children. This can lead to disputes concerning whether to keep or sell the property, how to manage maintenance and property taxes, and more. This can create conflict among siblings. This results in legal fees and possibly the sale of the property at a loss.
Similar dilemmas often arise when dividing a family business or other valuable assets. Additionally, nontraditional families are on the rise in America, which presents unique challenges. Many households are led by single adults or cohabiting partners who are not married. Some are even led by grandparents. State laws don't typically consider these scenarios. This often leaves surviving partners or family members without a legal claim to assets.
Despite the critical importance of estate planning, procrastination remains a significant problem as well. Many Americans recognize the significance of writing a will. However, they postponed the process due to its time-consuming and intricate nature. They may also be reluctant to create a will due to the emotional challenges of considering their own mortality.
In the Caring.com survey, respondents without wills cited various reasons for their inaction. For example:
- 42% cited procrastination.
- 35% believed they lacked sufficient assets to justify creating a will.
- 15% were unsure how to proceed.
- 14% considered the process too costly.
Why should I have a will or estate plan?
A will or estate plan is crucial for securing your financial future and ensuring your wishes are fulfilled. Here are some reasons why you should have a will or estate plan:
- Asset distribution: Without a clear plan, the state's laws will determine the distribution. This may not align with your intentions. Estate planning allows you to ensure that your assets go to the individuals or causes that matter most to you.
- Protecting loved ones: A will allows you to name guardians for your minor children. This ensures that someone you trust cares for them in the event of your death. Additionally, you can provide for family members with special needs or those who rely on your support.
- Minimizing taxes and costs: Trusts can help you minimize estate taxes and avoid the costly and time-consuming process of probate.
- Peace of mind: Having a well-thought-out estate plan or will eliminates uncertainty and potential disputes among family members. This peace of mind can reduce stress during difficult times and provide a sense of control over the legacy you leave behind.
No matter your age, it's never too late to get started on your estate plan. An Arizona estate planning attorney at The Law Firm of Brown & Jensen can help you explore your options and determine the best possible avenue. To learn more, contact us online for a free consultation.