A recent survey shows that two-thirds of Americans have no 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,” 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 essential for everyone, not just wealthy individuals.
Most people understand how a properly prepared estate plan puts them in control of what happens to the people who matter most to them, including minor children, their spouses, and partners. This indicates that they recognize how estate planning is necessary to protect themselves. That means having documents like a Power of Attorney and Medical Health Care Power of Attorney.
However, knowledge without action is meaningless. That is the problematic part. Don’t be the most knowledgeable person without a plan. We like to say, “Better done than perfect.”
Without a will, the state you live in writes one for you, deciding who gets what, when they get it, and who’s 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 have access to personal and financial information, which is not something anyone wants to happen. However, by failing to plan, that’s precisely what happens.
The survey of 2,007 adults showed little urgency in having legacy conversations. Only about a third of millennials and Gen Xers said they’d spoken with their advisors about the future.
We talk with many people who are about to take a trip or who have just seen a friend suffer an unanticipated death.
Surprisingly, only 38% of baby boomers had done so—and they are the generation most likely to need these plans immediately.
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 you name a person you want to receive these assets and that the person is still in your life.
Your beneficiary designation overrules what you say in 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. The rules concerning inheriting a retirement plan have changed dramatically in recent years.
Meet with an estate planning attorney to create an estate plan. If you haven’t updated your estate plan in three or four years, it’s time to update. It’s equally important to have up-to-date Power of Attorney and Health Care Proxy forms if you become incapacitated and want someone else to make financial and medical decisions on your behalf.
Reference: Think Advisor (September 16, 2019) “Americans, Even Advisory Clients, Have a Big Estate Planning Problem: Survey”
