Wills are favored by older, wealthier investors, but consumer advocates urge all Americans to create estate plans.
Investors are more likely to create wills as they age and accumulate assets, according to new Millionaire Corner research, but consumer advocates urge Americans of all ages and wealth levels to create estate plans.
Wills and estate plans play such a vital role personal financial planning, yet are so poorly understood that the U.S. Congress has created a National Estate Planning Awareness Week to increase financial literacy on the subject. An estimated 120 million Americans lack wills and an up-to-date estate plan to protect their families and their assets in the event of an untimely death, illness or accident, according to House Resolution 1499 declaring the third week of October estate planning week.
“Careful estate planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities,” states the resolution. Wills and sound estate plans can prevent expensive and lengthy probate proceedings, and can help reduce conflicts among family members. Yet, 55 percent of American adults have not yet written a will and, as a result, have little control over what happens to their wealth or minor children when they die, according to a December survey by the consumer website FindLaw.com. Only one in six Americans between the ages of 18 and 24 has a will.
Psychological factors – including a reluctance to confront one’s own mortality – can create obstacles to creating wills and comprehensive estate plans, though wealthier investors are more likely to undergo the process, according an October survey by Millionaire Corner. More than 87 percent of investors with investable assets of $1 million or more have wills, but the share drops to 58 percent for investors with $100,000 to $500,000 in assets. Men (81 percent) are more likely to have wills than women (75 percent), who typically under value their financial contributions to a family. Retired investors (92 percent) are the most likely to have wills, while investors age 40 and younger (45 percent) are the least likely to have a will.
Fear of the expense can also deter investors, particularly less affluent individuals, from preparing an estate plan. But a simple will can be created for $20 to $100 using online services, such as Legalzoom.com, according to the advocacy group AARP. Do-it-yourself forms are also sold in office supply stores.
Most of the investors surveyed by Millionaire Corner – nearly 66 percent – prepared their wills with the help of an attorney, though more than 5 percent used online software and nearly 6 percent, a financial advisor. A small percentage of investors consult with a friend or family member when preparing their wills.
Forty percent of the 652 investors surveyed have updated their will within the past two years and slightly more than 28 percent have updated the document within two to five years. Nearly one-fourth have not updated their will in the past five years, and more than 8 percent have never updated their wills.
“It's unfortunate how many people believe that estate planning is only for wealthy people,” said the federal help site USA.gov. “People at all economic levels benefit from an estate plan. Upon death, an estate plan legally protects and distributes property based on your wishes and the needs of your family and/or survivors with as little tax as possible.”