Nearly half of Americans (47 percent) believe estate planning is mostly for the ultra-wealthy, according to new data released today from the inaugural Estate Planning Awareness Survey commissioned by WealthCounsel.
Approximately half (49 percent) don't believe their assets are worth enough to worry about estate planning, while 46 percent of Americans believe that establishing a trust—a core element to many estate plans—is only something wealthy individuals need to consider.
This perception is having a significant impact on the preparedness of the average American—more than one-third (37 percent) of Americans without a will or trust say they haven't discussed the topic with their families because they don't believe they have worthwhile assets or valuables, while another 29 percent say they aren't wealthy enough to even think about putting together an estate plan.
"It's unfortunate that so many Americans hold the view that estate planning is only for the highest earners in our country, because that view couldn't be further from the truth," said Matthew McClintock, JD, TEP, vice president of Education with WealthCounsel. "Attorneys across the country have a duty to help educate Americans that, when done properly and mindfully, estate planning can help individuals address everything from designating a guardian for children to transferring a family-owned small business from one generation to the next and even reducing intra-family conflicts."
It's not just that Americans think estate planning is for the rich, it's that many Americans simply don't understand the topic. In fact, the survey found that three-quarters (74 percent) of Americans believe estate planning to be a confusing topic, and more than half (53 percent) said it's difficult to find an advisor they trust to create an estate plan.
While the survey shows Americans are receptive to learning more about estate planning—46 percent said they are interested in learning more about creating an estate plan—only one-quarter (27 percent) of those without a will or trust have even talked with their families about creating an estate plan, and only 1 in 10 has sought the advice of an attorney or other professional advisor. The internet, which has now become the default source of information for everything from financial advice to cooking tips, is the one place where Americans are not turning for estate planning advice. In fact, only 8 percent of those with an estate plan used an online legal service when first seeking advice on how to develop their plan.
Knowledge and Action Gaps Creating Significant Disconnects
The survey uncovered the existence of significant and potentially harmful gaps when it comes to estate planning. On one hand, many Americans expressed interest in the benefits of creating a plan ranging from peace of mind to feeling like a better spouse or parent. Conversely, the lack of understanding or a lack of action has caused many Americans to not even discuss some level of planning with their families.
Despite the fact that 71 percent say having a well thought out estate plan would help them feel like a good spouse or parent, fully one-quarter haven't discussed creating a plan with their families because they don't like to think or talk about their own deaths. This disconnect becomes magnified when you consider that more than one-third (35 percent) of Americans have either personally experienced or know someone who has experienced family conflict as the result of not having an estate plan or comprehensive will. Furthermore, fully half of those Americans who have a basic will incorrectly believe wills protect them from probate court after they have passed away.
"One of the most misunderstood elements of estate planning is how it can dramatically reduce the potential for family conflict when approached correctly," said McClintock. "The American legal system is very nuanced and difficult to navigate to the point that 'set it and forget it' solutions, including many types of basic wills, may not be enough to protect your family and your property."
The survey found that, unsurprisingly, personal finances play a significant element in an individual's approach to estate planning. More than two-thirds (67 percent) of Americans say they are often concerned about their families long-term financial well-being. Furthermore, three-quarters (74 percent) of respondents said they would be more likely to create an estate plan if it helped lower their families' taxes, while half (53 percent) would feel more successful if they created an estate plan
The knowledge gap again proved to be a significant barrier to action on pocketbook-related issues. For example, less than half (just 47 percent) knew that proper estate planning can in fact provide tax protections, while only 42 percent knew that estate planning can be used to facilitate the transfer of a business.
The full findings from the inaugural Estate Planning Awareness Survey can be accessed here.
About the Estate Planning Awareness Survey
The Estate Planning Awareness Survey was conducted online by ORC International among a sample of 2,036 adults comprising 1,014 men and 1,022 women 18 years of age and older. This survey was live on August 4-10, 2016. The margin of error for the total sample size of 2,036 respondents is +/- 2.2% at the 95% confidence level. Completed interviews are weighted by five variables: age, sex, geographic region, race and education to ensure reliable and accurate representation of the total U.S. population, 18 years of age and older.