Originally Published: January 24, 2023
An estate plan gives you two main things: control and peace of mind.
While most of us like having control and peace of mind, chances are you’ve still seen articles or news segments highlighting how few Americans have a Last Will and Testament. These reports often cite how “only 20% of Americans have an estate plan by the time they’re 65”, “only one-third of parents have a Will,” or “millennials aren’t estate planning!”
The thing is, we all know we should make an estate plan.
These other reports make it sound like most Americans are okay with having the state make decisions for them. They don’t look past the flashy statistics and act on the more important question:
Why don’t you have an estate plan?
Here at LawDepot, we decided to change that.
We surveyed and quizzed 973 of our users to determine the following:
- Who has an estate plan
- How well do people actually understand estate documents
- How they made their plan if they have one
- What’s keeping them from making a plan if they don’t have one yet
- Which part of estate planning they found the most challenging
- Which documents were the most confusing
What is an estate plan anyways?
Almost every adult has an estate. Simply by living your life, you acquire estate components, including your home, car, bank accounts, student loans, debts and more. Eventually, someone must handle these things if you pass away or become incapacitated.
Let’s bust a common myth right away:
Your estate plan is not only for after you die.
Yes, estate plans hold all the documents your loved ones will need to settle your affairs after you pass away. However, estate plans also contain invaluable documents that can help your loved ones care for you and your finances if you become ill or injured. This is crucial whenever you cannot make decisions or communicate your wishes.
Without an estate plan, if you become incapacitated or pass away, you leave much of the decision-making to the state.
If you die without a Last Will and Testament or Living Trust, the state will distribute your assets to the appropriate beneficiaries as defined by your state’s laws. Similarly, suppose you become incapacitated without a Living Will or Power of Attorney. In that case, the state will appoint someone on your behalf to make medical, financial, real estate and even family decisions, like who will care for your children.
If you’re not in love with the idea of having no control, start your estate planning today.
How many Americans have a documented estate plan?
Before we can talk about the difficulties of estate planning (and how we can make it easier), we have to start with the basics: How many people actually have a documented estate plan?
Of our 973 respondents:
- 23% had a documented estate plan
- 11% tried to create an estate plan but didn’t complete it
- 62% did not have an estate plan
This means that 73% of respondents do not have an estate plan.
Who has an estate plan?
Our survey supports that annual household income has the most significant impact on having an estate plan or not. We found that as household income increased, so did the percentage of respondents that had a documented estate plan.
34% of respondents with an annual household income of more than $150,000 had a documented estate plan. In contrast, only 8% of respondents with an annual household income of less than $25,000 had a documented plan.
Besides income, age seems to have the second most significant impact on completing estate planning.
Respondents above the age of 75 had the highest percentage of completed estate plans, although this was only 28%.
Furthermore, gender seems to have little to no impact on estate planning; 22% of women and 23% of men reported having a documented estate plan.
Surprisingly, having children also appears not to have a significant impact on completing one’s estate planning. While 75% of our respondents reported having children, only 22% of these parents had an estate plan.
At 32%, widowers were the biggest relationship group to have completed their estate planning. Singles and separated spouses were the groups with the least documented estate plans, with only 12% and 10% respectfully having finished their plans. Additionally, only 24% of married respondents had a documented estate plan.