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Pandemic Is a Wake-Up Call on Estate Planning: Wells Fargo

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Personal financial security has become a top-of-mind concern for many investors during the past 10 months, but a new survey finds that 45% of investors have neither a will nor an estate plan, Wells Fargo reported Monday.

“The pandemic has put in sharp relief the need to plan for the future, including having good end-of-life plans in place,” Michael Liersch, head of advice and planning for Wells Fargo’s Wealth & Investment Management division, said in a statement.

“The availability of the vaccine is great news, but it should not stop people from preparing estate plans.”

Related: Investors Too Giddy Over COVID Vaccine, Advisor Warns

According to the fourth-quarter Wells Fargo/Gallup Investor and Retirement Optimism Index survey, higher-income investors are no more prepared than investors as a whole, but the percentage of those with either a will, estate plans or both increases with age. The percentage who have made no preparations declines from 70% of investors under age 50 to 17% of those 65 and older.

Thirty-four percent of investors in the study said they do have a written will, 4% have written estate plans and 17% have both.

The online Gallup Panel survey was completed Nov. 9 to Nov. 15 by 1,709 U.S. adult investors. The fourth quarter poll included an oversample of 603 higher-income investors, those with $240,000 or more in household income.

Family Communication Gap 

Wells Fargo found that even investors who have a will or estate plan in place may need to communicate more openly about them with family or other heirs to ensure that their final wishes are understood and carried out.

Related: How to Get Clients Started on Legacy Planning

Sixty-five percent of respondents said they had spoken only a little or not at all to family members about their will or estate plans, and 57% said they needed to communicate more about these plans. Again, this changes with age, but even 45% of retired investors said they needed to do more.

Why the hesitancy? A slight majority of investors said they talk to family members about their will or estate plans out of obligation. Most of the remaining respondents either avoid or dread doing so, or do not ever do it.

Only one in 10 of those surveyed said they enjoyed engaging in such conversations.

At the same time, the survey found that the idea of including a “letter of wishes” in their will appealed to 56% of investors. Such a letter would detail a variety of matters, from funeral arrangements to how they want heirs to use their money or other assets.

Wells Fargo speculated that including a letter of wishes appeals to investors because it sidesteps direct conversations.

Higher-income investors in the survey were not markedly different in most respects from all investors in their estate preparation or preferences. However, 70% of wealthier investors said they wanted to include a letter of wishes, compared with 56% of all other investors.

Sixty-two percent of respondents said they preferred to leave it up to their heirs to do as they choose with the money and assets they leave them, while 35% wanted to determine the specific effect their estate has through directions they leave behind.

“Having a specific impact after you are gone is difficult to do without discussing your goals with family members while you are able to,” Liersch said.

Wells Fargo noted that one reason investors may avoid conversations about their will or estate is that 73% of those surveyed said they were highly or somewhat confident that their family members understand and support their estate plan goals. Just 13% said they had little or no such confidence, while 14% said they had not set these goals.

“The perception that family members are in sync with their wishes may be true for some investors, but for others, that may need to be confirmed,” Liersch said.

“Even if investors want to provide their heirs broad latitude in using their assets, communicating that sentiment now is important to give their heirs peace of mind — and the financial tools and knowledge — in making these decisions when the time comes.”

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