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Rising Health Care Costs Are Top Threat to Estate Planning: TD Wealth

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What You Need to Know

  • Prolonged life expectancy also moved to the forefront of estate planning concerns.
  • Just 10% of respondents called family conflict the top threat to estate planning, down from 25% in 2020.
  • The survey found 89% of estate planners said their female clients had lost jobs, left the workforce or taken pay cuts due to the pandemic.

A new survey of estate planning professionals released Thursday by TD Wealth finds health care costs have superseded family conflict as the biggest threat to estate planning.

Twenty-two percent of respondents reported that the increase in health care costs and prolonged life expectancy had moved to the forefront of concerns in estate planning, up from just 7% who said so in 2019.

Concerns about market volatility and political conflict rose significantly from last year’s survey.

Family conflict, the leading threat to estate planning cited by respondents over the past three years, fell from 25% in 2020 to 10% this year.

In previous years, TD Wealth found that the most common cause of family conflict was failure to communicate estate plans with family members, noted by 43% of survey participants in 2020. This number fell to 24% in 2021 as dealing with blended families became the most common cause of family conflict, according to 34% of respondents. 

Other sources of family conflict noted in the new survey were the designation of beneficiaries in retirement accounts, a client’s resistance to creating an estate plan and naming the guardian of a minor in a will.

In another finding in the new survey, 89% of estate planners said their female clients had lost jobs, left the workforce or experienced salary cuts because of the pandemic.

As a result, 87% made changes to their female clients’ estate plans to reflect their new financial situation. Thirty-eight percent changed guardian and beneficiary designations, another 38% changed powers of attorney, 35% current wills and 17% postmortem letters.

“It’s no surprise that women’s estate plans were dramatically impacted by the pandemic, as women overall have been disproportionately impacted through what we’re seeing as a ‘she-cession,’ particularly regarding their careers,” Kalimah White, vice president and wealth strategist at TD Wealth, said in a statement. 

“Due to a variety of reasons, priorities shifted, divorce rates skyrocketed, and tough family decisions had to be faced, rather than avoided this year.”

The study was based on 142 responses to a survey of estate planning professionals conducted in April by Maru/Matchbox.

Specter of Tax Reform

White noted that with the advent of the Biden administration, estate planners are concerned about the effects of new tax policies on estate and financial planning. Income tax saving strategies will become increasingly important and will persist across the industry, she said.

Estate planners in the survey were reconsidering how to alleviate the implications of future tax policies for clients. Twenty-five percent suggested planning to minimize future capital gains tax consequences as a way to alleviate the implications of future tax policies for clients.

Twenty-three percent prioritized planning around charitable giving as a way to reduce the size of estates and lower income tax liabilities.

Check out Democrats Mull Weakening Biden Tax on Capital Gains for Estates on ThinkAdvisor.