Two-Thirds of Americans Don't Have an Estate Plan: Survey

COVID-19 has claimed the lives of more than a million Americans, but that statistic hasn’t inspired many to put more thought into their end-of-life planning. Only 34% of American adults have an estate plan, and of those, 20% have not updated their plan in the last five years, according to a study released Tuesday by D.A. Davidson & Co., an employee-owned financial services firm.

Seventy-two percent of women in the study do not have an estate plan, compared with 59% of men.

The findings are just as bad for a health care power of attorney. Thirty-three percent of Americans have one, and just 30% accurately understand what this is.

Working with a financial professional makes a difference. Half of those who have done so have created a health care power of attorney, compared with 20% of those who have not. Across generations, 30% of Generation Z, 25% of millennials and 27% of Gen X have a health care power of attorney.

“Americans are vastly underprepared to pass on their assets according to their wishes and to care for loved ones in the event of a medical emergency,” Andrew Crowell, vice chairman of wealth management at D.A. Davidson, said in a statement. “If the COVID-19 pandemic has taught us anything, it’s the importance of being prepared for life’s uncertainties, and creating a focused and detailed estate plan can do just that.”

Directions Research conducted the online survey in early September among 2,094 U.S. adults.

Financial Illiteracy and Procrastination

Thirty-seven percent of survey participants reported that they do not have an estate plan because they do not think they have enough money to warrant one.

Among those who have worked with a financial professional, 44% said procrastination is the main reason they have yet to create an estate plan.

Here are other factors cited by those who do not have an estate plan:

• Haven’t gotten around to it: 32%
• Don’t know what needs to be done or where to start: 25%
• Don’t think they need one because they don’t have dependents: 16%
• Estate plans are too expensive: 13%
• Uncomfortable discussing death or money: 11%

Professional Planning

Working with a financial professional has a positive effect when it comes to creating an estate plan. Fifty-six percent of those who have worked with an advisor at some point have a plan, versus 18% who have not worked with one.

Respondents who have worked with a financial professional also report feeling more confident and prepared to discuss their estate plan and end-of-life wishes than those who have never worked with one.

Likewise, those who have a formal estate plan feel more confident and prepared to discuss their estate plan and end-of-life wishes than those who do not.

“Estate planning can be a sensitive topic, and an advisor can really help bridge this knowledge — and coverage — gap,” Crowell said.