You might think that the COVID pandemic would have caused more people than ever to become aware of the importance of incapacity planning and estate planning. But a 2024 Caring.com survey has shown that for whatever reason, estate planning in many demographics—including older people—is actually down. That’s a problem for the people who put off planning, as well as for their families and loved ones. Let’s take a look at the recent decline in estate planning, and reasons you should buck the trend.
Current Trends in Estate Planning
The 2023 Caring.com survey had shown a modest increase of 3% in overall estate planning between 2020 and 2023. Furthermore, about a quarter of people say that inflation has made them more likely to see the need for an estate plan. Somewhat surprisingly, young adults between the ages of 18 and 34 are almost as likely to have an estate plan as adults between the ages of 35 and 54. That’s significant, because as we’ve learned, a serious illness or injury can strike at any age.
Now the bad news: the 2024 survey showed the first decline in estate planning since 2020: 6% overall, and 16% among Americans in lower income ranges. One in four adults who don’t have a will don’t ever plan on getting one.
The reasons for the sharp decline are unclear, but it may be that some people don’t feel like they have a large enough estate to justify making an estate plan, or they may not have a spouse or children to provide for. The problem with this rationale is that every adult has someone important to plan for: themselves.
Every adult needs incapacity planning, which involves appointing someone to make financial and medical decisions for them if they become unable to make their own decisions or express their preferences. And most people who have an incapacity plan make that plan as part of the estate planning process.
So if people aren’t making a will or estate plan, chances are that they are not making an incapacity plan, either. In the event that they need someone to step in and manage their affairs, their loved ones may need to seek guardianship or conservatorship over them. That involves a court process that can become contentious and costly.
Estate Planning Declines in Surprising Demographics
Although estate planning is important for all adults, there are certain populations for which it is especially important, and all of these populations have seen declines in planning.
Older Americans
Older Americans are still more likely than younger demographics to have an estate plan, which makes sense. Older people are more likely to have lost loved ones and have a greater sense of their own mortality. They are more likely to have accumulated some wealth than most younger people. And they may be focused on leaving a legacy for their children, grandchildren, and communities.
Even so, the percentage of older Americans with an estate plan has declined. That means that if they should die, their families may struggle to carry out their wishes, and family members may even have disputes over what Mom or Dad “would have wanted.”
Given that seniors are more likely to become legally incapacitated due to health issues including dementia, making it crucial that they have an incapacity plan as well as a will or trust.
Business Owners
For many business owners, their business is more than just a source of income; it’s their life’s work and their legacy to their family. That makes it all the more shocking that the great majority of business owners do not have a current estate plan: 85% of business owners haven’t updated their estate plan in more than five years. Since business law, estate law, and tax law is constantly evolving, that could be a recipe for disaster.
Planning for business and partnership issues is essential. A minority of businesses survive into a second generation, and even fewer into a third. If you want your family to continue to reap the benefits of your business, having a current business succession plan is a must.
Art Collectors
Most serious art collectors have some wealth, and many have significant wealth. But only about 10% have created an adequate plan for the transfer of their art collections after their deaths. Considering that art collections can be worth millions, but fluctuate in value and are not easily liquidated, a failure to plan can result in costly, contentious probate litigation among heirs. The cost of planning is usually significantly less than the cost of a lengthy court battle caused by the lack of planning.
Don’t Follow the Trends: Make (or Update) Your Estate Plan
Estate planning may feel complicated or cumbersome, but putting off planning doesn’t eliminate the pain. It simply passes it on to the people you care about, who will bear the burden of your lack of planning.
Failure to estate plan can lead to an increased tax burden or litigation that diminishes the value of your estate. If you are a business owner, a lack of planning can destroy everything you have worked for. Worst of all, a lack of clarity about your wishes can lead to fighting and permanent rifts between your family members.
Furthermore, the difficulty of estate planning is usually much less than you might fear. With an experienced estate planning attorney helping you, the process often isn’t stressful at all—and the peace of mind you gain when the process is completed makes the effort more than worth it.
The knowledgeable estate planning attorneys at Barron, Rosenberg, Mayoras & Mayoras work with clients who need to make or update an estate plan. Schedule a consultation today by calling (248) 213-9514 in Michigan or (941) 222-2199 in Florida to learn how we can assist you. You can also use our simple online contact form.