2020 Estate Planning and Wills Study
Written By: Daniel Cobb, Managing Editor
What you should know:
- Estate planning is becoming less prevalent overall: The number of adult Americans that have a will or another type of estate planning document decreased by nearly 25% since 2017.
- Older adults are less likely to have a will: The number of older and middle-aged adults with estate planning documents dropped by 20% and 25% since 2019, respectively.
- A growing number of people lack the knowledge and resources to get a will: This is especially true among the Hispanic community. In 2020, 200% more Hispanics said they “don’t know how to get a will” (4% in 2017 vs. 12% in 2020).
Although estate planning is very important, it can also be difficult and unpleasant, causing people to put off the task. “The topic of estate planning can be a difficult one, but not as difficult as the situation your loved ones may be left in if you don’t have an estate plan in place,” says Patrick Hicks, Head of Legal at Trust & Will. “At the end of the day, it’s about peace of mind, not only for you, but more importantly, it’s about protecting your loved ones who will have one less thing to worry about during a difficult time.”
To demystify estate planning and help people better understand the process, Caring.com partnered with YouGov to conduct a survey of 2,400 Americans to determine who is engaging in estate planning, and why or why not. Since 2015, Caring.com has been conducting wills surveys to help raise awareness of the importance of estate planning, especially among people that may not feel that they have the resources or tools needed to create a will or living trust.
In our 2020 wills survey, we found that fewer people are engaging in estate planning than in prior years. In fact, Caring.com’s annual survey shows a 25% decrease in the number of people that have a will or similar document since 2017. When asked why they have put off estate planning, an increasing number of people are saying citing a lack of education or the cost of estate planning as their main reason. And, while about 60% of people still think that estate planning is very or somewhat important, the number of people who haven’t yet thought about whether or not a will or living trust is important for them increased by 12 percentage points compared to 2019.
The Prevalence of Estate Planning
The prevalence of estate planning documents has decreased since 2017.
In 2017, almost half (42%) of all Americans said that they have a will or another type of estate planning document. Fast-forward to 2020, and less than one-third (32%) say they have one or more documents – that’s a decrease of nearly 25% in just three years.
Of those who do have estate planning documents, a will is the most common, at 23.9% of respondents. 13% of 2020 respondents said that they have a living trust, and just 6.2% have an advanced health care directive.
The number of older adults with an estate planning document has decreased by 12 percentage points since 2019.
Middle-aged and older adults have had a more significant drop off in the number of people who have an estate planning document than their millennial counterparts. Compared to 2019, the number of adults ages 35-54 who said that they have a will decreased by more than 25%. Among those age 55 or older, there was a decrease of 12 percentage points, or approximately 20%. Young adults ages 18-34, on the other hand, only saw a drop of 1.6 percentage points.
This trend among middle-aged and older adults is alarming, considering that as one ages, they are more likely to need a will or other estate planning document. Adults who do not have a will run the risk of having no say in what happens to their estate after they pass, even if they have diligently saved over the years with the intention of providing for their heirs.
Less than half of people making $80,000 or more have any estate planning documents.
Our data shows that as one’s income increases, the likelihood of having a will, living trust, or advanced health care directive also increases. But, the number of people who have an estate planning document has decreased since 2019 among all people, including those in higher-income groups. In 2019, 61% of people making at least $75,000 had a will. This year, just 45% of people in the highest income group said that they have an estate planning document, a decrease of over 26%. Although these individuals have the resources to create a will, they may still feel as though it’s something that they can put off until later in life, which can have major consequences in the event of unexpected death.
An increasing number of people say that they do not have a will due to lack of education or resources, rather than simple procrastination.
60% of people surveyed think that estate planning is important, but significantly fewer actually have the necessary documents in place. This discrepancy between what people think about estate planning versus who actually has a will or living trust shows that while people do know that having these documents is a good idea, they face barriers to actually engaging in estate planning. Compared to 2017, the number of people who said that they do not have a will or living trust either because it is too expensive to set up or they do not know how to get one increased by 70% and 57.5%, respectively. Meanwhile, the percentage of respondents who said that they simply haven’t gotten around to creating a will decreased by 24% in the same timeframe.
Individuals in higher income brackets may still feel that they do not have enough assets to leave anyone.
In 2020, 30.4% of respondents said that they do not have a will or living trust because they don’t have enough assets to leave anyone. While the percentage of respondents who feel this way decreases as income increases, as one would expect, it’s important to note that those in higher income brackets aren’t immune to this sentiment. More than 10% of individuals who said that they don’t have a will due to lack of assets have an income of at least $80,000, which is 22% higher than the national median household income.
Those of Hispanic descent are the most likely to put off getting a will or living trust because they do not know how to start the process.
According to the 2020 survey results, disparities in knowledge and/or access to education about estate planning between different races may be playing an increasingly important role in who has a will. A total of 6.3% of survey respondents said that they have not started the estate planning process because they do not know how, and within that group, those of Hispanic descent are more than twice as likely as someone who is Caucasian to not know how to get a will or living trust in 2020.
In 2017 and 2019, however, the two groups were within one percentage point of each other. In both 2017 and 2019, 4% of Hispanic respondents said that they do not know how to get a will or living trust. In 2020, 11.9% chose this answer- an increase of almost 200% from previous years. Interestingly, in 2019, Black non-Hispanic respondents were by far the most likely to not know how to get a will or living trust, at 12%. This year, 6.8% of people in this group said that they do not know how to get estate planning documents.
The Importance of Estate Planning
The majority of people think that having a will is important, but significantly fewer people are thinking about estate planning than in years past.
The complicated and oftentimes confusing process of estate planning may hinder some people from creating a will even though they know its value. While less than 25% of people surveyed have a will, 60% say that they think having a will is important. And while more than half of people recognize the importance of wills, our data shows that fewer people are thinking about estate planning than in 2019. When asked how important having a will is for them personally, just 1% of 2019 respondents said that they hadn’t thought about it. This year, the number of people who haven’t thought about planning for their estate jumped to 13%- an increase of 1,200%.
30% of people believe that you should have a will before the age of 35.
When asked by what age someone should have a will, almost 1 in 3 respondents said that they believe adults should have the document in place by age 35. This was the most common answer among all age groups, despite the fact that only 8.2% of respondents between the ages of 18 and 34 actually have a will. This indicates that while many people know that they should have a will, they may also feel like they can put off creating a will until later in life.
Young adults may be putting off getting a will because they do not feel they have sufficient assets to warrant the need for estate planning.
One reason for the disconnect between when people think one should have a will versus when they actually start planning for their estate may be that younger people do not feel they have substantial enough assets to warrant the need for planning. Though 30% of all survey respondents said they do not have a will or living trust because they feel they do not have enough assets to leave anyone, the number is higher among those in the 18-34 age range at 42%. This is the only age group that cited not having enough assets, rather than simple procrastination, as the main reason why they do not have a will or living trust.
Many people only get as far as talking to a loved one in the estate planning process.
When asked how far along they are in the estate planning process, nearly 20% of respondents said they have talked to a loved one (61% of respondents had not yet started the estate planning process at the time of the survey). But, the data shows that talking about estate planning does not necessarily translate into taking action. Just 1.6% of people said that they had actually filed paperwork to create a will.
What You Should Know About Estate Planning
While our data shows that the majority of people believe estate planning is important, the comparatively low number of people who actually have documents in place indicates a lack of education and familiarity with the process. The brief explanations of the most important estate planning documents below can help you understand the process and which documents you may need to best plan for your future.
Estate Planning Documents
The three main estate planning documents you’re likely to come across are wills, trusts, and advanced directives.
According to the Caring.com 2020 survey, wills are the most common type of estate planning document. Even those who do not have a will or know exactly what it is have most likely heard the term before.
A will can be used to dictate several different things, including how to divide up property, guardianship, debts, and more. For some people, a will covers all estate planning needs. But in some situations, such as for those who own large properties or predict any family disputes that could impact the will, further estate planning documents, like a trust, may be necessary.
Trusts are useful for several reasons, including providing more support than wills for those with larger estates, large amounts of property, or those who expect a disability. The most notable difference between a will and trust, however, is when the documents come into effect. A will determines who will become a beneficiary after the person passes away; however, trusts take effect as soon as they’re enacted (hence the term “living trust”). It’s also worth noting that creating a trust is more complex, and more expensive, than a will.
Another reason that one may choose to have a living trust is to avoid probate court. “While everyone’s situation can be unique, a general rule is that the larger the value of the estate, the greater need there is for a living trust,” says Chas Rampenthal, General Counsel for Legal Zoom. “The main reason here is to avoid probate, which can be a long and costly process – especially for larger estates. Additionally, when a will goes into probate, it becomes a court document; a living trust, on the other hand, is not made public upon your death, so your estate can be managed in private.”
Advanced directives (also called advanced healthcare directives) stipulate a person’s wishes regarding end of life care and/or what is to happen if the person becomes mentally incapacitated or unable to communicate later in life. Thus, like living trusts, advanced directives are designed to take effect during a person’s life, not after they pass.
Despite its importance, our survey found that nearly 1 in 5 people (19.3%) do not know what an advanced health care directive is. This can be a mistake according to Phillip H. Palmer, ChFC, managing executive at The Chestnut Street Group. “Proper estate planning documents should include an advance healthcare directive, which provides guidance for your family and medical professionals in the event you can no longer make your own health care decisions. In an age of technology and medical advancements, much can be done to sustain life. The directive takes the pressure of making difficult decisions away from your family members.”
You can learn more about these documents by visiting Caring.com’s Guide to Advanced Health Care Directives.
Starting the Estate Planning Process
For many people, estate planning is a daunting task. But, the process can be simplified by breaking it down into steps and asking yourself some basic questions. To learn more about how to get started creating a will, trust, or advanced directive, visit Caring.com’s Guide to Estate Planning.
Caring.com’s survey included 2,400 Americans and was conducted in December of 2019 by YouGov. For more information about our methodology, the survey results, or how to cite it, you can contact email@example.com.
Additionally, you can see previous versions of the Wills Survey by clicking the links below: