The Pulse

Americans' Views Of Estate Planning And How It Fits Into Overall Financial Planning

Today, seven out of ten Americans (69%) finds estate planning at least somewhat important, yet only 26% have an estate plan

A new survey from FreeWill reveals financial advisors have the potential to play a major role: those with advisors are 4x likelier to have a plan.

NEW YORK, April 23, 2024 /PRNewswire/ — Data exploring Americans’ current perceptions, needs, and realities surrounding estate planning demonstrates that it is sorely needed yet vastly underutilized. At the same time, the data demonstrates significant potential for uplift in adoption when made part of the broader financial planning process, according to a survey from FreeWill, a social-good enterprise at the nexus of philanthropy and estate planning.

Specifically, FreeWill found that just 26% of Americans have an estate plan. The largest variable is whether respondents work with a financial advisor. Of note:

  • Those who work with an advisor are 4x more likely to have an estate plan than those who do not work with an advisor (65% to 17%)
  • Even so, there is still plenty of unmet demand among those with advisors: 90% of those who work with an advisor view estate planning as at least somewhat important (as opposed to 65% of those without an advisor)
  • Those who work with an advisor but do not yet have an estate plan are twice as likely to do their estate plan in the next two years (59% to 29%)

Participation in estate planning is correlated with wealth, which is correlated with gender. While just 26% of respondents overall have an estate plan, more than 50% of people with more than $500,000 in assets have plans in place. Males report greater emphasis on estate planning:

  • Males are more likely to have an estate plan today (32% to 23%)
  • More males consider estate planning to be at least somewhat important (74% to 67%)
  • Female respondents who do not already have an estate plan are far less likely to complete one in the future (53% to 41%)

Notably, financial behaviors surrounding various forms of giving – both during respondents’ lifetimes and how they define their future beneficiaries – are evolving. Parents of adult children are increasingly helping pay for significant expenses such as education and weddings, as well as purchasing homes and automobiles. They also help with smaller, recurring expenses such as groceries, utilities, and internet/cell phone bills.

  • 51% of parents with children 21+ report having made significant financial contributions to their child already
  • 53% say they’ve been approached by their child, or expect to be, for help on a significant expense, such as a home, car, or wedding
  • 62% of respondents report that early giving (giving in significant amounts during their lifetime) is reflected in their estate plan, or will be, if applicable
  • 70% for males, 53% for females

For the aforementioned expenses paid for adult children 21+, a contrast exists between male and female parent respondents. Males report a greater propensity to help with bigger-ticket items, while females report helping more with smaller, recurring expenses:

Big-Ticket Items:

  • Education: 35% for males, 26 for females%
  • Weddings: 26% for males, 24% for females
  • Homes: 25% for males, 20% for females
  • Cars: 29% for males, 22% for females

Smaller, Recurring Expenses:

  • Groceries: 31% for males, 34% for females
  • Utilities: 22% for males, 25% for females
  • Internet/cell phone bills: 13% for males, 17% for females

There is a growing generational trend among younger generations of giving beyond immediate family:

  • A quarter (24%) of respondents plan to leave assets for others beyond their spouse and children.
  • The uptick shows Boomers and Gen X (19%) less than Millennials and Gen Z (33%)
  • Twelve percent of respondents plan to leave assets for friends.
  • The uptick shows Boomers and Gen X (8%) less than Millennials and Gen Z (19%)
  • Twenty percent of respondents plan to leave assets for charity.
  • The uptick shows Boomers and Gen X (17%) less than Millennials and Gen Z (26%)

Lastly, six million pets are sent each year to shelters, and responses indicate this could continue, particularly among older generations:

  • Approximately two-thirds of respondents (64%) indicate they own a pet
  • Unfortunately, just half (50%) of pet owners with an estate plan account for their pet via their will or a pet trust. Among the other half, just 20% have informal agreements, and the rest have no plan
  • Less than a third of Boomers and Silent Generation respondents who have a pet and an estate plan formally account for their pets via their will or with a pet trust (31%). This contrasts with Millennial and Gen Z respondents who have a pet and an estate plan, 69% of whom formally account for their pets via their will or with a pet trust

“The unfortunate lack of estate planning in this country, despite its widely acknowledged importance, is a growing problem perpetuated by the oldest members of the Baby Boomer generation having now surpassed the average life expectancy,” said Jenny Xia Spradling, co-CEO of FreeWill. “Practically speaking, what that means is that the oft-discussed $84 trillion Great Wealth Transfer is already here. Our data also makes clear that parents aren’t waiting to give until after they’re gone, they’re increasingly giving while they’re still here to help their adult children today. Given this shift in giving habits, financial planning professionals are ideally suited to maximize intergenerational wealth for their clients through greater attention paid to estate planning.”

 

 

 

Methodology
Based on findings from a custom survey conducted by OnePoll on March 3-March 8, 2024, assessing a general population sample of 2,000 U.S. adults.
About FreeWill
FreeWill is a social-good enterprise offering online tools that empower Americans to address commonly faced estate planning needs and make charitable donations in tax-advantaged ways, all for free. Through its partnerships with 1,500+ nonprofits who understand that major gifts often are part of estate plans, the company is also able to provide a comprehensive suite of estate planning and related tools to consumers free of cost. To date, FreeWill has generated more than $10 billion in planned and real-time gifts for more than 10,000 nonprofits while helping more than 1,000,000 consumers create wills and plan their estates.