If you’ve attended a seminar with Rajiv Nagaich, or listened to him on the radio for any length of time, you know that preparing a will is an important part of retirement planning. For millions of American families, preparing a will is the main means of passing all sorts of assets – money in the bank, real estate, and treasured heirlooms – from one generation to the next. Ask most attorneys for the most important place to begin in estate planning, and they’ll likely answer, “Preparing a will.”

So, if preparing a will is so important, why are fewer U.S. seniors actually taking the time to do it?

We were surprised when we read this recent article on estate planning from USA Today. Reporter Daniel de Visé dug into recent research that seems to show fewer and fewer seniors preparing wills. He calls that “a finding that could spell trouble for survivors.”

Significant Drop in Number of Seniors Preparing a Will

De Visé begins, “The share of over-70 households with wills or trusts to distribute their assets after death has been in steady decline since the mid-2000s, according to an analysis published in August by the Center for Retirement Research at Boston College. Between 2008 and 2018, that share dropped from 70 percent to 63 percent.”

What does this downward trend reflect? De Visé says it’s largely due to increasing diversity of the older population in America. A larger-than-ever portion of U.S. seniors are Black or Hispanic, and these populations are less likely than non-Hispanic whites to leave a will or receive an inheritance.

Preparing a Will: Share of Households Declining

While the analysis of scholarly data ends in 2018, other surveys suggest that estate planning as a whole, and will preparation in particular, is in surprising, gradual decline among some seniors.  The negative trend line when it comes to writing a will shows no sign of abating.

“Between 2020 and 2023, the share of Americans over 55 with wills decreased from 48 percent to 46 percent, according to the 2023 Wills and Estate Planning Study by Caring.com, the caregiver site,” De Visé writes. “The study draws on a representative survey of 2,483 Americans by YouGov.”

Gal Wettstein, a senior research economist at Boston College, adds, “It does seem that there’s a tendency to put off writing a will. I think it’s an unpleasant process, even in the best conditions.”

Preparing a Will Affects Huge Amount of Wealth Transfer

Inheritance plays a larger-than average role in American wealth, as up to 46 percent of wealth is inherited in this country. Even conservatively, that represents trillions in wealth transfer.

“In a will or trust, a person instructs how to distribute property and other assets upon their death. When someone dies without a will, the local courts kick in. And that,” Wettstein says, “is where the problems begin.”

For example, the family home is often the most valuable asset. When the last living parent dies, state laws generally split their dwelling among surviving children. And as Wettstein notes: “[I]t’s not easy to divide a house.”

Preparing a Will Can Prevent “Frittering Away” Assets

Because of this, disagreements abound among surviving children about what should be done with a property: whether it should be kept or sold, or what should be done about maintenance and property taxes. “The resulting conflict can turn harmonious siblings into bitter litigants,” De Visé writes. “A legal battle, of course, spawns legal fees, and it might end with the property sold at a loss.”

This same dilemma can rear its ugly head in splitting up family businesses or any other prized asset. Ashley Folkes, a certified financial planner in Alabama, has even seen families break up over something as simple as a prized piano.

Wettstein adds, “In the end, you may fritter away a lot of the asset” – all for lack of a proper will.

Preparing a Will: Important in Non-Traditional Families

Probate also gets more difficult in nontraditional families, which are becoming increasingly common in America. There are more households today headed by single adults, or by cohabitating adults who are not married, or even by grandparents. State laws don’t often cover these more unique scenarios.

For example, Wettstein notes that if one unmarried partner dies, “the state doesn’t necessarily recognize that the other is an heir.” Without a will or other document, there’s no guarantee your assets will transfer to the person you would choose to be your primary heir.

Preparing a Will Means Planning for Eventual Death

Thanks, perhaps, to it being the most well-known aspect of estate planning, most Americans know on some level that writing a will is important, and most plan to get around to it “someday”. Procrastination tends to be the real enemy here of estate planning.

“It takes time, it’s complicated, and maybe, for some people, they don’t want to think about death,” says Andrew Herzog, a certified financial planner in Plano, Texas. Herzog himself only recently got around to writing his will, saying, “I’m married, and I have one kid and another on the way, and that motivated me.”

And Herzog isn’t alone. Becoming parents is a huge motivator for many Americans to work on their wills. High-profile stories of contentious legal battles—especially among deceased celebrities and their families—can be a motivator for others. (We wrote about R&B icon Aretha Franklin’s messy estate here on the Blog a few months back.)

Preparing a Will: Battling Procrastination, Ignorance, Cost

De Visé writes, “In the Caring.com survey, 42 percent of respondents without wills blamed simple procrastination; 35 percent said they didn’t have enough assets to bother writing one; 15 percent said they didn’t know how to proceed; and 14 percent said the process was too expensive.”

Folkes explains, “People are really busy, they’re procrastinating, they don’t see a need, and they think it’s going to cost them money.” Hiring an attorney to prepare a will might cost between $1,000 and $2,000 for the average American, with online wills – not great, but often better than nothing – costing much less.

What about COVID, you might ask? While the pandemic did spur many Americans to write wills, most of them were younger people. “The share of Americans ages 18 to 34 who reported having a will jumped from 16 percent in 2020 to 27 percent in 2021, according to the Caring.com report,” De Visé writes. “Oddly enough, the prevalence of wills declined in older age groups during that span.”

Preparing a Will: An Ethnic Divide

Still, out of all of the factors noted in the article so far—including procrastination and tight budgets—none of them fully explain the decline of estate planning in older Americans. But according to Wettstein, our growing diversity is the most likely theory behind the decline. 

De Visé writes, “The share of over-65 Americans who are racial or ethnic minorities rose from 20 percent in 2010 to 24 percent in 2020, according to the federal Administration on Aging.” He adds, “Black and Hispanic families are markedly less likely to have wills than non-Hispanic whites, according to Boston College research. Other sources concur. In the Caring.com report, 39 percent of white people reported having wills, compared with 29 percent of Black people and 23 percent of Hispanic citizens.”

Genevieve Waterman, director of economic and financial security at the National Council on Aging, says, “When we look at Hispanic and African American populations, they’re more likely to build wealth later in life. They’re just so focused on building their assets. That could mean they don’t get around to preparing a will.”

Preparing a Will: The Reality of the Wealth Gap

The disparities continue with inheritance amounts. “The Boston College analysis found that Black Americans and Hispanics are significantly less likely than whites to ever receive an inheritance,” De Visé writes. “Between 1992 and 2018, the study found, Hispanics were 23 percent less likely to reap an inheritance than non-Hispanic whites with similar socioeconomic profiles. Blacks were 25 percent less likely to receive a bequest.”

And when inheritance does happen in Black or Hispanic families, it’s often a smaller sum. “Black Americans received $75,000 less, on average, than non-Hispanic whites in the years studied by Boston College researchers,” De Visé explains. “Hispanics received $41,000 less. This inheritance gap perpetuates and amplifies historic racial disparities in American wealth, the report concludes.”

Preparing a Will Means Minimizing Family Battles

De Visé ends his article by admitting that there are some American families for whom having no will isn’t as much of a big deal. In “traditional” families with a married couple—with no prior marriages—and their children, the state probate laws are pretty clear. And people who have investment accounts and life insurance policies can name beneficiaries.

But Steven Stanganelli, an accredited estate planner in Massachusetts, speaks for most financial experts as his words close out the article: an estate plan is crucial for pretty much everyone. “It comes down to advice, and having access to qualified advice,” Stanganelli says. “Because transitions cause problems.”

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(originally reported at https://usatoday.com)