In the wake of the pandemic, many people recognized that they need to plan for the future. Yet the vast majority of people have stalled in creating an estate plan. According to a new study, a mere one in three people has an estate plan in place. Worse yet, more than 40 percent of those without a will report that they wouldn’t create one until they had encountered a serious health concern. But waiting too late to start planning can put you at risk of not having the time or ability to make your best judgment.
Why Is It Important to Make an Estate Plan Sooner Rather Than Later?
It is dangerous to wait until you have a health issue before creating an estate plan. Without one, you could potentially lose control over your money, property, health care, and, in some circumstances, the guardianship of your children. In addition, your loved ones may not receive the assets, property, or sentimentally valuable items you would have wanted to pass down to them after your death.
Read Discussing Financial Goals with your Family to learn how to discuss your current finances and future goals with your loved ones.
Depending on what health condition or acute injury may unexpectedly befall you, you may be unable to speak, understand others, or advocate for yourself. Part of the purpose of advance planning documents, such as a health care directive, is to maintain your bodily autonomy and express your wishes when you cannot. Even if you can communicate your wishes, being in a state of crisis means you might not have the time to think about who is truly best for what role. Your decisions may end up being more drastic.
Not all emergencies are health-related: it is important to consider the risk of natural disaster in destroying your important documents. For the documents you already have, it is important to keep them in a safe place and accessible for yourself and your loved ones. Read our article Keep Your Documents Safe From Disasters to learn more.
Bottom line: The reason for creating an estate plan is to put protections in place not only for you, but also for your loved ones.
Barriers to Estate Planning
Despite understanding the need for estate planning, with 64 percent of people saying they believe it is important, most have not made it a priority. In the 2023 study, Americans reported procrastinating on creating an estate plan for the following reasons:
- 35 percent do not believe they have enough money or assets to leave behind
- 14 percent said that inflation’s negative effect on their assets has made estate or financial planning less of a priority for them
- 15 percent reported that they did not know enough about estate planning, so they felt too intimidated to start
- 42 percent stated they want to begin estate planning, but simply have not gotten around to it
Many Americans Will Wait to Make an Estate Plan Until It’s Too Late
Many Americans are at risk of waiting until their health is compromised to seek estate planning advice or draft any documents. According to the study’s findings:
- 41 percent of respondents said they would not worry about creating a will unless they received a medical diagnosis or had a health scare
- 21 percent would wait until retirement age
- 22 percent said they would not create an estate plan unless they bought a home
- 20 percent want to wait until they are married or have children
- 14 percent would create an estate plan if their employer offered the benefit
Although each of the above reasons may seem valid, it is important to be prepared before any of these life events occur. Otherwise, it may be too late to act.
Updating An Estate Plan is Important, Too
Even after you draft an estate plan you are satisfied with, it is important that you review it every 4-5 years to make sure it still reflects your wishes. A good estate plan is built with safeguards and alternatives in mind should your life situation change, but it is important to address major life changes sooner rather than later.
Read When is it Time to Update my Estate Plan? for a comprehensive list of life changes you might have gone through that mean it’s time to review your documents.