Nobody likes to think about death, especially when they’re young and healthy. But failing to implement proper estate planning can have significant financial and legal ramifications. Despite this, 43% of Americans don’t have an estate plan. Of that number, more than one third (37%) haven’t addressed the issue because they don’t believe they have sufficient assets to warrant an estate plan.
For estate planning attorneys, it’s critical to convey the value of creating an estate plan and why not having one can lead to negative consequences down the road. Let’s take a closer look at why it pays to for your clients to think about death (and create an estate plan).
Why is estate planning important?
Regardless of wealth, estate planning facilitates the preservation of assets, and perhaps most importantly, peace of mind. An estate plan allows your clients to control their property while they’re alive, provide for themselves and their families in the event of incapacitation, minimize the impact of fees and taxes, and distribute their assets to whomever they want, when they want.
More specifically, spouses, partners, parents, and homeowners all have reason to consider estate plans regardless of their net worth. Help educate your clients about the universal benefits of an estate plan. Estate planning can help people:
- Designate a guardian for children
- Ensure homes are transferred to designated beneficiaries in the event of death
- Keep a business in family hands throughout generations
- Protect family assets in the case of future divorces
- Avoid probate
- Maintain privacy of assets since trusts are not public records
- Make provisions for digital assets/online accounts
Without an estate plan, your clients could lose control over who gets their property, who cares for their minor children, and even their own medical care in the event of an extended illness. Instead, their estate could be controlled by the court, which then decides what to do with your clients’ assets.
Most of us hope to pay off all of debts before death. But, with mortgages, student loans, and record credit card debt, that’s not always the reality. Seventy-three percent of Americans die with some form of debt to their name, with an average debt of $61,554, including home loans, according to Credit.com.
Debt after death can create headaches for beneficiaries. However, there are ways to protect against losing assets to creditors. For example, you could advise your client to set up an irrevocable trust. Once an irrevocable trust is created, the creator no longer legally owns the assets used to fund it and can no longer control how the assets are distributed. Additionally, any subsequent changes to the trust must be approved by the beneficiary. Therefore, creditors cannot satisfy any debts from assets in the trust.
Americans are living longer than ever, with the average life expectancy in the United States at 79 years and growing. Even if our later years feel a long way away, the passing of time is inevitable. Estate plans are a universal tool that can protect every American. However, a large percentage of the population still doesn’t take advantage of these tools. As an estate planning attorney, you can educate your clients and help them protect their assets and family future.
Download the complete Estate Planning Awareness Survey to learn more about the gaps in estate planning awareness and how you can use this information to gain new clients, deepen relationships with existing ones, and grow your practice.
Wealth Counsel Survey: What do Americans Think about Estate Planning?