estate planning worksheet

Why Attorneys Need to Discuss Estate Planning With All Clients

Planning for the future isn’t only for the ultra rich.

Attorneys know that estate planning can help people across the wealth spectrum make some of the most important decisions in life. Parents can name a guardian for their children; people can convey their choices for end-of-life healthcare and establish charitable initiatives; homeowners can transfer their homes to designated heirs; and business owners can keep their business in family hands as one generation gives way to the next.

Yet almost half (47 percent) of Americans in a recent survey said that estate planning is only for the ultra rich. Forty-nine percent said their assets aren’t worth enough for them to even consider having an estate plan. And only slightly more than half reported having a will or trust in place.

These were some of the results from the Estate Planning Awareness Survey, a study WealthCounsel conducted with the global business intelligence firm ORC International to gain insight into consumers’ perceptions of estate planning. The findings reveal the confusion many Americans feel about estate planning.

As a result, many people unwittingly forego the important protections provided by estate planning for decisions related to business and taxes, courts and conflicts, and parenting and personal healthcare choices.

The results also suggest that attorneys have a built-in opportunity to educate the public about planning and to make their own services better known. They can use the common misconceptions revealed in the study as starting points to discuss with prospective clients why they may need a personal estate plan, regardless of their net worth.

Small Business Owners

Many Americans, for example, remain unaware that a properly structured estate plan can reduce or even eliminate estate and income taxes. Yet three-quarters of our survey’s respondents said they’d be more likely to create an estate plan if it would help lower their families’ tax obligations, indicating an opportunity for attorneys to highlight the value of planning to prospective clients.

More than half of respondents also didn’t know that an estate plan can facilitate the transfer of a business. With 28.8 million small businesses in America, this means there are countless business owners who aren’t benefiting from the protections conferred by a plan. And these owners contradict the impression that only wealthy business owners need an estate plan: their median income in 2014 was $49,200. 

Court fights and family conflict involving estate plans and wills—or the lack of them—are numerous and can be very costly in terms
 of relationships, money or both. Recent headline-grabbing cases include those of the musician Prince, who died suddenly without a will, and ailing media mogul Sumner Redstone, whose estate has been mired in a messy court battle. 

Preventing Court Fights and Family Conflicts

Such disputes also occur among the less rich and famous. More than one-third of our respondents have either personally experienced, or known someone who has experienced, family conflict as the result of not having an estate plan or comprehensive will. 

Despite this direct knowledge of what can happen, 50 percent of respondents with a will believed that wills protect their estate from probate court after they pass away, and more than two-thirds didn’t know that wills offer only limited protections. 

With some $41 trillion expected to change hands by 2055 as baby boomers pass on their accumulated assets to the next generations, the protections offered by estate plans will only become more important for many families. Estate planning can also be used to provide for ongoing charitable initiatives, something that 95.4 percent of Americans participate in at some level, with charitable bequests totaling $31.76 billion in 2015.

Perhaps most distressing is the number of Americans who don’t know that estate planning is a highly effective tool for handling the most intimate decisions related to family and personal health.

Exactly half of all respondents didn’t know that they can use estate plans to legally designate a guardian for a minor. Fifty-five percent were also unaware that they could express personal wishes regarding healthcare decisions—for example, whether to maintain or remove life support in the event of grave illness.

Opening Conversation With Clients

The Estate Planning Awareness Survey reveals that there’s considerable room for improvement in Americans’ awareness and understanding of how estate planning can help them and their families. Confusion is common because there are large gaps between what people know about estate planning and what the facts are.

Armed with the survey results, attorneys offering services in trusts and estates can open more meaningful conversations with their existing and prospective clients. This is especially important when explaining the limitations of wills and why the use of trusts should extend far beyond the ultra rich.

In doing so, the legal community can help demystify this important area of the law for average Americans and give them the peace of mind and legal clarity that has too often been reserved for the wealthiest.

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