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TD Wealth Survey Finds COVID-19 Had Major Impact on Estate Planning

Women have been disproportionately affected.

A staggering 87% of estate-planning professionals said that they made changes to their female clients’ estate plans due to their new financial situation, a recent TD Wealth survey finds. Many of those female clients were negatively impacted in the past year by job losses, leaving the workforce or decreased salary, as a result of the COVID-19 pandemic.

According to Kalimah White, Vice President and Wealth Strategist at TD Wealth, "It's no surprise that women's estate plans were dramatically impacted by the pandemic, as women overall have been disproportionately impacted through what we're seeing as a 'she-cession', particularly regarding their careers.”

Threats Facing Estate Planning

Increase in health care costs and prolonged life expectancy are also having a major impact on estate planning. In fact, the survey found that these two factors are now considered the biggest threat to estate planning. Market volatility, political conflicts and tax reform followed close behind. Meanwhile, family conflict, the previous leading threat, fell by more than half in 2020.

The reason for the shift, says White, is because “priorities shifted, divorce rates skyrocketed, and tough family decisions had to be faced, rather than avoided this year” with the pandemic accelerating “the need for a long-term estate and financial plan in the event of uncertainty." She adds that "Clients saw firsthand the immediacy and importance of planning for the unpredictable and reviewing estate plans on an ongoing basis."

Dealing with blended families has become the most common cause of family conflict. Other common causes of family conflict include not communicating estate plans with family members, the designation of beneficiaries in retirement accounts, resistance to creating an estate plan and naming the guardian of a minor in a will.

Lastly, 25% of respondents unsurprisingly cited that tax reform under the new administration is of top importance, with planning to minimize future capital gains tax consequences, as well as charitable giving planning to reduce the size of estate and lower income tax liabilities, as priorities.

Plan Ahead

“The best advice any financial advisor can give a client is to plan early and review your plan often. The earlier you plan the more likely the success of the plan as you have more time to grow and adjust. Also, it’s important to routinely review an estate and/or financial plan to determine if any changes in tax law or family circumstances impact the current plan,” says White.

“Many clients want to set it and forget it, as working with attorneys or CPAs can be costly. It’s better to pay the planning cost upfront than pay unnecessary taxes or cause avoidable conflicts with your loved ones at a later date—the latter is usually more costly,” she continues.

According to White, even if a client hasn’t planned previously, it’s better to start now than to do nothing. Discussing your estate and financial plans with your family is also crucial to successful implementation.

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