Article summary: Between 60-70% of Americans do not have any formal estate plan. We take a closer look at three common reasons given for not creating an estate plan.
Depending on the study you read, somewhere between 6 and 7 out of every 10 Americans do not have a will, let alone an estate plan.
At The ACU Foundation, we operate under the assumption that every adult needs an intentional estate plan. Young or old, rich or poor, six children or none – we believe everyone needs an estate plan, and everyone can create an estate plan. Yes, that means you.
But why do we think it’s so important? And what kinds of things keep people from actually following through with creating an estate plan?
Let’s start with a simple definition: what is an intentional estate plan?
At its most basic level, an intentional estate plan is a set of documents that legally define what you want to happen to your body, your stuff, and your dependents (if applicable) if you are mentally or physically unable to care for yourself, or you pass away.
You can accomplish this through four documents: a will, a power of attorney, a medical power of attorney, and a directive to physicians (sometimes called a living will). I will describe each of those documents in more detail in future posts. For now, let’s just call them the four essential documents everyone should have.
(If you’re wondering why I keep calling it an “intentional” estate plan, the answer is very simple. Whether you create a will or not, you already have an estate plan. Your “unintentional” estate plan is found in your state’s Probate Code. Read it sometime, with a cup or two of strong coffee. If you approve of it, you have no other obligations. Your heirs, however, may or may not remember you fondly, depending on their approval of it.)
Over the years, we have heard many reasons why people say they haven’t created a will or made an intentional estate plan. Here are a few of the more common ones :
It costs too much.
It’s too complicated.
I don’t own enough to need one.
These seem like reasonable arguments on the surface. But let’s look a little closer.
It costs too much.
Whenever someone wants to talk about the high “cost” of something, my thoughts tend to turn to the idea of “value”. The cost of a particular product or service is only an issue for someone if they do not see enough personal value in the product or service. So the relevant follow-up question to “What does it cost to do my will?” is: “What’s the value, to me, in intentionally making a plan to distribute my assets and care for my family when my time comes and I am no longer living?”
That question cannot be answered by anyone other than you. But, as I said at the beginning, we believe that every adult should have an intentional estate plan. That, if anything, is my agenda in writing this blog.
From a financial cost standpoint, depending on where you live, you might pay a few hundred dollars for a competent attorney to draft your set of essential documents. Your bill will be more if your estate or your family dynamics are complex.
There is always the DIY route, via computer software. Attorneys will, of course, tell you to have your documents drafted by a competent attorney, and they are probably right. An attorney can provide you with options and make recommendations, and can provide feedback to your questions. Consider, however, that the amount of money you pay an attorney to draft your essential documents is not the only cost of a will. If you die without a will, most of that cost (some financial, some not) will be borne by your heirs.
It’s too complicated.
It’s not, actually. For now, let’s just look at a will, since it’s typically the longest of the four essential documents.
To make a valid will, you must be at least 18 years old, you must be mentally competent to sign the will, and the will must be signed in the presence of witnesses.
Here’s what goes in a basic will.
- Your name.
- Your spouse’s name, if applicable.
- Your childrens’ names, if applicable.
- If you have minor children, name a guardian for them.
- Who you want to be executor of your estate (basically, the person who is legally able to manage the distribution of your stuff).
- What you want to happen to your stuff, generally. (“I leave all my worldly possessions to my wife, excepting any specific bequests I have named.”)
- If you have specific items you want to go to specific people, you can put those in your will. (“I leave my Official Red Ryder Carbine-Action Two-Hundred-Shot Range Model Air Rifle to my son, Ralphie.”)
- If you want something of yours to go to your church or other favorite charity, put it in your will.
In simple terms, that’s more or less it. Can it be more complicated than that? Sure, if you want it to be.
I don’t own enough to need an estate plan.
As ACU Foundation President Dan Garrett likes to say, if all you own is two sets of clothes, you’re only going to be buried in one of them. What happens to the other one?
I mentioned above that if you don’t have a legal will, that question is answered for you: the laws of the state in which you live decide what happens to the assets you leave behind – whether you would approve the results or not. You may think you know what will happen with your assets. You probably don’t, especially if you own any property separate from your spouse, or if you have a complex or blended family.
MyStateWill.com’s intestacy calculator is an excellent resource for determining what could happen to your estate if you die without a will (legally speaking: “intestate”).
Next week, we’ll look at a few reasons why you should consider having a formal estate plan. In the mean time, if you would like more information on the four essential documents, have questions on creating a will, or would like some advice on your current estate plan (or lack thereof), please contact The ACU Foundation. My email address is chris.sargent (at) acu.edu. Our toll-free phone number is 1-800-979-1906. Our services are completely confidential and completely free of obligation or monetary cost. We hope the value you receive is immeasurable.
Disclaimer: All information on this blog is for educational purposes only. Employees of The ACU Foundation, and the writer of this blog specifically, are not attorneys and are not your adviser. Call us or come see us if you have any questions about this. See here for a more comprehensive (and more boring) version of this disclaimer.