Where is the inheritance? Fewer older Americans are making wills and planning for inheritance.
Search shows that fewer older Americans are writing wills, which could lead to problems for survivors. The percentage of households over age 70 who have wills or trusts to distribute their assets after death has been on a prolonged decline since the 2000s, dropping from 70% to 63%, according to an analysis released in August by the Center for Retirement Research at Boston College. This trend accounts for the increasing diversity of America's elderly population. Older adults have become more likely to be from black or Spanish-speaking ethnic groups, and these groups are less likely than non-Hispanic white Americans to leave a bequest or''to receive an inheritance.
"We studied who doesn't write a will," said Gal Wetstein, a senior research economist at Boston College. - "And there are significantly more people among them who are not black or Hispanic. "
The academic analysis is limited to data through 2018, but other studies show a continued decline in estate planning. According to a study on wills and estate planning in 2023 from Caring.com, a senior care website, the percentage of Americans over age 55 with wills dropped from 48% to 46% between 2020 and 2023. This study is based on a representative survey of 2,483 Americans conducted by YouGov.
"It seems that people have a tendency to put off writing a''bequests,'" Wetstein said. - "I think it's an unpleasant process, even under the best of circumstances. "
The majority of wealth inherited in the United States is between 15 percent and 46 percent, according to one analysis.
In a will or trust, a person specifies how to distribute property and other assets after his or her death. If a person doesn't have a will, local courts get involved.
And that's where the problems start, according to Wetstein.
"I've seen families break up over pianos," said Ashley Folks, a certified financial planner from Hoover, Alabama.
The family home, which is often a household's most valuable asset, is subject to division among surviving children according to the state''s legislation when the last parent dies.
"And dividing up the house is not easy," Wetstein said.
The survivors may disagree about what to do with the property: whether to sell it or keep it, as well as maintenance and estate taxes. As a result, conflicts arise that turn previously harmonious sibling relationships into bitter legal disputes. Litigation, of course, incurs legal fees, and it can end with the sale of the property at a substantial loss.
"You can end up wasting a lot of assets," Wetstein said.
The same problem can arise when dividing up the family business or any other valuable asset.
Additional problems with''inheritance can arise in the non-normative families that are becoming increasingly common in America. Many households are headed by single adults or cohabitants without formal marriage or grandparents.
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The majority of Americans believe that writing a will is important. Many plan to do so in the future. Procrastination, experts say, is the enemy of legacy planning.
"It takes time, it's complicated and maybe for some people writing a will means thinking about death," said Andrew Herzog, a certified''a financial planner from Plano, Texas.
The Duke only recently decided to write his own will.
"I'm married, I have one child and another is expected, and that motivated me," he said.
Parenting motivates many Americans to write a will. Others draw inspiration from news reports of inheritance litigation, such as the controversy surrounding legendary R&B singer Aretha Franklin and several sealed wills, one of which was found in couch cushions.
According to a Caring.com survey, 42% of respondents who don't have wills blame it on simple procrastination; 35% say they don't have enough assets to worry about writing a will; 15% don't know how to proceed''to do so; and 14% believe the process is too expensive.
COVID-19 prompted many Americans to write wills, but most were young. The percentage of Americans between the ages of 18 and 34 who said they had a will rose from 16% in 2020 to 27% in 2021, according to a Caring.com report. Interestingly, the number of wills declined in older age groups over the same period.
Hiring an attorney to prepare a will can cost between $1,000 and $2,000 for the average American, financial planners say. An online will usually costs much less.
People of black and Hispanic ethnicity are less likely to have wills. Procrastination and tight budgets don't entirely explain why fewer and fewer older Americans''Spanish-speaking and African-American populations, they're more likely to accumulate wealth later in life,' said Genevieve Waterman, director of economic and financial security at the National Council on Aging. - "They're just focused on accumulating assets," she said. That factor may be keeping them from starting to write a will.
A Boston College analysis found that black Americans and Hispanics are far less likely than whites to inherit when it comes to inheritance. Hispanics were 23% less likely to receive an inheritance than non-Hispanic whites with similar socioeconomic profiles, according to the study, which was conducted from 1992 to 2018. For blacks, that probability''Insurance policies can name beneficiaries.
Virtually all other financial experts say estate planning is extremely important.
"It comes down to getting advice and access to competent support," said Stephen Stanganelli, an accredited legacy planner from Amesbury, Massachusetts. "Because transitions cause problems. "
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