Survey finds many need to work on estate planning

The global focus on COVID-19 over the past year has caused people to evaluate aspects of financial security that they might previously have put off — most importantly, creating a will and an estate plan. But the Q4 Wells Fargo/Gallup Investor and Retirement Optimism Index shows that while some progress has been made in this area, many investors have more work to do.

Close to half of investors in the new survey (45%) report they have neither a will nor an estate plan. About a third say they do have a written will (34%), 4% have written estate plans and 17% have both.

“The pandemic has put in sharp relief the need to plan for the future, including having good end-of-life plans in place,” said Michael Liersch, head of advice and planning for Wells Fargo’s Wealth &Investment Management Division. “The availability of the vaccine is great news, but it should not stop people from preparing estate plans.”

Higher-income investors are no more prepared than investors as a whole, but the percentage with either a will, estate plans or both does increase with age. The percentage with no preparations declines from 70% of investors under age 50 to 17% of those 65 and older.

Even those who have a will or estate plan in place might need to be more open about them with family or other heirs, to ensure their final wishes are understood and carried out.

Nearly two-thirds (65%) report they have only spoken a little or not at all to family members about their will or estate plans, and 57% believe they need to do more when it comes to communicating these plans. Again, this changes with age, but even 45% of retired investors say they need to do more.

Talking to family members about wills and estate plans is not something most investors enjoy. The slight majority (51%) say they do it out of obligation, while most of the remaining respondents either avoid it (14%), dread it (10%) or don’t ever do it (14%). Just more than one in 10 surveyed (11%) say they enjoy it. At the same time, the idea of including a “letter of wishes” in their will detailing matters from funeral arrangements to how they want heirs to use their money or other assets, appeals to 56% of investors — possibly because it sidesteps direct conversations.

Higher-income investors are not markedly different in most respects from all investors in their estate preparation or preferences. However, those high-income investors surveyed are much more likely to want to leave a letter of wishes (70% vs. 56%).

While most investors (62%) say they want to leave it up to their heirs to do as they choose with the money and assets they leave them, 35% want to determine the specific impact their estate has through directions they leave behind. “Having a specific impact after you are gone is difficult to do without discussing your goals with family members while you are able to,” said Liersch.

One reason investors might avoid conversations about their will or estate is that most surveyed say they are confident their family members understand and support their estate plan goals: 35% are “highly confident” and 38% “somewhat confident.” Just 13% are “not too confident” or “not at all confident,” while 14% say they have not set these goals.

“The perception that family members are in sync with their wishes may be true for some investors, but for others, that may need to be confirmed,” Liersch said. “Even if investors want to provide their heirs broad latitude in using their assets, communicating that sentiment now is important to give their heirs peace of mind — and the financial tools and knowledge — in making these decisions when the time comes.”

Results for this Wells Fargo/Gallup Investor and Retirement Optimism Index are based on a Gallup Panel web study completed by 1,709 U.S. investors, aged 18 and older, from Nov. 9-15, 2020. This quarter’s poll includes an oversample of higher-income investors, defined as having $240,000 or more in household income, resulting in a total of 603 higher-income investors included in this survey.