Where's the inheritance? Why fewer older Americans are writing wills or estate planning
Fewer older Americans are writing wills, research shows, a finding that could spell trouble for survivors.
The share of over-70 households with wills or trusts to distribute their assets after death has been in steady decline since the mid-2000s, according to an analysis published in August by the Center for Retirement Research at Boston College. Between 2008 and 2018, that share dropped from 70% to 63%.
The downward trend reflects the growing diversity of older America. Seniors are more likely than ever to be Black or Hispanic, and those populations are less likely than non-Hispanic whites to leave a will or receive an inheritance.
“We looked at who’s not writing wills,” said Gal Wettstein, a senior research economist at Boston College, “and it’s disproportionately non-Hispanic Blacks and Hispanics.”
The scholarly analysis ends in 2018, but other surveys suggest a continuing decline in estate planning.
Between 2020 and 2023, the share of Americans over 55 with wills decreased from 48% to 46%, according to the 2023 Wills and Estate Planning Study by Caring.com, the caregiver site. The study draws on a representative survey of 2,483 Americans by YouGov.
“It does seem that there’s a tendency to put off writing a will,” Wettstein said. “I think it’s an unpleasant process, even in the best conditions.”
A large quotient of American wealth is inherited: anywhere from 15% to 46%, by one analysis.
In a will or trust, a person instructs how to distribute property and other assets upon their death. When someone dies without a will, the local courts kick in.
And that, Wettstein said, is where the problems begin.
‘I’ve seen families break up over a piano.’
Consider the family home, which is often the most valuable household asset. When a last living parent dies, state law generally splits their dwelling among surviving children.
“And it’s not easy to divide a house,” Wettstein said.
Survivors may disagree about what to do with the property: whether to keep it or sell it, and what to do about maintenance and property taxes. The resulting conflict can turn harmonious siblings into bitter litigants. A legal battle, of course, spawns legal fees, and it might end with the property sold at a loss.
“In the end, you may fritter away a lot of the asset,” Wettstein said.
The same dilemma can arise in divvying up a family business, or any other prized asset.
“I’ve seen families break up over a piano,” said Ashley Folkes, a certified financial planner in Hoover, Alabama.
More probate problems can emerge in nontraditional families, which are on the rise in America. Many households are headed by single adults, or by cohabiting partners who are not married, or grandparents.
State laws often don’t cover those scenarios. If one unmarried partner dies, for example, “the state doesn’t necessarily recognize that the other is an heir,” Wettstein said.
No one likes to plan for their own death
Most Americans think writing a will is important. Most people plan to get around to it someday. Procrastination, experts say, is the enemy of estate planning.
“It takes time, it’s complicated, and maybe, for some people, they don’t want to think about death,” said Andrew Herzog, a certified financial planner in Plano, Texas.
Herzog only recently got around to writing his own will.
“I’m married, and I have one kid and another on the way, and that motivated me,” he said.
Parenthood motivates many Americans to write wills. Others draw inspiration from news accounts of pitched probate battles, such as the one involving R&B icon Aretha Franklin and multiple handwritten wills, one of them found in couch cushions.
In the Caring.com survey, 42% of respondents without wills blamed simple procrastination; 35% said they didn’t have enough assets to bother writing one; 15% said they didn’t know how to proceed; and 14% said the process was too expensive.
“People are really busy, they’re procrastinating, they don’t see a need, and they think it’s gonna cost them money,” Folkes said.
Covid spurred many Americans to write wills, but most of them were young. The share of Americans ages 18 to 34 who reported having a will jumped from 16% in 2020 to 27% in 2021, according to the Caring.com report. Oddly enough, the prevalence of wills declined in older age groups during that span.
Hiring an attorney to prepare a will might cost $1,000 to $2,000 for an average American, financial planners say. An online will generally costs much less.
Black and Hispanic families are less likely to have wills
Procrastination and tight budgets don’t fully explain why fewer older Americans are writing wills: Those are perennial concerns.
Wettstein theorizes that more than anything, the decline in wills reflects the growing diversity of American seniors.
The share of over-65 Americans who are racial or ethnic minorities rose from 20% in 2010 to 24% in 2020, according to the federal Administration on Aging.
Black and Hispanic families are markedly less likely to have wills than non-Hispanic whites, according to Boston College research. Other sources concur.
In the Caring.com report, 39% of white people reported having wills, compared with 29% of Black people and 23% of Hispanic citizens.
“When we look at Hispanic and African-American populations, they’re more likely to build wealth later in life,” said Genevieve Waterman, director of economic and financial security at the National Council on Aging. “They’re just so focused on building their assets,” she said. That could mean they don't get around to preparing a will.
The Boston College analysis found that Black Americans and Hispanics are significantly less likely than whites to ever receive an inheritance. Between 1992 and 2018, the study found, Hispanics were 23% less likely to reap an inheritance than non-Hispanic whites with similar socioeconomic profiles. Blacks were 25% less likely to receive a bequest.
When Black or Hispanic people do inherit, it is a smaller sum. Black Americans received $75,000 less, on average, than non-Hispanic whites in the years studied by Boston College researchers. Hispanics received $41,000 less. This inheritance gap perpetuates and amplifies historic racial disparities in American wealth, the report concludes.
Want to start a family squabble? Die without a will
For some Americans, having no will is no big deal. For “traditional” families, comprising a married couple (with no prior marriages) and their children, state probate laws are relatively straightforward. People with investment accounts and life insurance policies can name beneficiaries.
More on life insurance:How to find a policy from a deceased parent
For just about anyone else, financial experts say, an estate plan is crucial.
“It comes down to advice, and having access to qualified advice,” said Steven Stanganelli, an accredited estate planner in Amesbury, Massachusetts. "Because transitions cause problems.”