On the heels of the pandemic, having a will and estate plan is more important than ever. Photo: Adobe Stock
“We saw a significant uptick in new clients looking to do estate planning as well as existing clients recognizing the need to update their existing plans,” Morris said.
After all, if 2020 and now 2021 have taught us anything, it’s that mortality is inevitable. And that has put a spotlight on the need for adults, young and old, to get estate plans in order.
A survey conducted by LegalZoom.com last fall found that 32% of young people ages 18 to 34 said they got a will because of the pandemic. What’s more, 21% of that age group also drew up a will specifically because they or someone they knew had COVID-19. Of Americans who have a will, 26% got one because they were fearful of serious illness or death related to the coronavirus.
Yet, the majority of Americans still do not have a will. The LegalZoom.com survey found that 62% of Americans don’t have a will and, of those who do, 12% created them in the past 12 months.
“Business has been busy with respect to estate planning,” said Kyle Winter, partner at Allison MacKenzie law firm in Carson City. “Events such as the pandemic are common to trigger people to start deciding that they need to plan for the future.”
‘HIGHLY FLAWED’ APPROACH
Not everyone does, though, Morris said.
In fact, a sentiment Morris hears all the time from people looking into planning their estate is that “the kids will figure it out or work it out.” He called that approach “highly flawed.”
“Once mom or dad are deceased, emotions are heightened,” Morris said. “People are grieving, and they generally don’t work things out very well. Just relying on the kids or heirs to ‘figure it out’ is really not appropriate.”
To that end,
“Their mindset is either, ‘I want to plan to make sure that it’s easy as possible for my kids or whoever’s going to receive it,’” Winter said. “Or it’s, ‘when I die, I’m not going to be here to care, so they can deal with it.’”
FUND A TRUST
One of the pitfalls to avoid when you have an estate plan, Winter said, is to make sure your living trust is funded. This, Winter said, involves transferring assets to the trust. Anything that is not transferred to the trust is not owned by the trust and subject to probate, which is the court-supervised process of passing assets through a will or, in the absence of a will, through state law.
“Even if you establish a trust and don’t transfer your property or bank accounts, a lot of times the successor trustees or family is left going to court to then get those put in the trust,” Winter said. “The very purpose of trying to establish an estate plan in the first place is to avoid that.”
“The more people that estate plan, the more often you get to keep the money in the family where it belongs,” he added.
And don’t wait until the last minute, either. Thinking about planning your estate is one thing, establishing one is another, and you need to have the capacity to do the latter, Winter said.
“Unfortunately, we see a lot of clients who wait to the very end when they thi
Morris said some people neglect estate planning because it’s something they don’t want to think about. Others hold off for superstitious reasons.
“There’s an odd sentiment that by somehow doing your estate planning, it means you’re going to die sooner,” Morris said. “There’s no magic trigger that once you’ve done your estate planning, you’re now more susceptible to death.
“But COVID-19 has taught us that it’s never too soon to estate plan.”
RETIREMENT INVESTING TIPS
Not only that, the pandemic has shown that the need for professional financial planning has never been greater. Millions of Americans have seen their income significantly reduced. Balances in individual retirement accounts and 401(k) and other workplace retirement accounts may have changed.
As such, since May 2020, the proportion of Americans who say they’re financially struggling has more than doubled — to 46% from 22% — according to Prudential’s latest Financial Wellness Census Special Report.
Moreover, 44% cite decreased confidence in meeting their financial goals, and 31% say their ability to achieve those goals is out of their control.
Jennifer Rogers Markwell
“People think they have it figured out,” she said. “A financial plan just gives you that much more insight. And you don’t want to guess when you’re coming to retirement. You’ve worked so hard to get to that point, it’s not timely to say, ‘I think this will work.’ You need to be more precise and work with an advisor or a financial planner, specifically, that can put that plan together for you just to give you that peace of mind that you’re on the right track and you’ve been making those correct moves.”
The first step, Markwell said, is to take a proverbial step back to reevaluate your timeline for retirement.
This should include “estimating your monthly and annual expenses, figuring out how much you need in retirement, and calculating your retirement after-tax returns,” she said.
In the process, people should review their risk tolerance to ensure they’re comfortable with a sudden jolt to their portfolio.
“What risk are you willing to take as you’re getting closer to retirement,” she said. “Are you still at the same risk tolerance level or has that changed?”
HAVE A PLAN IN PLACE
Markwell said the pandemic has highlighted the importance of being diversified in your investments so you “don’t have all of your eggs in one basket.”
But, with the pandemic triggering extreme market volatility, some people maybe overreacted by selling current holdings or jumping into day trading at the wrong time. For others, it served as a wakeup call to simply get a retirement investment plan in place, Markwell said.
“If you don’t have a plan in place, then situations like the pandemic can definitely be very concerning,” Markwell said. “And if you’re not chatting with someone, I can see how people would get nervous, especially with the big swings we were seeing.”
In other words, the pandemic further emphasized the importance of having a financial consultant that you could count on to answer the phone, answer an email or jump on a Zoom call, she said.
“I grew a considerable amount last year,” said Markwell, noting her business grew 48% in 2020 compared to 2019. “We got quite a bit of new clients in 2020 because other advisors weren’t talking consistently with their clients.”