Ever wonder what percentage of your 401k plan participants over age 50 have a will in place?
If they’re anything like Americans over 50 at large, just slightly more than half have a will, and only 18 percent have the recommended essentials of a will, a healthcare directive or proxy, and a durable power of attorney.
That so many Americans continue to ignore an unpleasant subject and leave their legacy in limbo is among the more disturbing findings in a new study released Feb. 7 by Merrill Lynch and Age Wave.
The study, Leaving a Legacy: A Lasting Gift to Loved Ones, explores a range of topics, including what people most want to be remembered for (two-thirds say memories shared with loved ones) and the benefits of having one’s affairs in order.
Although most Americans recognize that people should have this all taken care of before they turn 50, only about half have a will by that age—and less than one in five have tackled the will/health care directive/power of attorney triumvirate, even though most acknowledge that lack of planning can leave families in a bind.
“Planning your legacy can give you the reassurance that you’ve done all you can to organize your life, articulate your wishes and shape how you will be remembered,” says Kevin Hindman, national trust executive at Bank of America Merrill Lynch.
To get the essentials in place, he suggests, “seek trusted advice from family, friends, and financial, legal, and medical professionals. And make sure you have advocates who know your wishes and can work on your behalf.”
While 87 percent of Americans say it’s a parent’s responsibility to initiate legacy-planning conversations, few do.
Often it may be children’s reluctance to take part in difficult planning conversations that force them to acknowledge their parents’ mortality.
“Parents are actually more receptive to talking about legacy planning than their kids might be,” says Matthew Wesley, director of the Center for Family Wealth, Merrill Lynch Wealth Management. “Most parents don’t want to burden their kids with a mess, turmoil and conflict because of inadequate planning.”
Although these frank planning conversations may be uncomfortable as they’re happening, “it’s necessary to have them so that everyone’s expectations are out on the table,” says Cynthia Hutchins, director of Financial Gerontology, Bank of America Merrill Lynch.
To help clients get started in having these difficult conversations, the report offers the following guidelines.
Make it a life-affirming conversation
When it comes to talking with your family about your wishes—everything from how you want to be cared for to how you plan to distribute your property and financial assets—the sooner you get started, the easier it is for your loved ones.
By starting early and returning to the subject regularly, you help to normalize it, points out Stacy Allred, head of the Center for Family Wealth, Merrill Lynch Wealth Management.
“Introducing the topic gradually, maybe when your children are in their 20s, shows that you’re planning for a normal part of life. You don’t want to delay the conversation until you’re older, when the subject may be fraught with more anxiety,” she says.
Allred also suggests broadening the topic to include more than the financial and medical essentials. “Talk about your values and how you hope to be remembered. Make it a life-affirming conversation, not one heavily focused on death.”
Emphasize the benefits of planning ahead
“Relieving the burden on loved ones” was the top benefit cited by those surveyed for the Leaving a Legacy study, with 43 percent selecting that as the main reason for getting their affairs in order.
One potential way to start the conversation is to bring up a personal story—perhaps the loved one of someone you know recently became gravely ill, causing upheaval in a family that was unprepared, suggests Hutchins.
“You could follow the story with, ‘That made me start thinking about what would happen in our family. Here’s how I would like to see us handle it.’”
When it comes to health care, it can also help to focus the initial conversation on the client’s personal wishes—not on the assets needed to pay for long-term care, advises Wesley.
Talk about how your durable power of attorney for health care and your advance health-care directive will reduce the need for your loved ones to make tough medical decisions during what will undoubtedly be a difficult and very emotional time for them.
Call in the experts
A financial advisor can provide the family with a reality check on the cost of long-term care, which most people underestimate or incorrectly assume will be covered by Medicare, Hutchins adds.
An advisor could also offer useful perspective on legacy planning as a whole, including ways trust or life insurance strategies can help minimize taxes and manage assets for loved ones.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
