More Than One-Third of Wealthy Lack Estate Plans

Why aren’t the rich more concerned about how assets and belongings are distributed to heirs? Because they are a bit weary.

More than one-third of the wealthiest Americans have yet to take “the most basic steps to protect and provide for their loved ones when they die,” CNBC reports today.

The CNBC Millionaire Survey found that 62 percent of people with investable assets totaling at least $1 million have worked with a financial expert to establish an estate plan via documents such as wills.

The other 38 percent surveyed have not consulted with an expert.

The Spectrem Group conducted the survey for CNBC and polled 750 millionaires.

Estate plans were slightly more common among people with at least $5 million — among those, 68 percent have made plans, according to the survey.

The use of financial advisers was more common among Republicans (68 percent) than Democrats (61 percent) or independents (58 percent).

A steady stream of changes to federal estate-tax law may be to blame for the reluctance of wealthy individuals to think about their estate plans, says Mitch Drossman, managing director and national director of Wealth Planning Strategies Group at U.S. Trust.

Constant changes to the law for nearly a decade prior to 2013 resulted in “estate-planning fatigue,” he tells CNBC:

“We have had an incredible amount of uncertainty with respect to estate taxes, and every change led advisers to reach out to their clients to explain these changes and be sure their documents were up to date and reflective of those changes. Clients finally said, ‘Enough already.’ “

Certified Financial Planner David Mendels says a higher federal estate-tax exemption amount — which the Internal Revenue Service set at $5.43 million for this year — could be another possible reason for the lack of estate planning.

Mendels, who is director of planning for Creative Financial Concepts, tells CNBC:

“I think people tend to think of estate planning as being primarily a means to reduce estate taxes, and therefore, if they don’t have to pay estate tax, they may feel they don’t have to do any planning.”

People with estates worth less than $5.43 million aren’t necessarily exempt from all taxation, however.

Currently, 15 states plus the District of Columbia have estate taxes, according to the Tax Foundation.

To learn more about estate planning — including wills, living trusts and powers of attorney — check out “Estate-Planning Documents You Need Right Now.”

Have you made plans for how your estate would be distributed? Let us know in the comments below or on our Facebook page.

Stacy Johnson

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