HR Professionals: Here’s Why Estate Planning Should Be Part of Your Employee Benefits Package
Misperceptions and accessibility issues keep many people from setting up estate plans, but making it part of an HR benefits package is good for both employees and employers.
While estate planning is typically not included in employee benefits packages, the results of Wealth’s State of Estate Planning survey suggest that most employees would take advantage of the benefit if it were offered.
“Our survey revealed that while estate planning is often perceived as inaccessible, 72% of people surveyed were more likely to set up an estate plan if their employer offered it as a benefit,” says Rafael Loureiro, CEO at Wealth. “We also learned that educating employees on what estate planning is and why it’s meaningful will increase the likelihood that people will make use of it as a benefit.”
The December 2021 survey asked 10,000 adults about their attitudes and behaviors around estate planning.
Here’s a deeper dive into the survey’s findings:
Employees do want estate plans.
According to the survey, 7 in 10 people say it’s a personal goal to hand down wealth to family. While 53% currently have an estate plan in place, among those who don’t, 63% say they’ve seriously considered it in the past, and 70% say they expect to put one in place in the future.
Many people think estate planning is something to do later.
The No. 1 reason survey respondents gave for not having an estate plan is that they haven’t gotten around to it, suggesting they don’t think it’s something they need to do now.
The findings also suggest that when estate planning is done before a stressful life event, people tend to have positive attitudes about the process. When they wait until the last minute, people find estate planning to be confusing, tedious and depressing.
Getting started is hard.
For those who do have an estate plan in place, nearly half said the most difficult part was figuring out how to start. And for those who don’t have a plan, “I don’t know how to begin” and “I don’t know anything about it” were among the most common reasons given. Respondents are also less knowledgeable about estate planning services than they are about other financial products such as mortgages and retirement savings accounts.
Employees think estate planning is “not for me.”
One big misperception is that estate planning is merely a way of handing down wealth that is primarily meant for people who are extremely well-off. “I don’t have enough money saved” and “I don’t own anything valuable ” were two of the most common reasons respondents gave for why they haven’t set up an estate plan.
Even the term “estate planning” is a misnomer, conjuring up images of grand homes, so it’s not surprising that many employees think the process is mainly about handing down wealth to family. But estate planning actually encompasses other important end-of-life decisions, such as medical directives and funeral costs.
There’s a generational wealth and knowledge gap.
The survey revealed that parents are a major source of influence, and that their behavior predicts whether or not their children have an estate plan. Nearly 70% of respondents said their parents have or had an estate plan in place, and of that group, 83% have set one up themselves. For respondents who said their parents don’t or didn’t have a plan, less than 20% have their own plan in place.
People of color and those who live in rural areas face added barriers.
Employees who aren’t white and those who live in rural areas are less knowledgeable about estate planning and less likely to have an estate plan. Among rural respondents, only 27% consider themselves knowledgeable about estate planning products, compared with 66% of urban respondents. Rural respondents were also twice as likely as urban respondents to say they find the process of setting up an estate plan challenging and describe it as tedious.
Offering estate planning as an employee benefit could help overcome barriers.
While only 13% of respondents are currently receiving estate planning services as a benefit through their employers, more than 72% of those who aren’t say they would be interested in using the benefit if it were offered. Furthermore, the same percentage of respondents say they would be more likely to follow through with setting up an estate plan if it came through their employer instead of just pursuing it on their own.
There’s also evidence that educating employees about the importance of estate planning would help drive plan creation. Of the respondents who are already informed about estate planning, 80% say they would be likely to use an estate planning benefit if it were offered.
HR departments today are often tasked with leading their organization’s diversity, equity and inclusion efforts. Making the process of setting up an estate plan more accessible and equitable for all employees — regardless of their family background, race or geographic location — would go a long way toward solving these accessibility problems.
More and more companies are also recognizing the value of including financial wellness services such as estate planning in their employee benefits packages. Not only are healthy, confident, happy employees more productive in their jobs, but offering financial wellness benefits can also be a differentiating factor in recruiting and retaining talent.