Survey On Estate Planning After Death Tax Repeal
Respondents Cite Control Over Directing Wealth to Chosen Benefactors as Top Reason to Plan
HOUSTON--(BUSINESS WIRE)-- A new study suggests that the recent debate surrounding changes to the estate tax law has not dampened the strong interest of affluent Americans in engaging financial advisors to develop their estate plans. According to the study, the affluent depend on estate planners for multidisciplinary knowledge that reaches beyond grappling with taxes.
The study, "Survey of Mature, Affluent Consumers on Estate Planning and Wealth Transfer Issues" was conducted by Mathew Greenwald & Associates. Over 200 Americans age 50 or over with at least $2 million in net worth were asked a series of questions concerning their views on estate planning and wealth transfer issues. The study was conducted on behalf of American General (NYSE:AGC) and The Academy of Multidisciplinary Practice, Inc. (The Academy). American General is the founding sponsor of The Academy, a collaboration among academia, business, and industry professionals to develop estate and wealth transfer solutions across all financial planning disciplines.
The study showed that while virtually every wealthy American is keenly aware of discussions in Washington regarding reduction or elimination of the estate tax, 83% report these discussions have not caused them to delay estate planning activity. Almost nine in 10 (88%) still feel that estate planning is very important. Furthermore, taxes are not the most critical issue -- respondents place a higher level of importance on directing their wealth to beneficiaries (87%) than on minimizing estate taxes (79%).
Reasons for Estate Planning
Very Important Somewhat Important
Direct resources to those you
choose 87% 10%
Minimize estate tax liability 79% 16%
Ease family's emotional burden
during a time of stress 55% 25%
Provide for the continuation of
a business 14% 10%
Estate planning is a complex and multidisciplinary process that can involve financial planners, attorneys, life insurance professionals, planned giving experts, registered investment advisors, and trust officers. The survey shows that the affluent rely on planning professionals to provide an array of information and a network of experts to help them prepare their estates. In fact, 83% agree that it is important for an estate planner to have access to a network of financial experts. Ninety percent agree that an estate planner needs to be knowledgeable about all aspects of estate planning. Among the 70% who receive advice from planning professionals, over six in 10 rely on their advisor to consult with other professionals, and seven in 10 feel it is very important for their advisor to use a multidisciplinary approach. A large majority of respondents (78%) agree with the idea of having a centralized source of multidisciplinary information available to their estate planners.
Importance of Advisor Using a Multidisciplinary Approach
(Among those currently receiving advise on estate planning issues)
| -- | Somewhat Important -- 21% |
| -- | Not Important -- 4% |
| -- | Don't Know -- 5% |
| -- | Very Important -- 70% |
Findings also suggest that most affluent Americans are very involved in developing their estate plans. Eighty-one percent report having a formal estate plan. A large majority also reports having prepared a will, a power of attorney, and a living trust, as well as having named estate trustees.
A significant number of respondents also reports having consulted with attorneys, accountants, financial planners, and stockbrokers in preparing their estate plans. Nearly one-third report having used an insurance specialist.
Type of Professionals Used for Estate Planning
(Among those currently receiving advice on estate planning issues)
-- Attorney -- 89%
-- Accountant -- 78%
-- Independent Financial Advisor -- 54%
-- Stockbroker -- 50%
-- Insurance Specialist -- 31%
-- Banker -- 22%
-- Other Financial Professional -- 6%
More than two-thirds of respondents (68%) noted it is very important that their advisor(s) have a professional designation, such as a CPA, CLU/ChFC, CFP, or law degree.
Wealthy Americans appear to be pleased with the advice they are getting from estate planning professionals. More than half (55%) of respondents find their estate planning advice to be very effective, and the vast majority (87%) report that it has not been difficult for them to coordinate with various professionals.
Most (61%) would like to be at least somewhat knowledgeable about estate planning before they meet with an advisor, and a large majority (86%) report having familiarized themselves with estate planning laws. However, wealthy Americans do not view estate planning as a do-it-yourself discipline. Close to seven in 10 (69%) disagree that effective estate planning solutions can be developed by consulting reference publications, computer software, and Internet-based financial services resources.
Overall, findings suggest that the demand for estate planning will continue to flourish. Affluent Americans expect their planners to be knowledgeable and provide multidisciplinary support. To compete and succeed, professional planners will need to stay abreast of legislative and regulatory changes, as well as have access to a wide range of expertise that crosses the boundaries of professional disciplines.
American General is one of the nation's largest diversified financial services organizations with assets of $124 billion and market capitalization of $23 billion. Headquartered in Houston, it is a leading provider of retirement services, investments, life insurance, and consumer loans to more than 12 million customers. American General common stock is listed on the New York, Pacific, London, and Swiss stock exchanges.
Mathew Greenwald & Associates, Inc. is the premier public opinion and market research company serving the financial services industry. Founded in 1985, Greenwald & Associates' client list numbers more than 200 companies and organizations, including many of the nation's largest insurance companies, banks, mutual fund companies, and pension companies.
Survey of Mature, Affluent Consumers On Estate Planning and Wealth Transfer Issues
OVERVIEW
This study reports the results of a survey of 201 affluent Americans regarding estate planning issues conducted in May 2001 by Mathew Greenwald & Associates. The survey was conducted on behalf of American General and The Academy of Multidisciplinary Practice, Inc. (The Academy). American General is the founding sponsor of The Academy, a collaboration among academia, business and industry professionals to develop estate and wealth transfer solutions across all financial planning disciplines. Respondents were required to have a net worth of $2 million or more, be at least 50 years of age, and be involved in financial decision making for their household to qualify for the study.
MAJOR FINDINGS
1. Estate planning is a critical financial goal for affluent
Americans, one to which they pay a great deal of attention.
2. While the vast majority are aware of discussions about repeal
of the estate tax, there is little evidence that this has
diminished interest in estate planning.
3. Affluent Americans pursue estate planning for several reasons
-- the most important being to direct resources, but also to
minimize estate taxes, and to ease the emotional burden on
their families.
4. The vast majority of affluent Americans have been involved in
a wide range of estate planning activities such as preparing
wills, powers of attorney, or living trusts. Most have a
formal estate plan in place -- about half of these plans
include life insurance coverage.
5. The minority without an estate plan do not appear that
interested in having one.
6. The large majority view estate planning as a multidisciplinary
affair and want their planner to consult with a network of
professionals. In most cases, the planner does.
7. Many do consult with attorneys, accountants, financial
planners, and stockbrokers, with attorneys being the
professionals relied upon the most. Insurance specialists and
bankers are relied on less often.
8. Affluent Americans expect their estate planner to be
knowledgeable about all aspects of the field and to have a
professional designation. They see benefits in a resource that
will provide their planner with a centralized source of
financial information.
9. Most affluent Americans appear to be quite pleased with their
estate planner's level of knowledge and have not found it
difficult to coordinate with the professionals involved in
their plan.
10. While many want to be at least somewhat knowledgeable about
estate planning, most realize that it is not something they
can do for themselves.
11. The client initiates most contact with estate planners.
CONCLUSIONS
Estate planning is thriving among affluent Americans. Most affluent Americans age 50 or over have already chosen a planner and are pleased with their choice. Planners who want to compete in this field need to maintain a high level of knowledge, be prepared to deal with a wide range of issues that often cross the boundaries of professional disciplines, and must be able to provide access to a network of financial planning professionals. The recent passing of the Tax Relief Act of 2001, coupled with a heightened interest in estate and wealth transfer planning, combine to increase the demand for services provided by financial planning professionals.
FINDINGS
Interest in Estate Planning
Estate planning is an area of great interest to respondents. Eighty-five percent report that they have given it a "great deal of thought." Similarly, nine out of 10 respondents state that it is "very important" for them to have their estate in order (88%), while 10% say it is "somewhat important."
A limited number of select users have access to password-restricted area containing Special Report on "The Shadow of Estate Tax Repeal", which includes Adobe Acrobat PDF version of survey highlights.