Within 21 days, roughly 165 million Americans have lost more than $1.3 trillion in retirement savings vested in the stock market. Decades of hard-earned, accumulated savings from wage-earnings have vanished amid the COVID-19 panic. Real estate markets have dried up. Global markets are in a tailspin. Nevertheless, there is light at the end of the tunnel for those who plan accordingly to safeguard their assets.
While planning may not seem like a revolutionary idea, consider that a majority of Americans do not have emergency savings. More importantly, nearly half of Americans over 55 do not have a will, according to a recent study by Merrill Lynch and Age Wave. Only 18% of people in that demographic have the bare minimum recommended estate plan in place: a will, a general power of attorney and a health care directive.
As a result, billions are lost every year in real estate, investments and liquidated assets for Americans who die without a will. This phenomenon is not limited to middle and working class-Americans. Consider legendary celebrities who died without a will: Prince, Michael Jackson, Aretha Franklin, Jimi Hendrix and Bob Marley, among others.
Of course, for many celebrities earning millions annually, the net effect of dying without a will is not as tragic — their estates will likely continue earning revenue long after they have passed on.
Recent studies suggest the COVID-19 pandemic has spurred a demand for estate planning, and it should. I am encouraged that 113,000 people worldwide have recovered from COVID-19, according to at least three sources tracking the coronavirus worldwide. However, I am mindful that an alarming 461,000 people have been infected worldwide and at least 20,000 have died, the vast majority of whom are elderly and have compromised immune systems. This is not a time to be careless, nor is this a time to panic. This is a time to plan.
My hope is that COVID-19 ends as quickly as it began. Nevertheless, the disease and its implications for the global economy should sound the alarm for those who have procrastinated the hard questions that come with planning for one’s passing, the distribution of their assets, and their beloved family members and friends.
Estate planning can give one peace of mind about an uncertain future. A revocable living trust can save one’s real property from incurring burdensome taxes upon distribution to a beneficiary, shelter one’s assets from creditors, and protect one’s assets from being scrutinized in probate court for a year or longer. A health care directive can save one’s family members and loved ones from the burden of making critical medical decisions on their behalf. A power of attorney can give one’s designated agent the power to make important financial decisions on their behalf if an illness or injury has severely impacted their physical or mental state.
Sure, fundamental economics tells us that every economic crash eventually results in a boom, and every boom is subsequently followed by another bust. The stock market will rebound. Nevertheless, why leave the health and sustainability of one’s assets to chance? Now is the best time to plan. As Winston Churchill once said: “Those who fail to plan, plan to fail.”
A native of Pacifica, Jonathan Madison worked as professional policy staff for the U.S. House of Representatives, Committee on Financial Services, from 2011-2013. Jonathan is an estate planning attorney and can be reached via email at firstname.lastname@example.org.