Millennials know estate planning is important — but most still ignore it

There's a big difference between knowing you should do something and actually doing it. For millennials, one of those things is estate planning.

New research from Trust & Will, an estate planning services company, has shed light on this gap. Eighty-one percent of millennial Americans — who are currently between 28 and 43 years old — think it's important to have a will at their age, the study found. But only 36% have an estate plan of any kind.

What could explain this disconnect? Samuel Deane, founder of Deane Wealth Management in Atlanta and a brand ambassador for Trust & Will, says the root of the problem is a widespread lack of financial literacy on the subject.

"It just comes down to them thinking that maybe it's important, but it's not important right now," Deane said. "Or it's important, but I don't know what the next step would be."

Other findings from the study confirm this lack of knowledge. Only 58% of millennials said they had ever discussed estate planning with an older family member, and 34% had no idea whether their parents have an estate plan.

It's a taboo that many financial advisors have seen firsthand with their clients.

"Estate planning is typically one of the last aspects of financial planning people want to discuss," said Den Murley, a partner at Belonging Wealth Management in Longview, Texas. "First, people generally don't like to think of their own mortality, regardless of age. Second, there may be a mindset that death is a distant, far-away event and there is plenty of time to get everything in order."

Added to this, Deane said, many millennials — as well as other generations — have mistaken notions about what estate planning entails and who it's for.

"There are lots of misconceptions about estate planning," he said. "One of the things that we hear is, 'Hey, I'm young, I'm single, I don't have any kids, which means I don't need an estate plan.' Or 'I don't have significant assets or wealth, so I don't need a trust.'"

READ MORE: Millennials are on track for better retirement than boomers

In reality, anyone can plan for what happens after they die or suffer a health crisis — and not just with regard to their finances. For example, a will can specify who should take care of one's pets, or who's allowed to read their texts and emails.

And as Trust & Will discovered, young people care about these issues: 83% of millennial pet owners have chosen a guardian for their animals, and 39% of millennials don't want their families to have access to their digital messages after they're gone.

"An estate plan doesn't necessarily have to be made when you have a lot of assets," Deane said. "It could be as simple as, 'Hey, I'm 18 now and I'm responsible for myself as an adult. And if something were to happen to me, I want to have control over who gets to make health care decisions on my behalf. Or if something happens to me, I get to control who gets my dog.'"

Financial advisors, Deane said, can help educate their clients about this topic. And according to Trust & Will, millennials are open to that: 57% of the generation — as well as Generation Z — is interested in working with an advisor on their estate planning.

That opens up a significant opportunity for wealth managers — but they may want to tread carefully.

"Advisors can explain all the rational textbook reasons why estate planning matters, but until clients buy into the importance you must give them time and space," Murley said. 

READ MORE: How to guide clients of all generations to retirement

To do that, wealth managers can start small. 

"Help them win the small opportunities," Murley said. "Get the clients to name beneficiaries on accounts or document their sensitive information in a secure location. … These small steps can lead to larger actions like establishing a will, guardianship for minors and medical directives."

Once they've worked their way up to it, advisors can set up a meeting between the client and an estate planning attorney, who can hammer out the legal details. And it may be helpful for the advisor to come too.

"Attending the meeting may help the client feel more at ease and organized, which in turn will help the attorney receive more accurate and relevant data," Murley said.

The important thing, many planners say, is to start this process as soon as possible. Joshua Nelson, founder of Keystone Financial Services in Loveland, Colorado, said he's learned this the hard way.

"Advisors can instill a sense of urgency and purpose in their clients, so they are more likely to take action now instead of 'someday,'" Nelson said. "'Someday' is the road to nowhere, and financial advisors see the consequences when it is often too late."