A Growing Number of Americans are Choosing to Go Childless, and It's Creating a Major Headache for Estate Planning!
It's a trend that's becoming increasingly noticeable: more and more Americans are deciding not to have children. While this is a personal choice, it's also introducing significant complexities into the traditional ways people plan for their estates and manage their wealth. Experts are highlighting this as a growing challenge.
The Numbers Don't Lie:
Consider this: a U.S. Census Bureau report from 2021 revealed that in 2018, approximately 15.2 million adults aged 55 and older, which is about 16.5% of that age group, were childless. But here's where it gets even more interesting: a survey by the non-profit Pew Research Center showed that between 2018 and 2023, the percentage of adults under 50 who felt unlikely to ever have children jumped from 37% to a striking 47%! That's a nearly 10% increase in just five years.
This raises a crucial question: without a natural next generation to step in, who will ensure that these childless individuals' final wishes are honored, their assets are distributed as intended, and their affairs are managed if they become unable to do so themselves?
"This is one of the biggest issues facing estate planning," admits Kelsey Simasko, an attorney who herself is childless. "It’s truly the hardest thing to do and can stump us a lot of times."
Why is Planning So Different for the Childfree?
Jay Zigmont, CEO of Childfree Trust, an organization that assists childfree individuals with financial and estate planning, explains that traditional planning often assumes the existence of a next of kin. "People have wills because they have kids," he notes, though he quickly adds that everyone really should have a will.
And this is the part most people miss: a survey by Childfree Trust found that only 19.9% of childfree adults have a will, compared to 32% of the general population. Even more concerning, over 70% of childfree adults haven't completed any legal planning documents at all, including wills, trusts, or power of attorney (POA). The primary reason? "The number one reason they don’t is they have no name to put down."
What's Really at Stake Here?
Without a designated medical and financial POA, your wishes become unknown if you're incapacitated. This could mean that critical health and financial decisions are made by strangers or the court, potentially leading to outcomes you would never have wanted, and even exposing you to abuse. Furthermore, estates lacking clear instructions can become entangled in lengthy and costly probate court proceedings. Childfree Trust reports that these proceedings can consume up to 10% of an estate's value and drag on for months or even years.
It's worth noting that childfree couples are significant wealth accumulators. According to 2022 Federal Reserve data, they have a median net worth of $398,960 and an average net worth of $1,867,480.
And for many childless individuals, their beloved pets are their family. Childfree Trust's survey revealed that a remarkable 76.9% of childless Americans own pets, a slightly higher percentage than the general population (around 71%).
Who Should Childless Americans Turn To?
Simasko suggests that childless individuals should first consider trusted friends or relatives to serve as their POA, executor, and trustee. She advises people to ask themselves, "Take a step back, pretend something happened to both of you, who comes running? If the answer is a sister, put her down first." She also emphasizes the importance of identifying backup individuals, asking, "then think of who’s second? Third? Fourth?"
While friends can be a great option, asking someone to be a medical POA can feel like a massive undertaking, especially given the gravity of decisions like "pulling life support."
What If There's Truly No One Available?
Being a POA, executor, or trustee is a significant responsibility. Some friends or younger relatives might not be able or willing to commit. And what if you don't have enough people in your life whom you trust implicitly?
This is where professional help becomes invaluable. As the number of childless Americans grows, so does family estrangement. A YouGov poll found that 38% of American adults are estranged from at least one family member. In such situations, engaging professionals like attorneys, financial advisors, or trust companies is a wise move.
Organizations like Childfree Trust partner with trust companies to provide these services, essentially acting as a "next of kin" for their clients. Companies like Plante Moran and Northern Trust also offer services where they can be named as trustees and executors, ensuring financial affairs are managed according to your directives.
Smart Financial Planning for the Childfree:
Just like everyone else, childless Americans need to save sufficiently for retirement and, crucially, for long-term care. However, Zigmont points out that since they don't have children to leave an inheritance to, traditional life insurance might not be a priority. Instead, he stresses the importance of disability and long-term care insurance. Worryingly, fewer than 13% of respondents in the Childfree survey had long-term care insurance, despite being statistically more likely to need paid care later in life.
Burial insurance for funeral expenses is also a wise consideration. And for pet owners, it's essential to name a guardian for your pet and allocate funds for its care in your will or through a pet trust.
Zigmont suggests that childless individuals can enjoy their money and spend it down as they please since they may not have direct heirs. However, Dawn Jinsky from Plante Moran notes that saving and spending habits are often ingrained, and many choose to leave their money to charities or to nieces, nephews, and siblings.
As Childfree Trust aptly puts it, "Without direct descendants, the concept of legacy is reframed from one of familial succession to one of personal impact and philanthropic purpose."
Now, I'm curious to hear your thoughts! Do you agree that estate planning is significantly more complicated for childless individuals? What are your biggest concerns or unique strategies for those without children? Share your opinions in the comments below!
