Nearly 90% of American adults are vulnerable because they are missing this key document

By Beth Pinsker

Why your family is likely to end up in court if something happens to you

People tend to think a will is the only estate-planning document they need.

I don't want to scare anyone, but bad stuff happens to people sometimes.

The world is a crazy place. If the global COVID-19 pandemic didn't wake you up to this, then maybe current events will.

Or try this statistic: Only 11% of Americans have a power-of-attorney document in place, according to Trust & Will's latest report on the state of estate planning. This is the key permission slip that allows somebody to handle your financial affairs for you if you fall ill - and without it, your family will end up in court for an expensive guardianship hearing.

Trust & Will's power-of-attorney tally actually signifies that some progress is being made, just based on the fact that the online estate-planning platform asked about it as part of its large national survey. Most studies focus on a will as the central part of the process, but that isn't even the most salient document anymore, according to many in the estate and financial-planning industry. Their thoughts instead turn to trusts and beneficiary designations for after-death instructions, and they focus heavily on the documents that come into play if you get sick, like power of attorney and a healthcare proxy.

"Our goal was to try to arm advisers with the education they need so that they can have conversations with clients," said Cody Barbo, chief executive of Trust & Will.

The core of that conversation is that you are 100% going to die someday, and there's a better than 70% chance that you will be incapacitated at some point and need help with your own affairs if you live past 65.

Trust & Will said it asked separately about each document this year because it wanted to give a better picture of the true preparedness of families. Here's how things break down:

Wills

The share of people who have wills has fallen to 26% from 31% since last year. A will is typically considered the baseline estate-planning document and the key place to record your last instructions. Trust & Will surveyed 5,000 adults in the general American population, not just the company's own clientele, so this reflects a broader industry trend.

Barbo pins this partially on demographics. The American population is rapidly aging, with baby boomers hitting 65 in record numbers, which is just at the cusp of when people start to take estate planning seriously. At the same time, estate planners are retiring in droves.

"There will be this huge drought of financial advisers because they are retiring, and the gap is even bigger for estate planners," Barbo said.

Trusts

Trusts have always been seen as a specialty instrument, so it's no surprise that the number of people who report having a trust in place is much lower than those who have a will. Only 14% of respondents told Trust & Will they had a trust, which is actually up from 11% since last year. Demand for more comprehensive estate planning is part of the reason for the rise in trusts, Trust & Will said. Additionally, lawyers are now including trusts in those packages because probating wills is time-consuming, expensive and lacks privacy in many states.

Durable power of attorney

Creating end-of-life documents like wills and trusts is only half the goal of estate planning. Adults in the U.S. also need documents that protect their families in case they become incapacitated. Few people are up to speed when it comes to these, however. Only 11% of adults reported having a durable financial power of attorney, according to Trust & Will's 2026 survey. The company did not ask separately about power of attorney in prior years. But Barbo is seeing the need for these documents in his own family, and it's hitting home. "My dad is 81 and mom is 70," he said, adding that he can see the day coming soon when the power-of-attorney documents they have set up are going to be put to use.

Healthcare proxy

While power of attorney helps on the financial side, on the medical side, you need a specific document that outlines who can make those decisions for you in case of an emergency. As soon as you have a diagnosis of Alzheimer's, for example, Barbo said, "it's hard to get documents executed. Or there's a fall, and now the person is on their deathbed."

You might think you have years, but that can quickly turn into months or weeks. Barbo hears a lot of regret about this on the Trust & Will forums and said it breaks his heart. He's glad the numbers for this are getting better: 19% of people surveyed have a healthcare proxy, up from 15% last year.

HIPAA authorization

A HIPAA authorization may sound simple - you may fill out a lot of these in your lifetime to let one doctor talk to another doctor, or to get your records transferred between institutions. You need one that is assigned to a family member or trusted friend in case of emergencies, too, which it appears not many people realize, since only about 10% report having one of these documents in place. That's up from 8% last year, but it's still the lowest adoption rate among the five key documents you need for a robust estate plan.

Generational shifts

All of these estate-planning documents pertain to adults over the age of 18, so Trust & Will's survey starts with Generation Z, whose members are now between the ages of 16 and 29. They are doing better than their older millennial and Generation X counterparts. Only 54% have no documents at all, in contrast to 58% for millennials and 62% for Gen X. Most of that difference is because 21% of Gen Z respondents said they had trusts. But for the documents they should be most concerned about, healthcare proxies and financial power of attorney, the share stands at 17% and 8%, respectively.

Trust & Will calls this the "gap between knowing and acting," but the biggest factor keeping people from doing something about planning is that they don't think they have enough assets.

One last bit of hope: Among those who did have some kind of estate plan started and had one of these five key documents, there was a lot of confidence. More than 80% of those with a will, trust, healthcare proxy or financial power of attorney said they'd know what to do if a family member died. "Family conversations and formal documents reinforce each other," Trust & Will concluded.

Got a question about investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at beth.pinsker@marketwatch.com. Please put "Fix My Portfolio" in the subject line.

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04-18-26 1315ET