Retirement

Will combining will writing with the mortgage process help? – Center for Retirement Research

No, but here we have learned.

Writing a will can improve the transfer of wealth across generations, by preventing the consumption of assets such as the family home when distributed among multiple heirs. But by age 70, only 67 percent of households have a will, and the share is much lower for less affluent households and for black and Hispanic households. The question is whether targeted wills can be enhanced through an intervention that promotes will writing.

To answer this question, we conducted an online survey administered by NORC at the University of Chicago. Participants were first asked a series of questions about whether or not they liked it and why. Then, people without wills participated in an experiment where they were randomly assigned to a control group or one of three treatment groups to determine whether different incentives would motivate them to write a will.

Control group: Do you plan to write a will?

Treatment group 1: If the bank offered to set up a will (along with free legal and financial advice) when you signed for the mortgage, would you take them up on the offer?

Treatment group 2: If the bank offered you the opportunity to set up a will (along with free legal and financial advice) at the time you signed for the mortgage and offered you a $500 incentive to do so, would you take the offer?

Treatment group 3: Imagine you are opening a checking, savings or investment account at a bank. If the bank offered you the opportunity to set up a will (with free legal and financial advice) when opening your account, would you accept the offer?

The disappointing news is that the first two treatments, which linked writing a will with getting out of a mortgage, actually reduced the percentage of respondents who said they wanted to write a will (see Figure 1). Without treatment, 79.9 percent said they intended to write a will. Once the question was tied to the mortgage process, the percentage dropped to 71.0 percent – even with the offer of “free legal and financial advice.” Adding $500 to the proposal would only bring the percentage back to half of what it is without treatment. When the scenario changed from a mortgage environment to simply opening a bank account, the percentage intending to write a will increased to 80.8 percent.

For several reasons, the best way to proceed was to omit and compare the control group.

Between treatment groups. The results of this exercise showed that offering $500 barely had any effect, but—even without a financial incentive—just changing the primary event from taking out a mortgage to opening an account would have greatly increased intention to write a will. Is. We also used this design of the experiment—comparing treatment groups among themselves—to assess treatment effects by individual characteristics.

The bottom line from these results is threefold.

  • Most importantly, order matters. Trying to combine a somewhat complicated and emotional task like writing a will with a complicated and tedious process like taking out a mortgage just doesn’t work.
  • Money – in this case, $500 – increases the percentage of some people willing to write a will, but it has only half the effect associated with changing the order.
  • Finally, the effect depends on the characteristics of individuals. More financially sophisticated people react somewhat differently than the unsophisticated. The effect also varies by race. Not by gender though.

So, in the end, even disappointing results can provide some real information.


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