Recently, the world woke up to the health risks posed by COVID-19. Society at large is taking steps to curtail the impact of the virus. Closer to home, the virus should prompt people, especially those who are older, to make sure their affairs are in order. People should hope for the best, and plan for the worst.
The data from COVID outbreaks elsewhere, tells us that those above age 70 are at a significantly higher risk of death or hospitalization than others. Knowing that, it is important that those at a higher risk have an up to date estate plan and have their affairs in order.
To date, there have been over 350,000 cases of COVID-19 worldwide. In Canada and the US, the spread of the disease is in its early stages. But in China and Italy, where the outbreak has raged for longer, more than 80% of deaths occur in those over 60 years old. That’s distressing, but not particularly surprising given that older people are more vulnerable to disease.
More alarming is the death rate for those who contract COVID-19 and are over 70 years old. The best data on this comes from the Chinese Centre for Disease Control which, reports that 8% of those 70-79 years old who get COVID-19 die from it. That rate increases to 14.8% for those over the age of 80.
When these percentages are applied to population level numbers the results are striking. There are no public estimates available on the impact of COVID-19 in Canada, but there are estimates for the US. In a recent study put out by Imperial College London, assuming no policy interventions, in a span of 3 months, 4 million Americans die in total, representing 8-15% of the population over age 70. Controlling for what they refer to as a “mitigation” strategy, the number is reduced to around 2 million deaths.
Put simply, COVID-19 presents a material health risk to older adults. Obviously, everyone hopes for a better outcome, but the cautious response is to make sure that plans for their affairs are in order before they pass away.
That’s a goal most people have, but few do anything about. After all, 51% of Canadians don’t have a will currently. Most people figure estate planning is something they will get to later on. If not, they figure, the default rules (called intestacy) set by the government should fulfill their wishes. However, they might be surprised. Take a simple illustration. Jack, married to Jill, has a net worth of 2 million dollars in his own name. Jack and Jill have one son (John) and everyone lives in Vancouver, Canada. If Jack dies before Jill, and has no will, then Jack might assume that 100% of his assets pass to Jill. Under the law of British Columbia, however, that’s not the case. Instead, only 1.15 million dollars of the estate goes to Jill and the rest goes to John. The point is, reliance on the default rules or an old estate plan might lead to unwanted results. The more complex the estate, the more comprehensive a review is required. That’s because tax rules, preferences, and estate rules all change over time.
The health risk posed by COVID-19 is not negligible to older adults in the US and Canada. While we all hope for a quick resolution to the crisis, it should spur older people in particular to plan for if that does not happen.