Many people are intimidated by estate planning, which prevents them from creating an estate plan. Regardless of financial or marital status, an estate plan significantly benefits each person. Read on to learn more about the most common estate planning myths and why believing these myths can do more harm than good.
10. I’m Too Young
No one knows when they might need an estate plan. However, it may be too late when you decide you need one. Many aspects of an estate plan go beyond just your tangible wealth. Many married couples with young children may not even own a home.
However, their estate plan may provide valuable information about who they wish to be the guardian of their children in the event they unexpectedly pass away. Estate plans give people control over every aspect of their estate beyond just monetary wealth.
9. I Don’t Have Enough Money
Establishing a complete estate plan may be more affordable than you anticipate. Simple wills and trusts can often be created at a relatively low cost. The probate process is also expensive, including attorney fees, court filing fees, and other costs. These expenses burden your loved ones during such a difficult time.
8. I Don’t Need a Lawyer
There are many important issues to consider when drafting an estate plan that require the help of a qualified estate planning lawyer. While many estate planning documents may be available in draft form online, preparing these without an attorney’s guidance could result in the improper distribution of your estate or may unnecessarily subject your estate to estate taxes.
7. If I Don’t Have a Will, the State Gets My Assets
Many people wrongfully believe that if they don’t have a will, the state they die in will get all their assets. However, when you pass away without an estate plan, your estate is subject to probate and the court oversees the distribution of your assets. Each state applies its laws of intestacy to determine the division of your estate, and you lose control over who in your family inherits your estate.
6. If I Have a Will, I Don’t Have to Worry About Probate
In most states, a will also requires a probate process for the court to supervise the division of your estate according to the terms of your will. A will also becomes a matter of public record in the state where you pass away, permitting disinherited heirs or family members to contest your will and potentially creating delays and expenses. By contrast, a trust is a private document and can be handled without court intervention.
5. My Family Members Know What to Do
Common estate planning myths include the presumption that your family members know what to do after you die. This knowledge includes making end-of-life decisions and how you want your estate divided.
When your estate plan is written down and expressly details your wishes, it leaves less room for arguments or confusion. Additionally, without an official estate plan, despite your wishes, your estate may be subject to probate, with your assets distributed to family members or heirs you expressly did not wish to inherit.
4. An Estate Plan Only Matters If You Die
There are several essential issues that an estate plan can address that have little to do with the division of your assets when you die, including:
- Providing guidance to named agents on your healthcare wishes in your Medical Power of Attorney or Advance Healthcare Directive,
- Designating an agent to manage and make financial decisions for you in the event of your incapacitation,
- Planning for your long-term healthcare,
- Deciding who will manage your estate after your death,
- Establishing who will take care of your children and manage their money if you were to pass away, and
- Providing guidance on your burial or cremation arrangements after your death.
These decisions protect your right to independence and allow you to guide your family members on your exact wishes so they don’t have to worry they are making the wrong choice.
3. To Avoid Probate, You Have to Have a Trust
In some situations, a trust may not be necessary to prevent a probate. For example, in some states, you may be able to make all your accounts payable on death, meaning that the proceeds pass to the named beneficiary upon your death.
This may also be utilized for retirement accounts and life insurance policies. However, it’s important to speak to a qualified estate planning attorney to learn whether your estate qualifies for these options to avoid probate without the necessity for a trust.
2. Estate Plans Are Only for Married People
Marriage by itself does not prompt the need for an estate plan. Those who are single or unmarried still may have specific wishes about how they want their estate to be distributed upon their death. Additionally, the fact that someone is unmarried does not mean they are any less at risk for unanticipated health issues or accidents. Powers of attorney for health care and asset management are still helpful in these situations, regardless of your marital status.
1. Once My Estate Plan Is in Place, I Don’t Have to Worry
Estate plans change often as you mature. A person may get married or divorced, have children, or acquire significant wealth. These changes may all prompt revisions or amendments to an existing estate plan.
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