Five Estate Planning Myths Debunked

No one likes to face their own mortality, but estate planning is an important part of every individual’s life. It can be easy to push these plans off into the future, but setting aside time now to get these items squared away can provide peace of mind for yourself as well as your loved ones. Here are some common misconceptions about estate planning along with an explanation of why they are dangerous myths.

1. I have to pay a lawyer copious amount of money to draft these documents.

While it’s always a good idea to have an experienced professional like a lawyer look over your completed documents to identify any blindspots, if your financial situation is straightforward, you can likely create many of your estate planning documents yourself.

The National Hospice and Palliative Care Organization or your local hospital can likely provide you the documents you need for health care directives. Five Wishes from the non-profit, Aging with Dignity, also offers a low-cost living will template on their website.

Drafts of power of attorney and simple wills can be obtained for free from DoYourOwnWill.com or FreeWill.com. Some employers even offer these documents to their teams as a benefit for little to no cost to you.

2. My family knows what I want to happen with all of my assets. My spouse will automatically receive everything, anyway.

You should never make assumptions about people’s ability to act and react rationally in stressful and emotional situations. Even if you have fully discussed your wishes ahead of time, in the heat of the moment, past baggage and tensions can boil to the surface and create unnecessary challenges for those you leave behind.

Keep in mind, too, that without a will, each state has intestacy laws that will determine in probate court how your estate is divided. The probate court process can be quite lengthy and quite expensive without a will in place, and those family members (including a spouse or partner) who you assumed would inherit your belongings and assets may not receive anything depending on how these laws are written in your state.

3. Estate plans only matter when you die.

Key components of an estate plan do indeed come into play upon the owner’s death.

For example, your estate planning documents should designate:

• A trustee to manage your estate after your death. This includes an executor who oversees probating your will.
• Legal guardians for your children should both parents pass while the children are still minors.

However, there are other elements that could come into play long before that time. This include designating these key players in case you become incapacitated:

• A medical power of attorney who can make medical decisions according to your wishes.
• A financial power of attorney who can make financial decisions based on your desires.

4. I’m not wealthy enough or old enough to need estate planning.

If you are at least eighteen years old, then you should already have a basic estate plan in place. Not doing so can prove disastrous. The same holds true for people of all income levels. Particularly if you own property and have loved ones who count on you, or who you would like to help support should you pass away.

Your estate plan consists of more than liquid assets. Personal belongings like furniture or jewelry could be in dispute. All of your assets grow throughout your life and will likely be subject to estate and inheritance taxes. Having the proper plans and systems in place and consulting with planning professionals like financial advisors and estate planning attorneys can help minimize this burden for your heirs.

5. I have a will, that should be sufficient.

Congratulations! If you have drafted a last will and testament, then you have taken the important first step in your estate planning journey, but don’t rest on your laurels — there are a few additional steps to take that may prove very important.

Your will should designate a personal representative to manage your estate and the distribution of your assets, but there are some items which circumvent this designation and the probation process for your will. Life insurance policies, or retirement accounts, for example, typically require the designation of beneficiaries unique to those assets.

In addition, you will need to have in place:

• Medical and Financial Powers of Attorney (designating who can make medical and financial decisions on your behalf should you become incapacitated)
• A Living Will (a written statement detailing your desires for medical treatment in circumstances in which you are no longer able to express informed consent)
• A Revocable Living Trust (a written document that determines how your assets will be handled after you die; these can include real estate holdings, valuable possessions, bank accounts, and investments)
• A Buy-Sell Agreement if you are a business owner
• Instructions for the protection of digital assets (including hardware such as computers, external hard drives, flash drives, tablets, phones, etc; data stored on hardware that you own or on third-party servers such as those in the cloud, whether or not these assets have monetary value; and online financial accounts, email, and social media)

This may seem like a daunting list, but SYM can help.  Contact us to start making sense of these details so they fit into a financial plan that works for you.