Estate planning is the process of arranging for the management and disposal of your estate in the event you become incapacitated and after your death.
Simply put, estate planning is about defining your legacy during your lifetime and leaving an impact on the people and organizations you support after you’re gone.
Myth #1: Estate planning is only for the rich.
If you have anyone that relies on you for care, if you have pets, money (no matter how small), investments, life insurance, house, furniture, a car, or anything of financial or sentimental value, have a plan.
If you are single, married, have blended families, or have a partner that you would like to gift after you’re gone, if you have children, grandchildren that you look after, a solid estate plan can make sure that the distribution of your things goes smoothly and there is less stress while they are grieving your loss.
Myth #2: Estate planning is only about distributing your assets after you are gone.
Your legacy includes so much more than deciding who will inherit your fancy china.
– Authorize someone to make critical financial and healthcare decisions if you are unable.
– Specify a church or charity that you want to receive your gifts.
– Specify a guardian(s) for your children, dependents, and pets.
Myth #3: A Will oversees the distribution of your assets.
Some assets, such as life insurance policies, 401K, and IRAs, may be exempted because a Will does not override all your beneficiary designations (e.g., items left to an ex-spouse may still go to them no matter what your Will says).
Use a Healthcare Directive to designate someone(s) to make legal or financial decisions on your behalf. A Trust can accomplish a lot of things more efficiently than a Will can, even for those with modest estates, so don’t rule it out.
Myth #4: You only need to make an estate plan once.
Your preferences and goals change over time. Laws and tax rates change. Think about it, if you made an estate plan 10 years ago, chances are your decisions would look a little different than if you made one today. Maybe you’ve gotten remarried. Maybe your minor children aren’t so minor anymore. Maybe you have stepchildren now that mean the world to you. Whatever the circumstance, it’s important to revisit your estate plan often.
Myth #5: Taxes eat up the largest part of any estate.
Although it’s true that estate taxes are real and the rates are high, only people with estates worth millions of dollars are affected by federal estate taxes. Although there may be future changes, the general trend has been the federal estate tax affects only the very wealthy. Your estate planning attorney will keep abreast of any state laws that may change and impose a separate estate or inheritance tax.
Myth #6: I’m too young to need a Will.
This is one of the biggest myths of all, and honestly one of the most upsetting. Right now, you should specify how your possessions will be distributed after you are gone. If your situation changes later, you’ll already have a template in place which makes it so much easier to make changes to any beneficiaries. It is inexpensive and a thoughtful gift for those that you leave behind.
Other articles you might like…
If you’re a grandparent with assets that you plan to leave to your grandchildren, it’s important...
If named the executor in a Will, you'll be the final administrator of a deceased person's estate...
I've seen it time and time again, someone dies and divides up their assets among family and...