There are many misconceptions about estate planning, and any one of them can result in costly mistakes. Understanding who needs an estate plan and what it should cover is key to creating a tailored plan that is perfect for you and your family.
If you read our newsletter, you know it is not the first time we’ve discussed this, but it bears repeating. A properly crafted estate plan allows you, while you are still living, to ensure that your property will go to your loved ones in the way you want and when you want. It offers the comfort that you leave a positive legacy, one that does not include your loved ones being burdened with unnecessary red tape and financial confusion.
The following are some common myths that people have about estate planning:
My estate isn’t big enough to need planning. It is true that if you have a small estate, you may not need a complicated will or trust, but even if you have only a few assets, your estate plan can direct where you want those assets to go. In addition, a will allows you to name a guardian for your young children. Estate planning isn’t just about your will, however. A comprehensive estate plan also includes financial and health care powers of attorney and a living will. If you are incapacitated, who will make financial decisions for you and pay your bills? Who would you authorize to speak to your health care providers on your behalf if you are not able to? Although it may be difficult to think about now, have you made your wishes known regarding end of life care?
I’m too young for an estate plan. Again, no one likes to think about death, but it is important to be prepared at any age. Unfortunately, accidents can happen to anyone. As described above, an estate plan not only allows you to dictate where your assets should go, it also allows you to name a guardian for young children and plan for incapacity.
My will takes care of everything. A will directs who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will covers only probate property. Probate is the process by which a deceased person’s property is passed to your designated beneficiaries. But, several types of property pass outside of probate. Jointly-owned property, property in trust, life insurance proceeds and property with a named beneficiary, such as IRAs or 401(k) plans, all pass outside of probate. It is important to consult with an attorney to make sure all of your assets are properly designated, not just those mentioned in your will.
It is cheaper to create a will on my own. It is tempting to try to save money by using a do-it-yourself online will service or just writing something up yourself, but these poorly drafted documents may only cost additional money in the end. It is impossible to know, without a legal education and years of experience, what the right legal solution is to your situation and what planning opportunities are available. If there is anything about a family situation that’s not commonplace, using a DIY estate planning program means taking a large risk that can affect your family for generations to come. Without clear instructions, your assets may not go where you want and can lead to problems that drag out your estate administration, cost money, and create headaches for your heirs.
Once a plan is in place, I’m done. Once you have a plan in place, you need to review it every few years or whenever you have major life changes. Circumstances change over time and your estate plan needs to keep up with these changes. Major changes that may affect your plan include getting married or divorced, having children, or experiencing an increase or decrease in assets. Even if you don’t have any major changes, you should review your plan periodically to make sure it still expresses your wishes.
Review Your Plan: The best time to get your estate plan completed is now! Don’t wait until it’s too late. Make your appointment today by calling the office at (215) 706-0200 or emailing email@example.com.