Confusion about the process, a misunderstanding of what an estate plan is, or just outright denial and procrastination are a handful of the key reasons that many people don’t think they need an estate plan. But the reality is that everyone should have an estate plan, regardless of net worth. In this post, we’ll debunk some of the common myths around estate planning.
Myth #1: I don’t have an “estate”
An “estate” refers to anything that you own, not an expansive tract of land with a manor house. All of the assets that you own (house, car, furniture, 401k, savings accounts, even pets) make up your estate. If you have children or dependents, and want them to have access to those assets, you need a plan.
Myth #2: My property is jointly owned by my children and spouse, I don’t need a will or trust.
Just because you have joint ownership of an asset doesn’t mean that it will get distributed the way you might have intended. Family disagreements, maintenance expenses, etc. can cause problems down the line. A well-thought-out estate plan will ensure that assets and property are passed along and maintained in accordance with your wishes. It will also help smooth the way for potential future issues if a beneficiary passes away or encounters financial difficulties.
Myth #3: Leaving a dollar to someone disinherits them, period.
Unhappy beneficiaries frequently challenge wills. Naming someone in a will in this manner also exposes them to information they might not have originally had, such as the value of your estate and assets, which could spur them to challenge the will. Alternatively, a thoroughly crafted estate plan mitigates that risk by outlining a very specific set of actions that would be extremely difficult to reverse.
Myth #4: I run a family business, so they can step in if something happens to me.
What if no one in the family really wants to run the business? Without a succession plan in place, your business could face significant tax implications or the wrong person could be put in charge. Creating a succession plan protects everyone involved with the business by naming a willing and qualified successor and ensuring that proper steps will be followed for a smooth transition.
Myth #5: One of my children has done really well for themselves and will understand if I leave more to their sibling.
Funny things happen when there’s an inheritance to be had. Siblings can be the best of friends but turn into vicious enemies if they feel they’ve been unfairly treated in a will. A knowledgeable estate planner can help you evaluate your beneficiary relationships and create a strategy that makes sense for your situation.
Myth #6: Leaving money to my disabled child will negate their government assistance.
Not necessarily. When planning for beneficiaries with special needs, it’s important to work with an attorney who understands the ins and outs of public assistance and can strategize ways to provide for those beneficiaries without undermining or eliminating public assistance. (See our blog on Special Needs Trusts for more.)
Myth #7: I have a will, so nothing goes to probate.
This is incorrect. Wills do go to the probate court, but they serve as a guide for the court in distributing your assets. To avoid probate, consider a trust, which is administered outside of the court and outside of the public eye (since probate proceedings are public information).
Myth #8: My children know our wishes and have agreed to abide by them.
Again, funny things happen when there’s an inheritance up for grabs. The only way to be certain that your assets will be distributed the way you want them to be is to create a solid estate plan.
Myth #9: Everything will go to my spouse, and then to the children.
None of us can predict the future. You may think your spouse will outlive you and then handle the estate planning later. Or you may think that it’s an automatic turnover to your spouse. Without a will, the probate court will determine how to best distribute your assets. And if you have minor children, the court will decide who has guardianship. The only way you can control what the court does is by having an estate plan. Period.
Myth #10: I wrote my own will, so I’m covered.
This is extremely risky. A lot of things can go wrong with DIY wills, from failure to meet legal requirements and vague language to overlooking beneficiaries and failing to account for all of your assets. The only way to be confident about your estate plan is to work with a professional who is familiar with state and local laws and can help you identify possible contingencies and other factors that you might not have considered. (See our blog on four ways that DIY wills can backfire for more.)
The simple truth: A professional estate planner can give you peace of mind and create a comprehensive strategy to protect your assets and beneficiaries.
Wills & Wellness is a specialized estate planning and probate law firm that focuses on exceptional service for our clients throughout their lifetimes. We partner with you to create an estate plan and then periodically check in to make sure that plan still fits your needs. We are your attorney for life. Contact us today for a free consultation.