Creating a will, funding a trust or taking other steps to put an estate plan in place continues to be one of the most misunderstood areas of planning for our own needs as well as those of our families.
Estate planning is not just about giving your stuff away when you die. It’s also about taking steps to protect your wealth and other vital needs while you are still here to enjoy life with the ones you love.
Debunking common myths
Putting an estate plan in place is vital to your financial well-being as well as your ability to pass it on to future generations. However, many people must first get beyond common misconceptions, such as:
Myth #1 – Estate planning is only for the rich: Just about everyone has assets, not just the ultra-wealthy. An estate plan is vital for anyone regardless of age, marital status or how much money they have. Estate plans help you achieve many goals, including:
- Protecting income during your lifetime
- Designating guardians for minor children
- Naming family, friends and organizations you want to receive property after you die
- Transferring property to heirs and others while limiting legal obstacles
- Reducing tax liabilities
- Naming an executor to settle your estate
- Designating people who will make health and financial decisions for you if you can’t, these include a durable power of attorney and health care proxy
- Avoiding probate proceedings
- Establishing your funeral wishes
Myth #2 – Estate planning is only about giving away my assets after I die: While an estate plan will determine how you want your assets distributed when you pass away, an equally important component is planning for unexpected events, such as who will manage your affairs if you become too sick or injured to make decisions.
Myth #3 – A will determines who gets ALL my assets: While a will designates how your property is distributed after death, several assets are outside an estate plan, such as insurance policies, retirement and other accounts that pay off when you die. It’s vital that your beneficiaries are up to date for those accounts, which are not subject to probate.
Finally, review your estate plan often
Another myth for many is that once they have an estate plan in place, they are done. However, just like the course of your life, estate plans need to adapt to new events and circumstances. Remember to revise your plan after significant developments, such as marriages, divorces, deaths, retirements or changes to employment. An experienced estate planning attorney can help you create a plan that meets your needs.