Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on some of the following common myths.
Myth #1: Only the Rich Need Estate Planning
When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that the person had in place. The topic catches people’s attention: rich people have so much that, surely, they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not have anything close to Bill Gates’ billions.
This could not be further from the truth. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf, an equally important scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what — and many times, what the government’s best guess as to what you would want is contrary to what you do want. But because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you.
Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything
For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.
This approach, however, can be dangerous. What if you get into a car accident and die at the same time? What happens then?
Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people.
Estate planning does not mean that you need to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are distributed in a way that is agreeable to both of you.
Myth #3: A Will Avoids Probate
Many people believe that once they have created a will — whether drafted by an experienced attorney or using a DIY solution or online form — they have avoided probate. Unfortunately, they are wrong. While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record.
I am here to help answer any questions you may have about estate planning or the estate planning process. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected.