Misconceptions about estate planning abound, such as the belief that it is only necessary for the wealthy or that simply having a will is sufficient. Those who are considering putting together an estate plan can benefit from learning about the dangers of these common myths.
Myth 1: Only the wealthy need an estate plan
This is perhaps the most pervasive and damaging misconception surrounding estate planning. The reality is estate planning is not about the size of your estate. It is about putting tools in place to help better ensure your wishes are carried out and your loved ones are taken care of after your passing — regardless of your net worth. In fact, legal tools are available that can help make the most of your assets. Some can protect assets from creditors while others can reduce the impact of taxes on the estate.
Without a plan, the state will distribute your assets according to intestacy laws which may not align with your desires. This can lead to unintended consequences and conflict among family members. Everyone, regardless of their financial situation, needs a plan that addresses asset distribution, healthcare decisions, and guardianship for minor children.
Myth 2: A will is enough
While a will is an important component of estate planning, it is not a comprehensive solution. A will only covers assets that pass through probate. Many assets, such as retirement accounts, life insurance policies, and jointly held property, are not subject to probate.
Without additional estate planning tools like trusts and beneficiary designations, you relinquish control over a significant portion of your assets and their distribution.
Myth 3: You can do it yourself
While DIY estate planning tools are readily available, they often fail to address complex legal issues or state-specific requirements. Working with an experienced estate planning attorney can help you avoid costly mistakes and ensure your plan is legally sound and tailored to your unique circumstances.
An estate plan tailored to your family needs does more than address the distribution of assets. It provides you with peace of mind, knowing your affairs are in order and your legacy is secure.