To fully understand and appreciate anything, one must be able to put aside the myths that surround it. So many people have the wrong notions about estate planning and hence fail to reap the benefits. You must know these wrong notions so you would not fall victim.
So what are these myths of estate planning?
1. Estate planning is only for the wealthy
This is one of the widely spread fallacies about estate planning. Most people do not do estate planning because they think they do not have a large estate that requires tax planning. They believe only celebrities and business moguls need to put plans in place for their mansions and multi-million dollar company. Nothing could be further from the truth.
In as much as you have one or two assets to your name, you need to have a basic plan. If not, there is great tendency for your children to fight over who gets the car or the money in your account, no matter how small. If you do not want such tension growing in your household when you’re gone, then you need to plan now.
2. Estate planning is once and for all
Some people also think that once an estate plan is drawn, it’s till death do them part. But look at it this way. Say, Smith has a business. In his estate plan, he wills the business to his son, Jim. But along the line, Jim joins the army and lost his life. Smith fails to update his estate plan and later dies. Who will then inherit that business since the proposed beneficiary is deceased?
As you live on, you may acquire new assets, get divorced, remarry, and lose a beneficiary or an asset. Tax laws may also change. Any of these would require a change in your estate plan. Failure to do so will lead to confusion when you pass away.
3. You don’t need an estate planning attorney
To some people, estate planning lawyers are only out for your money. With all the estate planning documents available online, they see no reason for hiring professional hands. And along the line, they end up making costly mistakes.
But if your family and estate is simple, you can create a basic will, power of attorney, and healthcare directive without help. This would help you save cost.
4. You cannot do estate planning without help from an estate planning attorney
This is just another myth. You can do it so long you are conversant with the legal requirements for making each document valid. You would only need an estate planning attorney if you have special considerations such as when you are in a blended family, need to avoid probate, plan for tax, etc. To be frank, bringing expert hands on deck enables you to get the best of estate planning as there are strategies which you may not be able to implement yourself.
5. All i need is a will as it can distribute all my assets
This is very wrong. Firstly, a will is not all you need in an estate plan. Wills only distribute assets, and cannot be used to plan for tax, probate, or incapacity. In the long run, probating a will eats deep onto your estate purse, but this can be minimized if you include other estate planning strategies like trust execution. It’s also advisable to have durable powers of attorney to appoint an agent who will make financial or medical decisions when you become incapacitated.
Furthermore, a will cannot address all your assets. The following assets will pass outside your will:
- Life insurance proceeds
- Retirement accounts
- Transferable-on-death accounts
- Assets held jointly
- Assets held in trust
So you want to make sure each of this assets has a designated beneficiary according to your current heart desire.
6. If I don’t have a will, all my possessions will go to the state
Not true. If you pass away without a will or yours is found to be invalid, the court will only apply the state’s intestacy law to disburse your estate among your heirs. It doesn’t go to the state.
7. Estate planning is only for senior citizens looking forward to their final days
Even an 18-year old can pass away. It is worse when the individual has assets and a minor. Without a basic estate plan, how are you sure your wishes for your minor and assets will be carried out? People wait until they are old and so leave their families in confusion when death comes untimely.
Talk to a lawyer
To ensure you get your estate planning right, it is advisable to consult an experienced estate planning lawyer. For help with your New York estate plan, contact our law office today.