Estate Planning Awareness Month: Debunk These 5 Estate Myths
October is National Estate Planning Awareness Month. Estate Planning Awareness month aims to teach us that a proper estate plan can protect you, your loved ones, and your life’s work. It can also memorialize your medical wishes and ensure you have trusted people in place to help with financial or legal decisions in the event of your incapacity
While many people plan their estates diligently, with input from legal, tax, and financial professionals, others either avoid estate planning entirely or make mistakes that later affect the timely and orderly transfer of their estate. Let’s take a minute to debunk a few popular myths.
Myth #1: An Estate Plan Is Not Necessary
Although in the absence of Will or Trust, New York State has provisions in place for the distribution of your assets, if you do not set forth your wishes, your family could face legal issues and (possibly) bitter disputes. Making a plan now may leave you and your family with the comfort of knowing that your wishes are honored when the time comes.
Myth #2: You Can Do Your Own Estate Plan
Although you can use a website like legal zoom or Rocketlawyer to create your own Will, if you want to create trusts for your children, or set forth practical terms for disposition of real property, you may want to consult with an estate planning attorney. Often times people create Wills that split their assets evenly among their children without considering the practicality of the division of assets. For example, if you have a house and one child is living in the house, it may be difficult in practice to divide that house because one child may not want to sell that house and also may not have the funds to buy out their sibling(s).
In addition, the greater your estate, the more potential for complexities when passing it on to others. Estate planning, no matter your net worth, can be a complicated process with lots of room for error when done improperly. While, in some cases, you may be able to do it yourself, this is one thing that’s usually best left to an experienced professional.
Myth #3: All You Need Is a Will
Many people believe that once they have a Will, then their assets will simply be transferred pursuant to the terms of that Will. Although your Will may state who your beneficiaries are, those beneficiaries will still need to probate that Will in order to transfer those assets from your name to theirs. In certain instances, a Will may not be the appropriate remedy. Estate planning can include items like adequately prepared and funded trusts, which could help your heirs avoid probate.
Depending on your circumstances, your estate plan may include:
- Life insurance
- Disability insurance
- A living will
- Pre- or post-nuptial agreement
- Long-term care insurance
- Power of attorney
Myth #4: You Don’t Have Enough Assets for an Estate Plan
Rich or poor, when you die, you leave behind stuff. That stuff is called an estate. This estate can include real estate, cash, an investment portfolio, collectibles, and more. For others, it could be as straightforward as the $10 bill in their wallet and the clothes on their back. Either way, what you leave behind when you die is your “estate.” Estate planning is about determining how what you have now will be distributed both during your lifetime and after you die to avoid headaches.
Myth #5: Your Estate Plan Never Needs Updating
Any major life event should prompt you to review your will, trust, or other estate planning documents. These events could include (but are not limited to):
- New baby or adoption
- Purchase of significant assets (homes, boats, collectibles, automobiles)
- Death of an immediate family member
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