Bottom line: nobody likes to think about their own death or incapacity. But an estate plan isn’t just about what happens to your “stuff” when you die; it can also protect you while you’re alive.
Estate plans aren’t just for older adults and the wealthy. A comprehensive estate plan is important for anyone who has assets or children, or is concerned about who will make decisions if something happens to them.
Confused? Let’s take a look at some common misconceptions people have about estate plans and what the reality really is.
Mistake #1: “I’m too young for an estate plan.”
You are young and healthy. You will think about an estate plan when you get older.
Many people believe that creating an estate plan is for people nearing the end of their lives to ensure their heirs are properly taken care of.
The reality? Unfortunately, tragic things happen to people of all ages every day, including illnesses, accidents, and unexpected health crises.
In some unforeseen circumstances, you may not be able to make decisions about your medical care or financial responsibilities, and other people may have to make them on your behalf. Who will pay your bills and take care of your financial affairs? Who will make medical decisions for you? Who will care for your children? Do your loved ones know what you would want, and are they making the decisions you would make for yourself?
A basic estate plan will:
- Address what will happen financially and medically if you are faced with an emergency where you can’t make decisions for yourself.
- Name someone who will settle your estate should you pass away.
- Name someone to care for your minor children.
- Avoid leaving behind an “intestate” estate where the state decides who will get your assets.
Sure, as you age, you may require more protection, but any adult with children or assets should have a basic estate plan in place for these very situations.
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Mistake #2: “I don’t have many assets. Why would I need an estate plan?”
You don’t have millions in the bank or extensive investments. You don’t own a business, or much “stuff” at all. Why would you need to worry about an estate plan at this stage of your life?
The reality? Granted, the more assets you have, the more you may worry about what happens to them when you die. But an estate plan isn’t just about money; it’s about making sure your belongings – anything you value, regardless of its monetary worth – go where you want them to go.
If you die without an estate plan, your estate (anything you own) won’t immediately go to your heirs. It could be tied up in probate court for a long time, causing your loved ones unnecessary stress and legal costs. Furthermore, your estate will be distributed to family members according to state intestate laws, not your personal wishes.
With an estate plan, documents such as a will or revocable living trust allow you to decide where your assets and belongings get distributed, not the state.
Mistake #3: “Talk about money and death? That’s kind of morbid and not something my family does.”
In your family, money and death are not common dinnertime topics of conversation. It’s uncomfortable and after all, your money is your business.
The reality? While talking about death and money can be uncomfortable, they are facts of life. What happens after your death could significantly affect your family members and other loved ones, both legally and financially.
Dealing with the death of a loved one is stressful enough without the added burden of the unexpected. Having a comprehensive estate plan creates a safety net protecting your loved ones against the unknown. Your family deserves to know about and understand your plan. By being open and upfront about your wishes, you set reasonable expectations for when the time comes and avoid unnecessary stress and conflicts between family members.
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Mistake #4: “I have a will already. I’m good.”
You’ve already created a will and have it tucked away with the rest of your important records. You’ve given a copy of it to your family and your best friend, whom you’ve named as your executor. You’re set.
The reality? Yes, a will is an important component of an estate plan, but it may not be sufficient by itself. Your will only takes effect when you die. Furthermore, a will must go through the probate process, which can be time-consuming and costly.
You may want to consider other documents to round out your estate plan to make it more comprehensive. A revocable living trust names a trustee to manage your assets if you can’t and allows your beneficiaries to avoid probate. A durable power of attorney ensures that someone you trust can step in to manage your finances if you cannot. An advance healthcare directive will guide medical decisions made for you if you cannot express them yourself. All of these documents address different and equally crucial aspects of your life that a will cannot address by itself.
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Mistake #5: “I can do this on my own with one of those DIY online kits. Lawyers are expensive!”
You have children, a house, or some investments, you may already appreciate the importance of an estate plan! But an attorney? Why would you pay for a lawyer when you can just download these documents online? After all, it looks pretty simple.
The reality? It can be tempting to go the DIY route when you are only considering cost. But not having a property drafted plan can be far more costly in the long run.
Estate planning involves more than just filling out some online forms. Your estate plan should be created to meet your very unique financial situation and family circumstances, and there could be serious legal implications if your documents aren’t drafted correctly. Mistakes could invalidate documents or cause other unintended outcomes.
Creating an estate plan is a legal process that can have long-term implications for you and your loved ones. You should fully understand each component, how they benefit you, and how they work together. An estate planning attorney ensures legal requirements are met, your documents are clear and enforceable, and your plan is tailored to your specific situation, protecting you in many different arenas.
Mistake #6: “I created my estate plan years ago, so I’m covered. It’s in my safe deposit box.”
Looking toward the future, you may have created an estate plan years ago and tucked it away safely.
The reality? Estate planning is an ongoing process. As your circumstances and assets change, so should your estate plan. Significant life events such as birth, divorce, or remarriage could have an impact on the way you want your assets distributed or who you want to be in charge of your affairs if something happens to you. Tax and estate laws change, often necessitating changes in your plan.
Estate planning attorneys and financial experts recommend that you revisit your estate plan every three to five years, ensuring that it continues to reflect your wishes and protect your interests. Failing to update an estate plan could result in unintended individuals benefiting from your estate or outdated financial or medical care wishes being implemented in the case of an emergency.
Everyone Should Consider an Estate Plan
Creating an estate plan is not on most people’s top ten activities, and yet it is something everyone should undertake, no matter their age, wealth, or family circumstances. Don’t let these common misconceptions prevent you from protecting your future and providing for your loved ones.
Whether you need to create a new estate plan, revisit an old one, or get advice about other estate planning needs, an experienced estate planning attorney will be your best resource. Your attorney will provide personalized expert legal guidance, not just a generic template, and ensure against costly mistakes.
The experienced estate planning attorneys at Melone Hatley, P.C. are here to answer your questions. We will review your needs and advise you of all your estate planning options, tailoring a plan specifically for you and your goals. Don’t wait until it is too late. Call us at (877) 560-3568 or use our contact form to schedule a free consultation.
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