Many people don’t understand what estate planning is and those that do may believe in one of the four myths listed below. Estate planning is simply taking the time to plan ahead for the management or distribution of your assets in the event of either your own incapacity or death. A proper estate plan will nominate guardians on behalf of any minors, potentially cut taxes and more. Here are four popular estate planning myths:
1) Myth: My spouse can make all of my healthcare and financial decisions because he/she is my spouse.
Reality: This is not always the case. To make sure your spouse can indeed make important medical decisions on your behalf, you should sign a durable power of attorney and a medical advance directive.
2) Myth: I’ve told my family how I want my affairs handled after I die. They’ll divide everything the way I want it divided.
Reality: Informal discussions about your affairs have no legal enforceability. Even if your immediate family does carry out your wishes, if there is a remarriage or divorce, for instance, your estate could end up in the hands of people you never intended to be beneficiaries. A properly executed will and other estate planning documents are the only way you can ensure your estate ends up where you want it to go.
3) Myth: I signed a will before, so I don’t need to do it again.
Reality: An old will may not reflect your current goals. You or your children may have married or remarried. Your property holdings may have changed. A trust may now be the preferred method to safeguard your legacy because of changes in your circumstances and needs. The only way to know for sure is to have a comprehensive estate plan review.
4) Myth: I am not wealthy enough to need an estate plan.
Almost everyone will benefit from estate planning, which addresses non-wealth aspects of your legacy along with the financial aspects. Estate planning can ensure someone you trust will care for your children and pets after your death, and make sure treasured family heirlooms end up where you want them to go. Estate planning also can help you pass along your values.
Moreover, trusts are not just for the wealthy: In states that practice Medicaid recovery, for instance, your survivors may receive a large bill for Medicaid-funded nursing home care after your death, which can force the sale of assets like the family home. Some states even seize life insurance proceeds. Depending on your situation, a trust can prevent this from happening. The only way to know for sure is to visit with an estate planning attorney to obtain personalized advice for your situation.
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