Estate planning can be a very challenging process. While it may not be quantum physics or brain surgery, making the decision to prepare an estate plan forces us to face the fact that is we will not live forever. Avoiding thoughts of our death is one reason estate planning is avoided. Other reasons include the myths about estate planning below.
Myth #1: Estate Plans are Only for the Rich
We often hear about wealthy people and celebrities in the news who die without an estate plan, or whose family is contesting a provision of a will or trust. This topic catches interest and sells news content. Assumptions follow that a wealthy person has so much money that they should have an estate plan in place, and they can afford to have it done correctly. This assumption is what makes the story newsworthy and sensational. This impacts our thinking when we believe that our needs do not meet the same criteria, if we assume that our possessions are not worth enough to necessitate an estate plan.
But this thinking could not be further from the truth. Estate planning is about more than just wealth. While proper planning allows you to determine who gets your money and property when you die, the planning process also addresses what happens if you become incapacitated (unable to manage your own affairs) and someone must make decisions on your behalf. If you do not have an estate plan, the court may have to appoint someone to make your medical and financial decisions for you. The process can be very time-consuming, expensive, and public and can wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
If you have children under the age of 18, estate planning is crucial! Your estate plan can nominate a guardian and trustee to physically care for and financially look after your children in the event of your untimely death. Not only will this provide peace of mind, but it also prevents infighting between family members who would otherwise be left to guess your wishes.
Finally, even if your assets are modest, if you do not consider and decide who gets your hard-earned savings when you die, state law will dictate who gets what. The laws of intestacy (dying without a will) may be contrary to your actual desires. If you do not take the step to create an estate plan, this will be the default.
Myth #2: I Don't Need an Estate Plan Because My Spouse Will Get Everything
Joint ownership for many married couples is common. If a couple owns accounts or property jointly or as tenants by the entirety, when one spouse dies, the surviving spouse automatically becomes the sole owner. This is often a preferred outcome.
However, this approach can sometimes be dangerous. While it is convenient for money and property to pass automatically to a surviving spouse, outright distribution offers no protection. What if, after your spouse dies, you have a car accident and get sued? If the jointly owned money and property that passed to you automatically are available to creditors to satisfy any judgment against you.
What is your spouse isn't great with handling money, or what if, after you die, your spouse remarries? If the brokerage account you owned jointly becomes solely your spouse's, they can now spend it all in any way they want with no consideration for either your wishes or the next generation. Your surviving spouse's new spouse could buy a sports car with the money you intended to pass to your children. Blended families are more and more common today, and this scenario is a real concern for many people.
Estate planning does not necessarily mean that you intend to disinherit your spouse. Rather, it means the two of you proactively plan and decide what happens to your joint property and accounts when either of you dies. This ensures that the surviving spouse is provided for and that any remaining money and property are gifted in a way that is agreeable to you both.
Myth #3: A Will Avoids Probate
A will does not avoid probate. Whether drafted by an experienced attorney or by using a do-it-yourself solution, a will must be submitted to probate if the assets in the estate warrant same.
While a will is an effective way to designate a person to wind up your affairs after you have passed, determine who will get your hard-earned savings and property, and, if necessary, appoint a guardian to care for your minor children. A will must be submitted to the probate court to begin the process of administering your estate. The level of the probate court's involvement can vary depending on the circumstances, but because the will becomes a matter of public record, the process is not private.
You will benefit from taking the time to prepare an estate plan, regardless of how simple or complex your estate may be. Planning can offer you peace of mind that your affairs are in order, and it will save your heirs time, money and perhaps some emotional pain.
Contact Hartmann Law
Take steps to start your Life and Legacy planning today! Take action to ensure you voice is heard when you are unable to speak for yourself. Make the decision to protect yourself, your loved ones, your business, your property by design and not by default!
Schedule a call today with Hartmann Law, providing Life and Legacy plans ready for today with an eye on the future.