There are many common myths and misconceptions about the estate planning process. These myths can ultimately compromise the integrity of your plans and leave your wishes unfulfilled. Some of the most common myths include:
- Once you create an estate plan, you’re all done!
- Your spouse will inherit everything after you die.
- Estate planning is just about minimizing taxes.
- A will is enough to avoid the probate process.
In this post, Max Alavi APC, OC Trusts Lawyer, unpacks these joint estate planning myths.
4 Dangerous Myths About Estate Planning
Most people understand some of the basics of estate planning: How estate planning is all about preparing for the future, and ensuring your loved ones are cared for after your death, often via documents such as a will. However, there are several common myths and misconceptions about estate planning. Believing these myths can lead to headaches, not just for you but your heirs and beneficiaries. To ensure your wishes are genuinely upheld, you’ll want to avoid these misconceptions whenever possible.
The best way to know the truth about estate planning is to talk with an experienced living trusts attorney. In the meantime, here are four pernicious myths to be aware of.
Common Myths About Living Trusts & Estate Planning
1) I did my estate plan years ago, so now I’m good.
If you’ve worked with a living trust and estate planning lawyer to develop a comprehensive estate plan, that puts you ahead of most people… so way to go! You deserve a pat on the back.
Nevertheless, the set-it-and-forget-it mentality is something to be avoided. Life moves fast, and even a couple of years can significantly change your family dynamics or your financial circumstances. Your estate plan may be out of date without you even realizing it. Reviewing it with an estate planning attorney is key.
Just consider some of the life changes that can render your estate plan out-of-date.
- Your children get married and have children of their own.
- You have someone named in your estate plan, but that person passes away.
- Your relationship to a named heir or beneficiary changes or becomes more complicated.
- One of your named beneficiaries develops a harmful addiction, making you question their financial responsibility.
- You either gain or lose a great deal of money or personal property.
Any of these changes warrant a review of your estate plan. A simple phone call to your living trust and estate planning lawyer is often all it takes to bring your plan up to speed.
But even beyond creating and reviewing an estate plan, several additional steps are required to ensure your plan is as effective and enforceable as possible. Consider:
- Establishing a trust can be essential, but only if you fully fund that trust. That means coordinating and designating the appropriate assets to the trust.
- Have you checked the beneficiary designations on your retirement accounts and insurance policies, ensuring that the right people are named? This is something you may wish to double-check every few years.
- You’ll also want to verify that health directives and powers of attorney are readily available. Leave copies with your usual doctors and medical providers.
- Note that, in many states, your financial power of attorney will not be adequate unless your named agent actually signs the document. Has this been done?
If you have questions about any of these steps, coordinate with your living trust and estate planning lawyer.
2) The only reason I need an estate plan is to minimize taxes.
Frankly, most Americans don’t need to worry too much about estate taxes; this largely affects the very wealthy, those whose estates are quite sizable and valuable.
But there are plenty of other reasons why estate planning matters. For example, an orderly estate plan provides clarity regarding the distribution of your assets, including precious family heirlooms. This can reduce discord and disagreement between your loved ones after you die.
Additionally, estate planning can be an important avenue for naming guardians for your minor children, and for establishing your wishes should you ever become medically incapacitated in some way.
3) My spouse will inherit everything when I die.
This myth has a grain of truth to it. Most states do have default laws wherein, if you die but your spouse is still alive, and if you do not have an estate plan in place, your assets will pass to the spouse. Keep in mind, however, that if your spouse is not the biological parent of your children, then your kids could also have a stake in the estate. And regardless, without a robust estate plan, your survivors will need to go through the probate process, which can be time-consuming and expensive. It’s much better to have a clear estate plan in place, rather than assume your spouse will get everything smoothly and seamlessly
4) A will enables your loved ones to avoid probate.
A final myth is that simply having a will in place will allow your loved ones to sidestep the probate process.
This is seldom the case. To ensure your loved ones avoid probate, you’ll want to make sure you have a trust that’s fully funded. A will alone is not enough. Your living trust and estate planning lawyer can provide more insight.
Be Prepared for Anything
An adequate estate plan will help you and your loved ones feel prepared for any contingency. Make sure you’re working with all the correct information about how the estate planning process works. To talk with an experienced attorney in California, we invite you to schedule a consultation with Max Alavi APC, OC Trusts Lawyer.