Estate planning is crucial to personal financial management, so it is astounding that a majority of Americans do not have an estate plan in place. Why do so many people avoid this important process in planning for their future? The impact of deciding to not create an estate plan can result in significant court and attorney fees down the road, much costlier than the original investment of an estate plan. Yet, despite this fact, a 2016 survey showed that 65% of Americans do not have a plan in place.
This avoidance of estate planning may be contributed to the perpetuation of a few common myths. I hope that learning the truth behind these myths can help to clarify that most people would benefit from having an estate plan.
Myth No. 1: My estate is too small to need an estate plan.
There are many aspects to estate planning that are not based on your financial assets. Estate planning encompasses a variety of documents, including a health care directive and a statutory power of attorney. A medical emergency could impact anyone, at any time. If you were unable to make medical decisions regarding your care, who would you like to make them on your behalf? If you become incapacitated during your lifetime, you will need someone to take care of your financial affairs and medical decisions while you are still alive. For that, you need a Power of Attorney and a Health Care Directive. It is true that estate planning includes planning how your assets will be passed on, but there is so much more that affects and benefits people while they are living.
Myth No. 2: I don’t need an estate plan because my spouse will inherit everything.
Many people believe this to be true, but laws regarding this vary from state to state. If you die absent a will, your estate will go to probate. In other words, the courts will then decide how to distribute your assets according to state law. Possible heirs include the spouse, children, parents, and siblings- therefore not guaranteeing your spouse the rights to your assets. This becomes even more complex when there are children from prior relationships. Without an estate plan in place, there is little to no guarantee that what you want to happen will happen.
Myth No. 3: I don’t need a lawyer to help me develop my estate plan.
Online estate planning forms may seem useful to provide a basic guide about how your estate is to be handled. However, it is crucial to be aware that every state has different requirements regarding Wills, Trusts and other Estate Planning documents. In order for these documents to be valid, you must follow the rules specific to your state. Given the importance of estate planning documents, you will want to rest assured that they are completed and valid for when you really need them. If these documents are not valid, they will likely not be recognized in a court of law.
Myth No. 4: I should wait to do my estate plan, because updating or changing it will be costly.
Not many people only have one estate plan throughout their lives. They are documents that must be updated as your estate grows, and life circumstances change. One fear that I encounter consistently when meeting with new clients is that they will invest in the documents, only to have to pay to have them redone a few years later. The truth is, many documents can be drafted to take potential changes/growth into account – such as if you may continue to grow your family and have more children. Furthermore, if your documents do need to be updated, it may be possible to do so through codicil or amendment, which is oftentimes a fraction of the cost as re-drafting documents in their entirety. When working with an estate planning attorney, these factors should be taken into consideration.
Do you need help with estate planning? Most people do. Schromen Law, LLC is here to help you! For more information, call today at 651-571-2515.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Schromen Law, LLC and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.