UNDERSTANDING THESE FOUR misconceptions about estates WILL HELP YOUR OWN PLANNING
Misconception #1: Estate planning is only for the wealthy
This is not particularly surprising since the media’s portrayal of estate planning often relates to the estates of deceased celebrities or some piece of legislation that affects how wealthy individuals will be taxed at death.
Unfortunately, associating estate planning with famous people or tax proposals tends to feed the myth it’s just for elites. Your estate plan determines what happens to your assets when you die such as investment accounts, IRAs/401ks, your house, cars, jewelry, family heirlooms, etc. Failing to plan could make it quite difficult for these assets to be transferred to your loved ones upon your death. In many ways, estate planning is more important for the modest family because they are the ones who least can afford the time and money it costs to not plan.
Misconception #2: Estate Planning is just about death
An estate plan not only specifies who gets your assets upon you death but also how they will be managed if you are alive but are unable to do so. Validly executed Power of Attorney documents can save vital time and resources for your family in the event you become incapacitated. Such documents will give your agents the power to make legal and binding decisions on your behalf.
Irrespective of one’s wealth, a well-designed plan will also include documents designating who can communicate with health care professionals and make decisions about what type of medical treatment you should and should not receive if you can’t make those decisions for yourself. For parents, an estate plan will memorialize who will raise minor children and how they are to be raised.
Misconception #3: Estate Planning is complicated
Getting your affairs in order may seem overwhelming. But the process often brings peace of mind that you have prepared for the inevitable. Ultimately, if you don’t make your own plan, your family may be left scrambling at an already difficult time. If you become incapacitated, someone may have to ask a court to decide who will act as your guardian or the guardian of your minor children. When you die, your family may have to go through court to get ownership rights to your property
Misconception #4: Estate Planning is expensive
There is a cost to make an estate plan. It will take you time to put together your wishes and you may want professional assistance to assist you with the preparation of necessary documents. But not taking control also has its costs.
Every state has a default estate plan and process for every person that does not have the necessary documents in the event of death or incapacity. The cost of using the Court system to handle these affairs are based on the value of the estate and can be significant.
Weighed against the cost of not having an estate plan, a plan prepared by a reputable professional will generally be far less expensive and time consuming. Moreover, the peace of mind and gift to your family members are immeasurable.
FOUR Major Estate Planning Documents THAT MOS INDIVIDUALS SHOULD HAVE
Your situation’s complexity will determine which documents your plan requires; however, the first four are often essential.
A WILL provides instructions for distributing your assets to your beneficiaries when you die. In it, you name a personal representative (executor) to pay final expenses and taxes and distribute your remaining assets.
A durable POWER OF ATTORNEY lets you give a trusted individual management power over your assets if you can’t manage them yourself. This document is effective only while you’re alive.
A HEALTH CARE POWER OF ATTORNEY lets you choose someone to make medical decisions for you if you are unable to communicate your wishes, or don’t have legal capacity to make treatment decisions for yourself.
A LIVING WILL expresses your intentions regarding the use of life-sustaining measures if you are terminally ill. It doesn’t give anyone the authority to speak for you.
What about a LIVING TRUST?
By transferring assets to a revocable living trust, you can provide for continued management of your financial affairs during your lifetime and after your death — possibly for generations to come. However, a trust is only really needed in certain situations and primarily if real estate is owned. Many other assets have alternative options that easily enable you to transfer upon death. However, each situation is unique and you can schedule a complimentary planning session by filling out the form below.