This guide debunks common misconceptions which can lead to trouble for your loved ones down the road.
1. “I’m not wealthy enough to need an estate plan.”
There is no amount of money that signifies one should have a basic estate plan, rather it is something every adult should do. Of course, there is a financial aspect, and it would be a shame if even what you may consider a small estate wasn’t left with the person who you wanted to have it, but there is more to it. Estate planning should also encompass all decisions about your end of life wishes and who would make decisions for you if you ever become incapacitated. If you have minor children, then it is especially important that plans are in place should somebody ever need to care for your children.
2. “I’m not old enough to need an estate plan.”
Similarly, there is no magic age where an estate plan becomes necessary. The reality is things can happen at any point in your life, and it is important to have a plan in place for when it happens to you. Arrangements like who would get your car or who would make decisions for you if you become incapacitated may seem like something so distant that you shouldn’t even be thinking about it, but young adults would benefit from having documents such as Powers of Attorney just in case something happens. See https://bit.ly/2sq7q3P to gain an idea of what documents make sense for college aged students.
3. “I have a will, so my estate will not go to probate.”
This is simply not true. Wills are effective tools for expressing your wishes and having them carried out, but simply having a will does not keep your estate out of probate. Although it sounds scary, probate isn’t necessarily a bad thing to be avoided at all costs. For some estates this can be a simple process which will resolve with the assets in the hands of the people you would have wanted to have them, but not always. If you would like your loved ones to avoid the process all together, then a forming a trust could be the best option for you.
4. “My Spouse will get everything when I die.”
Your spouse is your partner in life but unless they are your partner in that they own property and accounts jointly with you, they will not be automatically get everything upon your death. Property that you own jointly with your spouse will be transferred to them when you die, but property that is just in your name will be subject to probate and the state laws governing disposition of that property if you have not acted proactively by creating a will and, if necessary, a trust.
5. “My power of attorney will handle my affairs when I’m gone.”
Setting up a power of attorney to handle your financial and medical decisions is an important piece in planning end of life care and management of your assets if you should ever come incapacitated for some amount of time. You can designate one person to do it all, have a few people make the decisions together, or even put one person in charge of financial decisions and another in charge of medical choices. They will be able to make important decisions for you while you when you are unable to, but the moment you die they will lose that authority. While they may be planning to divide your assets as you intended, without a trust in place your assets will be put through probate.