The Top Myths of Estate Planning
If you have been thinking about creating an Estate Plan it is likely you are receiving a lot of misinformation from well-meaning family, friends and online searches.
Let’s take a look at 10 common myths about creating an estate plan.
MYTH #1: Estate Planning is only for the wealthy
The words “estate planning” often conjure up visions of jet setters, movie stars and trust fund babies. Because of this common association with wealth, many people are led to believe that estate planning is not for them or that they somehow “don’t qualify.”
Too many people have been led to believe this myth…
Whether you feel wealthy or not, the fact is you do have an estate. Every estate can benefit from various forms of protection available under the law.
It’s important to have a basic estate plan in place regardless of your net worth.
Estate planning can entail several specific components and provides a number of important protections for you and your family.
Estate Planning includes several important legal instruments:
- A Will
- Assignment of Power of Attorney
- A Living Will or Advanced Medical Directive
- A Trust
Incorporating some of all of the instruments listed above into your estate plan can provide a number of very important benefits:
- Ensuring your assets are inherited by the people you want to inherit them.
- Handling of your financial affairs by someone you trust rather than the court.
- Custody of your children determined by you, in advance, rather than by the court.
- Avoiding costly probate where the court controls and distributes your assets (and collects a fee to do so).
- Avoiding unnecessary estate taxes
- Distributing wealth to your children and grandchildren without paying estate taxes.
- Ensuring your intentions are carried out with regard to your health care if you become incapacitated.
- And more.
MYTH #2: I don’t need a will
We find that the majority of clients who come through our doors lack even the most basic parts of an estate plan, including a will.
Everyone, regardless of their net worth, needs a will.
A will is a vital and important part of your estate plan. A will lets your survivors know how you want your assets distributed upon your death. Wills also provide the first step in transferring guardianship of minors.
If you die “intestate” (without a will), here is what will happen:
- Your estate will go into probate. Probate is a condition in which the court controls your assets and begins to make decisions on your behalf regarding your assets and any minor children you leave behind.
- The court will decide who receives all your assets.
- The court will decide who receives guardianship of your children.
- The court will divide your assets among your surviving spouse and children in the way the court thinks best. If you’re single, they will divide it among your blood relatives…whether you like them or not.
- The court will charge a fee to cover the cost of these services. This fee will be paid for by your estate before assets are ever distributed to your heirs.
If you feel confident that a judge who you do not know is competent to make these decisions for you, then you do not need a will.
On the other hand, if you want to designate your heirs and be sure your minor children are cared for by those you love and trust, a will is essential to your estate plan.
Myth #3: I don’t need a trust
That’s what these business owners thought too…and it’s costly them a fortune.
If you don’t think it’s true that one false belief can cost you a lifetime of wealth-building, think again.
This one myth is wiping out family business fortunes on a regular basis…
Trusts can reduce your estate and gift taxes. Trusts allow you to avoid probate court and distribute assets to your heirs according to your wishes.
Unfortunately, too many people, especially business owners, discover only too late the devastating effects that estate taxes can have on their wealth.
Myth #4: It’s best to let my heirs decide
Occasionally, people who prefer not to talk about death with their loved ones feel quite comfortable believing this myth.
Books have been written on the family wars that ensue when the deceased fails to leave clear instructions about how to distribute their money and property. Unless you intend to create a family feud, it is in everyone’s best interest for you to make your intentions clear by leaving a will and/or trust.
But money and property are not the only things your heirs will be making decisions about if you fail to make your wishes known.
In addition to distributing your assets, here are some other decisions your family may be making for you, under the direction of the court, whether you like it or not:
- The person who will manage your affairs if you become incapacitated.
- Whether you will be resuscitated or not.
- Who your health care agent or guardian will be if you become incapacitated.
- The guardian who will care for your minor children.
- How much money will go to each surviving heir?
- Who will take over the family business, if you have one?
Myth #5: I don’t need to worry about estate taxes
Estate tax laws are constantly changing. While you think you won’t be subject to estate taxation today, that may not be the case several months from now.
Estate tax laws are always changing. An experienced estate law attorney can help you navigate the laws and minimize your tax burden. As you age and your estate value increases, having someone on your side to keep you up to date on laws is invaluable.
This means that the larger your estate becomes, the more important it is to seek the counsel of a trusted and competent estate planning attorney if you wish to protect your assets against estate taxes.
Myth #6: My family will inherit my business
Too many people believe this myth and are finding they are unable to pay the estate taxes that will be due once the primary business owner passes away.
Without proper structuring and succession planning, your business may be subject to inheritance tax in amounts so high it may force the sale of your business and make it impossible for your family to inherit the company you have built.
The determination that you won’t have to pay estate taxes is not to be made without due consideration. It requires an evaluation of your assets in light of current and potential future changes to estate tax laws.
Myth #7: No one will contest my estate
Even when you make your wishes known via a will or trust, you run the risk that one of your heirs will dispute your instructions.
When someone dies, the distribution of his or her assets has the potential to cause conflicts among family members. Even when a will or a trust appears to leave no question as to the decedent’s intent, these disputes can be very emotional and lead to litigation.
If you are involved in estate litigation, or if you anticipate that you will be involved in an estate dispute, a knowledgeable, tenacious estate litigation attorney can be invaluable. We represent heirs, beneficiaries, trustees and other parties in the full range of estate litigation. We represent clients in trust litigation and will contests.
Trust litigation can encompass many different matters. The breach of fiduciary duties is often the root of trust litigation. Trustees must adhere to a number of fiduciary duties, including the duty of loyalty, the duty to protect trust assets, and duties to report on the trust regularly. When trustees are suspected of self-dealing, improper management of trust assets, fraud or other breaches of duty, litigation is likely to follow.
Will contests typically revolve around a number of issues, such as technical defects in the will, ambiguities in the will, or allegations that the will is the product of coercion or undue influence. Whatever the specifics, our law firm will undertake a complete investigation of the matter and work towards a favorable resolution.
Myth #8: Estate planning is expensive
Don’t postpone the peace of mind you will achieve by getting your estate in order. This common myth prevents too many people from taking protective measures their family deserves.
In fact, Estate planning is modestly priced, especially in comparison to the amount you risk paying in estate taxes if your assets remain unprotected.
Myth #9: I should handle my estate planning myself?
We see many do-it-yourselfers who start out with the belief that they should handle their estate planning needs themselves.
However, it takes only one misstep to make them wish they hadn’t.
While do-it-yourself solutions provide necessary paperwork, they provide a solution in a vacuum without any qualified assessment of your needs in the context of your financial or tax situation.
We represent people every day and are familiar with the rules, procedures, and rights that come into play in estate planning matters. When you represent yourself, you risk creating an insufficient or inappropriate estate plan that fails to accurately account for your current situation or potential tax law changes.
Most importantly, an experienced estate planning attorney will be able to properly advise you when it comes time to make decisions that will affect the ultimate outcome of your estate.
Thank you for taking the time to read this special report. It was our intention in providing you good information that you can use to make a more informed decision.
There is no way that we could answer every question or cover every situation in this special report. The best way for you to get the most accurate information concerning your unique situation is to make an appointment today with my office.
You are under no obligation during this appointment and we can talk about your unique situation and help you determine the next step together.
Give my office a call today at 602-548-3400
Remove the stress, worry and doubt and speak to us today. You will be glad you did.