The Top 4 Estate Planning Myths, And Why Your Plan Is Better Off Without Them
Estate planning doesn’t always conjure positive imagery—lawyer’s offices, paperwork, family tensions, mortality. It’s no wonder why so many people put their estate plans on the back burner.
LegalZoom reported that anywhere from 50-60% of Americans don’t have a will. Although the COVID-19 pandemic brought awareness to the issue, many people remain without.
What’s worse, people aren’t talking about their estate plans—whether with their spouses, kids, family members, advisors, etc., making it separate and removed. It seems like everyone is in the dark until the estate passes hands, and without proper measures in place, could result in a stressful, costly, and time-intensive process.
There are several myths about estate planning, and today, we’d like to do our part to set the record straight. Keep in mind that estate planning requires several members of your professional team: financial advisor, estate planning attorney, tax professional, as well as family and friends serving in legal capacities like executor or power of attorney.
It’s best not to alter your plan without consulting your professional team. We’ll take a look at the top four estate planning myths, why they can’t serve your plan, and how to build an estate plan with intention and meaning.
1. Estate Planning Is Only For The Ultra-Wealthy.
Have you ever caught yourself thinking that you couldn’t possibly have enough wealth to require an estate plan? This is a common thought, but it couldn’t be farther from the truth.
Try to reframe the answer to that question by asking yourself the following:
- Do you own any assets (house, car, business, collectible, etc.)?
- Do you have certain wishes for your end-of-life arrangements?
- Do you want to incorporate charitable giving into your estate plan?
- Would you like to choose the person/people who will carry out your wishes?
- Would you like to leave certain assets to certain people?
- Are you passionate about creating a lasting legacy?
If you answered “yes” to any of these questions, then an estate plan is right for you. Estate planning doesn’t rest in an ivy-covered hall, reserved for the upper echelons of society. Proper estate planning is a critical part of everyone’s retirement plan.
An estate plan brings organization, cohesion, and efficiency to your financial and personal life. By creating an estate plan that represents your wishes and goals, you take control of the situation and create something authentic to you and the life you’ve built.
A strong estate plan helps honor your life’s work, goals, and values by establishing a legacy that will live on for generations to come.
2. Your Family Will Automatically “Do The Right Thing”.
Assumptions don’t often lead to pleasant outcomes—just watch any movie.
While you and your family may be close, they may see things differently than you do. Perhaps you really wanted your kids to sell the family house and use the money to further their dreams, but if that sentiment was never communicated, your kids could hold onto the house because they assumed you wanted it to stay in the family.
The same could be said for end-of-life arrangements. Perhaps you would prefer that visitors donate to your favorite charity, church, or organization in lieu of flowers, for example. There are several instances where your personal preferences should be legally notated to ensure that everything unfolds as you planned and that your family isn’t burdened with making these choices for you.
Your family knows and loves you, but only you and your spouse really know what’s in your heart and how to craft a plan that best exemplifies your life. Leaving these critical decisions to the courts and your family could also add time, money, and stress to an already challenging event. Without a will or proper titling, your estate could be divided in ways that you didn’t intend, as it would follow what the state/local laws mandate.
Resting your estate plan on the court’s goodwill and your family’s decisions is like building a house on sand—it can’t withstand the rains, floods, and winds like a house built on stone can. Your life’s work deserves a well-thought-out and tailored plan. You and your spouse should work together to create a life and legacy you will always treasure.
3. A Will Takes Care of All Your Needs
While only 30% of the country has a will, many people believe that estate planning begins and ends with wills. But several other elements work in concert with your will to bring your estate plan to life.
A will is simply a document that allows you to legally express your wishes. It’s a document of intent not of action. Let’s take a look at a few other elements you should consider throughout the estate planning process.
- Set up primary and contingent beneficiaries on all accounts like retirement, brokerage, savings, and insurance policies.
- Be sure to review these beneficiaries regularly and watch out for contingent beneficiaries. Should your primary beneficiary pass away without one, your estate could have to go through probate.
- Ensure your assets are properly titled (property, bank accounts, investments, etc.)
- Several title designations depend on the type of asset, its function in your plan, and your marital status like transfer on death (TOD) for investment accounts, payable on death (POD) for bank accounts as well as joint tenants in common for real estate. Each of these titles comes with different financial and legal implications—work with your team to see if any apply to you.
- Assign a financial and medical power of attorney.
- This is a document that allows you to give someone else control over your finances or health should you become incapacitated.
Your estate plan should include vehicles that best serve your wishes, goals, and financial need. For you, that might be a trust with a charitable component and/or leaving your fine china to your grandson and his wife.
4. Your Legacy Isn’t Connected To Your Estate Plan.
What comes to mind when you think about your legacy? Perhaps it’s the goals, values, and dreams you’ve passed onto your family, or how your great-great-granddaughter’s future smile will remind the entire family of you. Maybe your legacy lives on through the charitable efforts you’ve so dutifully participated in throughout your life. It might be a combination of all these beautiful elements.
Estate planning is really about writing the next chapter of your life—your legacy. Estate planning and legacy planning are intimately intertwined. How you structure your assets can absolutely become part of the story you pass on—charitable giving, setting up a college fund for your grandchildren, passing down the values and faith by which you live your life, etc.
Your legacy is something you build each day. It shines through your values, priorities, how you treat others and yourself as well as the way you live your life.
Making an intentional estate plan is a natural extension of your legacy. Our team loves working with married couples to help them envision a plan that seamlessly combines their finances and their faith.
Seek Counsel from a Trusted Advisor
Your financial advisor alongside your estate planning attorney and CPA can help you create a plan that puts your goals and dreams first. At first, estate planning might seem unapproachable and cold, but things aren’t always as they seem.
When done with your goals and values at the center, your estate plan can serve as the foundation for your beautiful legacy set to live on for years to come.
Is it time to refresh your estate planning strategy? Give our team a call today.