5 Common Misconceptions About Estate Planning
As the holiday season begins, our lives suddenly take on a larger meaning than simply living for ourselves. We think of our loved ones, our extended families and friends. We think about our blessings and the road that lies ahead.
As you celebrate your family’s traditions this holiday season take some time to reflect on your plans for the future and how you can protect the assets you one day hope to pass on to your heirs.
Putting an estate plan in place is the best thing you can do to ensure that your family and financial goals are taken care of. It is important to recognize that there are many misconceptions when it comes to estate planning, and below are 5 of the most common.
1. Estate planning is just for the wealthy.
Creating the proper estate plan applies to everyone, not just the wealthy. No matter what your net worth, you want to be sure that your assets are properly distributed to the person of your choice.
2. If you are not married and don’t have children you don’t need to worry about estate planning.
Estate planning is about more than just who gets your property when you pass away. One key aspect of estate planning is creating a durable power of attorney or an advance medical directive which spells out what care you should receive in the event you can’t speak for yourself due to an injury or illness.
3. I’m married so everything will go to my spouse anyway.
Being married does make dividing your assets seem a bit easier; but there are several things that can change that. What if your spouse re-marries or you and your spouse pass away together? Are there certain things you would like your children to have? These situations happen frequently and without an estate plan your finances can be left in disarray.
4. If you die with a will, your heirs do not have to go through the probate process and your personal financial life will remain private.
Even if you have a will, your finances will become public. Establishing a trust can help maintain your family’s privacy. Unlike a will, a trust does not go through the probate process. A trust can be more costly to setup, but once complete the costs to administer are minimal and can save you time and money later on by avoiding probate.
5. You need to update your will or trust frequently, at least every one to two years.
It is necessary to update your estate plan, but for many people it is better to think about doing it only after certain life events or changes such as getting married or divorced, having children or grandchildren, or when the value of your estate changes significantly or there are changes in tax laws.