You have worked hard for years, have family members and friends you care about, and have approached a time in your life when “estate planning” sounds like something you should do, but you are not exactly sure why. You may feel that you are not wealthy enough or old enough to bother or care. Or you may already have a Will and feel that you are all set on that front. Whatever your current position, consider these common misconceptions about estate planning:
- Estate planning is for wealthy(ier) people.
False. Anyone who has survived to age eighteen and beyond has likely accumulated a few possessions that are of some monetary or sentimental value. While things like your home, car, and financial accounts are self-evident assets, that collection of superhero figurines or your iTunes library also deserve proper attention. There is no minimum asset value required to justify having a Will.
- Estate planning is for old(er) people.
False. Tragedy can strike at any moment, and it is best to have your affairs in order so as not to put your loved ones in a financial bind or cause disagreements while they are grieving. Young parents should ensure that proper guardians are in place to take care of their children if they are no longer around, to avoid children ending up with the most irresponsible member of the family or, worse, a complete stranger.
- Estate planning means having a Will.
False. Having a Will is smart because it puts you in charge of the disposition of your assets. A Will allows you to pick your executor, designate the guardians for your minor children, and name any individuals and charitable organizations as beneficiaries of your estate. If you were to die without a Will (i.e., intestate), the law of the state where you reside at your death would govern who receives what part of your estate, who administers your estate, and who takes care of your children.
However, a Will is only one tool in the estate planning toolbox. There are other vehicles that allow you to remain in control of your possessions and family’s future during life and upon death. Depending on your situation, a Will alone may not be the most efficient or the most cost-effective means to achieve your goals.
Upon your passing, your Will has to go through probate – a process whereby a court reviews your Will and determines its validity. It is a lengthy and often costly process and can become even lengthier if a Will is contested (e.g., someone wants to fight the terms of your will and wishes). The delay in the disposition of your assets and the accompanying legal costs may put your family members in financial straits. If your goal is to ensure that your survivors’ cash flow is uninterrupted after your death, it would be wise to incorporate a trust and/or a life insurance policy into your estate plan. These assets are considered “non-probate” – they pass outside of your Will and the probate process.
You are neither too young nor too poor to engage in estate planning! Click here to schedule an appointment with us to discuss your estate plan.