Myths We Tell Ourselves About Estate Planning

Estate planning can be a very difficult process. While it is not brain surgery, making the decision to move forward with an estate plan requires us to face the fact that we will not live forever. This thought stops many people in their tracks. Others talk themselves out of taking the first steps of speaking with an estate planning attorney.

Why?

Often times it’s because of these common estate planning myths:

Myth #1: Only the Rich Need an Estate Plan

When we hear about estate planning on the news or read about it on the internet, it is usually in regard to a wealthy businessperson or celebrity who had no estate plan, made an error in their estate plan, or has family members who are angry about the actual plan. The topic catches people’s attention. Rich people have so much that, surely, they need an estate plan and can afford to have it done correctly. By comparison, when the average person thinks about their own planning needs, they assume that their possessions are not worth enough to necessitate an actual estate plan.

But this thinking could not be further from the truth. 

Estate planning is about more than just money. While proper planning allows you to determine who gets your money and property, the process also addresses what happens if you are unable to manage your own affairs and someone has to make decisions on your behalf—a far more likely scenario. 

If you do not have an estate plan, the court will have to appoint someone to make your medical and financial decisions for you. The process can be very time-consuming, expensive, and public and can wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.

If you have no plan, state law will decide who gets what, and many times, the government’s best guess as to what you would have wanted is contrary to your actual desires. But because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in.

Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything

For many married couples, jointly owning property and bank accounts is common. If a couple owns accounts or property jointly, when one spouse dies, the surviving spouse automatically becomes the sole owner. In many cases, married individuals prefer this outcome.

However, this approach can be dangerous. 

While it is convenient for money and property to pass automatically to a surviving spouse, outright distribution offers no protection. What happens if, after your spouse dies, you have a car accident and get sued? If the jointly owned money and property automatically become solely yours, they are available to creditors to satisfy any judgment against you.

In addition, what if, after you die, your spouse remarries? If the brokerage account you owned jointly becomes solely your spouse’s, they can now spend it all in any way they want with no consideration for either your wishes or the next generation. Your surviving spouse’s new spouse could buy a sports car with the money you intended to pass to your children. 

Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and proactively plan what happens to your joint property and accounts when either of you dies, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.

Myth #3: A Will Avoids Probate

Many people believe that, once they have created a will, whether drafted by an experienced attorney or by using a do-it-yourself solution or online form, they have avoided probate. Unfortunately, this is not the case. 

A will does many things – designates a person to wind up your affairs after you have passed, determine who will get your hard-earned savings and property, and, if necessary, appoint a guardian to care for your minor children. 

But the one thing a will doesn’t do is avoid probate. 

A will must be submitted to the probate court to begin the process of distributing your money and property and the level of the probate court’s involvement can vary depending on the circumstances. 

When there are no controversies and all the parties get along, then the probate of your estate can be pretty straight forward. But if the parties don’t get along, then the court will be involved in overseeing every step of the administration process. The court must approve your personal representative’s actions. The process can be very time-consuming and expensive. Each time the personal representative has to take an action, they have to file a legal form and send it to the interested parties, which, in contentious situations, opens up the possibility for disagreements and additional attorneys’ fees.

Don’t let one of these myths stop you from creating an estate plan or taking the the important first step in talking to an estate planning attorney about protecting your family.

To get started with the process, click here to schedule a Peace of Mind Strategy Session or call us at 781-474-3450.