5 Estate Planning Myths (and Why You Need to Know the Truth)

5 Estate Planning Myths (and Why You Need to Know the Truth)

In recognition of National Estate Planning Awareness Week (October 16-22), we are sharing 5 myths we frequently hear about estate planning. These myths often prevent people from taking action to protect their assets and ensure their loved ones receive the benefits of careful stewardship. Which of these myths do you believe?

Myth #1: I only need an estate plan if I am rich.

Truth: Almost everyone can benefit from estate planning. Estate planning allows you to determine how your estate is managed during your lifetime and how it is distributed upon your death. It also allows you to decide who manages those things for you. When you meet with an estate planning attorney, some of the things you may discuss include:

  • Guardians for your minor children or an adult child (or parent) with special needs.
  • Concerns about your assets or beneficiaries.
  • An appropriate executor for your estate.
  • Advance directives and healthcare power of attorney: These documents take estate planning a step further by allowing you to designate someone to represent you and carry out your wishes regarding health treatment should you be unable to make those decisions.
  • Ownership of any businesses and how those will be handled upon your death. Is there a succession plan in place?
  • Questions you may have about your online presence after you are gone.
  • Whether a trust makes sense.

Even if you are young and still have limited assets, estate planning is a good idea to make sure things are handled the way you want them to be.

Myth #2: I should start with my estate planning in my 50’s or 60’s when I am planning for retirement.

Truth: As your life changes – you get married, start a business, have children, have grandchildren, perhaps remarry, or even if you stay single – you will likely want to protect your loved ones. Putting an estate plan in place early in your life – and keeping it updated – can ensure your wishes are carried out. There are no guarantees in life, so it is prudent to start planning early. This kind of planning can save your loved ones a lot of time, money, and frustration by avoiding court proceedings that might otherwise be required.

Myth #3: Once I have completed my estate plans, I can put the document in the safe deposit box and forget it.

Truth: Our lives change regularly, and when major shifts happen, it is important to update your estate plans to accommodate these life changes. These major changes may be positive or negative, but you should consider the old estate plan, as well as reviewing assets you own where a beneficiary is listed (CDs, IRAs, 401Ks, etc.), and make the necessary updates in a timely fashion. As an example, if you have remarried after a divorce and, perhaps, had another child with your new spouse, there may be a fight over your assets upon your death if you have not updated your estate plans. For most people, they may start off naming parents or siblings in positions of responsibility, but over time those people may not be willing or able to handle these positions and changes to the younger generation may become necessary. We typically do not recommend putting important estate planning documents in a safe deposit box unless your executor or power of attorney has a key and has been named on the box to obtain access before your death. Otherwise that person may not even be aware of the box or able to obtain the documents inside without court intervention.

Myth #4: When I die, my assets will be equally distributed to my family.

Truth: In North Carolina, if you die without a will, the state will distribute certain assets based on the laws in place at the time. This may not be how you would want them distributed. And some assets – including those held joint with another person or those where you have named a beneficiary (like a 401K) – will still go to the person named – even if the beneficiary is out of date. Most people do not like the default rules in North Carolina for how property can be distributed, and it can be particularly complicated where there are minors or a disabled individual who would be receiving those assets. The best option to retain control of how your assets are distributed is to have current estate plans in place and keep your beneficiaries updated.

Myth #5: Estate planning is too expensive.

Truth: Those with experience in the industry often can help you put your estate plans in place more quickly than you expect. A simple estate plan may take a few hours of their time and be very affordable; a more complex plan will obviously require more time. In some cases, your estate may be structured to avoid probate altogether, saving your loved ones’ time and money. In the long run, estate planning can ensure you have more say in how your assets are distributed. It can also protect those assets so your loved ones have more financial security after you are gone.

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