There are five common myths that frustrate all estate planners—particularly because we know that not only are they patently untrue, but also because their continued circulation can be harmful.
1. Estate Planning is only for rich people. This is probably the single most common estate planning myth there is—and it is a myth. Many people believe that "estate planning" deals only with saving estate taxes upon death. But that is certainly not so. A commonly used definition of "estate planning" includes ... I want to control my property while I am alive, take care of myself and my loved ones should I become disabled or incapacitated, and give what I have, to whom I want, the way I want, and when I want. Furthermore, if I can, I want to save every last tax dollar, professional fee and court cost legally possible. Everyone needs an estate plan of some sort, regardless of your net worth.
2. “I have plenty of time.” AKA: Only old people need estate plans. First of all, just because you’re young doesn’t mean bad things can’t happen to you. But you know this, and anyway, this post is not about fear. Unexpected tragedies aside, an estate plan is useful even when you’re young because an estate plan is not just about death. A good estate plan will include not only a will or living trust to transfer assets upon your death, but it will also include incapacity protection tools - including a Medical Power of Attorney, directives and HIPAA Authorization (which are useful if you find yourself facing a surprise stay in the hospital or are unable to make health care decisions for yourself), Designation of Guardian (should you later need a guardian to be appointed for yourself), Statutory and/or General Power of Attorney documents (which you may need if you are unable to sign for yourself on financial or legal documents), and various legal documents relating to minor children, including Designation of Guardians, (if both parents die, who would take care of the children?) and medical authorizations (in case you leave the children for extended periods of time with other family, friends or sitters).
3. Married people don’t need estate plans. While many people think that a married person with straightforward wishes for the distribution of his or her property (all to their spouse) has less need of estate planning, it does not necessarily follow that they should skip estate planning altogether. Since many married couples hold their financial accounts as joint tenants with rights of survivorship, in that case, the property will pass to the surviving spouse upon the death of the first spouse... But what happens if the surviving spouse gets re-married? What about the property you would specifically like to go to your children, or to your parents or siblings? And what if both you and your spouse die together? These are the reasons why even married people should consider drawing up at least, a simple estate plan.
4. All I need is a quick and simple will and I’m done. A quick and simple will is certainly better than no will. And if you want to be technical, you don’t even need a will; after all, your state of residence has a plan already in place for you. The problem is that it may not be the plan you want. There is a saying that “anything worth doing is worth doing well.” This goes for wills (or any other legal document) as well. If you want the basics you can have the basics. But if you want a well thought out, reasoned plan, you’re going to need to spend a little more time on it.
5. Estate Planning is only about money. Although money is often one of the main motivating factors behind creating an estate plan, money is absolutely not what estate planning is all about. Estate planning is about people. It’s about your family and doing what’s right for them. Estate planning is not just about saving your family from estate taxes, or making sure Junior gets the house; it’s about leaving them peace of mind. A well thought-out will or trust saves them from a lengthy probate process, but also reassures siblings that they are doing what mom or dad really would have wanted. An estate plan is full of documents designed not just to save you or your heirs money, but to allow you to express your wishes and values even after your death. Estate Planning is about more than just money—it’s about family, legacy, and love.