5 Common Myths About Estate Planning
There’s a lot of misinformation about estate planning and what’s involved that people have heard at some point or another throughout their lives and taken as the truth. This misinformation; or myths, as some may call them, are so pervasive that they’ve prevented many otherwise smart and thoughtful people from creating an estate plan until it’s too late.
Take charge of your future, and your family’s future, by leaving these five estate planning myths behind and getting started on your planning today.
- Myth # 1 – For a will to be legal it has to be drafted by a lawyer.
- Myth # 2 – Estate Planning is only a concern for the wealthy.
- Myth # 3 – My will overrules all other documents.
- Myth # 4 – I don’t need to worry about estate planning yet.
- Myth # 5 – By having a will I will avoid probate altogether.
Myth # 1 . For a Will to Be Legally Binding, It Has to Be Drafted by a Lawyer
This myth is so old and so common that it not only prevents people from beginning their estate planning journey, it also makes them doubt their own capabilities around estate planning, as well as the validity of do-it-yourself wills and trusts.
The truth is, for a will to be legally binding it does need to meet certain criteria, but none of them involve being drafted by a lawyer.
To create a legally binding will you’ll need to make sure the will is a written document. It can’t be only an audio or video recording and you can’t simply leave verbal instructions. In your written will you’ll need to use clear language identifying the document as your legal will. This can be accomplished with a brief paragraph asserting that the document is your will, or by labeling the document as such in the title.
You’ll also need to sign the will yourself. Many states require that your signature be notarized, others only require two witnesses watch you sign your will and then sign the will themselves as proof. In states that require your signature be notarized, it’s also usually required that the two witness signatures be notarized as well.
Create as clear and complete instructions on the disbursement of your estate as possible. If you do not reference all of your estate in some recognizable way, the state can enforce what you have referenced, but will then decide the fate of any unreferenced property.
And, lastly, name an executor to act as your representative and see that the wishes stated in your will are honored after you die.
Myth # 2. Estate Planning Is Only for the Wealthy
This myth does not exist on its own, it is often supported and held alongside the idea that in order for a will to be legal it has to be drafted by a lawyer. As you’re learning today, neither are true.
No matter how large or small your estate may be, if you have any wishes for the disbursement of your property; whether it’s to individuals or institutions, you should be concerned with estate planning. It doesn’t require much, in fact, many people find that a simple will is more than enough estate planning for their purposes.
Myth # 3. A Will Overrules All Other Documents
When you are estate planning, it’s important to remember to update associated documents to echo the wishes stated in your will. This is critical when it comes to naming beneficiaries. Any time you name a beneficiary in your will, make sure that beneficiary is also listed in associated account and legal documents.
A common example of this is life insurance. If you name someone as a beneficiary to a portion of your life insurance payout in your will, they should also be listed as a beneficiary in the policy itself. If you have differing beneficiaries between the policy and your will, the policy beneficiary will overrule the person named in your will.
Myth # 4. I Don’t Need to Worry About Estate Planning Yet
It’s easy to set aside estate planning for another day when you’re busy making excuses. Sometimes it’s that you think you’re too young, sometimes it’s that you think you don’t have enough estate to worry about, or maybe it’s because you have no living relatives.
The truth is, it is never too early for estate planning. Regardless of how young or old, rich or poor, or single you are – you can still create an estate plan starting today. If you’re young, you’ll be giving yourself more years with a mind at ease knowing your wishes have been recorded.
If you’re not wealthy, you’ll still know that what you do have will go to the people and organizations you want it to. And, if you don’t have any living relatives, you can still designate friends and organizations to inherit your assets and make an impact that reflects what you care about and the life you’ve lead.
Myth # 5. By Having a Will You’ll Avoid Probate Altogether
Having a will does make disbursing your assets more straightforward, but it is a myth that it avoids probate altogether. Your will acts as a guide for the courts to allocate assets based on your wishes, but your estate may still go through the probate process, especially if it is large or complex.
The good news is, many states offer simplified and inexpensive probate processes for estates where the testator’s assets, not including real property, are collectively worth less than $100,000.
If your estate is larger or more complex, there are ways to avoid probate, including establishing a revocable living trust. In the case where your estate is large or complex, you should consult an attorney to get advice based on your specific needs and the requirements of your state.
Estate planning can be a touchy subject for anyone. After all, no one really wants to think about what happens after they pass away; especially not the legal, practical, and somewhat unemotional aspects.
But, overcoming the uncomfortable feelings and tired excuses can ultimately relieve your stress and allow you to enjoy living your life more, without undue worry or concern about what may happen to your loved ones when you’re gone.
Now that you’ve learned the truth about some common estate planning myths, you can begin your own estate planning. It doesn’t require a lot of effort, and you don’t need to be an expert. There’s no reason to wait any longer and you can even start right now by