Four Major Myths You Should Know About Estate Planning
Growing up, chances are you didn’t take a course in estate planning and there wasn’t someone who sat down with you and explained the basics. Unless you have legal experience, chances are you have no idea what estate planning is at all. First and foremost, it’s important to understand what an estate is. Your estate is everything you own and anything that is categorically yours. This includes your clothing and furniture, the money in your bank accounts, your vehicle, and pretty much anything else.
Estate planning is the process of organizing where those possessions go in the event of your death, or if you become unable to make independent decisions. Although estate planning is synonymous with life planning, many people cannot fully grasp its complexities, which perpetuates misconceptions about the topic. Here are four major myths you should know about estate planning.
An Estate Is the Same Thing As a Will
This couldn’t be further from reality. The truth is, your Will is just a smaller piece of the entire estate. While a Will falls under the estate umbrella, they are not the same. Think of your Will as a set of directions, and your estate plan as the execution of those directions. An estate plan covers much more than just a plan for what will happen to your belongings when you can no longer direct control of them.
“A will goes into effect after you pass away. Until then, it’s important to have a living will with written legal instructions regarding your preferences for medical care if you are unable to make decisions for yourself,” says Walser Law, an estate attorney in South Florida. “For example, if you became terminally ill and need someone to make healthcare or financial decisions on your behalf, advance directives provide a guide for doctors and caregivers to help reduce confusion or disagreement about the choices you would want.”
Essentially, an estate plan provides you with the additional protection necessary in the event of an emergency before your death, as well as after.
It’s Only for The Rich
Contrary to popular belief, estate planning isn’t just for individuals with a high net worth. If you own property or assets, or have people who rely on you, estate planning is for you—no matter how big or small your estate is. Even if all you have are a few thousand dollars saved in your bank account, this means you have an estate.
Without a plan in place, all the money and assets you worked so hard for will likely go to the state. Your loved ones won’t see a penny of anything that’s yours or be able to access it if you suddenly become unable to, such as if you’ve been involved in an accident. If you have children, this is even more important than ever.
It’s Cheaper to Create Your Own Will
In a digital era, there are a tremendous amount of resources at your fingertips. Conduct a search for “downloadable living will” and you’ll get plenty of state forms and templates. Those looking to save money might consider going in this direction. Although they’re simple to create and simple to fill out, there are many reasons why lawyers specialize in estate planning and drafting up Wills.
Without the guidance of a professional estate planning lawyer, you could end up spending much more money in the long run—or even worse, your family could end up struggle to fix your mistakes after your death. After you pass away, the legal probate process begins, and this is a complicated set up steps that takes months to navigate. The probate and estate settlement process will always have to take place in accordance with local state laws, and the cost will be much more significant than if you’d set an estate plan in writing in the first place.
You Can Tell People What to do After You Die
No matter how strong your family is, there are many laws in place that govern a person’s estate if there are no legal documents in place to back up a person’s wishes. A small minority of states will allow oral requests (for example, you telling a loved one that can have specific items of yours after your passing), but there are major stipulations and fine print involved. Oral wishes are limited in terms of monetary value, and some states require at least two competent witnesses in place to corroborate with those wishes. And when it comes to major decisions, such as who will take care of a minor after you pass, oral wishes are out the window.