If you find estate planning confusing, you’re not alone. Estate planning is one of the areas of financial planning with the most widespread confusion, and this can lead to costly mistakes and unnecessary loss of time and money as well as excess stress for people’s loved ones.
Here are some common estate planning myths (I will address 5 now and then 5 more next week):
- I’m too young for estate planning. We never know for when we will need our estate plan – and when we do, it is already too late. Although our specific needs change depending on which stage of life we are in, estate planning is important for those young and old alike.
- Estate planning is just for the wealthy. This myth is in part based on the focus some attorneys and financial advisers place on the estate tax, which might not be an issue for those whose estate does not surpass $11,580,000. However, estate planning is also about how your finances will be taken care of if you’re incapacitated, decisions regarding how your health care will be carried out, and how your children and other heirs will be taken care of when the time comes.
- I need a lawyer to draft these documents. There are certain documents that you yourself can draft at low or no cost if your situation is simple enough. For health care decisions, a health care directive may be available from your hospital. You can also download your state’s advance directive from the National Hospice and Palliative Care Organization here or create and store one online at MyDirectives, both of these being available for free. Five Wishes is also a popular, low-cost living will form from the non-profit Aging with Dignity organization. Sites such as DoYourOwnWill.com and FreeWill are also free resources to draft other legal documents, such as a power of attorney or a simple will. Your employer might also offer these documents as an employee benefit inexpensively or for free.
- I don’t need a lawyer at all. Although the documents that are available online may cover common, simple situations, it often happens that there are complicating issues that you are unaware of that a legal advisor would bring to your attention. For this reason, even if you draft your own documents for free or at little cost, it is best to run these documents by a qualified estate planning attorney.
- If I pass away without a will, the state will get my assets. If you die without a will, your state will apply its “laws of intestacy” to determine what will happen and who inherits what. Heirbase is a website where you can see what that might look like based on the state in which you live. If you don’t like how this looks, you should get a will drafted. Either way, if you have minor children, you should definitely get a will drafted as a will allows you to determine who would become the guardian of your children, should the need arise, instead of a court deciding this.
I will address 5 more common myths about estate planning next week.
For help with your estate planning, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.