Estate planning is an essential process that every individual should undertake to ensure that their affairs are handled during their incapacity and their assets are distributed according to their wishes after their death. However, there are several myths surrounding estate planning that can hinder individuals from making informed decisions.
Many people believe that estate planning is only necessary for the wealthy or elderly but that is far from the truth. Estate planning is essential for anyone who has assets, properties, dependents, or minor children, regardless of the size of the estate. A well-crafted estate plan can help to ensure that loved ones are protected and that assets are distributed according to one’s wishes. An estate plan can also help to minimize estate taxes and avoid disputes among family members.
Another common misconception is that estate planning is only about planning after one’s death. But estate planning also can and should address how to protect one’s assets and properties and ensure that their health and financial wishes are carried during their incapacity. Documents such as powers of attorney for health and finances, a living will, and nomination of guardian are an essential part of every estate plan and allow a person to prepare for unexpected life events at different stages of their life.
Another harmful myth about estate planning involves the assumption that a last will and testament is all that is needed. While a last will can certainly ensure that one’s wishes are followed after their death, it does not help the estate of the decedent to avoid lengthy and expensive probate. A last will can be sufficient in some situations, but when the estate includes real property, or when planning is needed for minor or disabled beneficiaries, a trust is likely a better tool. Additionally, some assers can pass to beneficiaries outside the will and therefore the beneficiary designations must be carefully planned and reviewed.
Estate planning is also not a one-time event, but rather an ongoing process. As one’s life changes with marriage, children, divorce, or the loss of a loved one, the estate plan should be reviewed and updated accordingly to reflect those changes. Furthermore, changes in one’s financial circumstances as well as changes in the law can necessitate updates to an estate plan. Failing to review and update an estate plan regularly can lead to unintended consequences and costly mistakes.
Despite its benefits, the cost of an estate plan is often a deterring factor preventing people from setting up their estate plan. Unfortunately, the intended consequences and expenditures associated with the lack of an estate plan are often much more expensive. In addition to the distribution of the estate to undesired individuals, the estate may face costs related to probate or even litigation resulting from the conflict among the relatives.
Estate planning is an essential process that every individual, regardless of their age and financial situation, should undertake to ensure that their assets and properties are distributed according to their wishes. An estate plan can and should be crafted to ensure every person’s individual needs and desires.
Natalia Vander Laan is a Minden attorney.