Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on three common myths. Today we are going to cover the first two and stayed tuned for our next post that will reveal the third!
Myth #1: Only the Rich Need Estate Planning
When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely, they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they don’t have anything close to Bill Gates’ billions.
This could not be further from the truth. Estate planning is about more than just money. While proper planning allows you to determine how your assets and property are distributed upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf–a far more likely scenario than you may realize. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you, and if you have children, they will appoint a caretaker for them. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. You will also want to consider preplanning your funeral, giving access to your assets quickly and without court intervention to beneficiaries, and more. Without any planning, there is more weight falling the shoulders of the loved ones you leave behind, and state law will decide who gets what—and many times, the government’s best guess as to what you would want is contrary to what you actually want. If you do not take the opportunity to formalize your wishes in an estate plan, the state will step in and do it for you.
Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything
For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.
However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit.
Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. With blended families being common today, it is important to consider how you want to provide for your children in the event you were to pass before your spouse.
Estate planning does not mean that you and your spouse have to painstakingly divide things. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.
We understand that taking that first step towards contacting an estate planning attorney to begin the journey to establishing your estate plan is a tough one. We invite you to visit our website, explore our blog, and schedule your complimentary consultation. We want to help you learn more about how estate planning will benefit you and how our team can help you gain peace of mind through our unique process that protects your loved ones, yourself, and your assets.
Don’t forget to check back for our next blog post where we bust myth numbers 3 & 4!