When it comes to Estate Planning, there are 5 ridiculous myths that could cause your plan to absolutely crumble and fall apart when your family needs it the most.
I’m talking about lengthy and expensive court battles, dishonored wishes, unnecessary government intrusion, taxes, and costs—all because of a few dangerous myths and mistakes that can cause your plan to fail in an emergency.
Well no more, as it’s time to debunk these myths and learn the truth about protecting your family and assets once and for all.
To make sure your plan works exactly how you want if the unthinkable happens, it’s important to get familiar with the top 5 Estate Planning myths and learn how to fix any mistakes that may be lurking in your documents.
Once armed with this knowledge, you can feel confident knowing that the documents you’ve spent so much time, money, and emotion on will actually work if the unthinkable happens.
Myth # 1: Estate Planning is Something You Do Once and Never Have to Worry About Again
This myth is the number one reason why even the most expensive Estate Plans can fail after a person’s death or during the crises of life.
Estate Planning is not something you “do” once and never look at again. For your documents to remain valid and effective, they need to stay updated as your life and the law changes through the years.
For example, if you forget to update your Will, Trust, or beneficiary designations following a divorce, there is a good chance that your ex could still inherit a portion of your Estate. Forgetting to update your documents following the birth of a child may lead to his or her accidental disinheritance under your current plan. If your chosen Power of Attorney moves 5 states away and you forget to pick someone new then all your previous planning can work against you instead of for you.
It doesn’t matter how good your lawyer was or how fancy your plan. If you don’t keep your wishes, financial and family status updated, your documents simply won’t work the way you intended them to when tragedy strikes.
Myth #2: Estate Planning Is Only for The Elderly or Super-Rich
Many people falsely believe that Estate Planning is only for the elderly or the super-rich. They feel that unless they have a ton of assets, Estate Planning is not necessary and their family can just duke it out for their stuff when they die.
Estate Planning is not just about who gets your “stuff” when you pass. Nor is it just a tool for the rich use to minimize tax liabilities. Estate Planning is about making things as easy as possible for your loved ones if something unexpectedly happens to you.
It’s my personal belief that every adult needs an Estate Plan… some are just more complicated than others.
If you truly don’t have any assets, you still at the very least need a Power of Attorney, Living Will, HIPAA and Advance Health Care Directive to ensure your healthcare wishes are known and someone is legally able to make medical or financial decisions for you in an emergency.
If you have minor kids, Estate Planning is also necessary to ensure that your children are raised by the people you want if something happens to you.
For those in a non-traditional relationship, Estate Planning preserves your loved one’s rights to inherit your things or get involved in a medical crisis. In a blended family situation, Estate Planning helps to prevent family drama and keeps the lines very clear as to who gets what if something happens to you (this is especially important if you have children from a previous marriage and you are now concerned about your Estate going 100% to your new spouse).
It’s not always about money. For a large majority of people, Estate Planning is just about making things as simple and cost-effective for your loved ones during the transitions and crises of life.
Myth #3: Having a Trust Guarantees Your Family Will Stay Out of Probate Court
Having a trust only guarantees that your family will stay out of probate court if you do it right.
By this I mean your assets need to be properly titled in the name of the trust for them to be protected by the trust. This is called “funding” and it’s something that you need to stay on top of as you acquire new assets through the years.
Otherwise, any assets that are not properly owned by your trust at the time of your death will have to go through the probate court.
This is something that catches many families off guard following the passing of their loved one. Incomplete or inadequate funding of a trust can make it as though you had no trust at all at the end of your life. Your family will be subject to the expenses and delays of the probate court, while your wishes may go ignored upon your passing.
Don’t take the chance of having your trust fail when your family needs it the most. Take the time to make sure all your assets have been properly transferred from your name into the name of the trust.
Myth # 4: Social Services Will NEVER Take Custody of Your Kids if You Have Guardians Named
Many parents properly name long-term guardians for their kids and believe that because of it, their children will never spend a day in social service’s care should they suddenly pass away.
While for the most part, this is true, there are still some (yet, avoidable) instances where social services may be forced to take temporary custody of your kids.
For instance, if your legal guardians live in another state or are not immediately available to care for your children following your passing (ie. they are traveling on business, in the hospital, unable to be reached) the authorities may have no choice but to place your children with social services until their legal guardians can arrive.
The only way to avoid this is by having short-term guardians named too. They are then authorized to legally care for your kids until their long-term guardians can arrive.
If you haven’t named short-term guardians for your minor kids, don’t wait one more day to do so. Talk to your attorney and ask to make this important update so your minor kids never spend one second in the care of the state.
Myth #5: You Don’t Need to Tell Anyone About Your Estate Plan—It’s Better to Keep These Things Private
Ever see a movie where a family is going crazy trying to find a copy of their loved ones will after they pass?
Believe it or not, these situations happen all the time because people are afraid to talk to their loved ones about their end-of-life wishes or any Estate Planning they have in place.
However, if you don’t let your family know what documents you have and where to find them, they may be forced to spend a ton of unnecessary time and money working with lawyers to sort out your Estate.
Not to mention, they won’t know your true wishes or how to best carry them out if something happens to you.
This could range from not knowing your preference about things such as life support, feeding tubes or other medical interventions in a serious emergency to not knowing the type of independent living facility or nursing home you would want if it ever became clear that you needed long-term care.
To avoid this type of confusion about your wishes and the plans you have in place, take the time to have open, direct and honest communication with your loved ones. Talk to your family in advance about your documents, choices, and wishes, so there is no chaos, fighting or misunderstanding if the unthinkable happens.
I’ve Bought into The Myths—Now What?!
If you’ve bought into any of the Estate Planning myths we just talked about, I promise you are in good company. Most people have bought into at least one myth about Estate Planning, which probably explains why so many plans fail each year.
The good news is that if you are still alive, well and of sound mind, there’s still time to fix any mistakes regarding your planning.
Perhaps for you, that means amending your documents to bring them up to date or to simply include some of the strategies we talked about above.
Or, maybe for you it means creating a plan from scratch, as you falsely believed Estate Planning was not applicable in your personal or financial situation.
Whatever your “to do” item may be, I encourage you to get it taken care of quickly while there is still time to make your planning right. Accidents, illness, and death can happen without warning, so don’t put off any planning that you may need.
If you would like to make an appointment with the attorney to talk about a unique plan right for you please call 435.688.9117 or fill out the form on our Complimentary Strategy Session page.