Most people are familiar with the concept of creating a last will and testament as a means of ensuring that, at the time of their demise, their worldly assets are passed on to loved ones, charities, or whomever they select. Fewer adults understand other end-of-life planning options, including estate plans. But while a last will and testament is certainly a good starting point and it works just fine for many people, you might be surprised to learn that an estate plan could offer you more benefits. The only problem is that you first have to sift through the common myths surrounding the process and products of estate planning so that you can determine whether or not it’s the right move for you and your loved ones. Here are a few rumors that can be dispelled.
- Only the wealthy need estate plans. This is patently ridiculous. Anyone who owns property, has a retirement plan, or has other assets that they want to pass on to family and friends when they shuffle off this mortal coil could potentially benefit from estate planning. The reason estate planning tends to cater to the uber-wealthy is because that’s where estate planners make their money. But this certainly doesn’t exclude those interested in finding the best way to ensure that the lion’s share of their wealth, however large or small, is passed on to their loved ones rather than being lost to debt, taxation, and other end-of-life expenses.
- Only the elderly need estate plans. You’ve probably heard that the two certainties in life are death and taxes, and if you don’t have an estate plan in place, they could strike simultaneously. All you have to do is flip on the news to know that accidents happen, taking the lives on young and old with equal opportunity. You don’t necessarily have to adopt a fatalistic outlook, but you should definitely plan for the future if you want to spare your loved ones the expense and hassle of dealing with your funeral arrangements, disbursing your debts, paying death taxes, and splitting up your assets in the event of your untimely demise.
- Estate planning is expensive. There is certainly a cost associated with estate planning in most cases, as with any professional service. But it will depend largely on the complexity of your estate. And you’ll be happy to hear that you can do some of the work yourself by filling out forms on your own, saving some dough in the process.
- Estate plans are the same as wills. This is definitely untrue. While both constitute end-of-life preparation, that’s where the similarities end. A will is a fairly simple, legal document assigning ownership of your assets following your death. It can be more complex if you decide to name a legal guardian for your underage children, for example, but as end-of-life planning goes, a last will and testament is pretty straightforward. Estate planning, on the other hand, could include not only a will, but also a trust, assignment of beneficiaries for retirement accounts, and directives for power of attorney and medical care (in the event you are incapacitated or otherwise incapable of making medical decisions for some reason), and more.
- Estate plans help you avoid estate tax. This is not precisely true, although you’ll need to get professional estate planning advice to see what is possible for your particular situation. Estate planning, in and of itself, is not designed to help you avoid taxation. But components like trusts could assist you in passing on assets prior to your death as a means of avoiding some taxation. You’ll simply have to contact a reputable and experienced firm like Evans Petree PC to determine the best plan for your estate.