Lies People Tell Themselves About Estate Planning

In a recent Forbes article, “3 Lies People Tell Themselves About Estate Planning,” author Jeffrey Levine (a CPA and financial advisor) begins, “People tend to avoid estate planning like it’s the plague, but no financial plan can be complete without one.” I obviously couldn’t agree more.

Here are some of the most common estate planning myths that we see people buy into:

I don't need a will because I'm not old/sick/wealthy enough.

As I’ve said many times, estate planning is not just for the Gates or Buffets of the world. Estate planning accounts for some of life’s most personal and important decisions. It is something that all people need, regardless of age, health, or value of assets.

Comprehensive estate planning ensures that the right people are in place to make medical, financial, parental, and business decisions on your behalf – both while you’re alive and long after you’re gone. It makes certain that the right people and/or organizations inherit your assets (regardless of their value) and that they are distributed in the time and manner in which you intended. A properly executed estate plan should also provide protection against the misuse, squandering, and mismanagement of assets, due to a reckless beneficiary, divorce, lawsuit or creditor.

I can draft my own will using an online estate planning service.

This is a huge no-no.  Buying a sweater online is one thing, but drafting a will online is another. If you think that you will be saving a few dollars by using forms found on the internet or in a do-it-yourself book to prepare your estate planning documents, then your family will be in for a rude awakening when they learn that part or all of your documents are not legally valid/don’t work as you had anticipated or that your assets go to individuals not named in your Will due to outdated beneficiary designations.

I don't need to update my documents because nothing has really changed.

Think you’re covered for life?  This is one of the most common and tragic mistakes when it comes to estate planning.  Falling ill or dying with outdated, incomplete or unsigned documents is how bad things happen, like a stranger making medical decisions on your behalf, or an ex-spouse inheriting your home.

Your (entire) estate plan–will, trusts, health care proxy, etc. -needs to be reviewed at least every four years and as often as any of the following events/scenarios occur:

• The birth, death or disability of a child
• A change in state residence
• A change in marital status
• A significant change in the value or character of your financial assets that would make your estate taxable on a Federal or State level
• A change in intended beneficiaries
• The death of a beneficiary
• The death or disability of a guardian, trustee or personal representative
• A change in tax laws affecting federal and or state estate tax deductions
• A change in privacy laws that affect access to medical or financial information
• You have minor or problem children
• You want to leave some or all of your estate to charity

Federal and state laws are one and the same.

False. Even if you are exempt on a Federal level, your estate may still be exposed to State estate taxes. Furthermore, most individuals don’t realize that state laws are very specific about what can and can’t be in a will, trust, or medical or financial power of attorney.  Or who can and can’t be a witness to a signing of a will or trust, and what formalities or protocols must be observed when signing. Working with a qualified estate planning attorney will help to avoid this kind of simple and yet costly mistake.

The bottom line?

Your estate plan should be a living, breathing document that changes with your life circumstances. Everyone needs one and only a qualified estate lawyer can help you to sort out complex family or financial situations and ensure that your estate is distributed how and to whom you want it to upon your death.