You have worked hard for years, have family members and friends you care about, and have approached a time in your life when “estate planning” sounds like something you should do, but you are not exactly sure why. You may feel that you are not wealthy enough or not old enough to bother or care. Or you may already have a will and feel that you are all set on that front. Whatever your current position, consider these common misconceptions about estate planning:
- Estate planning is
for wealthy(ier) people.
False. Anyone who has survived to age eighteen and beyond has likely accumulated a few possessions that are of some monetary or sentimental value. While things like your home, your car, and financial accounts are self-evident assets, you may have a collection of particular items that also deserve proper attention. There is no minimum asset value required to justify having a will, especially since there are many low-cost options.
- Estate planning is for old(er) people.
False. Tragedy can strike at any moment, and it is best to have your affairs in order so your loved ones don’t have to needlessly suffer more than they already are, by daunting financial or bureaucratic processes, while they are grieving. Young parents should ensure that proper guardians are in place to take care of their children if they are no longer around, to prevent their children from ending up with the most irresponsible member of the family or, worse, a complete stranger.
- Estate planning means having a will.
False. Having a will is smart because it puts you in charge of the decision-making process of who gets your belongings when you’re gone. A will allows you to pick your executor (the one(s) who will manage your belongings when you’re gone), designate the guardians for your minor children, and name any individuals and charitable organizations as beneficiaries of your estate. If you were to pass away without a will (i.e., intestate), the law of the state where you reside at your death would decide who receives what part of your estate, who distributes your estate, and who takes care of your children. There are some situations where state law may override the provisions in your will (e.g., a spouse’s elective share), but for the most part, you are in the driver’s seat.
However, a will is only one tool in the estate planning toolbox. There are other planning options that allow you to remain in control of your possessions and family’s future during life and upon death. Depending on your situation, a will alone may not be the most efficient or the most cost-effective means to achieve your goals and wishes.