While estate planning is a relatively straightforward concept, many folks are unclear about what it actually entails. As a result, there are several myths and plenty of misinformation about estate planning floating around.
And, unfortunately, these myths often prevent people from putting together plans that offer vital protection to their family, money, and property. That’s why we’re here to debunk those myths.
“I don’t need to worry about an estate plan until I’m retired.”
From Martin Luther King Jr. (39) to Amy Winehouse (27), countless unexpected deaths demonstrate that we never quite know when our time will come. If you wait until you think you need an estate plan, it may be too late.
Rather than waiting until the “right time,” it’s far better to get some sort of plan in place now that you can amend as needed according to changing life circumstances, wealth, local laws, and more.
“My family members already know my wishes.”
Verbally communicating your hopes for your legacy to your family can be an important part of your estate planning process. However, it’s not the same thing as a thoroughly documented strategy. When your estate plan is written down—particularly when it’s done in collaboration with an experienced estate planning attorney—it can clearly detail your wishes and how you’d like them carried out.
As a result, you decrease uncertainty and reduce potential conflict between your family members, while also ensuring your legacy is respected.
Keep in mind that in the absence of an estate plan, your belongings and assets may be divided in accordance with Texas’s intestate laws. Verbally-expressed preferences may or may not be carried out as a result of this process.
“I don’t have enough money to bother.”
In a recent survey, 33% of people without estate plans cited that they simply don’t have “enough” assets to pass on to loved ones. This is a misconception, though! The ultra-wealthy aren’t the only ones who need estate planning.
A well-executed estate plan offers benefits that everyone deserves, regardless of financial status. For example, an estate plan can provide:
- Peace of mind about your children’s care by establishing guardianship
- The opportunity to take more control over your end-of-life care
- A chance to protect your legacy and business in the event of your death
- Financial protection for your loved ones
- A clear plan for the distribution of sentimental and unusual assets
- The right to have your preferences respected and legally enforced
- And so much more
“I have a will. Isn’t that enough?”
At the law firm of Shann M. Chaudhry Esq., Attorney at Law PLLC., we see many clients who believe that a will is the only legal document involved in an estate plan.
While a will is a great place to start, a solid plan actually includes at least four to five basic estate planning documents:
- Basic will: to outline who you want to have your property and assets after you pass away.
- Medical Power of Attorney: to appoint someone to make medical decisions on your behalf, should you become too incapacitated to do so.
- Durable Power of Attorney: to appoint someone to manage your finances and/or business if you’re unable to due to illness or disability.
- Living will/medical directive: to establish the medical care you’d like to receive (or not receive) in the event that you experience a terminal or irreversible health condition.
- Declaration of guardian for a minor child: to appoint an individual to care for your minor children in the event of your serious injury or death.
We also recommend that you secure a life insurance policy, even if it’s only a short-term policy.
“Estate planning takes too much time and money.”
It’s true that the decisions involved in estate planning shouldn’t be made in haste. Overall, though, the estate planning process takes less time—and money—than leaving the division of your assets to be sorted out after death or disability.
Furthermore, modern estate planning and client collaboration tools have made the process easier and more straightforward than ever. These tools make it convenient to collaborate with your attorney, ensuring that you can set up and maintain your estate plan in a timely manner.
“With a will, I can avoid probate.”
Many of our clients are disappointed to hear this, but estates generally need to pass through probate. That’s because wills aren’t valid in Texas until they’re probated.
But here’s some perspective: consider your will as a letter to the probate court that offers guidance on how you’d like your estate to be managed.
Fortunately, probate tends to be less time-consuming and expensive when a will (along with other estate planning documents) is available.
“Estate planning is too morbid. It’s all about death.”
While some estate planning topics do address death, we believe the process isn’t morbid at all. It’s about protecting your autonomy, relieving potential emotional and financial burdens on your family, and taking control over your future.
In addition to the division of your assets, you can use estate planning to:
- Protect your medical wishes by appointing a Medical Power of Attorney
- Designate a Durable Power of Attorney to make financial decisions for you
- Decide who will manage your estate after you’re gone
- Establish who will be responsible for your children if both parents pass away
- Financially plan for long-term care or other future healthcare needs
- Establish clarity over your healthcare preferences with an advance directive
- Incorporate charitable giving into the legacy you leave behind
“If I have a living trust, I don’t need to worry about estate tax.”
Texas doesn’t have a statewide estate tax, but large estates may be subject to federal estate taxes. Many people set up trusts to minimize income tax implications, but these protections generally don’t apply to estate taxes.
A living trust, in particular, may prevent your assets from being passed through probate court. However, it won’t protect large assets from federal estate taxes.
If you’re concerned about having a taxable estate, consult with an experienced estate planning attorney so you can choose the option that’s most appropriate for your unique situation.
“I don’t need an estate plan if my accounts are payable on death.”
Though some financial advisors recommend it, taking this approach can create an undue burden for your family. Who will be responsible for paying the debts of your estate? Who should file your last tax return after you pass away?
Uncertainty about these and other unaddressed details can erode familial relationships among your beneficiaries—an outcome that’s probably not on your list of final wishes.
Furthermore, getting multiple beneficiaries to sign several different deeds can be a source of stress. While transfer on death deeds might make sense in your estate plan, it’s best to talk to an attorney first.
“Well, at least I only need to do this once.”
Estate planning is not a once-and-done affair. Life circumstances—and the law—are subject to unexpected change. It’s prudent to review your plan every year to ensure it still reflects your beliefs and desires.
If it doesn’t, contact a Texas estate planning attorney to add or revise documents, or make other changes as needed.
Our Texas estate planning attorneys can help you prepare for your future
At SMC ESQ PLLC, we look beyond what happens after death to help you create a long-term care plan that protects your assets and prioritizes your end-of-life goals.
Our team coordinates with other key parties, such as your financial advisor, to make sure your estate plan is executed and fully funded. Most importantly, we ask questions so we can customize your plan based on your goals, needs, and lifestyle so you can feel confident about the legacy you’ll leave behind.
Take more control of your future today. Contact us now for your free consultation.