Despite the fact that estate planning has been around for decades, with Living Trusts becoming a far more popular and recognized estate planning strategy since the 1990's, according to a 2019 survey conducted by Caring.com, 57% of Americans do not have any estate planning documents prepared. Procrastination and the belief that it's not necessary because of the amount of assets they owned were among the top reasons for why individuals have not gotten any estate planning done.
Here are a few common myths about estate planning that many people believe.
Myth #1: Estate planning is for rich people.When estate planning used to be a highly necessary strategy for avoiding estate (or death) taxes, this belief was less prevalent. Twenty years ago, the exemption amount was less than $1 million, which meant for many individuals (especially in California), by the time you took the value of their home and other assets they owned, the over 40% estate tax their family would be stuck with following their death was of much greater concern than it is now. But, estate planning is much more than about estate tax avoidance and protection, it also dictates how your assets will be managed and distributed in the event that you become ill, disabled or pass away. The fact that many families now what are known as blended or mixed marriages, with children from another marriage, estate planning is necessary for most people to avoid World War 3 and the fallout that can happen once someone passes away.
Myth #2: A Will is sufficient."Where there's a Will, there's a... PROBATE!" A Will is one estate planning instrument that is used and is more publicly known, but a Will requires the involvement of the court to make decisions and execute. For Californians, this can become not only a lengthy process, but an expensive one. Additionally, it is not sufficient for adequately appointing someone to step in and take control if you should become ill or disabled (think about the Britney Spears Conservatorship nightmare). For this reason and many more, this is why a Living Trust is still deemed a far superior and ideal estate planning option for most.
Myth #3: Estate planning is only about who gets my assets when I die.Most people view estate planning as solely about what happens to your assets when you pass away; however, as mentioned above, estate planning goes far beyond that. What are the chances that you may become ill or disabled as you get older? What happens when you are no longer able to make decisions for yourself? Someone needs to be able to step in and a properly drafted Living Trust plan can ensure that the person(s) of your choosing are properly put into place to take over and make decisions when and if that happens. In addition to the distribution of your assets, estate planning is also about managing and preserving your assets for your loved ones.
Myth #4: Once I've gotten my estate planning done, I'm good.One of the most common myths about estate planning is that once you've got an estate plan, you're all set and you no longer need to think or worry about it. Things change, including family members, your relationships with people, and also the laws and planning strategies. Just like most things in life, like your own body and your car, your estate plan needs to be reviewed by an attorney a minimum of every 3 years to ensure that it is properly up-to-date and that it will work properly when something happens to you.
Myth #5: I can get my estate planning done tomorrow (later).
Last, but not least, procrastination still remains the #1 silent killer of most estates. People don't want to spend the money, have the difficult conversations or even think about being older, disabled, or dying. It's not an enjoyable experience, but the peace of mind that comes from having your estate planning completed and that you and your family are properly protected when that time does come is invaluable. It's one of the greatest benefits that come from getting your estate plan done.
If there is one thing that we've learned in the past year or so, it has been that we never know what can happen or when. If you have already taken the steps to get your own estate planning done—BRAVO! If not, that's okay. There's no better time than right now. And be sure to share this newsletter and what you now know about estate planning with everyone else that you love and care about.
If you would like to schedule a free meeting with an attorney in our office, attend one of our free upcoming informational seminars. At the conclusion of the seminar, all attendees will be offered a free attorney consultation and will be eligible for a fee discount. You can also call our office at 1-800-756-5596.