When many people think of estate planning, they may think of the ultra-wealthy, bequeathing properties, artwork, and millions of dollars. However, this is just one of many myths about estate planning. The truth is, is that if you have any dependents, assets and life insurance, or other wishes for your property after you pass on, estate planning is for you. Let's dispel many other estate planning myths.


Estate Planning Myth #1: My Estate Is Too Small To Need a Plan

Many people just don't think they have enough money to need a complicated estate plan. However, no matter how much or how little property you have, you could need an estate plan. You'd be surprised how straightforward creating one can be.

Without an estate plan in place, you have no control over who gets your assets, property, and even family heirlooms after you die. If you have something special you'd like to leave to someone, there's no guarantee that that person will receive it. In short, estate planning can help ensure that your wishes are honored, even if you only have a small amount of property.

Estate Planning Myth #2: Probate Should Be Avoided at All Costs

Probate, the legal process of settling an estate and processing a will, often gets a bad rap. It may be partly because many people don't fully understand the probate process and partly because, in the past, probate was cumbersome and expensive.

Now, however, the process is streamlined and, for the most part, an effective way to help ensure that the deceased's will is honored. Without a will, the probate court is the body responsible for dispersing your property and assets and even assigning guardianship of any minor children you have.

Estate Planning Myth #3: Estate Planning is All About Property

Although allocating property is a big part of estate planning, this is false. Estate planning deals with very personal matters too. For example, part of your plan may include establishing a guardian for your minor children or a dependent adult for whom you provide caregiver services. While custody may often go from one married spouse to the next, there are many other situations where it may not.

Estate planning also covers your own health and well-being. A "living will" is a formal document that states your preferences for medical treatment, including resuscitation, in the event you're unable to advocate for yourself. Or, you can designate someone you trust to ensure your health care directives are followed.

Estate Planning Myth #4: Taxes Will Claim a Lot of My Estate

Estate taxes can get quite high, with a cap of 40% of the whole estate. But, it's only people who are worth millions or more that typically are assessed that amount. Bear in mind, though, that's just federal taxes. Many states don't assess an estate tax at all. Federal taxes only start with estates worth more than $5 million.

Estate planning can help avoid certain taxes and depending on how you allocate your assets, you may be able to mitigate the estate taxes for your heirs.

Estate Planning Myth #5: Estate Planning Means I Can Disinherit Someone

This is a popular estate planning misconception and probably, like other myths, may be based on a little bit of theatrical drama. Yes, you may be able to cut people out of your will or fail to acknowledge them, but you may not be able to leave everyone out of your estate plan. For example, it can be very difficult to disinherit a spouse, as they may be able to waive your will and receive a share of the estate.

Even if you do choose to structure your will to disinherit someone, probate courts tend to look askance at that and may allow a will to be challenged. If you truly don't wish a close family member to receive anything, then a professional estate planner can help structure it so that it could be more difficult to challenge.


Do You Have Questions?

Hopefully, several of your estate planning misconceptions have been cleared up, and you've realized that it's time to start the estate planning process. Don't navigate this complex process alone; work with a professional that can review your options with you. Daran Tucker is an experienced financial planner and knows who to contact for the legal side of estate planning. Contact us today to learn more!


This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor..