Estate Planning Awareness Month: Rethink These 8 Estate Strategy Myths

MYTH #1:

AN ESTATE PLAN ISN’T NECESSARY

If you don’t leave behind an estate plan, your family could face major legal issues and (possibly) bitter disputes. Making a plan now may leave you with the comfort of knowing that your wishes are honored when the time comes.

MYTH #2:

YOU CAN DIY YOUR ESTATE PLAN

While it may be possible to create a will on your own, it can be risky to do so – especially if your estate is complex. Look at the example of Aretha Franklin. The “Queen of Soul’s” estate, valued at $80 million, may be divided under a handwritten or “holographic” will. The family discovered multiple wills among her personal effects. Provided that the handwritten will can be authenticated, it will be probated under Michigan law, but such unwitnessed documents are not necessarily legally binding.¹

The greater your estate, the more potential for complexities when passing it on to others. For some with few assets, taking a do-it-yourself approach may be possible. But estate planning, no matter your net worth, can be a complicated process with lots of room for error when done improperly. While, in some cases, you may be able to do it yourself, this is one thing that’s usually best left to an experienced professional.

MYTH #4:

YOU don’t have enough assets for an estate plan

You have an estate. It doesn’t matter how limited (or unlimited) your means may be, and you should have a plan for what will happen to your assets after your passing.

Rich or poor, when you die, you leave behind an estate. This estate can include real estate, cash, an investment portfolio, collectibles and more. For others, it could be as straightforward as the $10 bill in their wallet and the clothes on their back. Either way, what you leave behind when you die is your “estate.”

If your estate is small, should you still plan? Well, even if you’re leaving behind the $10 bill in your wallet, who will inherit it? Do you have a spouse? Children? Is it theirs? Should it go to just one of them or be split between them? If you don’t decide, you could potentially be leaving behind a legacy of legal headaches to your survivors. Estate planning is about determining how what you have now (money and assets) will be distributed after your lifetime.

MYTH #5:

YOUR ETATE PLAN NEVER NEEDS UPDATING

Any major life event should prompt you to review your will, trust or other estate planning documents. So should a significant life event that affects one of your beneficiaries.

These events could include (but are not limited to):

• Marriage
• Divorce
• New baby or adoption
• Purchase of significant assets (homes, boats, collectibles, automobiles)
• Death of an immediate family member

MYTH #6:

YOU don’t need to share your plan with others

While you may not want to explicitly reveal who will get what before your passing, your heirs should understand the purpose and intentions at the heart of your estate planning. If you want to distribute more of your wealth to one child than another, consider writing a letter to be read after your death. In that letter, explain your reasoning.

Make a list of which heirs will receive collectibles or heirlooms. If your family has some issues, this may go a long way toward reducing tension and avoiding legal fees.

MYTH #8:

YOUr heirs will get your estate at its ful value

Probate subtly reduces the value of many estates. In some cases, it can take more than a year, and attorney’s fees, appraiser’s fees and court costs may eat up as much as five percent of a beneficiary’s accumulated assets. For what do these fees pay? In many cases, routine clerical work. Few estates require more than that. Heirs of small, five-figure estates may claim property through affidavit, but this convenience doesn’t apply to larger estates.²

The best estate plans are clear in their language, evident in their intentions and updated as life events demand. They are overseen through the years with care and scrutiny, reflecting the magnitude of significant wealth transfer. If you need help with your estate planning, click the button below, call 1.800.467.8152, or email info@ronaldgelok.com.

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