Many people avoid preparing their estate plan because they have heard too many negative anecdotes from friends or family members. They might have simply read something on social media and taken it to heart without considering the truthfulness or universality of one person’s experiences.
Here are four myths about estate planning that are as incorrect as they are pervasive:
- Estate planning is only for those with a higher net worth: Individuals with any level of wealth should take the time to create an estate plan. Regardless of your age, estate size or marital status, estate planning documents can help protect those who depend on your income, transfer property to heirs and legally document the type of care you’d prefer to receive if you become medically incapacitated.
- Estate planning is only about the distribution of assets: While this is a significant aspect of estate planning, it is only one piece of the larger puzzle. “Incapacity planning” is an element that many people overlook when considering whether they should develop an estate plan. Incapacity planning refers to an individual devising contingencies should they become unable to make medical or financial decisions on their own.
- A simple will can do the job: While a will is generally considered the foundation of a strong estate plan, it is not the only document. Certain assets such as life insurance or a retirement plan generally must be handled by different documents. Additionally, individuals might choose to set up trusts, guardianships, powers of attorney or charitable foundations which are all largely outside the scope of a will.
- Estate plans are impossible to revise later: Estate plans can – and should – be revised on a regular basis. Additionally, any significant life event should necessitate a revision. Marriage, divorce, the birth of a child or changing relationships should all trigger a modification.
It is wise to consider drafting a comprehensive estate plan to ensure your assets and loved ones are legally protected.