Estate Planning can first seem scary to consider. From wondering what will happen to your family when you pass on to who will take care of you if something happens, there is a lot of myth and misinformation when seeking advice or knowing where to begin. Here are six estate planning myths that haunt families:
1: I don't need an estate plan because my estate isn't worth protecting.
Often when a person hears the words "estate plan", "trust", or "will", they have images of vast estates, mansions, and business tycoons come to their head. It is thus common to dismiss estate planning as something only for the extremely wealthy. Although is true that people in the highest tax brackets are in need of a rather intricate and complex estate plans (which we at Groneman Law Firm are happy to create when the need arises), estate planning is not limited to such a small percentage of the population or require such a high degree of complexity. The reality is that any adult 18 and older should have some type of plan in place.
Estate plans are not the same for everyone. Depending on the person's assets, an estate plan may include a full spectrum of legal tools such as trusts, wills, deeds, and so forth, while others, such as young college students and adults with income less than a total of $100,000 and don't own real estate, may only need a Power of Attorney and a Last Will and Testament. Regardless, these tools are highly effective to protect your legacy and your interests both in life and death. From college students fresh out of their parents' home to the highly successful business owner hoping to protect his legacy and provide a business succession plan, an experienced estate planning attorney can help you know what your specific life circumstance will require to best protect you.
2: My family will know what to do.
Probate is the court process that appoints a person in charge of managing an estate that was left without an estate plan and orders how that estate is distributed. In probate cases, a common issue is the claim by an heir that they were told who would get what, or even more problematic, who should not get anything. Simply telling your family what you want to have happen and trusting them to follow through is not enough. Even when the family makes the honest effort to follow what you told them, if it isn't in an estate plan, it is unlikely to be carried out how you want it.
In probate, courts are required to determine equal distribution amongst heirs, appoint a person in charge, and follow a myriad of other procedures to distribute your estate. While you hope your long-lost friend from decades before will receive the gift you gave him, that friend is not an heir in probate and, unless there's at least a valid Will to say so, will likely be left out. Further, your family may forget many of the details you shared in life. Creditors may claim property before your family can access it. Even more likely is the chance that family members disagree on what they believe you told them. Some family members may attempt to take more than is fair, leading to more court involvement and higher attorney costs. An effective estate plan can avoid all of these issues for a fraction of the cost of probate, leaving you the peace of mind that your wishes will not only be remembered, but specifically carried out.
3: I can buy an online template and get the same result for half the cost.
More than ever, there are options for online templates, also known as DIY estate plans. These templates are pushed on radio and TV ads, flyers at bank counters, and social media. We at Groneman Law Firm will often review these online templates that clients have completed and, while some are better than others, we have yet to see one DIY estate plan that was created accurately or is even legally valid.
The draw to these DIY plans is of course the promise of simplicity and low cost - often costing less than half of what an estate planning attorney will charge. That said, the old adage "you get what you pay for" holds true. DIY estate plans are only as good as the system that creates them coupled with the person's knowledge of the law when completing them. The reality is even a "simple estate" can require specific and complex legal language, careful review of all assets, and guided advice for distribution of assets and medical decisions. Often the automated systems do not provide the necessary information for appropriate legal tools such as which type of trust is best, will fail to account for alternate trustees in trusts, lack instruction for proper management of assets, neglect specific wishes for healthcare decisions or funeral arrangements, or even include accurate legal definitions and references. Sadly, saving money on the front end more often than not will cost far more later with a complex probate case.
Coinciding with DIY estate plans is the recent push for non-lawyers to offer estate planning. This often comes up in the financial and banking fields. While we at Groneman Law Firm have great respect for and work closely with financial professionals and banking institutions to ensure we reflect your specific assets and distributions accurately, we also recognize that, as we are not experts in financial investments, financial professionals are not licensed attorneys specifically practicing estate planning. Similar to DIY estate plans, the end products often lead to poorly prepared documents, expensive and complex probate issues, ambiguity, and serious ethical concerns of the unlicensed practice of law. Just as you wouldn't call your doctor to fix your sink, you shouldn't trust your financial expert to perform your legal work, and vice versa.
4: I can wait to get my estate plan done when I'm older.
Along with the common issue of a person simply telling their family what they hope will happen with their estate, another common issue we hear of in probate is that the person planned to have an estate plan but never followed through. Whether it is because the person believes they are too young, the cost is too high, or they simply don't have the time right now to worry about it, these issues often are the first problem raised when a probate case is opened.
You are never too young to have an estate plan. A well-crafted estate plan can anticipate years in advance, from guardians of minor children to trustee succession to future acquisition of real estate, an experienced estate planning attorney can create a plan that can anticipate most of life's changes.
A common misconception preventing some from creating an estate plan now is that once an estate plan is created, it cannot be changed. Contrary to this belief, a well-crafted estate plan allows for changes when the unexpected happens. Whether it be a spouse or child passing unexpectedly, a new grandchild or in-law, a recent marriage or divorce, newly acquired or liquidation of property, creation of a business, or even a family member who develops an addiction, all of these can be addressed and included in your estate plan even after its creation by way of an amendment.
5: Everything I own will go to my spouse anyways.
When a married person passes without an estate plan (known as "Intestate"), the common belief is that their spouse will automatically receive everything, and probate is not necessary. While there are occasional instances of spouses lucking out and not needing court involvement, more often than not a spouse will be left to probate your estate in order to have the authority to access your bank and retirement accounts, manage your marital home, and handle creditor claims.
A sad reality for newly widowed spouses is that, in probate cases, they are not simply being granted the authority to manage assets. They will also lose a portion of your estate to your children if you die intestate. Under Utah law, a spouse is not entitled to receive the entire estate in a probate case. Rather, they are entitled to the first $75,000 of the estate, then half of the remaining estate. For property you may have owned prior to marriage, your spouse may not be entitled to any of it. An estate plan can avoid this issue by directing that whichever spouse lives the longest will receive everything. It can also direct that the spouse and any other heir can receive specific amounts or assets. Without an estate plan, however, your spouse and family will be at the mercy of the court and Utah's default laws.
6: An Estate Plan Only Covers My Home and Bank Accounts When I Die.
Commonly, a person's main priority when first creating an estate plan is considering what will happen to their things when they die. This is certainly a guiding factor as it focuses on how you will leave your legacy and care for family; however, a full estate plan also anticipates your medical care and asset management if something should happen to you that renders you incapacitated, such as a coma or terminal illness, cognitive decline, and so forth.
Business owners are in a unique position of not only managing their family's property, but also an organization that produces income for themselves and often others. Business owners can include in their estate plan a business exit strategy or business succession plan in order to avoid their life's work being dissolved in an instant and risking harm to their employees.
Religious families can leave behind a statement of their beliefs or a family constitution to be remembered by. Personal beliefs of medical care and property ownership can be reflected and followed. Children with disabilities or family members who struggle with addiction can be cared for with more than simply receiving a lump sum from your estate. An estate plan, when created by an experienced estate planning attorney, will cover not only your material assets, but your personal wishes and beliefs to ensure your legacy is protected.
Don’t let myths and misinformation hold you back from creating the estate plan you need and deserve. Let us create an estate plan that will give you peace of mind and ensure your legacy is protected.
