{"id":69490,"date":"2023-10-06T12:01:58","date_gmt":"2023-10-06T16:01:58","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/10-estate-planning-myths-you-shouldnt-believe\/"},"modified":"2023-10-06T12:02:01","modified_gmt":"2023-10-06T16:02:01","slug":"10-estate-planning-myths-you-shouldnt-believe","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69490","title":{"rendered":"10 Estate Planning Myths You Shouldn\u2019t Believe"},"content":{"rendered":"
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In my experience, estate planning is one of the areas of personal finance with the most widespread confusion. Unfortunately, this can lead to costly mistakes in time, money, and stress on people’s families. Here are 10 of the estate planning myths I hear most often.<\/p>\n

1) Estate Planning Is Just For The Wealthy <\/strong><\/h2>\n

This myth comes from the focus of so many attorneys and financial advisers on the federal estate tax. This isn\u2019t an issue until your estate surpasses $12.92 million, an amount that most of us would characterize as pretty well-off, if not downright rich. The focus makes sense for estate planning professionals since so much of their business is centered on the estate tax.<\/p>\n

But estate planning is also about making sure of three things: your finances are taken care of if you’re incapacitated; your health care decisions are carried out the way you’d like even if you’re not able to make them; and your children and other heirs are taken care of when that time eventually comes. Estate planning is for anyone who may become seriously ill or die. In other words, it’s for everyone.<\/p>\n

2) You\u2019re Too Young For Estate Planning<\/strong><\/h2>\n

We never know when we might need estate planning and by then, it will be too late. For example, history is replete with stories of celebrities who unfortunately died before creating a will, many of them at a relatively young age.<\/p>\n

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3) If You Die Without A Will, The State Will Get Your Assets<\/strong><\/h2>\n

If the last two myths can lead so many people to inaction, it always amazes me this myth hasn’t led to a boom in the will-making business. If you die without a will, each state will apply its “laws of intestacy” to determine who will get what. So, if you don’t like that result, get a will drafted.<\/p>\n

If you’re fine with it and have minor children, get a will anyway. That’s because the will also allows you to determine who would be the guardian of your children if that need should arise, which is probably not a decision you want a court to make for you.<\/p>\n

4) If You Have A Will, You Don\u2019t Have To Worry About Probate<\/strong><\/h2>\n

This may be wishful thinking as probate can be a long and expensive process in which one or more courts decide who will inherit your assets. While a will provides the court with guidance on your wishes, it doesn’t actually avoid the process altogether.<\/p>\n

Since a will is public information, it can also be easily contested in court, adding more time and costs. In addition, if you have real estate in more than one state, each property may have to go through probate in its respective state.<\/p>\n

5) You Need A Lawyer To Draft These Documents<\/strong><\/h2>\n

For health care decisions, you can get a free directive from your hospital, draft and store one online for free at MyDirectives, or download a state-specific form from the National Hospice and Palliative Care Organization here at no cost. Another resource for health care decisions is the Five Wishes<\/em>, a popular, low-cost living will form made available by the nonprofit Aging with Dignity.<\/p>\n

You can draft other legal documents like a power of attorney and a simple will for free at sites like DoYourOwnWill.com or Free Will. Your employer may also offer these documents as an employee benefit at little to no cost.<\/p>\n

6) No One Needs An Estate Planning Lawyer At All<\/strong><\/h2>\n

While these documents may cover most common situations, there also may be a complicating issue warranting legal advice that you’re not even aware of. That’s why it’s still a good idea to at least run these documents by a qualified estate planning attorney, which may cost you less than having the attorney draft them all from scratch.<\/p>\n

You can search for an attorney by asking for referrals from family, friends, and other professionals; by using the lawyer referral service of your local bar association; or by searching the membership of organizations like the American Academy of Estate Planning Attorneys and the National Network of Estate Planning Attorneys. Finally, don’t forget to ask your employer about any discounted legal services that may be offered.<\/p>\n

7) To Avoid Probate, You Have To Draft A Trust<\/strong><\/h2>\n

One area in which you’re most likely to need an attorney is drafting a trust. Avoiding probate is one of the most common reasons people do this, but there are cheaper and easier methods that may be sufficient for your needs.<\/p>\n

First, jointly owned property (like what you own with your spouse) generally passes to the other owner(s) without going through probate (unless it’s a “tenancy in common” situation). Second, life insurance, annuities, and anything in a retirement plan like a 401(k) and an IRA avoid probate as long as there is at least one living beneficiary listed. Some states also allow you to avoid probate by adding beneficiaries to bank accounts with a “payable on death” registration and to brokerage accounts, real estate, and even vehicles with “transfer on death” registrations. You can see what’s available in your state here. Finally, each state has methods to speed up or even skip probate for “small estates,” which in some states can be quite large.<\/p>\n

8) Trusts Avoid The Estate Tax<\/strong><\/h2>\n

Most trusts do not help you avoid estate taxes in and of themselves. However, if you’re worried about having a taxable estate, be sure to seek qualified legal advice (your friend or family member who just graduated from law school with a focus on criminal law doesn’t count) since certain trusts can be used as part of a strategy to reduce and even eliminate estate tax liability.<\/p>\n

9) You Don\u2019t Have Enough Money To Worry About The Estate Tax<\/strong><\/h2>\n

This may be true at the federal level, but some states have their own estate tax with much lower thresholds. When you add in the value of your home, life insurance proceeds, and retirement accounts, those thresholds may start looking a little too high.<\/p>\n

10) You\u2019ll Have To Pay A Gift Tax If You Give Someone More Than $17,000 Per Year<\/strong><\/h2>\n

Anything (except for money paid directly to a charity, 529 plan, or a medical or educational institution) more than $17,000 that you give someone (other than your spouse) in a single year simply reduces your federal lifetime gift and estate tax exclusion amount (currently the $12.92 million). Only after you use up the entire exclusion amount do you actually have to start paying anything. In other words, you’d have to give away quite a bit.<\/p>\n

That being said, you would still have to file a gift tax return and then keep track of how much money you’ve reduced your lifetime exclusion amount by. So, you might want to stay within the $17,000 annual exclusion amount just to avoid that hassle.<\/p>\n

As you can see, there are lots of misconceptions about estate planning. It\u2019s understandable as the topic can be complex, constantly changing, and removed from our everyday lives. However, knowing the truth about these myths can help you avoid numerous mistakes.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In my experience, estate planning is one of the areas of personal finance with the most widespread confusion. Unfortunately, this can lead to costly mistakes in time, money, and stress on people’s families. Here are 10 of the estate planning myths I hear most often. 1) Estate Planning Is Just For The Wealthy This myth […]<\/p>\n","protected":false},"author":1,"featured_media":67857,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-69490","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-featured"],"yoast_head":"\n10 Estate Planning Myths You Shouldn\u2019t Believe | iFintechWorld<\/title>\n<meta name=\"description\" content=\"In my experience, estate planning is one of the areas of personal finance with the most widespread confusion. 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