Common Estate Planning Myths That Put Your Loved Ones at Risk
As of 2024, approximately 52% of couples in America lack estate plans; which can be disastrous in the event of death, illness, or incapacity. This statistic shows a serious disconnect between understanding the importance of estate planning and taking action to ensure your legacy and your loved ones are protected:
I don’t have enough “stuff” to need an estate plan.
This is dangerous thinking! Estate planning is not just about the “stuff” you have . It is about ensuring your wishes for your own care are considered if you cannot make decisions for yourself due to accident or illness and ensuring what you do have stays out of court (which can be costly and time consuming).
Estate plans are also important to:
Ensure what you DO have goes to the people you want, in the way you want (and stays out of the court process);
DID YOU KNOW probate proceedings are public record- that means that anyone can sit in and listen in, or follow your case and see what happens?
Ensure your children (and/or pets) are raised by the people you choose, and that your wishes for how they are cared for are known;
DID YOU KNOW you can confidentially exclude people from your list of caregivers & that will only come to light, if they try to take custody of your children.
DID YOU KNOW you can also make specific provisions for your pets? You can specify who takes care of your fur babies if you are unable to, and dictate what that looks like.
Ensure that your wishes for your medical care are honored if you become incapacitated, or if your mind deteriorates;
DID YOU KNOW that you can specify all kinds of things- including what type of life-saving care you want (if any), what happens to your body or organs after you pass, and whether or not you end up in a care facility or on medication?
Ensure that only people you trust are able to manage your finances if you are unable to do so yourself, and
Ensure that your most valuable assets (your values, insights, stories, experiences, and your love) are preserved for your loved ones.
By clearly outlining your wishes and intentions, a comprehensive estate plan can minimize conflict among your loved ones and significantly reduce the chances of misunderstandings or disputes, while also increasing the chances that your resources will be used to create a better future for the ones you love.
2. AN ATTORNEY-DRAFTED ESTATE PLAN is too expensive
Attorney-drafted estate plans will save you time and money in the long run, and offer you and your loved ones peace of mind. Not having an estate plan (or having an improperly prepared plan) can ultimately be MORE costly- in both time and money.
Most document preparation sites offer “affordable” or “quick” options- where you plug in your information and out pops a will or a trust. However, the reality is that most of the time these plans are not adequate to truly accomplish what you want them to accomplish. These document preparation sites often times cannot or will not provide legal advice, and offer cookie-cutter, one size fits all solutions. However, the reality is that every situation, and every estate plan are different and the documents that you need to make sure that your legacy are protected, are not a one-size fits all solution,
Not having an estate plan at all, is even more detrimental and costly. In California, probate fees are statutory & usually calculated based on gross estate value (meaning it does not exclude mortgages and debt):
• 4% of the first $100,000
• 3% of the next $100,000
• 2% of the next $800,000,
• 1% of the next $9 million
• 0.5% of the next $15 million
And this is usually double because both the attorney & the executor are entitled to that amount. So for example if someone’s estate is worth $1,000,000, the estate will spend over $50,000 (once you calculate court fees, and other statutory requirements).
But even beyond the financial aspect, the peace of mind that comes with knowing your loved ones are protected is invaluable. Without a comprehensive estate plan, your loved ones likely will not know what assets you own, where they are located or how to access your accounts. They likely will not know what your wishes are (and even if they do know, they may not be able to do anything about it without a formal document). The last thing that your loved ones want to do while they are dealing with your incapacity or death, is to have to guess what you would have wanted.
A comprehensive estate plan ensures that your wishes are carried out and that your loved ones are cared for. By being proactive, you save the people you love from emotional and financial burdens.
3. I trust My spouse to carry out my wishes
Trust between spouses doesn’t prevent legal complications or avoid court and as cliche as it sounds, failing to plan is just planning to fail.
Without a comprehensive estate plan, in the event of one spouse’s incapacity or death, the surviving spouse may face lengthy probate proceedings, increased tax burdens, and may have difficulty accessing accounts. This strain can damage relationships and deplete assets unnecessarily.
Even worse, if both spouses die simultaneously, that can create an even BIGGER issue- and could create significant complications especially if there are children involved.
Another potential issue is that if the surviving spouse remarries, without an estate plan, assets could unintentionally be passed to a new spouse instead of the loved ones of the deceased first spouse. In some cases, children may be accidentally disinherited.
4. I don’t need to worry about who would raise my kids
Without proper planning, the decision about who raises your children will be left to a complete stranger.
Many parents of minor children assume that loved ones will step forward to care for their children, and while that may happen, the court has the final say on who gets your children if you are unable to care for them. Unfortunately, when a stranger makes a decision about who will raise your kids, it might not be the person you would have wanted.
In some cases, the individual granted guardianship could have values, parenting styles or circumstances incompatible with how you envisioned your children being raised.
Sometimes, even if you have named legal guardians for your children in a properly created will, the plan may not be sufficient to truly identify and protect your children. Unfortunately, there are common mistakes that many attorneys make when drafting Guardianship provisions. If you have an existing plan and have named legal guardians, but want me to review your plan to see if you have made any common mistakes, call my office.
Another important consideration is the financial burden imposed on your children’s chosen guardian. If you haven’t crated a comprehensive estate plan and allocated sufficient funds for your children’s care, even willing loved ones might decline guardianship, leaving the court to make an even more difficult choice.
taKE ACTION NOW TO PROTECT THE PEOPLE YOU LOVE
Once you have created your comprehensive estate plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your property protected.
Book a call with us today to get started!