PEACE OF MIND
Estate planning often feels overwhelming, leading many people to rely on assumptions that can have devastating consequences for their loved ones. From whom can make decisions for you to whether you need an estate plan, common myths can stand between you and a secure future.
Let’s debunk these misconceptions and reveal four essential truths about effective estate planning.
Myth 1: My spouse can make all my healthcare and financial decisions because they are my spouse.
Reality: While your spouse has certain rights, they generally do not automatically have the legal authority to make all medical decisions or manage all your financial accounts if you become incapacitated.
Without properly executed legal documents, you and your spouse may face obstacles handling the following:
• Medical decisions. Your spouse may be unable to access your medical information, direct your care, or make critical end-of-life decisions without a medical power of attorney and an advance directive, or living will.
• Financial decisions. Similarly, your spouse could be locked out of accounts in your sole name, unable to pay bills or manage investments without a financial power of attorney. This can prevent timely financial management and even payment of day-to-day expenses.
Myth 2: My family knows my wishes. They will divide everything the way I want it divided.
Reality: While your family may genuinely intend to honor your verbal wishes, discussions about your affairs, without proper legal documentation, carry no legal enforceability.
After your death, without a legally binding plan, your estate may be distributed according to your state’s intestacy laws, which may not necessarily be what you intended. This could lead to the following outcomes:
• Unintended beneficiaries. If you rely on the state’s default distribution plan, your money and property may not go to your spouse, if they are not the parent of your children.
• Family disputes. Even well-meaning family members can disagree on what your true wishes were, leading to bitter conflicts and costly litigation that depletes your hard-earned money and property.
• Loss of control. Without a last will and testament or revocable living trust, you have no say regarding who inherits your money and property and how they receive it.
Myth 3: I signed a will before, so I do not need to do it again.
Reality: Life shifts, laws change and your goals evolve over time. You should ideally review your estate plan every three to five years and whenever significant life events such as the following occur:
• Family changes such as marriages, divorces, births or adoptions, or deaths.
• Financial changes, such as significant changes in the value of what you own.
• Location changes. Moving to a different state or country can dramatically impact the validity and effectiveness of your existing estate plan.
• Tax law changes.
• Changes in your goals.
Myth 4: I am not wealthy enough to need an estate plan.
Reality: This myth is perhaps the most dangerous. Almost everyone, regardless of their net worth, can significantly benefit from thoughtful estate planning.
While an estate plan certainly addresses your financial accounts, estate planning encompasses far more than just money.
• Protecting your children. If you have minor children, a will is the primary legal document for nominating a guardian to care for them if something happens to you. Without one, a court will decide who will raise your children — without your input — often through a public and potentially contentious process.
• Planning for your incapacity. A comprehensive estate plan allows you to name trusted individuals to manage your finances, make medical decisions and carry out your wishes without delays if you become incapacitated. This is by far the most invaluable part of an estate plan.
• Distributing sentimental items. A personal property memorandum can specify who receives your cherished family heirlooms, or other nonmonetary items, which can help prevent family squabbles.
Estate planning is about taking control, ensuring that your wishes are honored and providing peace of mind for you and your loved ones, no matter what you own.
This article is provided as a service of the Law Office of Lasca A. Arnold, PLLC.
Comment
Comments