There are a number of misconceptions about estate planning. This is especially so given that a majority of the population is not aware of the importance of estate planning. Additionally, the few who might be aware of the importance, might have the wrong information coupled with bias and misconceptions. Some examples include:
- That estate planning is exclusively for the wealthy
This is perhaps the most common and profound estate planning misconception. Estate planning is for every one since becoming ill and dying is also a human occurrence for everyone.
- That an individual is too young to engage in estate planning
The most cited example in this case is for the celebrities who passed on without creating a will at a relatively young age. The process should be initiated as soon as possible to avoid any future problems.
- That in the event an individual passes in the absence of a will, the assets that they owned are automatically passed on to the state. This is one of the major estate planning misconceptions that should be avoided.
In the event that an individual dies without a will, the specific laws of intestacy will be applied in order to establish the person or persons to whom the assets will pass. It is important to draft a will or trust in order to avoid this outcome.
- That there is no need for taking care of probate if an individual has a will
The probate process has been known to be extremely long and quite expensive in order for the courts to allocate the portion of assets to be shared by the next of kin. Even though you have a will, probate is required.
- That it is imperative to have a lawyer draft your estate plan
The estate plan can be drafted by the individual at very low or no cost at all. But there are many risks in so called “do it yourself” ways. It is too important when trying to protect your loved ones to risk using a non-experienced estate planning attorney. The specific state laws have to be followed in the drafting process and especially in the requirements about the number and presence of witnesses.
- That estate planning can be done exclusively without involving a lawyer
Issues may emerge that require legal interpretation, hence the need for a qualified lawyer. The circumstances of every family’s situation is different and so are their needs.
- That drafting a trust is a way of avoiding probate
A trust may only address a particular portion of assets, and the remaining assets may be subject to probate.
- That the creation of a trust can avoid the imposition of estate tax.
While some trusts can be used as a strategy for reducing or avoiding estate tax, it is critical that it is properly drafted. Therefore legal expertise is important in every situation.
For further information and advice on estate planning misconceptions, please call us today!