What happens when you don’t see estate planning as a process?

  • Your drug-addicted ex-spouse is vying for custody of your 16-year-old daughter, presumably to help spend the trust fund money you left her.
  • Your son from your first marriage gets cut out of your will; there is no provision to take care of your elderly uncle who helped raise you.
  • Your house is part of a debt settlement plan instead of going to your heirs.
  • Three different children think you would have wanted them to have your vintage shop tool collection.

Four of the most common estate planning myths cast it as a checklist to be solved. In actuality, your legacy depends on making sure the estate plan is created to maximize harmony and accuracy as regards your final wishes. Here, our legal experts debunk some of the most commonly held myths about estate planning:

Estate Planning is only complex if you’re wealthy

Estate planning involves passing along assets in ways you see fit as well as minimizing the burdens entailed by your passing. Southern families have stopped speaking over heirloom sets of China worth a few hundred dollars. That is to say, it’s not about the amount of monetary value of assets that determines the need for an estate plan, but instead the complexity of assets, size of the family, and special considerations for individual family members.

Estate planning consists of the following elements:

Wills and Trusts

While wills pass assets to heirs, trusts place specific conditions on the way assets can be accessed. Out-of-state assets (or land), debts, divorces, second marriages with children, disabilities, addiction, family-owned businesses, forgiving debts—if you have any of these situations, estate planning is going to be complicated, net worth notwithstanding. The consequence to your family can be chaos and unnecessary expenses. 

Beneficiary Designations

Some accounts allow you to name a beneficiary and actually take precedence over the will. You need to make sure that all of you have beneficiaries and contingent beneficiaries listed on all insurance policies and retirement accounts that allow you to do so.

Durable Power of Attorney & Healthcare Power of Attorney

Your estate can be up for grabs before you are even gone. If you don’t have a power of attorney document, the courts could decide what happens if you are mentally incompetent. This could include real estate and financial decisions that would change what had been anticipated in your will.

Healthcare power of attorney similarly arranges for someone to make decisions about what kind of healthcare you will receive if you become incapacitated

Guardianship

If you have minor children, it is important to designate a guardian who is financially sound and willing to raise your children. Backups or contingents should be considered.

A thoughtfully designed will is an estate plan

A will is only a piece of your estate planning that can make it clear who gets what in general. Unfortunately, it could take a year or more for your assets to pass through probate, and a will is limited in how it can put conditions on asset distribution. Clients with diverse assets and nuanced wishes may find that a trust guarantees that those assets make it to the right people in the right way. For example, you might be concerned that your son is going to be bankrupted by a new wife; a trust will keep both creditors and spouses out of what you have intended for him. What’s more, a trust could shield assets from your creditors while you are still alive.

Did you know that you can list an heir on property jointly now to bypass publicly announcing it in a will? Gift giving is another way that many wish to see their heirs enjoy some of their inheritance: $15,000 per year in gifts is excluded from taxes (this amount adjusts from year to year). 

An existing will does not always consider the state laws of transferring certain assets. It is important to review your will with an attorney to make sure you are accounting for state laws. Speaking of state laws, a will is only valid when it has had witnesses. Every state has its own rules for who those witnesses can be.

Estate planning goes far beyond wills and trusts, of course, and into the strategy of leaving a simplified, sustainable, and fairly distributed estate.

You only have to do it once

Estate planning is ongoing because people around you will change all the time. Most experts recommend revisiting a will and estate plan every 3 to 5 years (or if there is a major life event). If you get divorced, remarried, move, or if state laws change, you may have outdated provisions in your wills and trusts. Remember, this is about fulfilling your vision. There may be a time where you would like to move some assets into a trust, or you may see that your children are well-off enough that you could re-think a charitable remainder trust. Many see their house as their most valued possession. It can be prudent to move a house into a testamentary trust to safeguard it in the case that your health begins to deteriorate.

You can count on your heirs and family to work out details of your estate

Family members can have notoriously bad memories when it comes to your wishes, especially as it benefits them personally. They may hold it against one another or contest the will in court. For instance, in some states, a child not actively disinherited in a will may have a case that they were simply left out and deserve consideration along the lines of state inheritance laws. You and your attorney must consider various scenarios that could cause discord in the family. One thing you might do is change the executor if conflicts have emerged or if you feel the need for an unbiased third party.

The big picture on estate planning

Estate planning myths that construe the process as a mere checklist miss the point. Use all the tools at your disposal to make your life’s bounty do its job when you’re gone. It is as important emotionally as it is financially to your heirs that you get it right, no matter the size of the estate.

When it comes to planning your estate in the most efficient and drama-free way possible, the help of a legal professional is key. The Semmes Law Firm is built on a philosophy that every client’s case is of the utmost importance and that each of our clients deserves our very best work. The Semmes Law Firm is ready to assist you in your estate planning today. Please click here to contact us today!