Estate Planning Myths

Just getting started thinking about estate planning? Putting a little thought and effort into estate planning now helps to ensure your final wishes are fulfilled problem-free. Belief: If you don’t have a will, the government takes everything you own. Truth: Without a will or trust, the laws of your most recent home state dictate who receives your assets. Plan: Depending on state laws, your surviving spouse, children, or parents are likely to inherit what you leave behind if you don’t have a will. However, live-in partners, step-children, and other kin will be left out. To ensure your specific assets go to the people you want to receive them, you should outline your wishes in a will or trust. Belief: You have to update your will every time there is a life change. Truth: Some parts of a will “self-adjust” due to life changes. Plan: When putting together an estate plan, discuss possible upcoming life changes, such as adopting a child or buying a home, with your lawyer. He or she can advise under what conditions an update needs to be made to the plan. Belief: The court-supervised probate process of gathering and distributing assets to creditors and inheritors is unavoidable. Truth: Assigning a beneficiary to certain assets helps avoid probate. Plan: If you can assign a beneficiary, such as in the case of a life insurance policy and tax-deferred account, do it. But assets like houses and standard bank accounts don’t allow for named beneficiaries. Creating a revocable trust instead of a last will may help your relatives avoid probate, but make sure everything is actually transferred to the trust. Belief: I’ve created an estate plan, so everything is taken care of. Truth: You should review your estate plan every three to five years to make sure it’s up-to-date and appropriate for your current situation. Plan: Some estate planning documents “self-adjust” due to particular life circumstances, but it’s always a good idea to revisit and close any loopholes. For example, if you recently adopted pets, you’ll want to designate what should happen to them if you die, and if your trustee is no longer an appropriate choice, name someone else in his or her place.