One of the big reasons that most families donâ€™t yet have this kind of plan in place is because of some incorrect thinking about whether itâ€™s right for them, or if itâ€™s even necessary. And sure â€“some people just havenâ€™t gotten around to creating a will or trust. Others think they donâ€™t need an estate plan because theyâ€™re not â€œrichâ€.
But hereâ€™s the problemâ€“if you continue without an estate plan, you could leave a legacy of bad feelings and attorneysâ€™ fees.
So I wanted to speak to some of the more common misconceptions out there. Iâ€™ll start with a couple big ones this week, and when the time is right, address a few more for 2012â€¦
MYTH #1: Only rich people prepare estate plans.
Do you own ANYTHING? Because if so, you need a will. You see, a will allows you to designate who will receive your property should anything happen. Continuing without one ensures that your assets will be distributed under the terms of your stateâ€™s â€œintestate successionâ€ laws. That means your money and property could end up with family members you havenâ€™t spoken to in years, instead of who youâ€™d really like to see control your assets.
I wonâ€™t go into all of the different components of a will, trust, health care directive etc., as my purpose here is to emphasize that failing to plan is simply a decision to trust your assets to government bureaucrats who donâ€™t know you from Adam.
Even if you think your situation is pretty straightforward, you may feel more comfortable hiring a lawyer to guide you through the process.
MYTH #2: Everything goes to your spouse, if something happens.
Unfortunately, thatâ€™s not always the case. We deal with clients from different states around the country, and state laws vary. In fact, in most states, if you continue without a will (intestate), your inheritance will be divided among your spouse and your children. In New York, for example, when someone dies intestate, the spouse gets the first $50,000 of the estate and whatâ€™s left is divided 50-50 among the spouse and the children.
You can imagine how this could create all kinds of problems, particularly if your spouse was financially dependent on you or you have children from a previous marriage.
Iâ€™ll send a few more in the future, but I hope you can already see that things are not always as we â€œthinkâ€. And letâ€™s take advantage of tax season and move towards getting this done (or updated) this year!
I hope this helps. To your familyâ€™s financial and emotional peaceâ€¦