There are so many myths about estate planning floating around out there. Thanks to Hollywood and misinformation, these myths can deter people from getting an estate plan (even though it could be really beneficial for them). Estate planning can include drafting a will, creating a trust, appointing a guardian for a minor child, creating an advance healthcare directive, or creating a power of attorney. Many people avoid estate planning due to these prevalent myths, which can lead to unintended consequences. Let’s get into the twelve common misconceptions you need to know about estate planning.
Misconception 1: “Estate planning is only for the wealthy.“
Let’s knock this one out first—estate planning is not only for the uber-rich. If you have any amount of assets, whether it’s $10,000 or $10M, you should create an estate plan. After all, someone is going to get your $10,000 when you die, don’t you want to make sure it goes to who you want it to?
Not only does estate planning take care of your assets (no matter how big), but it can also do so much more. It can also appoint guardianship for minor children, plan for medical issues and incapacity, and avoid probate (which is a long, annoying process your loved ones have to go through when you die to get your stuff). So, even if you don’t have significant wealth, creating an estate plan can bring peace of mind and help you avoid potential complications.
Misconception 2: “I’m too young to worry about estate planning.”
The unfortunate reality of life is that you never know what the future holds—good or bad. The hope is that you will live a long and healthy life, but it’s not a guarantee. Life is unpredictable. Accidents, health issues, or sudden illness can happen at any age. Having an estate plan in place ensures that your wishes are followed if you’re unable to make decisions for yourself in more than one way. You may want to ensure your assets are devised in a way you want through a will. Not only that, but estate planning can protect your minor children and ensure they are appointed a guardian that you feel comfortable with instead of letting a court determine that. In addition, you can set medical proxies and power of attorneys to take care of you should you become incapacitated. While all very morbid and hard to conceptualize, it’s a prudent and logical step, regardless of your age.
Misconception 3: “A will is all I need.”
While this may be true for some folks, there are some limitations to wills you should know about. Simple wills cannot avoid probate or distribute assets in a very specific way (such as dictating specific conditions for inheritance, like completing education or remaining drug-free). While a will can designate a guardian for your minor children, it doesn’t automatically include instructions for day-to-day care or for the management of a trust that might be set up for your children’s benefit. Simple wills also do not allow you to plan for incapacity, such as appointing a medical proxy and/or power of attorney.
Some alternatives and add ons to wills include establishing a living trust which allows you to manage your assets during your lifetime and transfer them directly to your beneficiaries upon your death, bypassing probate. In addition, living wills allow you to dictate medical proxies and certain healthcare directives. Finally, creating a power of attorney document allows you to appoint someone to make your legal and financial decisions on your behalf.
Misconception 4: “My family will know what I want.“
Sure, your family might know that you want most of your assets to pass to your spouse and the kids, but do they know about your desire to pass on your extensive record collection to your brother? What about your lifelong dream of giving a portion of your estate to a charitable organization? Maybe, maybe not. Taking the risk is dangerous if it’s the latter. Putting your intentions down in formal writing (a will or trust) is the best way to ensure your wishes are met! Not only that, but it can avoid family conflict, too. Having a well-drafted estate plan also makes your intentions legally binding, leaving little room for interpretation. This helps avoid delays, legal complications, and financial burdens for your family.
Misconception 5: “Estate planning is a one-time event.”
Sorry, but you’ll unfortunately need to revisit your estate plan on a regular basis. This is because life changes—beneficiaries die, give birth, remarry, divorce, become estranged, etc. Not only that, but your asset structure changes. You may accumulate more that needs to be devised. Or maybe you lose some assets and now you need to reassess your gifts to your loved ones. On top of that, sometimes laws change, which necessitates a quick review with an attorney to ensure your estate plan is in compliance with the new laws. Plus, as you age or experience health changes, you may need to revisit your healthcare directives and powers of attorney to reflect your updated preferences.
Misconception 6: “If you die without a will, your stuff goes to the government.”
This isn’t the case unless you have zero traceable heirs. Now, if you don’t have any traceable heirs (not even extended family members), then, yes, your estate will go to the government. This is called “escheatment” and is meant to prevent the assets from sitting in limbo forever since no one is there to claim them. If you don’t have any heirs, then setting up a will is critical to ensure your friends and chosen family get your stuff instead of the state.
Misconception 7: “If you have a will, your family doesn’t have to go through probate.”
False. Having a will doesn’t avoid probate, but having a trust does. A will still requires your beneficiaries or will executor to go through the probate process where a court will ensure the validity of your will, and your will executor will pay off debts, pay taxes, and distribute your assets (according to your will), and then submit it to the probate court for approval. While having a will can speed up probate (which is likely where this myth stemmed from), it doesn’t totally remove the requirement.
Misconception 8: “You need a lawyer to draft a legally valid will.”
Virtually all states are totally cool with people making their own wills without the need to hire an attorney. Why? Because states want to empower people to take control of their own assets and devise their assets. This helps to minimize strain on the courts from the long probate processes that occur when people don’t have wills. Generally, most states agree that all you need for a valid will is to be of sound mind, put it in writing, sign it, and have it witnessed by two witnesses. (Though requirements vary by state, so always check with your state’s laws).
Misconception 9: “My assets will automatically pass to my heirs when I die without a will.”
Your assets will automatically pass to heirs, but the question is are you okay with which heirs it will go to? For example, every state has its own succession laws that tell the court how to divide up assets when there is no will. Usually, it starts with spouses and children. Then, it goes to parents, siblings, grandparents, etc. Depending on your situation, these default laws may not be to your liking. For example, state law doesn’t take into consideration unmarried life partners or best friends; without a will, only legal family members will be considered. Putting a will in place to dictate the correct heirs to your estate is crucial to making sure your wishes are met.
Misconception 10: “There will be a reading of the will.”
This is not necessarily true, though we see it all the time in movies. In reality, there’s typically no dramatic gathering where the will is read aloud to assembled family members. Instead, the will is typically filed with the probate court, and beneficiaries are notified. They can then obtain copies of the document. The process is far more administrative and less cinematic than Hollywood portrays. Remember, the primary goal of the will is to ensure that your wishes are followed and your assets are distributed in an orderly, legal fashion. While it’s important for family members to know who inherits what, it is generally handled in a more straightforward and less public way to avoid conflict or confusion.
Misconception 11: “Verbally expressing my wishes is enough.”
Sadly, this is not true, and can be a harmful misconception. Not all states deem verbal wills (nuncupative wills) to be valid. This means if you verbally express your wishes to your daughter, who you trust so much, it may not be enforceable in your state; verbal statements or informal conversations about how you want your assets distributed or your care handled usually bear no legal standing. Not only that, but there is so much more room for fraud or mistakes when it’s one person reiterating what you verbally expressed to them. Verbal wishes can be misinterpreted, forgotten, or disputed, leading to confusion, conflict, and legal complications after your death.
Misconception 12: “Trusts help you avoid estate taxes.”
If your estate plan includes a trust, that doesn’t mean you get to avoid estate taxes. You are able to avoid probate court, but the IRS will still come looking for your estate taxes if you qualify for them. Generally, the only estates that qualify for estate taxes are typically very large. For example, the federal estate tax applies when the estate is above $13M+ (with a $26 million exemption for married couples). In addition to federal estate taxes, some states impose their own estate or inheritance taxes, often with much lower thresholds than the federal level. Just because your money is in a trust doesn’t mean you get to avoid these taxes.
The bottom line on misconceptions about estate planning
As you can see from the above list, there are so many misconceptions about estate planning floating around out there. From Hollywood portrayals of will readings to taxes to probate confusions. Dispelling these misconceptions helps people understand what they truly need out of estate planning and just how important it is for them. Estate planning can benefit pretty much anyone, especially those with assets and minor children. At the end of the day, you’ll feel so much better when you get your estate plan in place and breathe a sigh of relief knowing you and your loved ones are protected.
Katherine (Kathy) Bakes is the founder and managing attorney of Bakes Law LLC. Her eleven years of practice involves all aspects of family law, including the formation of prenuptial and postnuptial agreements, divorce and legal separations, child custody, child support, and visitation agreements, spousal support and financial settlements. Kathy also engages in the practice of estate planning including the formation of wills, revocable and irrevocable trusts, durable powers of attorney, health care proxies, HIPAA authorizations and living wills. Kathy is a member of both the Connecticut and Massachusetts state bars after receiving her Juris Doctorate degree from New England Law | Boston. Kathy lives in Southport, CT with her husband and toddler. Outside the office, Kathy enjoys playing the piano and teaches music education to students of all ages.
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