Despite the growing understanding of the uses and benefits of estate plans, there are still common misunderstandings about estate planning. You may believe you don’t need to worry about estate planning yet or that you do not have an estate requiring planning. These statements are not always true. An Indianapolis, IN, estate planning attorney can be very beneficial in outlining the benefits of creating certain estate planning documents at any point in your life.
Understanding the misconceptions surrounding estate planning can help you determine what it can do for you with the assets and goals you currently have. Some of these misconceptions include:
Myth 1: I’m Too Young to Think About Estate Planning
Young people should not have to worry about potential incapacity or death, but unfortunately, these things can happen to anyone. You cannot plan for every eventuality, but an estate plan enables you to plan for specific situations, such as how you receive medical care or who can manage your finances if you cannot. These and other considerations are managed with an estate plan, which can give both you and your loved ones some comfort.
Myth 2: A Will Is a Complete Estate Plan
A last will and testament is an effective document for basic estate planning. However, it cannot do everything and cannot avoid probate by itself. While a will can determine important decisions, it is not a comprehensive estate plan and does not completely address certain issues.
A will cannot:
- Determine what happens if you are incapacitated but alive.
- Put someone in charge of your medical or financial decisions.
- Hold assets for minor children or grandchildren under the care of someone with a fiduciary duty toward those minors.
Additional estate plan documents are needed in order to address these needs or to prevent your estate from entering the probate process.
Myth 3: Creating a Trust is Too Complicated and Expensive
A trust is often more complicated and has the potential to be more expensive, but it can also save you a lot overall. The more complex your estate plan is, the more expensive it will likely be. However, the use of trusts can avoid higher administration costs and other costs associated with probate, and certain types of trusts can even provide you with tax benefits during your lifetime.
Making a trust is also much simpler with a skilled attorney. When you create an estate plan, your priority should be ensuring your goals are upheld by the estate plan so that you can efficiently meet those goals with the exact documents that are necessary. This can help you meet your needs without an estate plan becoming too expensive.
Myth 4: An Estate Plan Is Only Necessary if I Am Wealthy
Many people believe they do not have an estate that requires estate planning, and that only very wealthy individuals have need of estate plans. This is not the case. You meet the requirements of having an estate if you own any assets at all. Your estate plan can determine important decisions about these assets, including who they are passed to and when.
Estate plans can especially benefit those with minor children or complex family units. Intestate law gives your estate to specific surviving family members, but you may have additional family members you wish to inherit from you who would not inherit under these state laws. Your estate plan can ensure they are cared for.
An estate plan also does much more than manage your assets. It can help you plan for your own future, ensuring you can place trusted individuals in charge of your decisions. An estate plan can also plan for your children’s future, including who is their guardian.
Myth 5: I Created an Estate Plan and Don’t Need to Revisit It
Reviewing and updating your estate plan is crucial once you have made it. When you review your estate plan, you are able to ensure it still upholds your goals as you intend them. You are also able to determine if any changes to state or federal laws have affected your estate plan, such as tax laws or property laws. Revisiting your estate plan ensures it is enforceable and does what you want it to.
FAQs
Q: What Are the Two General Situations That an Estate Plan Lays Out?
A: The two general situations that an estate plan prepares for are death and incapacity. Documents, including your will, list your wishes for your estate if you pass, such as which of your family members benefit and how your debts are paid. Other documents address what happens if you are incapacitated or otherwise unable to manage your own affairs. This includes documents such as powers of attorney or your living will.
Q: What Is Estate Planning Concerned With?
A: Estate planning is concerned with managing your assets, estate, and personal affairs when you cannot. Estate plans can also address any unique goals that the person making the plan has. For most people, their estate plans address the distribution of their assets when they pass, to name an executor of their estate, and to name a guardian for their children. Other documents can be used to manage their affairs if they become incapacitated.
Q: What Are the Seven Steps in the Estate Planning Process?
A: The seven steps in the estate planning process are:
- Inventory your assets and determine their value.
- Determining your family’s needs, your needs, and your goals for your estate.
- Looking over your state’s laws regarding estates and estate plans and the laws of any state in which you own property.
- Deciding who your beneficiaries will be and what assets they will inherit.
- Determining your wishes for end-of-life care.
- Securing a legal review of the estate plan.
- Regularly evaluating and updating your estate planning documents.
Q: Why Should You Be Concerned With Estate Planning?
A: Estate planning enables you to plan for your future, your family and loved one’s futures, and the management of your hard-earned assets and estate. Some benefits of estate planning include:
- Being able to plan your own medical care in advance if you become incapacitated.
- Limiting the disputes between your loved ones after your death by making your wishes clear.
- Minimizing the cost, time, and stress your loved ones go through to distribute your estate.
Drafting an Estate Plan That Address Your Needs
Creating a comprehensive and effective estate plan is much simpler with a skilled estate planning attorney. Contact Stange Law Firm in Indianapolis today to learn how we can help you.
