Spooked or put off by the idea of Estate Planning? To no surprise, you aren’t alone.
To be honest, we can’t think of anyone who’s walked through our doors feeling excited and joyful about tackling the task of their end-of-life planning. In our experience as financial planners and executor advisors, it’s fair to say we’ve heard nearly every excuse out there when it comes to putting off estate planning.
Ultimately, however, nothing can stop inevitable from happening. Which is why we believe it’s best to plan ahead and tie up your loose ends now to prevent them from coming undone once you’re no longer here to give direction.
There’s a number of myths out there when it comes to estate planning. Perhaps you've heard a few of them before (2, 7, and 9 are the ones we hear most often). This article takes a closer look at 11 of the most common estate planning myths people fall for that unfortunately puts their family at risk for excess stress, costs, and turmoil. Continue reading to learn more.
Myth #1: Estate planning is only for those with deep pockets and large estates
There's no doubt that the protection and distribution of assets is a major part of estate planning, but it’s not the entire point. For instance, if you were suddenly incapacitated, how would you want to be taken care of? Or, to be less hypothetical, have you thought about what you want your end-of-life process to look like? Would you like to have a life insurance policy or fund set aside that supports your family? Are you going to be buried or cremated? Who should be in charge of taking care of your pets? What about childcare?
For families with young children, the most important part of estate planning has nothing to do with money or assets, it’s about designating a caregiver for your child(ren) should something happen to both parents.
From this basic overview of a few of the most common estate planning challenges, you can see that estate planning goes beyond the division of assets. Your estate plan helps communicate instructions and an action plan to carry out your wishes for a variety of issues including health care or childcare. A good plan is for anyone who may be involved in an accident, become seriously ill, or pass away - that is to say, it’s for everyone.
Myth #2 - I already told my family how to deal with everything after I’m gone
It’s a mistake to assume that your family will follow your wishes just because you told them to. A legally-bound trust or will is the only guaranteed way to ensure that your personal belongings, whether they are assets or items with great sentimental value, are delivered to the right people.
Even the most functional of families can end up in a feud without proper estate planning. Grief brings out a lot of emotional stress; a legally-binding document that clearly lays out directions to follow will not only help your family avoid any potential conflict, it will help them to avoid any uncertainty or confusion. Having an estate plan isn’t all about you, it’s a simple courtesy for your family.
Myth #3 - I’m too young for an estate plan
Most of us have a general idea of what we want to happen if we were to fall ill. But if that idea exists only in your mind, no one will know your thoughts on the best way to go about things.
When you’re young and healthy, you can feel invincible, or like nothing will ever happen to you. You may be the most confident person in the world, however, and can still fall victim to unexpected circumstances. You may be in the process of paying off a mortgage, car loans, or student loans. If you have a child(ren) or are married your children and spouse will likely need money for their education, housing, and care.
If one thing is a given, it’s that we’re all here for a limited time. Taking the time to create your Estate Plan as soon as possible is one of the best gifts you’ll ever give yourself and your loved ones. Plan for the worst, hope for the best.
Myth #4 - I don’t have any beneficiaries or loved ones, so none of this matters
Perhaps you’ve gladly found yourself in this situation by choice, or maybe this is a harder part of your life story. Regardless, you made your mark on this world and you still have a legacy to leave behind.
Creating an Estate Plan gives you the chance to support a cause or an individual that you care about. Your estate plan will serve as a guideline for where and how to donate your assets. Whether you choose to leave something for a student, favourite care aid, or charity, your legacy doesn’t require blood to carry on.
Myth #5 - My Estate Plan is nobody’s business
Perhaps you’re an incredibly private person and believe that your personal business shouldn’t concern anyone else but you. We respect that, but we’re also going to look out for your best interest and give you advice that reflects that.
While you want things done in a certain way and have direction to give in your estate plan, it’s really about creating a plan to protect and offer comfort to your loved ones. In fact, some of our clients consider creating an estate plan to be a crowning act of love and care for their friends and family.
If you don’t tell anyone about your estate plan, there’s a possibility of your assets being divided up, with some of your investments going unclaimed because no one knew to ask about them. Even worse, if your family doesn’t have a clear direction on how to divide your assets, much of what you have could be tied up in probate, leaving a judge to decide.
If something were to happen to you, consider the amount of relief your family would feel, knowing that you already have a plan in place for them to continue forward without any confusion. It’s best to always communicate with those who will be affected. Doing this will make the planning process more manageable, ensure that your legacy is placed into rightful hands, and that your loved ones can focus on what really matters - healing and honoring your memory.
Myth #6 - I can do my estate planning on my own
Without tooting our own horn, this isn’t our first rodeo. Your ambition to tackle this mountain of estate planning by yourself doesn’t go unappreciated - unless you actually go forward with a DIY estate plan.
Here’s why: estate planning involves a number of scenarios to consider and moving parts to pay attention to. Trying to tackle all of this on your own is not only overwhelming but can often lead to missing key parts that end up costing you time and money, while running the risk of not even being a legal plan that gets followed after you’re gone.
At Thom & Associates, we are seasoned Financial Advisors and Certified Executor Advisors. We understand the complex in’s and out’s of estate planning because we deal with them all the time. Call 250-861-7777 to learn more.
Myth 7 - The first draft of an estate plan is enough
Estate planning isn’t a “set it and forget it” kind of deal.
Life changes quickly and often. Safe to say you aren’t the same person you were 5 years (or even 5 months) ago. Perhaps you have new grandbabies, a new spouse, or new property to enjoy. People change. Circumstances change. It’s what keeps us going forward.
Any time there’s a major life event that changes your assets, your beneficiaries, or any other conditions you set out in your estate plan, everything needs to be updated to reflect those changes.
An out of date estate plan that was never updated is much more likely to be challenged when the time comes. Regularly review your estate plan with Ken to make sure your intentions are clear for what you want to happen once you’re no longer here.
Myth #8 - Estate Planning is only about distributing assets
Yes, you have assets and need to make a plan for how they should be handled after you pass away. That’s the most obvious part of estate planning. It’s the other details, such as your wishes in certain medical situations that are easily overlooked.
There are many decisions to be made while creating an estate plan. It’s important to note that some assets such as joint accounts and accounts with beneficiaries may not be included in your will and should be considered and accounted for through other methods.
Estate planning is a key part of financial planning. Your financial life doesn’t end after you’re no longer here; it continues and affects those you leave behind.
Myth #9 - If I pass away without an estate, my spouse will get everything anyway
If you would like to have all of your belongings to go to one person, that’s quite simple to make happen with an estate plan. Without one? Not so much. You’d be surprised to see who may come out of the woodwork to claim your assets after you pass away.
Because it’s legally-binding, Estate Planning is the only way to ensure that your spouse truly inherits everything as intended. Furthermore, we’ll help you put back-up plans in place, in case something were to happen to you both at the same time.
Clients often forget to consider that they may outlive their spouse which is why your best plan of action is for both you and your spouse to have estate plans in place, and to keep them up-to-date.
Myth #10 - I don’t need an estate plan because I’ll be gone and my family can tie up my loose ends
If you’ve made it this far into reading this article, it’s likely that you realize that an estate plan isn’t really about you. This plan is about you giving direction on how to best protect and offer comfort to your loved ones once you’re no longer here. It’s a simple courtesy for your family that you leave behind to help them while they grieve your passing.
A complete estate plan saves months, if not years, of pain for those that you leave behind. At a time when they’re feeling uncertain and emotional, your estate plan offers direction and guidance for how best to deal with your affairs and assets. It also ensures that most of the estate stays with your loved ones rather than being wasted on legal fees from family feuds.
Unfortunately, even with the best of intentions, friends and family can’t make decisions on your behalf if you pass away without an estate plan. Without anything legally-binding to explain your intentions, the Court decides who gets your assets and will appoint a caregiver for any minor children.
💡 Further reading: Executor Duties & Responsibilities
Myth 11 - I am way too busy to bother with estate planning
We’re not sure where it got started, but there’s a common thought that setting up an estate plan is a painstaking process that takes a long time.
It’s true that creating a proper estate plan is important and can be confusing if you’re not familiar with the local estate planning and probate laws. But that’s why you get help from experienced professionals.
Here at Thom & Associates, we put you, our client, first and will make estate planning as quick and painless as possible.
Yes, it may take time for you to gather the proper documents and think through your arrangements, but you’ll be working with professionals who will do everything to make planning the future of your estate a simple and straight-forward process.
As you can see, there are a number of misconceptions out there about estate planning. Knowing the truth about these myths can help you avoid countless mistakes and cost.
Estate planning is a crucial part of financial planning, your financial life doesn’t end when your life does. All people, young or old, affluent or not, share similar concerns and considerations about estate planning - we all want to deal with what we have in the most effective way that we can. We’d like to do the best for those left behind, reduce taxes, and make sure our directions are followed.
Estate planning is preparing for the future.
Let's get started. Contact Ken at Thom & Associates today - 250-861-7777.