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Estate planning myths you need to be aware of

| Oct 28, 2020 | Estate Planning |

Estate planning law is state-specific, ever changing and can be complex. This is often the reason why many avoid the estate planning process. Estate planning myths only further hold some back from estate planning. However, as the old adage says, “the only guarantees in life are death and taxes.” This is why it is so important to estate plan now.

Only the wealthy need an estate plan

Many people think that only millionaires need an estate plan. But, what many may not realize is that the estate planning process is not just about money and assets. Estate plans also dictate who can make decisions for someone that is incapacitated. They also can dictate who will be responsible for taking care of children if their parent’s pass. And, they can dictate what happens to one’s body after death, like organ donation, funeral arraignments, etc. None of this has anything to do with money.

The state will figure it out

This is, of course, not a myth as the state will indeed figure it out, but what they decide may not be what one wants. After all, does one really want the state deciding where their children go after they pass? We all have family heirlooms that have value to us, but they may not have value to the state, which mean they may go directly to the dump. Accordingly, before one decides to let the state figure it out, call an attorney to ask about your state’s “laws of intestacy” to get an idea of what the state would do when one passes. If what would happen is not acceptable, draft an estate plan. These calls are often free.

One has to draft a trust to avoid probate.

The idea of drafting a trust can seem complicated and expensive, which may be a reason someone avoids estate planning. However, there are several estate planning options that can avoid probate without the need for a trust.

First, jointly owned property generally passes to the joint owner after one of the owners dies. This means that a joint account holder on a bank account will inherent the account when the other account holder dies. Second, many investment vehicles designate beneficiaries that avoid probate. These include annuities, retirement plans (401(k)s, IRAs, etc.) and even life insurance policies. Finally, some account allow one to designate a “payable on death” beneficiary, like on a brokerage account, that can also avoid probate.

As our Jackson, Tennessee, readers can see, estate planning is not so scary. The key is to check in with an attorney to ensure that one has set these accounts up properly to avoid probate and to ensure that one’s wishes are met after death.