Estate Planning Myths: Why Me, Why Now … and is a Will Enough?
Marylanders – you have worked hard for years, have family members and friends you care about, and have approached a time in your life when “estate planning” sounds like something you should do … but you are not exactly sure why. You may feel that you are not wealthy enough – or not old enough – to bother (or care). Or, you may already have a Will and feel that you are all set on that front. Unfortunately, these common misconceptions about estate planning can lead to unfortunate consequences for you and your family if not addressed. Whatever your current position, consider these common estate planning myths.
3 (Dangerous) Estate Planning Myths
Estate planning is for wealthy(ier) people.
False. Anyone who has survived to age eighteen and beyond has likely accumulated a few possessions that are of some monetary or sentimental value. While things like your home, your car, and financial accounts are self-evident assets, that collection of superhero figurines or your iTunes library also deserve proper attention. Although this is one of the most rampant estate planning myths out there, the truth is that there is no minimum asset value required to justify having a Will. This is especially true since there are many low-cost options available today, including estate planning attorneys who will not charge an arm and a leg for a basic Will.
Estate planning is for old(er) people.
False. This is perhaps one of the most dangerous estate planning myths, especially for young families. Tragedy can strike at any moment, and it is best to have your affairs in order so as not to put your loved ones in a financial or bureaucratic bind while they are grieving. Young parents should ensure that proper guardians are in place to take care of their children if they are no longer around, lest the children end up with the most irresponsible member of the family or, worse, a complete stranger.
Estate planning means having a Will.
You guessed it… false! Having a Will is smart because it puts you in charge of the disposition of your assets. A Will allows you to pick your executor, designate the guardians for your minor children, and name any individuals and charitable organizations as beneficiaries of your estate. If you were to die without a Will (i.e., intestate), the law in the State of Maryland (if you are a resident of Maryland at the time of your death) would govern who receives what part of your estate; who administers your estate, and who takes care of your children. There are some situations where Maryland law may override the provisions in your Will (e.g., a spouse’s elective share), but for the most part, you are in the driver’s seat.
However, a Will is only one tool in the estate planning toolbox. There are other vehicles that allow you to remain in control of your possessions and family’s future during life and upon death. Depending on your situation, a Will alone may not be the most efficient, or the most cost-effective, means to achieve your goals.
Upon your passing, your Will has to go through probate – a process whereby the Register of Wills reviews your Will and determines its validity. It is a lengthy, and somewhat costly, process in Maryland to begin with, and can become even lengthier if a Will is contested (e.g., on the grounds that someone coerced or cajoled their way into an inheritance). The delay in disposition of your assets and the accompanying legal costs may put your family members in financial straits. If your goal is to ensure that your survivors’ cash flow is uninterrupted after your death, it would be wise to incorporate a trust or a life insurance policy into your estate plan. These assets are considered “non-probate” – they pass outside of your Will.
There are other non-probate assets that may constitute a part of your estate. For example, a joint tenancy arrangement on your home, IRA, and payable-on-death (POD) or transfer-on-death (TOD) accounts, which designate specific beneficiaries upon your death, and the assets pass to them without the delay and cost of the probate process. If your Will provides for a different beneficiary of your IRA account or another non-probate asset, it will be superseded by the beneficiary designation form on file with that account’s or asset’s administrator. Therefore, it is wise to review all of your beneficiary designations periodically, but certainly upon life-altering events like marriage, birth of a child, or divorce.
Let’s Bust These Estate Planning Myths Once and For All!
So, what’s the moral of this story? You are neither too young, nor too poor, to engage in estate planning! And, just remember that a Will may be a necessary, but not the only means to plan your estate in an efficient and cost-effective manner. Keep on top of your assets, and your survivors will have another good thing to say about you at your memorial. For competent legal advice on the right estate planning vehicle to help secure your family’s legacy, give Andre O. McDonald, a knowledgeable Howard County estate planning attorney a call at (443) 741-1088, to schedule a no obligation consultation in our Columbia, MD office.
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL ADVICE.