Estate Planning Myth #1: Estate Planning is only for the Rich | Over the next few weeks we are going to be rolling out and debunking some of the most common myths surrounding estate planning, but this week we focus on one of the biggest myths of all: Estate Planning is only for the Rich! This really couldn't be further from the truth because ...
Everyone needs an Estate Plan!
When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. These errors are more common than you might think and include the likes of Phillip Seymour Hoffman, Jim Morrison, Heath Ledger, David Bowie, Michael Jackson, Prince. And these are the ones that garnish media attention! In reality, these blunders happen every day to all types of people.
We rarely hear of celebrities or people who "did it right" because their beneficiaries and finances will forever remain private.
The topic does catch people’s attention though. Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not have as much as the ultra-wealthy like some of these actors, musicians, and entrepreneurs.
Estate planning is about more than money!
However, this could not be further from the truth. Estate planning is about more than money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf--a far more likely scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time-consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what—and many times, the government’s best guess as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you. This can also lead to long and lengthy court battles between family members as they try to secure a small piece of the pie for themselves.
Estate planning can protect your minor kids!
By far one of the biggest reasons to plan is to protect your most important and valuable legacy, your children! Have you considered what would happen to your minor children if something were to happen to you? Consider for a few moments a few of these questions:
Do you have family members who would take care of your children?
If you had a choice, would you want them to? Or would you prefer the go to a close family friend or extended relative?
Would there be a conflict to determine who would care for your children?
Would these people, who the court will appoint, raise your children in the same way you would?
Without proper estate planning documents, the court will ultimately decide who cares for your children on a permanent basis. Often their choice would not be the same as yours. It also leaves open the possibility of your kids being placed into child protective services if you don't have any family members nearby to take your kids on a temporary basis.
Hope you found this helpful and that it challenged you to think about some issues you may not have previously considered. Stay tuned as well be rolling out some more myths in the upcoming days and weeks!