Debunking Estate Planning Myths

Debunking Estate Planning Myths

by Heleigh Bostwick, April 2010

Myth #1: I'm not rich so I don't need an estate plan.

Fact: This is probably the number one reason people think they don't need an estate plan, but it's not a very good one. While you may not be Bill Gates or Michael Jackson, chances are you have accumulated some assets and you'll need an estate plan to direct how the property you've accumulated during the course of your life will be disposed of or managed after you die.

Myth #2: A will is the same thing as an estate plan.

Fact: Another common misconception is that if you have a will it covers the disposition of all your assets. Wrong. A will is a list of instructions specifying how your property is to be distributed after you die, including naming a guardian for your minor children. A will is one part of an estate plan, albeit an important one.

Myth #3: Preparing an estate plan will cost me a lot of money.

Fact: This may be true in some cases—if you have a complicated estate. For most of us, an estate plan consists of several simple, but important documents. These documents can include a last will and testament, medical power of attorney, financial power of attorney, revocable living trust, and a living will. Most people can easily prepare these documents themselves, or with the help of LegalZoom.

Myth #4: I automatically inherit all of my spouse's property when he or she dies.

Fact: Many people believe this to be true, but laws vary from state to state. If you die without a will, your estate will go to probate, the division of local courts which handles decedents' estates. In other words, the courts will decide how your assets will be distributed according to state law. Possible heirs include the spouse, children, parents, and siblings. The estate planning documents offered by LegalZoom can help avoid the uncertainty of probate.

Myth #5: There's no more estate tax so I don't need an estate plan.

Fact: Yes, the estate tax was repealed for 2010, but if lawmakers have their way, it will return. So you may want to reconsider if you've put off preparing an estate plan based on that one fact.