No one likes to ponder their own demise, but a worse scenario is thinking about all of the things that could go wrong with the distribution of your assets should you fail to make your wishes clear. Too often, the wrong family members step in and try to claim “close” relationships and rights to an inheritance that you might have never dreamed to come into play.
To avoid these unfair scenarios and make sure that your wishes are followed, you’ll want a solid estate plan. Don’t let any of these five estate planning myths lull you into a false sense of security about the state of your assets after you’re gone.
Myth #1: Estate planning is only for the wealthy
Many people mistakenly believe that the only reason to do estate planning is to avoid the estate tax. While it’s true that you won’t be subject to the estate tax unless your estate surpasses a value of $5,120,000, this is always subject to change. Regardless of the total value, if you have assets that you want distributed in a certain way should you become incapacitated or die, consider an estate plan.
Myth #2: I only need to do this once
Estate plans are not a “one and done” proposition for most people. Life circumstances change and you want to make sure that your wishes reflect your current family situation. It’s not uncommon for a will that hasn’t been updated to leave everything to an ex-wife or to leave out recent offspring. Update your will and estate documents at least every five years.
Myth #3: Wills can’t be contested
Wills can, and are, contested so you can head these sorts of things off by adding a “no-contest” clause to your will or trust. These provisions act as penalties for anyone who chooses to file a challenge. Yet, those who were left nothing often have little to lose by contesting the will.
Myth #4: Old wills can be destroyed
It’s not always the best idea to destroy old wills. Sometimes the most current will is successfully challenged and found to be invalid. In these cases, you’ll want to have the previous wills on file as the one before the challenged will is then going to be the valid document.
Myth #5: Competence is assumed
Don’t assume that your loved ones will simply accept your wishes. Some may claim undue influence or question your competence. The best course of action is to document your competence and videotape the will signing session.
There are a lot of misconceptions about estate planning, and it can be a complex process. Understanding the myths surrounding the process can help you avoid some costly future mistakes.