There are some very common misconceptions that many people share regarding Estate Planning. Due to these misconceptions, people limit their ability to develop an Estate Plan that addresses types of problems that often arise when there is no estate plan in place. Yet others fail to realize the liabilities their estate will face due to poor planning. The fact that Federal estate tax begins at 39% and can reach up to 55% is unbeknownst to most individuals and is only fully understood when they find that half of a loved one.s estate is going to be paid to the government. Below you will find some common misconceptions regarding estate planning followed by some explanation of the different methods of planning your estate.
Only wealthy people need estate plans
Planning your estate does more than minimize estate tax and distribute assets at death. In broadest sense, an estate plan provides financial security, stability and growth before and after an individual.s death. In short, an estate plan is a form of financial protection for us and for those people we care about the most. An Estate Plan can direct the courts as to the appointment of Guardians for your minor children. Furthermore, a properly planned estate plan can control and manage wealth for generations to come, as well as, minimize and even eliminate estate tax.
Estate planning is only necessary to minimize estate tax
An Estate Plan does much more than minimize the amount of tax you pay. It can provide for your physical care and financial requirements, should you become disabled or incompetent. It ensures that your assets benefit those individuals that you care about most. It reduces the administration expenses your estate will incur. Most importantly, a properly drafted estate plan demonstrates your true intentions regarding the distribution of assets and, hopefully, eliminates intra-family conflicts, which often tragically permanently sever family relationships.
When I die, everything will go to my spouse; therefore, I do not need an estate plan
Intestate law requires that only half of a decedent.s estate passes to the spouse, the other half passes directly to the children of the decedent. If the children are minors, a guardianship may be required for the children.s benefit. The guardianship must remain open until the child reaches 18 years of age and up until that point, the court strictly monitors all aspects of the guardianship.
Estate plans are very complicated and expensive
Any type of plan to manage ones assets, either before or after death, is an estate plan, including a Will. Although Estate Plans vary widely in complexity and scope, the cost of implementing an Estate Plan almost always saves the estate a tremendous amount before and after death. Implementing an estate plan can save you anywhere from a couple hundred dollars to a couple hundred thousand dollars. Plus, a proper estate plan can avoid expensive and embarrassing Guardianships.
If you write directions on a piece of paper, it can serve as your will
The legal requirements needed to form a valid will are very strict. If the document does not strictly adhere to the requirements, it will be an invalid will and the assets will pass according to the statutes of intestacy. Only a qualified expert, such as an attorney should determine and draft the instrument that will correctly and efficiently provide the financial stability and security you require during your life, plus distribute your assets to those individuals or institutions you care about most after you are gone