Myths About Estate Planning

Posted by Michael Pederson on November 2nd, 2021

There are many misconceptions and myths about estate planning. Some myths arise from poor communication between consumers with the media. Other myths stem from misunderstandings of fundamental laws. Estate planning is an important tool that people with large estates or small ones must be familiar with to ensure that their assets are distributed to the beneficiaries they choose. Here are six common myths about estate plan.

Estate Planning is reserved for the very wealthy. This is often a mistaken assumption for those most in dire need of protection. Most people don\'t need to worry about complex estate tax issues affecting multimillion-dollar estates. This misconception stems from lawyers and financial advisors focusing on estate taxes. Planning is vital for everyone. This involves planning your health and assets so that your loved ones can take care of you in the event of your death.

I Don\'t Have the Money to Pay Estate Tax. Even though this may sound true today, estates greater than million are not subject to estate tax. The federal tax on estates over million is set to rise to 35 percent in 2015. It may seem outrageous to pay a 35 percent federal tax on 4 million dollars. However, this number is not based on the actual value of your home, retirement savings, or life insurance. Estate tax is now possible for a growing number of Americans.

I\'m not old enough to plan. If you are over 18 years old, you can still plan. You can\'t predict when you will pass away, or become medically incapacitated. Estate planning is essential for all people, regardless their age.

The state can take my assets even if I don’t have a written will. The state will follow its \"laws on intestacy\" if someone dies without a will. These laws are those that govern who gets what. There may be differences between states, so it is important to find out what laws apply in your particular state. Even if your knowledge of the laws is good, you should still prepare a will to ensure that the right people receive your assets.

Estate Planning Protects My Assets. A family trust will not protect assets from business risks or lawsuits. Most states consider family trusts or living Trusts \"transparent,\" which means your assets are susceptible to lawsuits and other losses. You can protect your assets with homeowner\'s insurance, auto insurance, or even automobile insurance. For specific assets you want to protect, hire a specialist.

Trusts are a way to avoid estate tax Most trusts can\'t help you avoid the estate tax. However, qualified legal advice can help to create strategies that reduce or eliminate your tax liability.

There are many damaging myths surrounding Estate Planning. Talk to a lawyer to make sure your loved ones are taken over after you pass away or that you are cared for in the event you become incapacitated.