Many people take the time to carefully plan countless events in their lives. They will obsess over a road-trip itinerary, create numerous lists leading up to throwing a birthday party or develop extensive plans for what items to purchase at what stores during household errands. When asked about their estate plan, however, these same people will shrug it off as if it was an uninteresting project.
It is important to remember that developing an estate plan is essential to having a comprehensive financial plan for your future. Additionally, a complete estate plan affords an individual peace of mind knowing that heirs will be cared for and the distribution of assets will go smoothly. To help clarify this point, it is important to debunk certain pervasive myths about estate planning.
- Estate planning is only for high net worth individuals: People will often eschew the idea of developing an estate plan with the rationale that they are simply not wealthy enough for it to matter. If you have any types of assets or anyone in your life who depends on you, you have an estate and need to plan for what happens when you pass away. Regardless of your estate’s size, a bank account, your car and personal property should be addressed through proper planning.
- Estate planning is only about distributing my assets after I’m gone: While wills and trusts tend to focus on the distribution of wealth and assets, other estate planning documents cover other topics. Incapacity planning, for example, can help you plan for unexpected illnesses or conditions that might prevent your ability to make decisions for yourself. Powers of attorney and naming a guardian for your minor children are elements of your comprehensive estate plan.
- A will can oversee the distribution of all my assets: While a will is largely considered the cornerstone of any solid estate plan, it generally only covers the distribution of physical assets. For example, your home, your car or a valuable book collection will likely be the first things you list in your will. However, assets such as life insurance policies or your retirement account might require additional attention from other planning documents.
- Once I put a plan in place, I don’t need to revisit it later: Many financial planners agree that you should examine your estate plan every five years or so. Certainly, you should make revisions after significant life events. These events can include marriage, divorce, adoption, the birth of a child or the death of a loved one. Additionally, you might make changes to your health care proxy or who you’ve identified as the guardian of your minor children as personal and professional relationships change over the course of time.
Proper estate planning is essential in having a comprehensive financial map designed for your future. From deciding who gets what when, to determining who will make financial decisions for you if you suddenly become incapacitated, your estate plan offers peace of mind in uncertain emotional times. Look to an experienced estate planning attorney for guidance.