There are many misconceptions about estate planning and implementing any of them into your estate plan can result in costly mistakes. Understanding who needs an estate plan and what it should cover is key to creating a plan that is right for you that will work properly when the time comes.
While you are still living, a properly crafted estate plan allows you to ensure that your property will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs, and attorneys’ fees. It affords you the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion. The following are some common myths that people have about estate planning:
Depending on how small your estate is, it is true that you may not need a complicated plan. But even if you only have a few assets, your estate plan should direct where you want those assets to go. Your estate plan will also allow you to name a guardian for your minor children, should the unexpected happen and you are unable to care for them. A thorough estate plan also includes a medical power of attorney and a statutory durable power of attorney, both of which protect you while you are still alive. A statutory durable power of attorney allows you to appoint an agent to handle your finances in the event that you are unable to pay bills or manage finances yourself. A medical power of attorney appoints someone you trust to make medical decisions for you in the event of your incapacity.
No one likes to think about death, but it is important to be prepared at any age so any unnecessary hardships can be avoided. In our office, we believe even if you are as young as 18, anyone with a bank account should have an estate plan. We also stress the importance for college students to have powers of attorney in place, because once a child turns 18, parents no longer have the legal right to access the child’s medical and financial information. Should your child turn 18 and leave home to attend college, you do not automatically have the right to their information if an emergency were to happen.
A will is a legally-binding statement directing who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will only covers property that can go through probate; this is the court process by which a deceased person’s property is passed to their heirs or people named in their will. Many types of property or forms of ownership pass outside of probate. Jointly-owned property, property in trust, life insurance proceeds, and property with a named beneficiary, such as IRAs or 401k plans, all pass outside of probate. An ideal estate plan should be designed to avoid probate, save on estate taxes, protect assets from future nursing homes, and appoint someone to act for you if you become incapacitated or disabled.
It may be tempting to try to save money by using a do-it-yourself online will service or to write your will yourself, but these poorly drafted documents may only cause additional costs and hardships in the future. Without a legal education and years of experience, it is impossible to know what the right legal solution is for your particular situation and what planning opportunities are available. If there are any complicated aspects of your family, such as subsequent marriages or children from previous marriages, using a do-it-yourself estate planning software means taking a large risk that may disinherit your children and can affect your family for generations to come. Our goal is to learn more about your specific situation and your family, determine which planning option may be right for you, and to avoid dragging out your estate administration, avoid unnecessary expenses, and prevent headaches for your heirs.
It may be surprising to learn, but once you have a plan in place, you will need to review it every two to three years or whenever you have major life changes. Whether it is a birth or death in the family, a marriage or divorce, or the acquisition or loss of an asset, your plan needs to reflect this. In Texas, legislators can amend legislation every two years, so it is also crucial to ensure your plan stays up to date with current legislation. Even if you do not have any major changes, you should review your plan periodically to make sure it still expresses your wishes.
Whether you already have your plan in place or you still need to start your estate planning journey, we hope these 5 myths will help you know the right steps to take and the mistakes to avoid. The best way to ensure your plan will be bulletproof is by meeting with an experienced estate planning attorney. To set up an estate planning strategy session, call our office at (281) 218-0880 or schedule online here.
Kimberly Hegwood is the Managing Attorney of Your Legacy Legal Care, a Houston estate planning law firm. With more than 25 years of experience practicing law in Texas, she represents clients in a wide range of legal matters, including elder law, asset protection, estate planning, Medicaid crisis planning, probate, guardianship, and other estate planning practice areas.
Kimberly received her Juris Doctor from the South Texas College of Law and is a member of the State Bar of Texas.
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