Estate planning is essentially the process by which you determine how to distribute your assets once you pass away. Although it might at first sound like a grim topic, it’s actually about life; what you have built over the years can help your loved ones live comfortably after you’re gone.
Many people, especially young adults, might not think about estate planning. However, tragedy can happen at any moment. A will or trust can protect your parents, spouse and children from losing access to your belongings and property. You can also draft a document to tell doctors what to do if you are in critical condition or can’t make health decisions for yourself, called a living will or advance healthcare directive. Getting past the misunderstandings about estate planning can help you prepare for the future.
Myth #1: It’s only for wealthy/elderly people
The word “estate” may conjure images of butlers, luxury cars and chandeliers, but it simply means a person’s assets. It includes real estate property, life insurance, stock investments and valuables, to name a few.
In fact, young parents may want to choose someone to care for their child if they passed away. Estate planning can allow you to select a legal guardian so you can rest easy knowing your child would be safe.
Myth #2: You just need to write down a note
A will is a bit more than writing down names and monetary values on a notebook page. Wills have to offer proof of legitimacy and intention in order for a court to take it seriously. Witnesses, signatures and notarization can help ensure that your document will be valid.
Furthermore, there are more options than a standard last will and testament. There are also revocable trusts, for example, in which your estate could skip the long probate process and remain private as opposed to a public will.
Myth #3: Your loved ones will receive everything you chose for them
Don’t forget that the government usually taxes estates, although some parts might be exempt. Leaving assets out of your plan won’t shield them from tax law. With the help of a skilled attorney, you may be able to avoid some of these taxes so that your family and other beneficiaries inherit as much as possible.