1. What is an estate?
When most people hear the word “estate” they imagine a large mansion seated at the end of a lengthy driveway, framed by an alley of trees, with a prestigious gate. While that is indeed an “estate”, what we are talking about with estate planning is more generally inclusive. Estate planning applies to our stuff and encompasses even those of us who might not own a mansion.
A comprehensive estate plan should have considerations for your wishes, your assets, healthcare, tax implications, and your family. Besides a mansion, an estate plan might include a designation for a retirement account; or perhaps address a life insurance policy; it probably should also list who you want to make healthcare decisions for you if you were to become incapacitated; and many more aspects common to all of us. Regardless of whether you have $1 or $1,000,000,000, an estate plan is crucial but often is procrastinated.
2. “I don’t have an estate plan.”
Just because you may not have put anything in place, does not mean that there isn’t a plan. It comes down to what you have put in place, or it defaults to what the state decides should be done.
Who has the right to manage your finances if you are incapacitated? Who has the ability to make medical decisions for you if you enter a permanent vegetative state? Who gets a property that you might own? What happens to your business if you are incapacitated or deceased?
These are cases that have happened before, and if you do not establish a legal basis for the who’s and what’s of your affairs, then the state will. And your wishes, and what the state decides, are infrequently the same.
3. “It’s covered in my will.”
A will is perhaps the most well-known method of establishing an estate plan. However, there is a multitude of different ways to prepare your estate for now, and for later. A will has its place but is frequently overestimated in its ability to carry out your wishes.
A will is not effective during your incapacity, nor is it necessarily the final say when you pass away. Despite what is mentioned in a will, there are many instances where certain family dynamics, or how an asset is titled, have determined how and where things are managed, or distributed after passing.
Estate planning is truly a network of pieces working together to accomplish your goals. Things like the court system, healthcare documents, trusts, wills, Powers of Attorney, and titling assets (to name a few) can all play a part in a greater estate plan.
4. “I planned my estate 5 years ago. Am I good-to-go?”
There is a running joke amongst lawyers that the answer to any legal question is “that depends”, and eventually “no”. If you have planned your estate, that is great! However, is it still effective after a certain amount of time? That depends, and possibly not.
Have you ever caught up with an old friend and their child (who you are sure is still a toddler) is suddenly graduating high school? Life changes and our estate plans need to change with it.
Since your estate plan was last updated has one of your children become a legal adult? Did you purchase a property? Have there been any tax law changes? Did your kid get married? Did your kid get divorced? Did you open a business? Did you receive an inheritance? Was there a family disagreement that resulted in new dynamics? Did you move?
There are innumerable ways our lives change, and if your estate plan isn’t changing with it, then it likely does not represent your current situation, and may no longer be effective. Some documents can grow stale, so it is very important to keep your plan fresh so that it works when you need it.
5. “The kids are taken care of.”
Often parents are surprised to learn the degree of separation legally inherent between them and their children.
One such area is healthcare information. Healthcare information is legally protected, and once a child becomes a legal adult, their parents are not automatically privy to it. In some cases, it may even be sooner than adulthood. There have been instances where an adult child is in a life or death situation, but their parents are not able to receive any information on them. It, therefore, becomes imperative for parents to have legal documents in place that allow them to care for their children.
Additionally, children of any age may not automatically be included as an heir in a blended family situation. Conversely, if a spouse remarries after the passing of their previous spouse, then the new spouse’s children may be legally entitled to assets from the late partner’s estate, rather than the direct descendants of the deceased spouse. If you do not have the legal documents in place that protect your assets for your children, then there is a chance they will not receive what you’ve left them after you pass.
When it comes to estate planning, there are countless nuances that affect how things will go. That is why it is so important to consult a professional that can advise you on exactly what you need. Mason Law’s estate planning attorneys can examine your specific situation, and create documents that will help you to sleep soundly, knowing your estate won’t be left to the “it depends” answer. Call Mason Law today and take the first step toward securing a plan that avoids these misconceptions, and many others.
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