Estate planning is the process of documenting your assets and last wishes in anticipation of your passing. This way your assets can go into good hands and your beneficiaries can benefit from your estate.
However, many people put off estate planning. This likely happens because a testator is misinformed about how an estate plan works. If you’re unsure if you’ve been misinformed, you may need to better understand several common estate planning misconceptions. Here’s what you should know:
Myth #1: Your will can bypass probate
Truth: Your beneficiary will have to wait for probate to end before they can inherit anything from your will. Not only do beneficiaries have to go through probate but they may even face estate taxes with a will.
Instead, many people place assets into a trust. A trust can bypass probate and estate taxes. Your trust may even include additional terms that you wouldn’t otherwise add to a will.
Myth #2: You don’t need a will when you’re young
Truth: You should create an estate plan once you come of legal age. While you may not have many assets to include, there is still the possibility of facing a serious accident or developing a medical condition. This is important to note because, without an estate plan, you wouldn’t have a power of attorney. A power of attorney is a representative who makes decisions on your behalf if you’re incapacitated.
Myth #3: You can only have one power of attorney
Truth: Most people elect one person as a general power of attorney. That doesn’t mean, however, people can only have one power of attorney. Instead, if you desire, you may designate two individuals: one for your medical power of attorney and the other for your financial power of attorney.
Myth #4: It’s better to make your own will
Truth: Many people find cheap pre-made estate planning templates online and others find it cheaper to hand-make an estate plan. The problem with this is that either of these choices may invalidate an estate plan.
An estate plan has to go through several processes and should include the correct legal wordage to ensure legal validity. For example, a will needs two witness signatures to make it valid. In any case, if you’re looking to create an estate plan, you should be aware of your legal options.
