Empowering Your Legacy: Dispelling Four Common Estate Planning Myths

By Jennifer Napper, CFP®, CDFA®

As a CERTIFIED FINANCIAL PLANNER® professional, I often encounter misconceptions surrounding estate planning. Many believe it's a concern solely for the ultra-wealthy or only about distributing assets after death. However, estate planning is a fundamental aspect of life planning, ensuring your legacy lives on and your loved ones are safeguarded, both in life and beyond.

Let me share a real life story. Recently, a client shared with me that her aging father assured her and her sisters that his estate planning was taken care of and they did not need to worry. Once he passed, they contacted their father’s estate attorney to discuss his last wishes and distribution of his estate. What they discovered was that although their father had a “will”, he did not have a trust and therefore, his family would have to go to probate court to get his home retitled to them. They suspected that the attorney purposefully advised their father that he only needed a will and not a trust hoping to be able to handle the probate case herself which would gain her thousands more in fees than preparing the trust document. The sisters quickly fired the attorney and hired a new one to help usher them through the probate process. All this could have been avoided with proper estate planning.

MYTH #1: Estate planning is only for the ultra-rich. Contrary to popular belief, estate planning is essential for everyone, regardless of wealth or age. If you possess assets like a bank account, investments, or property, you have an estate. Moreover, if you have dependents, such as a spouse, minor children, or family members with special needs, estate planning is crucial to secure their financial well-being. It's about protecting your loved ones and ensuring your wishes are honored, even if you're unable to express them yourself.

MYTH #2: Estate planning is solely about asset distribution after death. While estate planning does involve distributing assets, it's equally vital for planning during incapacity. None of us can predict unforeseen circumstances that may leave us unable to make decisions. By documenting your wishes in advance, you alleviate the burden on loved ones and ensure your preferences are respected, maintaining dignity and autonomy throughout all stages of life.

MYTH #3: A will covers all asset distribution needs. Although a will is crucial for outlining asset distribution and naming guardians for minor children, it doesn't circumvent probate for all assets. Assets like real estate may still be subject to probate unless properly titled or held within a trust. Probate can be time-consuming and costly, underscoring the importance of considering trusts for efficient asset transfer while avoiding probate delays.

MYTH #4: Estate planning documents are a one-time affair. Estate planning is a dynamic process that requires regular review and updates. Life circumstances change, as do tax laws and financial markets. Periodic reviews of your estate planning documents ensure they align with your current goals and reflect any changes in laws or personal circumstances. Staying proactive in updating your plan safeguards against unforeseen complications and ensures your intentions are accurately reflected.

Effective Communication: A Key Component As retold in my previous real life story, communication is paramount in estate planning. Transparent communication ensures that your loved ones understand your wishes and can effectively carry them out. Sharing the location of legal documents, financial accounts, and important passwords with appointed representatives streamlines the process and minimizes confusion during challenging times.

As a CERTIFIED FINANCIAL PLANNER®professional, in collaboration with a licensed Estate Planner, I am committed to guiding you through the complexities of estate planning with empathy and expertise. Together, we'll create a comprehensive plan that not only protects your assets but also preserves your legacy for generations to come.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJA, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.