Estate planning often isn’t the top concern for families. However, it may be wise to start planning sooner rather than later. As life can take unexpected and inconvenient turns at any moment, people often feel safe knowing their assets and finances are handled and distributed the way they want.
Setting up an estate plan can be a daunting task, as people often have to fill out various documents and decide how their possessions get distributed. With all of the steps involved, it can be easy for people to make mistakes.
Estate planning myths
These are some frequent misconceptions and the realities that surround them:
- They don’t need someone else to oversee their estate: Some may think everything is said and done once their plan is in place. However, that’s not always the case. As people age, their mental state can deteriorate over time, potentially making it difficult to recall and rationalize the requests they originally made. In these instances, estate owners may want to give a beneficiary power of attorney. Doing so can help individuals better manage their finances and get the medical care they need.
- A will can accurately distribute all assets: In many cases, a will can allow an individual to control how their assets get divided. Those assets can include things like family heirlooms, a vehicle and other various possessions. However, people should know most wills have specific limitations. For those that have joint accounts with a spouse or a beneficiary, the owner of the estate may not have full control over those shared assets or accounts.
- It’s difficult to make changes to a plan once established: While it can take a lot to set up an estate plan, people’s circumstances can and often do change over time. When such changes occur, it can be possible to adjust an existing plan. For example, if a person unexpectedly has another child, they may want to add the child as a beneficiary to their 401(k).
Planning for the future is important
With the hectic lives many people live, setting up an estate plan may be the last thing on their checklist. But by understanding the common myths surrounding establishing one, those looking to do so can feel more at ease and make decisions that work best for them and their families.