Many individuals avoid planning their estate because they believe that doing so will onset their death, they believe that they are too young, or many individuals find the concept depressing. Whether these myths are true or not, preventing yourself from planning your estate may end up causing problems for both yourself and your family. However, peace of mind can come by making arrangements for yourself and your loved ones should an unexpected event occur. Below is a common list of estate planning myths that are often times false:
1. Estate planning is only for the wealthy. This is the most common and most inaccurate myth in estate planning. Estate planning is an essential tool for all income levels and goes beyond planning for your death and disposing of your assets. Estate planning also includes financial and health care decisions in the event you become incapacitated or if you need someone to pay your bills while you travel.
Further, it is understandable why many individuals believe that estate planning is only for certain individuals when the 2020 federal tax law exempts estate assets up to $11,580,000.00 for an individual. However, when you add up the value of your home, life insurance policies, retirement accounts, and savings, you may be much closer to being wealthy than you originally thought.
2. I am young and healthy—I do not need to plan my estate. Unfortunately, we are unable to predict the future and know exactly when we will need an estate plan. The truth of the matter is, even young, healthy adults can benefit from simple estate planning documents, such as powers of attorney and HIPAA releases. Powers of attorney can help ensure that your agent properly handles your property and medical desires should you become incapacitated or even while you are on vacation. Therefore, just because you are young does not mean that bad things cannot happen to you and does not mean that you would not benefit from a simple estate plan.
3. Idaho is a community property state, therefore my spouse will get everything. Although basic intestacy laws (if you die without a Will) provide that your share of property acquired during your marriage will go to your spouse, such law does not apply to all family types or assets acquired before marriage. For example, if you are currently married, but have children and assets from another marriage or union, and you die without a will, then Idaho law will not automatically transfer all of your assets to your current spouse. Instead, your current spouse may only get half of your separate property and your children will receive the other half. Depending on the structure of your family, your assets may go to a number of different family members. It is advisable to have a simple will to ensure that your estate goes to whom you want to receive it and that certain family members are properly provided for.
Additionally, just because assets are titled with your spouse does not mean that your spouse automatically acquires your interest in such property—grant deeds or probate may also be required to accomplish this transfer. Setting up basic documents such as a will or a deed with rights of survivorship will help streamline the process for your spouse and family after your death.
In the next article we will continue the countdown of the remaining 3 most important estate planning myths to avoid. This article is not intended to replace legal advice applicable to your situation and should be used only for informational purpose. Consult with your legal or tax advisors before implementing any suggestions contained herein.
Ms. Clapp-Younggren is an associate attorney with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at aclapp@clapp-legal.com or (208) 938-2660.