4 Estate Planning Myths That Put Your Loved Ones at Risk
Surveys conducted in 2024 by Caring.com and Ameriprise Financial revealed a troubling trend: Americans are falling behind on estate planning. The Caring.com survey revealed that only 32% of Americans have a will - a 6% decline from 2023. The Ameriprise survey found that 52% of couples lack estate plans. These statistics highlight a dangerous disconnect between understanding the importance of estate planning and taking action. Let's examine these misconceptions and their potentially devastating consequences.
Myth 1: "I don't have enough assets to need an estate plan."
This dangerously narrow thinking ignores that estate planning isn't just about financial wealth. It's about doing the right thing for the people you love so you don’t leave a mess and about ensuring your wishes for your own care are considered if you cannot make decisions for yourself due to accident or illness.
If you haven’t created an estate plan (the type of comprehensive planning we offer), your loved ones could face lengthy court proceedings, unnecessary taxes, and difficulty accessing financial accounts, which could have devastating consequences if bills need to be paid.
It’s also about:
Ensuring what you DO have goes to the people you want in the way you want (and stays out of the court process);
Your children being raised by people you choose;
Your wishes for your medical care are honored if you become incapacitated, or if your mind deteriorates;
Only people you trust are able to manage your finances if you can’t manage your finances yourself;
Leaving your loved ones with your most valuable assets - your values, insights, stories, experiences and your love.
Moreover, an estate plan can minimize conflict among your loved ones. By clearly outlining your intentions, and ideally getting Simpson Law Firm’s support to share your intentions with your loved ones, you significantly reduce the chances of misunderstandings or disputes, while also increasing the chances that your resources will be used to create a better future for the people you love.
Finally, an estate plan that works will save your loved ones time and money by avoiding court and conflict and ensuring the people who matter know what you have, where it is, how to find it, and what to do with it when they do find it.
In short, an estate plan is not a luxury reserved for the wealthy; it’s a necessity for anyone who has things that matter, and people who matter. If that’s you, and you don’t have an estate plan (or your plan could be outdated) let’s talk soon.
Myth 2: "My spouse and I trust each other completely."
Ameriprise's survey reveals 95% of couples trust each other with finances and 91% share financial values. When couples don’t plan because they trust each other to carry out each other’s wishes, they’re overlooking several essential matters.
For instance, trust between spouses doesn't prevent legal complications or avoid court. Without an estate plan, a surviving spouse may face lengthy probate proceedings, increased tax burdens, and difficulty accessing accounts. This strain can damage relationships and deplete assets meant for heirs. Even worse, if both spouses die simultaneously, the complications can be significant, especially if the spouses have children from prior marriages, or minor children.
Another potential issue arises if the surviving spouse remarries. Without an estate plan, assets could unintentionally be passed to the new spouse instead of the people the deceased spouse loved. In some cases, children may even be accidentally disinherited, leaving them without the financial support their parent had planned to provide.
Myth 3: "Estate planning is too expensive."
Another common misconception is that estate planning is a luxury reserved for the wealthy because of its perceived high cost. The reality? Avoiding estate planning due to cost concerns can lead to far more significant time and money costs for the people you love down the road. Without a plan, your loved ones may face costly probate proceedings, unnecessary taxes, and legal disputes that can drain your estate and create additional stress for your loved ones during an already difficult time. These costs often far exceed the upfront investment of creating an estate plan.
Beyond the financial aspect, the peace of mind that comes with knowing your loved ones are protected is invaluable. An estate plan ensures that your wishes are carried out, your loved ones are cared for, and potential conflicts are minimized. By addressing these matters proactively, you save the people you love from emotional and financial burdens, making estate planning one of the wisest and most compassionate investments you can make, as well as the best gift you can give to the people you love.
Myth 4: "I don’t need to worry about who would raise my kids."
Many parents of minor children assume that in the event of their death, loved ones will naturally step forward to care for their children. Unfortunately, these assumptions are often misplaced. Without an estate plan, the decision about who raises your children will be left to a judge - a complete stranger to you and your children. And when a stranger makes the decision about who will raise your kids, it might not be the person you would have wanted. In some cases, the individual granted guardianship could have values, parenting styles, or circumstances entirely incompatible with how you envisioned your children being raised. Even if you have named legal guardians for your children in a prior created will, it’s likely not taken into consideration common mistakes we see consistently when people (and even their well-meaning lawyers) name legal guardians without the training of an estate planning lawyer.
Another important consideration is the financial burden imposed on your children’s chosen guardian. If you haven’t created an estate plan and allocated sufficient funds for your children’s care, even willing loved ones might decline guardianship, leaving the court to make an even more difficult choice.
An estate plan alleviates the potential financial burden on your chosen guardians and ensures that your children receive the care and stability they need during an emotionally challenging time.
Take Action Now to Protect the People You Love
We've seen too many people suffer negative, yet unnecessary, consequences after a loved one dies. If you haven't experienced it yourself, chances are you probably will. But with the proper education, beginning with correcting these dangerous myths about estate planning, you can break the cycle of strife.
At Simpson Law Firm, we start with education so you are clear on what would happen to your loved ones and your assets if you become incapacitated and when you die. Then we will work together to create a plan that aligns with your values, your goals, your loved ones, and most importantly, that works when you need it to.
This article is a service of Simpson Law Firm. We do not just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. We offer an Estate Planning session, during which you will get more financially organized than you’ve ever been before and we will assist you in making all the best choices for the people you love. You can begin by contacting us here, https://simpsonestatelaw.com/contact-us or calling us at 803-764-9555, and one of our friendly client service assistants will help you set up your consultation.