Estate planning is the process of arranging legal documents to determine how your assets are managed after you pass away. There are a lot of different legal documents that can be included in an estate plan, such as a will, trust or power of attorney.
When looking for information online about estate planning, you may come across common myths, including the idea that:
1. Estate planning is only for people with money
Some people believe that an estate plan is only beneficial to people who are wealthy. While it is certainly true that an estate plan can help people who have a large estate, an estate plan can benefit anyone.
There are a few legal documents that you may want to consider drafting if you do not have a large estate. For example, a power of attorney document can allow you to pick an agent who can act on your behalf if you become incapacitated after an accident or from a medical condition.
2. You do not have to update an estate plan
Some people forget they have an estate plan once they finish it and file it away. This can create some issues if an estate plan is out of date, such as legal disputes between beneficiaries. It is often suggested that people update their estate plan every three to five years to include new assets or change beneficiaries — sooner if there is a major change in one’s life or assets.
3. Your spouse will inherit all of your assets without an estate plan
Some people do not draft an estate plan because they believe their spouse will inherit their estate. However, if a person dies intestate, their estate may not go directly to their spouse. For example, if a person has children and a spouse, their spouse may only inherit a fraction of the estate. Having an estate plan can prevent this issue.
Professional legal guidance can help you avoid misinformation about estate planning.