Top Misconceptions About Estate Planning

Estate planning is not incredibly clear cut. However, it’s more than the process that can create confusion. My goal is to simplify the process for you, and that starts by helping you gain a better understanding of what is entailed.

Below are ten misconceptions I deal with everyday when discussing estate planning. Hopefully these can answer a few of your questions!

1. It’s only for rich people.

You may be thinking, “Why would I need an estate plan? I don’t have an estate!” But your estate includes everything you own—your home, your financial assets, your personal belongings, and any payments owed to you. Whether your estate is large or small, you want to ensure that if something happens to you, it goes to the people you choose, in the way you choose.

2. I don’t need to do anything if I’m okay with my property passing according to state law.

If you don’t have a will, the state of Texas wrote one for you in the intestacy laws spelling out where a deceased person’s property goes in the absence of a will. But even if the intestate scheme happens to match your wishes, a well-drafted estate plan can ensure that your property passes more efficiently and with more flexibility to account for circumstances than in the absence of such a plan. For example, if you have minor children who would inherit, it’s far easier and more cost-efficient for property to pass to them through a will than without one, as you can include trust provisions for management until the child is older.

3. I’m married, so my spouse will automatically get everything.

Texas is a community property state, which means that for married people, much of what you own is co-owned with your spouse. Yet that doesn’t mean that your property automatically passes to your spouse. In fact, it’s often the case that when a client comes to me to probate the will of one parent, we discover that there’s work undone from the earlier death of their other parent, because of the mistaken assumption that the property had transferred automatically.

4. Probate is onerous and expensive so I should plan to avoid it.

A well-drafted estate plan can minimize the expenses and time your loved ones will spend administering your estate, while a poorly done plan, or worse, the lack of any plan, may force your loved ones to spend far more time and resources. This increases the risk of conflict. While the probate process varies from state to state, Texas has arguably the easiest and most cost-efficient probate process in the country. Trust-based planning has its value, but probate avoidance is not generally a major planning consideration.

5. Estate planning is just a thing you do once or twice over your life at a lawyer’s office.

When people hear “estate plan” their first thought is of wills and trusts and the like, but estate planning is a lifelong process. In fact, much of it will happen outside a lawyer’s office. Other aspects of your estate plan, beyond the documents you hire an attorney to prepare, include lifetime gifts, beneficiary designations, and titling property with rights of survivorship. In my estate planning process, we talk broadly about everything that estate planning entails. I’ll then help you create a framework for your overall planning goals.

6. Estate planning is just about where my stuff goes.

Estate planning is more than simply deciding who gets your property when you die; it’s about deciding who cares for your children.  It’s also about deciding who would make decisions on your behalf if you were to become incapacitated and unable to care for yourself. In fact, for those with young children, planning for their care may be the most important part of the estate plan.

7. Estate planning is just filling out forms; I can do it myself.

I like to say that estate planning is like the dental cleaning of legal work; no one looks forward to it, but it’s a preventative step that may avoid a costly and painful root canal later. To carry the analogy a bit further, if your tooth hurts, you don’t have to go to the dentist. You could consult Dr. Google instead. Maybe you do a little research, decide the solution is to pull your tooth, and watch a few Youtube videos to learn how. Will it work? Well, maybe, IF you’re able to diagnose your own problem AND treat it correctly. But there’s a fair chance you’ll diagnose wrong and end up having to go to the dentist later anyway for a more painful and costly cure than you’d have needed had you just seen an expert in the first place. As a probate and guardianship attorney, I bring the experience of seeing how planning documents and strategies work (or don’t) when in practice. As such, I can draft a plan for you that anticipates and mitigates against the issues that can arise down the road.

8. I’m too young to need to worry about this.

In a perfect world, we’d all be blessed with long, healthy lives and would have plenty of notice when the time comes to get our affairs in order. As the current COVID-19 pandemic makes all too clear, though, we don’t live in that perfect world. The sad reality is that health and longevity are promised to none of us. Planning ahead for the future is one of the best gifts you can give your loved ones so that no matter what happens, you can keep taking care of them.

9. My family will do the right thing; they don’t need instructions from me.

“I want to leave everything to one person, and they know to share with everyone else.” It’s a statement I’ve heard many times as I walk clients through the estate planning process. It sounds good but there are a few problems with it. First, of course, nothing prevents a beneficiary left a gift with this informal understanding from choosing to keep the whole gift rather than share. But even such a beneficiary who wants to share might run into some challenges doing it, facing possible gift tax considerations and risk that the property may become subject to their own creditors. Informal planning may seem appealing, but a well-drafted estate plan can better ensure your wishes are met.

10. I don’t need to worry about this because by the time it comes up, I’ll be dead anyway!

This is the phrase that’s launched a hundred contested probate matters! When I see expensive, unpleasant intrafamily squabbling after a loved one’s death, I often think, “I’m not sure what the person would have wanted, but I’m sure it wasn’t this.” On the other hand, I’ve also seen how a well-drafted estate plan can make the process easier and less stressful for the loved ones left behind. While an estate plan can’t force people at odds to get along, a well-drafted plan can anticipate potential conflicts and perhaps mitigate them. As I like to say, I can’t make people who hate each other get along, but I can prepare an estate plan that may help avoid creating or aggravating conflict.

If you have more questions about estate planning or are ready to move ahead creating or updating one, please contact me today!