Estate Planning Truths: Debunking Common Misconceptions
Estate planning often feels complex, leading many people to rely on assumptions that can have devastating consequences for their loved ones and their legacy. From who can make decisions for you to whether you need an estate plan, common myths can stand between you and a secure future. Let’s debunk these widespread misconceptions and reveal four essential truths about effective estate planning.
Myth 1: My spouse can make all my healthcare and financial decisions because they are my spouse.
Reality: This is a dangerous misconception that can lead to significant stress and financial hardship for your family. While your spouse has certain rights, they generally do not automatically have the legal authority to make all medical decisions or manage all your financial accounts if you become unable to manage your affairs (i.e., become incapacitated). Without properly executed legal documents, you and your spouse may face obstacles handling the following:
Medical decisions. Your spouse may be unable to access your medical information, direct your care, or make critical end-of-life decisions without a medical power of attorney (also known as a durable power of attorney for healthcare) and an advance directive (or living will). Without these documents, a court may need to appoint a guardian or conservator in a public, costly, and time-consuming process.
Financial decisions. Similarly, your spouse could be locked out of accounts in your sole name, unable to pay bills or manage investments without a financial power of attorney. This can prevent timely financial management and even payment of day-to-day expenses. As with medical decisions, a court may need to appoint a guardian or conservator before your spouse can access these important accounts.
Proper planning ensures that your spouse or another trusted individual you choose has the immediate legal authority to act on your behalf and honor your wishes without court involvement.
Myth 2: My family knows my wishes. They will divide everything the way I want it divided.
Reality: While your family may genuinely intend to honor your verbal wishes, discussions about your affairs—without proper legal documentation—carry no legal enforceability. After your death, without a legally binding plan, your estate may be distributed according to your state’s intestacy laws, which may not necessarily be what you intended. This could lead to the following outcomes:
Unintended beneficiaries. If you rely on the state’s default distribution plan, your money and property could go to distant relatives rather than close friends, stepchildren, or other nonrelated loved ones.
Family disputes. Even well-meaning family members can disagree on what your true wishes were, leading to bitter conflicts and costly litigation that depletes your hard-earned money and property.
Loss of control. Without a last will and testament or revocable living trust, you have no say regarding who inherits your money and property and how they receive it, who will raise your minor children, or who will be in charge of winding down your affairs.
A comprehensive estate plan is the only way to legally ensure that your estate is passed on as you intend, protecting your legacy and providing clear guidance for your loved ones.
Estate planning is about taking control, ensuring that your wishes are honored, and providing peace of mind for you and your loved ones, no matter what you own. To learn how estate planning can benefit your specific situation, call us to schedule a consultation and check back next week for the TWO more myths!
