Myth One: If I Prepare a Plan, Something Will Happen to Me
I understand this fear, and I hear this a lot from my clients— this idea that if I put an estate plan in place, something will happen to me. I will die unexpectedly. The good news is that of the thousands of cases I’ve worked on, I’ve seen no correlation or connection between putting an estate plan in place and something happening accidentally or suddenly. The reality is, at some point, we will all pass on. When the time comes, your loved ones will appreciate you taking the time now to put all your ducks in a row. Unfortunately, the alternative, the “do nothing” approach, will often result in your family going through the probate process, which is time-consuming and costly. In our Estate Planning in Colorado company, we help families to avoid that.
Myth Two: I Am Too Young to Make a Plan
I get asked a lot of questions: Am I too young to put together an estate plan? The answer is no. There isn’t a set age, and there’s a common myth that you must be elderly to have an estate plan in place. Really, that doesn’t serve people because, a lot of times, it’s a type of planning that if you procrastinate putting in place and something unexpected happens, it’s too late. Additionally, when people wait until they are unhealthy to put a plan in place, they often aren’t making the best decisions.
Myth Three: I Am Not Wealthy Enough to Make a Plan
Estate planning is not about how much money you have, it’s about how much input you want to have. Without an estate plan, you are at the mercy of the government to make your decisions. Ultimately, a stranger or a judge will decide who will care for you financially and medically if you become disabled. In reality, most of us will be disabled sometime in our life. Additionally, a judge will decide who will care for your kids if they are minors, and if your children are adults, they will receive their inheritance outright with no asset protection and without guidance.
Many people think they don’t have enough money to pay for an estate plan. The reality is the cost of no plan is more than the cost of a plan. Probate court is the default plan if you do not have an estate plan. This is costly and inconvenient; on average, it costs 5-9% of your estate and takes between 9 months and two years. For example, a family with a $400,000 home, $500,000 in life insurance, and $100,000 in retirement accounts will lose $50,000- $90,000 in probate. Alternatively, by creating an estate plan with a qualified attorney, they will avoid the $50,000-$90,000 in probate costs and only pay the estate plan costs between $6,000-$8,000.
Myth Four: All I Need is a Simple Will
Many parents believe they need a simple will to protect their loved ones. Unfortunately, a will alone is not enough. A will doesn’t cover what happens if you’re incapacitated or disabled. A will also has to go through the probate court, be filed with the court, and a court case is actually commenced for a will to be effective. I was grateful to receive the 5280 Magazine Top Estate Planning Lawyer in Colorado. But my real satisfaction is to help families overcome this myth and plan best for them and their families.
What is probate?
Probate is a court process. Each state has its own probate court process. During the probate process, a judge decides how assets are transferred. It is a court proceeding. When your family members or loved ones have to go through probate to help you or your estate, they get a case number. There are court fees, legal fees, and you are reliant on the timetable of the courts. On average, the probate process takes 9 months to two years and costs 5-9% of your estate value.
The probate process also gets involved if there is a minor child or incapacitated adults. The judge will decide who will be in charge of the financial affairs and the medical decisions for the minor or incapacitated adult. The probate court gets involved when you pass away or become incapacitated and have a will in place or if you have no plan in place. However, you can create an estate plan that avoids probate.
If you haven’t created an estate plan that will avoid probate, you’re leaving it up to a probate judge to figure out who’s in charge of your finances if you’re incapacitated and who becomes guardian of your children if something happens to you.
Myth Five: If I am Married, My Spouse Will Automatically Be in Charge
If you are married, you still need a plan. Without one, your spouse will likely have to deal with frozen bank accounts when you pass away. They will have to go to court to be able to make decisions if they become disabled. Without a plan, your spouse will lose out on the opportunity to minimize the taxes paid and will not benefit from asset protection. Additionally, eventually, both of you will die, and some action will need to be taken with your remaining assets. There is a common misconception that if you are ever incapacitated or disabled, your spouse will automatically be able to act on your behalf. However, this is not true. The law does not assume that your spouse has your best interest. Therefore, without a legal plan, your spouse would have to go to probate court to ask the judge to make your medical and financial decisions. If a family member wishes to make your medical or financial decisions, for example, your parents or a sibling, they can ask the judge to appoint them as financial or medical guardians.