four estate planning myths that refuse to die ( article)

May 15, 2019 - Posted by: admin - In category:

taxes - No Responses

In his recent article, Ron Carson reviews four common estate planning myths. Because I have been talking about estate planning myths for years, having even published a book on that subject, this article caught my attention. Likewise, since Mr. Carson uses the same “life planning” phrase I like to use (and have used for a long time), I confess that I started to think that he and I are of a like mindset as I read the article.

The first myth covered in the article is that estate planning is only for the wealthy. To dispell this myth, Ron points out that the following objectives of an estate plan that are applicable to almost everyone:

Protect those who depend on you and your income during their lifetime.
Name guardians for minor children.
Name the family members, loved ones, and organizations you wish to receive your property following your death.
Transfer property to your heirs and any organizations you’ve named in your estate planning documents in a tax-efficient and expedient manner, with as few legal hurdles as possible.
Manage tax exposure.
Name your executor and/or trustee – the individual(s) or institution you appoint to act as your proxy in settling your estate and distributing your property.
Avoid probate, the court process for proving that a deceased person’s will is valid.
Document the type of care you prefer to receive should you become ill or incapacitated, including any life-prolonging medical care you do or do not wish to receive.
Express your wishes and preferences for funeral arrangements and how related expenses will be paid.

Mr. Carson next deals with the misconception that estate planning is the equivalent of death planning and preparing to distribute assets after death.

Myth number 3 in the article is the all-too-common mistaken belief that a Will can and does avoid probate. As Ron discusses, nothing could be further from the truth and while there are acceptable methods of making non-probate transfers (i.e. instead of using a Will), using a Will as the main estate planning document and legal vehicle is usually not recommended.

The last item in the article is the myth that estate planning is a one-time event and exercise and that once it is done, it is done forever. While it would be nice if we could go see the dentist only once, build a house and forget about maintenance and have one checkup with our doctor at age 21 and then never again, such is not reality. Likewise, an estate plan requires periodic maintenance and a good rule of thumb is to review and update every 3 to 5 years. Or, at least engage in the exercise of review in order to determine if any updates are required.

As mentioned at the start, Mr. Carson’s article is very good. I recommend it to one and all.