Broker Check

Estate Planning Myths

October 10, 2023

Estate planning can be one of the most misunderstood aspects of financial planning; however, it’s vital to ensure your assets and family are protected. Unfortunately, common myths convince many they don’t need to create or update an estate plan. Here are some common estate planning myths (and reasons why having a documented strategy is vital for everyone).

Only the Wealthy Need Plans. Without a will, state succession laws and the probate process decide who serves as the estate representative and where assets go. The probate process is public and can take anywhere from a few months to multiple years.

Proper estate planning considers tax liabilities. While the federal estate tax exemption in 2023 is $12.92 million (thanks to the Tax Cuts and Jobs Act), the now-higher exemption expires at the end of 2025. Despite the generous federal exemption, around a dozen states levy their own estate taxes with a lower exemption than federal, and six states collect an inheritance tax. The highest top rate among state estate taxes is 20%; the highest rate among state inheritance taxes is 18%.

You Already Have a Will. Estate plans are not meant to be “one-and-done” documents. They should be reviewed regularly and updated following any significant life event such as a birth, death, marriage, divorce, or move to another state. Beneficiary designations trump wills and should be revisited regularly. A complete plan should include a current list of all digital accounts with usernames, passwords, and security questions.

A Will is Enough. A thorough estate plan includes components designed to protect your income if you become disabled during your working years and protect your assets if you require costly long-term care. It should also provide direction should you become unable to make decisions regarding your health and finances. Minimum documents include a Health Care Proxy, which designates an individual to make decisions regarding medical treatments, an Advanced Care Directive that provides treatment instructions regarding prolonging life, and a Power of Attorney, which names the person you wish to make financial decisions.

Estate planning can be complex. No matter the age, with so much at stake, it’s crucial to have things set up appropriately to protect against the loss of money or time stuck in probate. We are happy to work with you, your attorney, and your tax professional to secure and make the most of your legacy; please reach out if we can help!