Myth #1: My spouse can make all of my healthcare and financial decisions because he/she is my spouse.
Reality: This is not always the case. To make sure your spouse can indeed make important medical decisions on your behalf, you should sign a durable power of attorney and a medical advance directive.
Myth #2: I’ve already told my family how I want my affairs handled after I die. They’ll divide everything the way I wanted it.
Reality: Informal discussions about your affairs have no legal enforceability. Even if your immediate family does carry out your wishes, if there is a remarriage or divorce, for instance, your estate could end up in the hands of people you never intended to be beneficiaries. A properly executed will and other estate planning documents are the only way you can ensure your estate ends up where you want it to go.
Myth #3: I signed a will before, so I don’t need to do it again.
Reality: An old will may not reflect your current goals. You or your children may have married or remarried. Your property holdings may have changed. Additionally, a will does not protect your loved ones from a lawsuit or divorce, meaning anyone can obtain your assets if not properly protected. A trust may now be the preferred method to safeguard your legacy because of changes in your circumstances and needs.
Myth #4: I am not wealthy enough to need an estate plan.
Everyone can benefit from estate planning, which addresses non-wealth aspects of your life along with the financial aspects. Simply owning a home or being married with children imposes a need for proper planning. Ancillary documents, such as a Power of Attorney, Advanced healthcare directive, and HIPAA Authorization forms are a MUST. Not only can Estate planning ensure someone you trust will care for your children and pets after your death - it can also serve for emergency purposes. Should someone be hospitalized, you need proper documentation to be able to speak with doctors for them to be able to disclose diagnosis/information of a loved one.
Myth #5: Trusts are expensive
The average cost of a Trust drafted by an attorney in California is anywhere from $2,000 - $5,000 - The average cost of probate court in California for assets worth $800k is $6,000. This does not include additional expenses, such as lawyer fees. Not to mention the emotional distress of having to go through court proceedings while mourning the loss of a loved one. Peace of mind is priceless.
Moreover, trusts are not just for the wealthy: In states that practice Medicaid recovery, like California for instance, your survivors may receive a large bill for Medicaid-funded nursing home care after your death, which can force the sale of assets like the family home. Some states even seize life insurance proceeds. Depending on your specific situation, a trust can prevent this from happening. The only way to know for sure is to speak with an estate planning attorney to obtain personalized advice for your situation.