Planning your estate is one of the last things most people want to think about or discuss. It’s a taboo subject which tends to make families uncomfortable, as the thought of losing a loved one is unpleasant to focus on. Estate planning may also be confusing and lead to costly mistakes which can cause stress for you or your loved ones.
Let’s look at a few misconceptions around Estate Planning…
Myth #1: Estate planning is only for the wealthy
Estate planning is about so much more than the value in your bank accounts. You do not need to have $100,000 in an account to plan your estate. It is about making sure that your loved ones know what to do if something happens to you. Where should they look for documents? Do you have a will prepared and where are the copies kept?
Consider who will be responsible for you and your finances should you become incapacitated or your health fails (POA), and who will take care of your children (Guardianship).
Myth #2: I am young, I have time to plan my estate
Working with Estates, it is always disheartening to be informed that a young person has passed. No one knows at what age they will die, therefore having an action plan in place for your accumulated assets is crucial. The value of your assets may be financial, property, or sentimental, for example family heirlooms, but regardless of the asset, having clear guidelines on how they are managed is important to eliminate any conflict or confusion.
Myth #3: If I have a will, I don’t have to worry about probate
Probate is determined necessary for various reasons so it is important to speak to your lawyer about your assets as part of your Will preparation. The probate process can be time consuming and costly. Your financial institution may determine that probate is required based on the type and value of accounts held. Probate may become necessary to settle family disputes, real estate properties, and right of survivorship. While a Will provides the court with guidance on your wishes, it does not truly eliminate the probate process altogether.
Myth #4: I don’t need a lawyer
If your estate and financial situation is relatively simple, you may draft up a Will using several free online resources and have it witnessed. For personal and health care decisions, using a power of attorney (POA) document can also be sourced and prepared via online sources.
However, while most documents may cover some common simple situations, there may be other complicating scenarios that warrant review and legal guidance. It is always prudent and advisable to have a qualified legal estate professional review your documents to ensure you are in the best possible position. A lawyer will also ensure that your wishes are set out correctly and carried out.
Myth #5: Power of Attorney has the same power as the Will
The power of attorney is a legal document that allows the appointed person to stand in for you/act on your behalf for certain financial, legal or medical matters. A Financial Power of Attorney will allow your agent to make decisions about your money or property.
A Health Power of Attorney allows your agent to make healthcare decisions. It is important to note that the power of attorney ceases to be effective on death, and has no further power. That is where the Will or Trust becomes active.
Being proactive about your estate planning is an important factor in your overall financial plan. Please reach out if you’d like to speak to an estate specialist today, and we’ll be in touch!