Estate planning is having a plan for how you want your assets and financial affairs to be taken care of when you can no longer make decisions for yourself, either from death or incapacity (e.g., stroke, mental illness, coma, dementia). However, there are many myths that I commonly hear about why someone doesn't think they need estate planning. Let's break down a few common myths about this aspect of financial planning.  

Myth #1: Estate Planning is for Only Wealthy People 

Wealthy people are not the only humans who are subject to death and incapacity. We all are, so it would stand to reason that we would also need to plan for these events. It can also be helpful to think more broadly about the concept of assets. Often, the word asset is associated with an expensive item, like an art collection, or some type of financial account, when really the term just refers to something a person owns, which can be as minor as your favorite mug, clothes, books, or furniture. All of these assets are examples of things that would need to be addressed or given to another party if the original owner could not care for them.  

Myth #2: Estate Planning is Complex 

Estate planning can actually be very complex, but it doesn’t always need to be. Usually, the more complex a person’s financial situation is or the more assets they have, the more complex their estate planning may be. Estate planning complexity can also be driven by the complexity of a person’s financial life, such as having a special needs child or stepchildren. However, there are some simple and effective ways that people can start estate planning. For example, checking your beneficiary designations on your retirement accounts is an excellent place to start estate planning. This is by far one of the most overlooked estate planning tasks that has a major impact on how a person’s assets are distributed. Even spending some time researching your state’s intestacy laws, which is the process your state will follow to transfer your assets if you die without a will, can be a good first step in planning your estate. Through this research, you may find that local law is completely in line with how you would want your estate distributed in the first place. Alternatively, if local law is out of line with how you would like your assets to be distributed, it can be fuel for future research on how to ensure this scenario does not happen.                                            

Myth #3: Estate Planning is for Old People 

Estate planning involves discussions about death and disability, and this may cause many younger people to think these conversations can be delayed well into their future. However, more people would benefit from a basic estate plan than one would think. If you want a say over how your assets will be handled after you die or how your assets will be distributed when you die, then having an estate plan is something that you should consider. Additionally, for young families with children, it is vital to have estate planning documents in place to establish guardianship of your children in the event of your death or the unfortunate death of yourself and your partner, which is a common clause in a last will and testament. In the unfortunate event that neither child's parent is available to provide for their care and there is no legal documentation stating the wishes of the parents, state law will dictate who becomes responsible for taking care of your children, which in some cases may not align with the wishes of the parents. This is by far one of the key indicators for me as a financial planner that estate planning needs to be a priority and is something I advise all families with minor children to think about. 

Myth #4: Estate Planning is Expensive 

The final myth that we're going to look at is the idea that estate planning is costly. Similar to the earlier discussion of complexity, estate planning can be an expensive process if a person’s financial life is complex. The idea of having to spend a lot of money on an estate plan is often one of the most significant barriers to preparing for death and incapacity. While having a last will and testament prepared and other common estate planning documents such as a power of attorney or living will can come with the expense of legal fees, there are several other ways that people can get started with estate planning that cost literally nothing. For example, if you have a retirement account such as a 401K or 403B, making sure that you fill out your beneficiary designation forms and also periodically review them to ensure they still represent your wishes is an excellent place to start with the estate planning and may also be the only estate planning that you need if you're just getting started with your financial life. Some employers even offer the ability to get a will or power of attorney drafted for free or a discount as a benefit to employees, and this could really help to make the whole process more affordable to at least get the basics established, which may be all a person needs. Handwritten wills, also known as holographic wills, are also an option for those seeking to avoid legal fees while establishing a basic will. However, if you are choosing this option, it is vital to make sure that you are writing the will in alignment with the laws of your state to ensure it is valid. 

There are many misconceptions about estate planning that can keep people from getting started with building a plan for the transfer of their assets at death. Although most of the misconceptions about estate planning come from a kernel of truth, the benefits of having a valid estate plan, like peace of mind and financial security for surviving family members, can far outweigh the challenges of the process for those who need it.