Wills, living wills, and trusts can be confusing. That’s why we created an easy estate planning checklist covering the costs, tools, probates, and taxes. But there are still plenty of myths out there that can derail your plans.
As a responsible adult, it’s in your best interests to have at least a basic estate plan in place at all times. Understanding what you need, what you don’t need, and how all the parts work together is not always easy, especially if you don’t have a legal background. While it’s always best to talk to a lawyer, here are some common myths to avoid.
Dispelling Common Myths About Estate Planning and Wills
Myth 1: It’s cheaper to make a will/living will/trust on my own.
Wills are, at first glance, relatively simple documents to create. The legal standards they have to meet are usually fairly simple and include basic requirements such as being made in writing, signed, and verified by two witnesses. To save money, people often choose to create wills or other estate planning tools on their own, without the guidance of an experienced estate planning lawyer. However, saving the attorney’s fees by creating your own estate planning devices can ultimately be more costly.
Most people are familiar with wills, even if they never get around to making one. Wills are key tools in estate planning, an area of the law that allows you to control what happens to you, your family, and your possessions if you lose capacity or die. Wills serve a key role in any good estate plan, though they are not the only tools and may not be the most important part of your plan. Knowing how to make a will is simple, but knowing how to craft it is much different than creating the document itself.
When it comes to any kind of legal or financial planning, the costs you need to consider come both from the initial expenses and the future costs or savings. Determining how much an estate plan costs requires consideration of the the costs associated with not having a plan, or having a plan that is incomplete or flawed.
Costs of Making a Plan:
The price of creating an estate plan differs significantly based on your location, individual needs and circumstances, and other factors.
For example, if you hire an attorney to help you create a will today, you can expect to spend several hundred dollars or more. A more comprehensive estate plan with multiple documents and ongoing revisions as the law or personal circumstances change could cost several thousand dollars over the course of your lifetime. On the other hand, if you make a will yourself by downloading a pre-made form and filling in the blanks, you might pay nearly nothing.
But what happens after that? Probate is the legal process that applies to a person’s property left behind after death. This process takes time – usually six months or longer – as well as people to manage it. The person who manages a probate estate is known as an administrator, executor, or personal representative, and typically receives a flat fee or a portion of the value of the estate as payment.
Executors usually hire probate attorneys to advise them throughout the often complicated probate process. The estate pays the probate attorney’s fees. There are also the administrative costs of filing and managing the probate case, paying any applicable estate taxes, and paying any fees or costs associated with maintaining the estate until the property is distributed to new owners.
Estate planning also covers the possibility that you might lose capacity before death. Should this happen, your plan will include tools that direct your medical care, appoint someone to manage your estate, and designate a guardian to care for your minor children. It costs money to create and implement these estate planning devices, and the costs vary widely. In general, the larger and more complicated the estate, the larger the costs.
Costs of Not Making a Plan:
If you don’t make a will or an estate plan you pay no upfront costs. But, the probate and estate settlement process will still take place, and the associated costs can be higher – sometimes significantly so.
For example, it’s quite common for people to have made no estate plans of any kind, especially when they are young. Let’s say a young, single parent is left hospitalized and incapacitated after a car crash. What happens to his child? Who pays for childcare expenses? What about his money? Who pays the bills? Who decides what kind of medical care or treatment he receives?
These types of questions must be answered, but because there is no estate plan, there are no clear directions. Someone will have to ask a court to make those decisions or appoint someone to do so. The costs of such a process can be significant.
For example, without an estate plan, there is no clear guidance about who should make decisions on behalf of the incapacitated parent, or who becomes the guardian of the child. Because of this, a court will have to hold hearings to make those determinations. If family members or other interested parties disagree about who the guardian should be and the hearing becomes contentious, the court costs and attorney’s fees can balloon substantially. These processes also take a lot of time and can damage family relationships beyond repair.
Another example of how not creating an estate plan can cost money in the long-run is the cost of mismanaged or squandered inheritances. For example, if you die without an estate plan, your young children will receive their inheritances as soon as they become 18. They will then become the sole decider on how that inheritance is spent.
Young adults who suddenly inherit money are notoriously bad at financial management and can easily squander sizable inheritances. While a good estate plan can guard against such an event by providing inheritances over time or under the supervision of a responsible manager, dying without a plan provides for no such protections.
Then there are the situations where people make their estate plans on their own. While this might save on upfront costs, there are substantial risks. How, for example, do you know you’ve made your estate planning tools correctly? If you decide to make a will without the assistance of an attorney, you risk the possibility that the will doesn’t meet the necessary legal standards or it doesn’t provide effective protections.
State legal standards, for example, make no requirement that you name an executor in your will, nor do they require you to name a guardian for a young child. But, if you make a will and leave these important provisions out, you could cost your estate more money because you’ll require the court to go through additional steps to address the questions you failed to answer. The time and money associated with answering these questions can easily cost your estate more than if you had paid an attorney to help you craft an effective plan.
Myth 2: Wills and living wills are the same thing.
One of the most common myths surrounding wills and estate planning arises from the confusion between a living will and a last will and testament. While the two estate planning tools sound similar, they serve entirely different purposes.
A living will is a type of advance directive: a legal document you make in anticipation of losing capacity or the ability to communicate. Advance directives allow you to make choices about who will manage your finances, take care of your children, or make your health care decisions for you. More specifically, living wills allow you to choose what kind of healthcare you wish to accept or refuse, and make your wishes known to your health care providers. Living wills only take effect if you are alive yet unable to make or communicate choices, and have no effect on your affairs after you die.
A last will and testament has nothing to do with your health care choices or your preparations for the possibility that you might lose capacity. Wills only take effect after you die, and do nothing to protect you should you fall ill or be involved in an accident that leaves you incapable. Wills allow you to make choices about your property and your family that will only take effect after your death, not before.
Myth 3: I need to plan a reading of my will.
A reading of the will is one of those great fictional devices that, while dramatic and compelling, has nothing to do with actual laws. Your family will be able to read your will after you die but they won’t do it by gathering together in a room to listen to your lawyer read the document out loud. Today, the only place you’ll find a reading of the will is in a movie, a TV show, or in a novel.
After someone dies, someone else has to bring that person’s will to a probate court. Once filed with the court, the will becomes part of a new probate case, and will be subject to the court’s (and the public’s) scrutiny. During the probate process, a court will determine if the will meets legal standards. If so, the terms of the will determine what happens to the estate. If not, state intestacy laws control.
Probate cases are public records: Anyone who wishes can inspect the will as part of the case record. While private readings of the will may have been common in times when literacy rates were lower and it was harder to notify distant relatives, they are not practiced today and are not required by any state’s probate laws. If you have your heart set on a reading of your will, it may be possible to have your probate attorney make such arrangements for you, but the process is superfluous.
Myth 4: Only wealthy/sick/old people need a will.
Apart from discomfort that comes from confronting mortality, a mental hurdle that prevents people from creating a will or estate plan is the idea that these tools are only necessary if you’re wealthy, sick, or old. While it’s true that you have a more pressing need for an estate plan if you’re a part of these groups, young adults, healthy adults, and people who don’t have a lot of money still need a will and an estate plan.
If you care about what happens to your family after you die or are incapacitated, you need an estate plan. If you want to make choices about who inherits your property, you need an estate plan. If you want to guard against destructive family conflicts that might arise after your death or incapacitation, you need an estate plan. None of these issues are strictly the domain of the wealthy, the elderly, or the ill.
Even if you are a young adult with few possessions, no children, no spouse, and in excellent health, you have no way of knowing what the future will bring. If you don’t have a plan, you have no way to ensure those questions will be answered to your satisfaction.
Myth 5: I already made a will so I don’t need anything else
A will is an important estate planning document, but it’s not the only tool you need, nor can it be a substitute for tools that serve other purposes.
A last will and testament only takes effect after you die. Until then, it serves almost no purpose. For example, if you get sick and need someone to manage your financial affairs, or you need someone to talk to your doctors about your health care options, your will won’t help you.
Each estate planning device serves one or more specific purposes, and many of these purposes cannot be addressed by other tools. For example, a living trust can allow you to make inheritance decisions that won’t be revealed in probate, but they do not allow you to name an executor for your estate. A will, on the other hand, allows you to name an executor and make inheritance choices, but your decisions will not remain private.
So, making a last will and testament is a great first step, but you will need additional estate planning tools if you want to give yourself, and your family, as many protections and benefits as possible.
Myth 6: I don’t need to write a will because I can just tell people what I want.
Another popular trope in fiction is the oral will. The scene typically unfolds with a dying character telling her last wishes to the loving family members who have gathered around to be with her in her final moments. Like readings of the will, these scenarios are dramatic, but they are not an accurate reflection of modern estate planning laws.
A minority of states (about 20) still allow people to make oral, or nuncapative, wills, but with significant limitations. For example, while the state of Washington allows you to create an oral will if you meet specific criteria, but you can only use an oral will to dispose of personal property of up to $1,000 in total value. (If you are in the armed forces or working on a merchant marine vessel you can use an oral will to dispose of both wages and personal property without the $1,000 limit.) Second, there must be two competent witnesses present. Third, you must be in your last illness, meaning that you must make your oral will while sick from the illness or injury that leads to your death. Fourth, someone must write down the terms of you oral will and submit that document to a probate court within six months of your death. Fifth, any spouse or children left behind must be notified of the submission of the oral will so that they can contest its terms.
In other words, while it’s true that oral wills are allowed in some states, they’re not an easy substitute for a properly drafted last will and testament. Even if you live in a state that allows for oral wills, you still need to create a written will.
Myth 7: I already made an estate plan so I don’t need to do anything else.
If you’ve already created an estate plan, you should congratulate yourself. You’ve taken a step that most people never get around to taking, and have made choices that will protect you and your family.
But having a plan in place is not enough. You now need to review and update your plan periodically to ensure you get the best protections possible. A lot can change over time, and there are several reasons why you may need to change plans or tools you’ve already made.
- Your Circumstances. An estate plan needs to fit your individual needs and circumstances. As your life changes, so too should your plan. For example, if you created a plan when you were single and are now married, you need to change the plan to reflect your new marital circumstances. Similarly, if you get divorced, have a child, experience a significant change in your financial life, or are diagnosed with a serious illness, you likely need to make changes to your plan.
- Your Desires. Even if you don’t get married, divorced, have a child, or go through any other significant life changes, you may need to change your estate plan because you’ve changed your mind. Whether you want someone else to act as your child’s guardian, want to leave more to charity, or anything else, you should change your plan when it no longer matches your desires.
- The Law. Even if your life nor your desires change, you may still need to update your plan because of changes in the law. Estate planning legal changes can come at any time. Even if you are aware of the changes, it can be difficult to determine if they apply to you. The best way to know if you need to change your plan because of changes in the law is by having an estate planning attorney assist you. Your attorney will usually keep you advised about any changes to estate planning laws and tell you when you need to make a change.
Myth 8: I can avoid probate if I make a will.
Probate is not always as time-consuming and expensive as common as many believe, but even the simplest probate process can last months and involve significant expenses. If you want to create an estate plan that will help you minimize or avoid probate, there are ways to do it. A good revocable living trust, for example, is commonly used for exactly this purposes.
A last will and testament, on the other hand, does nothing to help you avoid probate. No matter what you say in your will or how complicated your estate is, your will must be submitted to a probate court after you die. This is the only way for a court to determine if your will is legally valid, and the only way to ensure that the choices you made in your will are enforced.
Myth 9: My kids can challenge my will if I don’t leave them an inheritance.
It is possible for people to challenge a will, but it’s more complicated than you might think. To challenge a will, you have to meet some basic legal requirements. First, you have to show that you have “standing,” meaning you are someone who stands to inherit from the current will or would have inherited from the decedent if the current will is not legally valid. In general, children almost always have standing because they are usually entitled to inherit from an estate if the decedent dies without a will, or if the will left behind is not legally valid.
Second, to challenge a will you need to have a legally recognized reason why you believe the will is invalid. These reasons, called grounds, include the testator (the person making the will) lacking capacity, the submitted will not being the most current version, and the will failing to meet necessary legal requirements.
But, being unhappy with the terms of a will, or unhappy with the inheritances it leaves, does not qualify as grounds to challenge it. So, unless your children can show both standing and grounds, they can’t challenge or invalidate your choices simply because they don’t like them.
Myth 10: The government will inherit my property if I don’t have a will or estate plan.
It is true that your state government could inherit your estate, a process called escheat, but it doesn’t happen very often. Every state has laws that determine what happens to your property if you die without a will, called laws of intestate succession. These laws predetermine who inherits your property based on who survives you after death.
For example, if you die leaving behind no surviving spouse but two surviving children, each child will inherit half of your estate. The only way a government will inherit your estate is if you die intestate (without a will) and have no identifiable surviving relatives. In this case your state will inherit all of your property.
Even if you have no identifiable living relatives, you can still avoid escheat by creating a will. As long as you decide to craft a will, preferably as part of a comprehensive estate plan, you can make whatever inheritance decisions you like. If you do this, your estate will pass how you want it to and won’t be inherited by the state unless that’s your choice.
If you’re like most people, thinking about death probably seems as pleasant as performing self-dentistry. Yet being a responsible adult requires many tasks that we might not otherwise wish to perform, and estate planning is one of them. If you create an estate plan, you can be confident that you’ve taken steps to protect you and your family.
On the other hand, if you put off estate planning for too long or choose not to create a plan, you leave it up to others to make important decisions for you with no way of knowing (or controlling) what those choices are or who makes them.
For more information, check out: What Is Estate Planning – Basics & Checklist for Costs, Tools, Probates & Taxes.
Do you have any horror stories about estate planning gone wrong? Any tips to add?