Why we put off estate planning for too long
Updated: Sep 27, 2022
Although we all know that no one lives forever, people have differing views on what is the best path forward for managing their worldly goods after they are gone, and many end up not making a plan at all. With only half of Americans having at least a will in place, at least one in three of these believe that they don’t have enough assets to leave behind. Apparently, inflation fears are one reason people believe that their savings have a lower value.
While recent health and economic challenges have fed these fears, it is important not to overlook a long-term life plan because of short-term fears. For residents of Nassau County, New York, having at least a few documents for an estate plan in place with a will or living trust is an important way of planning for what lies ahead.
The purpose of estate planning
Many reasons we don’t go through with even the most basic estate-planning steps such as creating a will or power of attorney is that there is confusion about what it is all about. Is it to take care of finances or healthcare needs? The answer is, both, as both are an essential part of life planning.
The purpose of a will is to clarify an individual’s intentions regarding who can oversee the estate once they are gone, as well as how they wish to settle debts and taxes on the estate, the allocation of assets and property and who will be the guardian to take care of any minor children.
In addition, having a financial power of attorney (POA) or POA for healthcare ensures not only that a trusted agent will be able to oversee the financial health of your estate in the event of incapacity, but also that your preferences regarding treatments, choice of healthcare providers and other end-of life decisions are carried out.
Common myths about estate planning
There are many misconceptions about estate planning, who it’s for and what it can do. One common myth is that it is only for the rich. No matter what your net worth is, your assets will still go through probate, which follows court-mandated procedures according to state laws. It’s just that without a directive, probate will determine the distribution of assets, assess the taxes due and charge the estate for court costs and services rendered.
Estate planning is not just about assets, either. It also wisely plans for a future for your loved ones regarding:
Dependents who will need financial assistance.
How to pay for remaining debts such as a mortgage or car loan, death taxes and costly funeral expenses so that loved ones do not have to shoulder that burden.
Creating a legacy for loved ones that will provide for them through a trust, life insurance, or other financial planning tool to cover living expenses, education costs, or healthcare.
Although smart estate planning minimizes the impact of estate taxes, it isn’t just about dodging taxation. Creating life insurance, trusts, or gifting designations ensures that your assets go to the people, organizations, or causes that you value without having the cumbersome and expensive process of probate to chip away at your legacy.
But just because the plan is in place does not mean it will remain relevant. Any life change, such as a graduation from college, divorce, marriage, or death of a spouse, will require a reassessment and adjustment of any estate plan.