It is Estate Planning Awareness Week, a perfect occasion to clear up some widespread misconceptions about the importance of making plans for the future. Just about every Colorado resident can benefit from estate planning, from millionaires to children of low-income parents. The only difference is in the individual choices you make about your assets, health care or the welfare of your children.
One of the most common myths about estate planning is that only the wealthy need it. While those with considerable assets have more to lose financially than the average middle-class citizen, there is still a lot at stake for most of us. Part of estate planning is making sure that if you become very ill, disabled or otherwise incapacitated, your finances are handled the way you want them to be. If an accident puts you on life support, for example, a living will, aka an advance directive ensures that your preferences regarding surgeries, feeding tubes and resuscitation are carried out. Determining who will take care of your children if you suddenly are not able to is also a part of estate planning best not left to chance.
Another assumption about estate planning is that if you die without a will, the state will seize your assets. Why this myth does not push more people to plan for the end of their lives is unclear, but this statement is not accurate anyway. If you do not have a will, the state where you live will decide how your assets are divided, but unless your assets exceed $5,120,000 (which can change) they will not be subject to the estate tax. There is the possibility, however, that you will not like the way Colorado handles your assets, which is another reason to write up a will. You will then have the choice of how to divide your assets and property.
When it comes to making your wishes formal, there is some confusion about whether you need a lawyer. If you have a very simple financial picture, you may be able to do some of the work yourself. Health care directives can be drafted with forms from your hospital, and simple will forms can be found online at little to no cost. But it is important not to underestimate the complexity of your estate. Children, property and retirement and life insurance accounts can make things more confusing, so it is not a bad idea to review even simple documents with an attorney who focuses on estate planning.
Source: Forbes, “10 Common Estate Planning Myths That Can Be Detrimental to Your Family,” Erik Carter, Oct. 3, 2012
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