Many people procrastinate when it comes to estate planning tasks. Some of the more common reasons for putting off something we all know needs to be done includes: fear of the legalities involved in estate planning, a reluctance to face our own mortality, and the general belief that while estate planning is important, it is hardly urgent. In truth, estate planning could be much more urgent that you might think. Of course no one wants to confront their own mortality, but accidents and illnesses do happen. No matter your age or your income level, make the time for estate planning. Once you get started, you may encounter estate planning “absolutes,” which, in truth, are nothing more than myths. Some of the more common estate planning myths include:
- I have a will and I lead a relatively simply life, so my estate planning is complete. Without proper planning, the days and weeks following a death can be disastrous. Clear end-of-life instructions can make a difficult, emotional time just a bit easier, plus the deceased can feel secure knowing their wishes will be carried out. No matter how simple your life or how basic you want your funeral to be, make sure your instructions are clearly noted. In addition to a will, you may need a Financial Power of Attorney, an Advance Medical Directive, and possibly a Living Trust. Consult your estate planning attorney to decide which documents you need.
- My spouse/children will carry out my wishes. Of course we all wish this were true, but, unfortunately, this is not always the way it works out. The death of a loved one can cause people to do unusual things and it is very common for family members to end up in a free-for-all when it comes time to distribute assets. Avoid this by legally stating your wishes.
- I can make my own online will. Would you perform surgery on yourself? If the answer to that question is “no,” then put estate planning in the same category. Unless you are a legal professional, you could make serious legal mistakes or oversights—which won’t be apparent until after your death.
- I’m healthy—I don’t need to plan for long-term care. Many seniors ignore perhaps the greatest financial risk—the expenses of long-term care and how these costs could decimate assets. When paid out-of-pocket, home care services can easily consume 84% of the income of a middle-income family. Nursing home care paid out-of-pocket can consume a staggering 246% of a middle-income family.
- I won’t need as much money when I retire as I need now. Generally, in order to maintain a lifestyle which is similar to the one you are leading now, experts say you will need approximately 70% of your pre-retirement income. But wait—this figure assumes you don’t intend to do anything with the free time you will have after retirement. If you plan on adding travel, hobbies and leisure activities to your retirement years, that 70% figure may not be adequate. Additionally, you can usually expect higher medical expenses after retirement than you had pre-retirement.
- I don’t need to think about retirement or estate planning until I am much older. This is, unfortunately, one of the biggest mistakes many people make. Time is one of the most powerful tools regarding retirement and estate planning. The sooner you begin to accumulate assets and plan for your future and retirement years, the easier it will be.
- Social Security will cover my retirement, I can live off the interest while leaving the principal untouched and I don’t need to plan for that many years. This is a trio of retirement myths which should be put to rest. Social Security actually accounts for less than 38% of the average retiree’s income. The myth of living off the interest originated decades ago, back when the interest actually amounted to something. Finally, if you are 65, you have a life expectancy of at least 21 more years. That’s the average, so you could live much longer. This means you need to be planning for a minimum of two decades.
- More than 10,000 baby boomers retire each year. This is, actually, true. Those born between 1946 and 1964 are retiring in droves. The impact of baby boomer retirements will put considerable pressure on the Social Security Administration and the Medicare system as well.
There are a variety of reasons you should speak to a knowledgeable Virginia estate planning attorney. Even if you have a will, your estate may have to go through probate which can be both costly and confusing and can take a long time to resolve. Your estate planning attorney may advise you to secure your assets in a living trust, ensure that any property owned jointly includes survivorship rights, and that there are payment-on-death or transfer-on-death designations for all your accounts, deeds, titles and vehicles. The state of Virginia also offers a simplified probate process for smaller estates. Contact an experienced Virginia estate planning attorney today!