7 Common Estate Planning Myths

by Jenny Ling, Esq.

Two-thirds of Americans have never done any estate planning.  There are many reasons that people have for not completing this important step – they think they are too young; they figure their family will figure it out; they are concerned that estate planning is too expensive; or they figure estate planning is only for rich people.  But the reality is that estate planning is for everyone, no matter their age or wealth, and not having an estate plan can be traumatic and costly to your family.  Here are some of the most common estate planning myths I hear.

1.  I’m too young for estate planning.

Whether you think you do or not, you have an estate.  Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, retirement, life insurance, furniture, and personal possessions. No matter how large or how small, everyone has an estate and needs to make a plan for it.

Most people think they don’t need an estate plan until they are older or have a lot money.  But that’s not true.  Adults at every age should make sure they have an estate plan in place.  Your plan will make sure your end-of-life wishes are followed and your loved ones are taken care of after your death.  We never know when we will need an estate plan, and delaying planning can often have disastrous consequences.

2.  You only need estate planning if you’re rich.

Estate planning isn’t only for people with lots of money.  It's about making sure that your finances are taken care of if you're incapacitated, that decisions about your health care are carried out the way you'd like even if you're not able to make them, and that your children and other heirs are taken care of when that time eventually comes.  Estate planning is for anyone who may become seriously ill or pass away. In other words, it's for everyone.

3.  I don’t need to name guardians for my kids.  They’ll go to my family anyway.

No one will love and care for your children exactly the way you do, but as a parent, you should be the one determining who cares for your children if something happens to you.  If you die without making a plan for your children, a judge will decide who should be guardian of your children.  Anyone who is willing to be guardian will be considered.  The judge won’t know the reasons you have for wanting one person over another.  They will pick a guardian for your children based on who can make the best case.

And what happens if more than one family members wants to care for your children after you’re gone?  This could set up a long, and costly, court battle over your children.  This is a result I can’t imagine anyone desiring.

4.  I want my spouse and kids to get everything anyway.  Why do I need a Will?

If you don’t make an estate plan, Washington’s intestate succession laws will determine who is entitled to your property.  This means the law, not you, will decide who will receive your assets.  Spouses and children are given top priority, followed by your closest living family members.  But what if your Spouse remarries and still doesn’t have a plan? Your assets may end up going to an unknown to you third party.  If you are single with no children, your assets would first go to your parents. But what if you are estranged from them?  What if they already have enough to live on, and you’d rather give to your siblings or niece and nephews?  You would need to have in a plan in place to make that happen. It is important to note that state intestacy laws do not apply to unmarried partners.  If you want someone outside of your family to inherit your property, having a plan is an absolute must.

If you have minor children and you die when they are minors, they will receive all of your estate in one lump sum when they turn 18 years old. It is usually not a good idea for 18-year-olds to have access to hundreds of thousands let alone millions of dollars, a heavy burden for most 18-year-olds.

5.  I can just find a form online.  Attorneys are too expensive.

When it comes to legal documents, like t-shirts, one size does not fit all.  Legal service web sites are set-up to provide fill in the blank legal documents to their customers. If all lives were the same, that would work. Because your life is unique to you, there are still many small details that could make online documents ill-suited for your planning needs. Everyone’s circumstances, lives, and assets are different, so too are their legal needs.  A one size fits all approach simply does not work.

At The Law Offices of Jenny Ling, PLLC, we can help you create a plan that handles your assets in the exact manner you wish, taking into account all of your family dynamics, so your death won’t be any more painful or expensive for your family than it needs to be.  We offer flat-fee, customizable plans that fit your life so you can be certain that you family is taken care of, and that there is no question what your wishes are. 

6.  I don’t have enough money to worry about estate taxes.

You might be surprised to learn that you are at risk of paying estate taxes when you die.  Afterall, you probably aren’t a member of the Walton family and don’t own a family farm.  Our vision of who owes estate taxes is very influenced by the federal estate tax conversation.  But Washington State has an estate tax as well.  In fact, Washington has one of the lowest thresholds in the entire country.

In Washington State, estates valued at more than $3 million dollars are taxed at a rate of 10-35%.  I know that $3 million sounds like a lot but use this worksheet to see what your estate is worth.  Your estate will include everything you own – your house, your cars, any retirement accounts, savings, even your life insurance.  That can add up quickly.  If you are married, any assets that you pass to your surviving spouse are exempt from state estate tax regardless of value.  However, estate taxes on the whole amount would be due when that spouse dies.

    7.  I already made a plan.  I don’t need to think about estate planning again.

An estate plan that is out of date can put you and your family at risk.  You spent the time and effort needed to create an estate plan that will protect your family – make sure it can grow with your family.  You should review your estate plan at least every 3 to 5 years or after a major life change.

If you are concerned that you don’t have a plan or that your plan won’t work when your family really needs it, Contact Us for a complimentary 15-minute phone call to learn how we can help you Make a Plan.

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.