5 Common Estate Planning Myths
Most people will find the term Estate Planning confusing and think that this doesn't apply to them; when actually, Estate Planning is relevant to all of us, regardless of how much wealth we might possess. Estate Planning sits alongside making your Will and is a key part of putting your affairs in order for later in life but in our experience this area of financial planning causes some of the most widespread confusion, which can lead to costly mistakes being made and cause untold stress for families. Here's a few examples:
1. I'm too young for estate planning
We never know what the future may hold and when we might need to think about estate planning but by then, it may well be too late. We know that the average age of first time mums is 28 years old with the average age of mums and dads registering births being 30 and 33 years old, but only 8% of this age group have made a Will. And yet, a Will is the only way you can appoint a legal guardian to look after your children.
2. I don't have anything to leave
Your estate will include all manner of things, such as your property, your personal possessions, your savings and investments, any jointly owned assets, as well as life policies and pensions and not forgetting those digital assets. Estate Planning is about more than money, it's about ensuring that your finances are taken care of if you become incapacitated or unable to manage, that decisions about your health and welfare can be made by people who know you and who you trust and that your children and other dependents are taken care of when that time eventually comes around. Estate Planning will save your family time, money and stress when dealing with your estate
3. I don't need a Lawyer, I can do it myself
Well actually, yes you can. If your financial and family situation is relatively straightforward then you can prepare your documents yourself. However, while these documents may cover some common situations, there may be complexities that you would be unaware of and where legal advice would be a necessity. You don't need a mechanic to fix your car, however, many of us choose to use one since we wouldn't know where to start and what to do, and the same applies to your estate planning.
4. My family and friends will get everything anyway
Wrong - if you die without leaving a valid Will, then the intestacy rules - a Law written nearly 100 years ago decides who gets what. This law is out-of-date and does not cater for the modern family - such as co-habiting partners and stepchildren, who get nothing! And think again, if you believe your husband or wife receives it all - if you have children, then their entitlement will be limited and shared with your children.
5. My family won't have to worry about Probate anyway
This may be wishful thinking. The large majority of estates in England and Wales will require Probate, however, there are a couple of exceptions such as very small estates, i.e. a low value estate and joint estates i.e. where assets are held jointly and the other owner has survived.
There is no definitive definition of what is classed as a Small Estate because each financial institution sets its own limits as to the value they will release without Probate, however, the Law would suggest it is estates under £5,000. Probate will definitely be required where there is a property owned solely by the person who has died in order for the property to be disposed of, whether this is sold or transferred, which is why lots of people choose to set up a Trust as a way of avoiding Probate.
Estate planning is for anyone who may become seriously ill or pass away. In other words, it's for everyone. Read our blog entitled "Estate Planning in a Nutshell" to find out how to get started.