Six estate planning myths busted

You might be just starting out or entering retirement. Staying child-free, raising young children, or enjoying an empty nest. Whatever your current situation and long-term goals, it’s always a good time to think about estate planning. In fact, estate planning is for everyone, according to Leandro Vicuña, JD, Head of Trust & Estates at Fremont Bank. He tackles six common misconceptions about the complexities, timing, and decisions of estate planning.

Myth 1: You need to already be established and wealthy to utilize the benefits of estate planning.

Reality: The best time to start estate planning is now. It’s a great idea to commit to learning the basics of estate planning before your situation becomes more complex — from your own success or a change in your situation that involves a spouse or children, for example.

Here’s how to get started:

Leandro suggests making a list of your important assets and belongings, and designating the appropriate beneficiaries.“Consider getting something started once you are a legal adult, and employed. Even if you’re renting an apartment and making minimum wage, you likely have wishes you want to be carried out, and items you want to be sure go to a specific person. Rather than going through a long and costly probate process, which is open to the public, it’s best to control what happens to your assets in the future while maintaining your privacy.”

As your needs evolve, you may want to:

• Shelter your assets from taxes
• Ensure that your long-term wishes are carried out
• Use smart gifting strategies
• Create a business succession plan if you have a family business

Good News! Fremont Bank has experts ready to help with all of these steps.

You can always make amendments and additions as your life changes — and you should. When it’s time to entertain some gifting and tax-saving strategies, consider creating an irrevocable trust, and learning about the various types of irrevocable trusts, or explore all the opportunities in front of you. It will take a series of meetings with your fiduciary, investment advisor, CPA, and/or attorney because it’s a process that doesn’t happen overnight, and doesn't need to happen overnight.

Myth 2: It’s too expensive to have a trust or will prepared.

Reality: Although it can be expensive, many platforms can help you prepare a basic trust and a will, and get started with a power of attorney.

Leandro shared that the most important thing is to get started. “As the assets in your estate evolve over time — for example, in addition to contributing to your IRA, 401(k), and/or HSA, you decide to acquire income-producing real property, private equities, 529 plans, donor-advised funds, life insurance, and other types of investment options — a professional can help you update and expand your estate plan. Start with the basics. As your financial world expands, you’ll be ready to do more research and ask questions, and you’re just going to learn."

Myth 3: If you don’t have children, you don’t need to worry about your estate.

Reality: Leandro gave two related reasons why it’s important to plan, whether you’re a parent or not. The first is control. If you want to be sure that specific resources and items go to specific people or institutions, you need to delineate that. Suppose you have a long-term partner not specifically named in your estate. They may be left out, regardless of your intent, if they aren’t legally related to you by marriage or civil union. You may have friends or young people you want to provide for, but aren’t related to.

“Without an estate plan, the state may determine who your heirs are, and who gets what,” he shares.

The second is peace of mind. The probate process is costly and time-consuming. It can also lead to interpersonal conflict between people important to you. Even if your estate is small enough to avoid probate, there’s still a risk of disputes over who gets what, or whether your intentions are clear. The last thing you want is for family or friends to argue over money, heirlooms, or sentimental items that could have been clearly addressed with an estate plan.

By keeping an up-to-date estate plan and naming a trusted executor, you ensure that your wishes are carried out, and your values are upheld.

Myth 4: An estate plan is a set-it-and-forget-it process.

Reality: Completing your plan is a major achievement, but remember — it’s just the first step in an ongoing process.

Be sure to review your current investments, or consider an estate plan update anytime you pass an important personal milestone or life event. For example:

• when you marry or divorce
• when you have children
• as your children age
• if you buy a home or a second home
• if you start or sell a business
• if you inherit money
• when you become more successful
• when your investment risk tolerance changes

“Even if life doesn’t feel like it’s changing all that much, review your estate plan every 5 years at a minimum with your team,” says Leandro. “People often don’t realize their beneficiaries include exes or people who have passed. Some children come and work in your business, and others don’t. Children grow up. The specific bequests you made for them to get at 20 or 25 aren’t relevant if they’re now in their 40s. Healthy, young partners age, and now need care. If provisions no longer apply, it can cause issues.”

We provide complimentary trust reviews for our clients who may have not reviewed their trusts recently. Learn more about what else Fremont Bank can do for you.

Myth 5: It’s greedy or selfish to create an estate plan.

Reality: Cultural or religious beliefs may make some people uncomfortable with explicitly stating their wishes, or they fear it feeling boastful or arrogant that there’s a plan for their estate after they pass. However, the realities of American law mean that having a plan in place is a smart step. Otherwise, your estate may wind up in probate for a year or more. It’s not only a time-intensive and costly process, but it’s also public.

The estate planning process can be emotional, as can the time after someone passes. Providing a clear estate plan is truly a gift that supports friends and extended family, spouse or partner, children, and business partners.

Myth 6: Estate planning only matters for personal matters.

One last one — if you own a business, be sure you have a succession plan in place.

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