3 Estate Planning Myths Baby Boomers Should Stop Believing
If you've been putting off estate planning — or think you already have it handled — there's a good chance one of these common misconceptions is part of the reason.
Earlier this year, I had the privilege of speaking at an event hosted by Jim Smith, a Golden real estate professional who regularly brings together valuable resources for his clients and community. He recently published a summary of that presentation on his blog, and you can read it here and watch the full video here. I wanted to expand on a few of those key points for our own readers.
Myth #1: A trust protects your assets automatically.
This is one of the most persistent misunderstandings I encounter. Many people go through the process of creating a trust, feel a sense of relief, and move on — without ever actually funding it. A trust is a legal container. Until you formally transfer your assets into it — your real estate, bank accounts, investment accounts, and so on — it holds nothing, and it protects nothing. Your assets will still go through probate when you die, which means court oversight, potential delays of a year or more, and unnecessary expense for your family.
Funding a trust is a step many attorneys don't emphasize enough, and it's one we make a point of walking our clients through carefully.
Myth #2: Estate planning is only about what happens when you die.
This one surprises a lot of people. A complete estate plan isn't just a roadmap for distributing your assets after death — it's also a set of instructions for what happens if you can't speak for yourself while you're still alive. A health care directive, a HIPAA waiver, and medical and financial powers of attorney are what allow trusted people to step in and make decisions on your behalf if you're incapacitated. Without these documents, your family may face court proceedings just to get the authority to help you.
For baby boomers especially, this is often the most urgent part of the conversation.
Myth #3: You disinherit someone by leaving them a dollar.
This old myth has made its way into popular culture, but it's not only wrong — acting on it can backfire. Leaving someone a nominal amount like one dollar can actually make them a legal "interested party," which may give them grounds to contest your estate. The right approach is to explicitly state your disinheritance intent within the plan itself, in a way that's legally clear and defensible.
Situations where this comes up more often than you might expect include estrangement from a family member, a desire to divide an estate unequally among children, concerns about how someone would handle an inheritance, or prior financial support already given in lieu of a bequest.
Bottom Line
Estate planning works best when it's built on accurate information. If any of these myths have been shaping how you think about your own plan — or your lack of one — we'd encourage you to take a fresh look.
We'd also encourage you to check out Jim Smith's full blog post here, and to watch the video of the full presentation if you'd like to go deeper on any of these topics.
If you have questions about your own estate plan, or you're not sure whether what you have in place still reflects your wishes, we're happy to help. A conversation with our team is a good place to start.
The McKenzie Law Firm, LLC serves clients throughout the Denver metro area in estate planning, estate administration, and small business law. Contact us today to schedule a consultation.
