On October 17, 2012

It’s Estate Planning Awareness Week, a perfect occasion to clear up some widespread misconceptions about the importance of making plans for the future. Just about every Colorado resident can benefit from estate planning, from millionaires to children of low-income parents. The only difference is in the individual choices you make about your assets, health care or the welfare of your children.

One of the most common myths about estate planning is that only the wealthy need it. While those with considerable assets have more to lose financially than the average middle-class citizen, there’s still a lot at stake for most of us. Part of estate planning is making sure that if you become very ill, disabled or otherwise incapacitated, your finances are handled the way you want them to be. If an accident puts you on life support, for example, a living will — aka an advance directive — ensures that your preferences regarding surgeries, feeding tubes and resuscitation are carried out. Determining who will take care of your children if you suddenly aren’t able to is also a part of estate planning best not left to chance.

Another assumption about estate planning is that if you die without a will, the state will seize your assets. Why this myth doesn’t push more people to plan for the end of their lives is unclear, but this statement isn’t accurate anyway. If you don’t have a will, the state where you live will decide how your assets are divided, but unless your assets exceed $5,120,000, they won’t be subject to the estate tax. There is the possibility, however, that you won’t like the way Colorado handles your assets, which is another reason to write up a will. You’ll then have the choice of how to divide your assets and property.

When it comes to making your wishes formal, there’s some confusion about whether you need a lawyer. If you have a very simple financial picture, you may be able to do some of the work yourself. Health care directives can be drafted with forms from your hospital, and simple will forms can be found online at little to no cost. But it’s important not to underestimate the complexity of your estate. Children, property and retirement and life insurance accounts can make things more confusing, so it’s not a bad idea to review even simple documents with an attorney who focuses on estate planning.

Source: Forbes, “10 Common Estate Planning Myths That Can Be Detrimental to Your Family,” Erik Carter, Oct. 3, 2012

· Our firm handles estate planning, probate and many more related legal services. To learn more about our practice, visit our Denver estate planning page.

Categories: Estate Planning

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