I recently happened across a blog post called “Estate Planning 101” in The Family Wallet. Now to be very fair, I don’t know the author, and believe them to be very well intentioned. Unfortunately, the post is a perfect illustration of the incorrect information and bad advice that is often given by good people trying to do the right thing.
I will not go through the post line by line to point these things out. My goal is not to beat up the author. My goal is to simply point out that you should get your advice from professionals.
Here are a few of the mistakes as to information or advice:
1. “Without a will, which is the crux of any estate plan, your belongings become the property of the state”.
This is simply inaccurate. First, your belongings do not become the property of the state. Rather, they will be distributed according to the intestacy laws of your state through the probate system. Secondly, in our humble opinion, most estate plans based on wills are ill conceived. Better estate plans are trust based.
2. “Do I need a lawyer to do estate planning? Not necessarily.”
This is scary. Yes, you can legally prepare your own will. However, this blog has several stories about people who have tried to do it themselves and caused huge problems for their families. Your planning involves all that you have accumulated for all of your life. One small mistake can cost someone tens or hundreds of thousands of dollars. Lawyers, including myself, make a lot more money in the long run off of do-it-yourself planning. Don’t be penny-wise and dollar foolish.
3. “What about estate taxes? As of 2009, there is no federal tax on estates that are worth less than $3.5 million.”
This is a correct statement — just outdated, and relying on it can cost someone hundreds of thousands of dollars. In 2010 there is no estate tax — at least as of right now. If Congress fails to act the appropriate number is $1 million — not $3.5 million as of January 1, 2011. If Congress acts — we’ll, we’ll have to wait and see. Yes, the Estate Tax may be coming back, and many will be poorly prepared.
Now, to give the author credit where it is do. Encouraging people of all ages and walks of life to plan their estate is excellent advice. I applaud the intent of the article.
So — the bottom line? See a professional. Don’t rely on advice from well-intentioned, but poorly informed sources.
