Estate planning isn’t just for wealthy people, and it’s not just about distributing assets upon death. Estate planning also protects you while you’re living and helps grow and protect wealth from one generation to the next. A recent article from GO Banking Rates, “4 Estate Planning Myths That Could Be Stopping You from Building Generational Wealth,” explains the top reasons people fail to make the most out of estate planning.
Myth 1: The biggest myth is that only rich people have estates. Everyone has an estate. An estate is the legal term used to describe all your tangible (and intangible) possessions, including homes, bank accounts, cars, or investment accounts. If you rent your home, the possessions in the home are part of your estate, as are any other assets you own.
Your will is used to direct the distribution of assets upon your death. However, an estate plan serves more purposes. They include documenting your wishes for healthcare, allowing someone else to speak for you if you’re too sick to do so, naming a guardian for minor children and an executor to oversee your estate after death. These things are all addressed by your estate plan.
If you aren’t sure what is in your estate, start by creating an inventory of all your assets, including financial, digital and physical property. If you have minor children, the next step is to decide who you would want to raise your children if something were to happen to you.
Everyone should have a healthcare proxy so another person can step in and make medical decisions on their behalf if they can’t. This is admittedly unpleasant to think about. However, it will save your loved ones from having to make decisions for you in a health crisis. Without clear medical directives, your family members could be embroiled in a battle over what you would have wanted or spend the rest of their own lives regretting decisions made about your care.
Myth 2: Estate planning is easy. It’s fair to say an estate plan for a simple situation is less complicated than an estate plan for someone who owns a business, has children from multiple marriages and owns homes in different states. Oversimplifying an estate plan by trying to do it yourself could lead to the wrong people inheriting your property or a massive tax debt for heirs.
Myth 3: Estate planning is a one-time task. Estate plans are like owning a home—you’re never done maintaining and caring for a home, and the same goes for an estate plan. Life changes, people marry, divorce, children are born and people move. All these things call for a review of an estate plan. Laws also change. An estate plan created in 2015 is long outdated, potentially leaving heirs with a smaller inheritance and a larger tax burden.
Myth 4: Estate planning is just for people who are going to retire or who are very old. Parents with minor children who don’t have an estate plan leave their children’s fate to a court. Your will also names a guardian of your choice who will raise your children. If there’s no estate plan and a young parent becomes seriously ill, their spouse isn’t allowed to be part of their healthcare decision-making if there’s no Healthcare Proxy in place. Everyone needs an estate plan.
Thinking differently about your estate plan now? Start by making an appointment with a local estate planning attorney. Their experience in creating plans and their knowledge of your state’s laws will give you peace of mind in knowing you’ve done the right thing to help yourself and your family.
Reference: GO Banking Rates (April 4, 2025) “4 Estate Planning Myths That Could Be Stopping You From Building Generational Wealth”