Most people recognize the need to have an inheritance plan in place; however, too many fail to recognize when inheritance planning should start. In fact, many people are under the mistaken impression that you must achieve a certain level of material wealth before planning should start. To help clear up some of the common misconceptions about inheritance planning, a Baldwin Hills estate planning attorney explains why inheritance planning is important.
What Is Inheritance Planning?
At its most basic, inheritance planning, also known as “estate planning,” refers to the process of using legal tools and strategies to decide how your estate assets will be distributed upon your death. When most people think of a basic inheritance plan, therefore, they think about executing a Last Will and Testament. A Will certainly can provide for the distribution of your estate assets when you are gone; however, it is not the only option. Furthermore, a comprehensive estate plan does much more than simply create a roadmap for the division of your assets. A well-thought-out estate plan can also protect and help grow those assets during your lifetime, plan for the possibility of your own incapacity, and ensure that your loved ones are provided for after you are gone.
Inheritance Planning Myths and Misconceptions
Inheritance planning can be rather intimidating for the uninitiated given that most people know very little about it. To make matters worse, there are several myths and misconceptions surrounding the concept of inheritance planning, particularly with regard to when and why you need to create your first inheritance plan. One way to make estate planning less intimidating is to learn the truth about some of those myths and misconceptions.
- “I am not wealthy enough yet to warrant creating an inheritance plan.” This is, by far, the most commonly offered explanation by people who do not have an estate plan in place. The truth, however, is that the need for inheritance planning is not tied to your material wealth. Chances are good that the assets you do own have value to you. If so, you probably don’t want the State of California to decide what happens to those assets. Moreover, the value in an inheritance plan is not limited to the distribution of estate assets. On the contrary, an inheritance plan can also achieve a variety of other goals, such as incapacity planning, probate avoidance, and protecting the inheritance of a minor child.
- “I don’t need an inheritance plan because I am not married and have no children.” Another common reason for not taking the time to create an estate plan is the belief that one is only really needed when you have an immediate family to gift assets to in that plan. Once again, the myth simply is not true. When you start your own family, you should update your existing plan; however, you should not wait until you have a family to start your plan. In reality, there is often more of a need for inheritance planning when you are single because the state intestate succession laws will not likely distribute your assets in the manner you would want them distributed. Likewise, because you are not married, it is even more important to create a plan that makes it clear who you would want to make decisions for you and/or control your assets in the event of your incapacity.
- “Since I don’t have much of an estate I can just use the DIY forms I find on the internet to create my inheritance plan.” Using fill-in-the-blank “DIY” forms you find on the internet will frequently result in a much more time-consuming and costly probate of your estate after you are gone. This is because DIY forms are often riddled with out-of-date information and errors. They are also known for creating ambiguities and failing to dispose of your entire estate. Any of these problems will result in litigation during the probate of your estate. In the end, your modest estate could end up spending months – even years – in litigation which will likely deplete the assets you did manage to leave behind.
Contact Collins Law Group
For more information, please join us for an upcoming FREE seminar. If you have additional questions related to inheritance planning, consult with an experienced inheritance planning lawyer near you. Contact the Collins Law Firm by calling (310) 677-9787 to register for one of our FREE estate planning workshops.
- Why Is Inheritance Planning Important? - December 3, 2022
- Attorney Caprice L. Collins Asks: Do You Have an Incapacity Plan? - March 21, 2018