There are a lot of misconceptions surrounding Wills and estate planning, so here are some commons myths, explained:
Myth: Estate planning is for rich people
Everybody needs a Will. A Will allows you to designate who will receive your property when you die. If you die without one, your assets will be distributed under the terms of Iowa’s intestate succession laws. That means your money and property could end up with family members you haven’t spoken to in years, instead of a close friend or a charity you support.
Your estate plan should include a durable power of attorney for finances and a health care directive. These documents allow you to designate someone to act on your behalf if you become incapacitated.
Myth: If I die without a Will, everything will go to my spouse
If you die without a Will, your inheritance will be divided among your spouse and your children. Under Iowa law, if you have children from another relationship, your spouse only receives half of your assets and your children receive the other half. This can be a surprise for people in a second marriage.
Myth: If I have a Will, my estate won’t go through probate
All Wills are subject to probate. In probate, a court determines whether the document is valid and ensures that relatives and creditors are notified. Probate is a straightforward process, and it isn’t necessarily something to avoid. But if you have a lot of assets or real estate in multiple estates, it may be advisable to find non-probate alternatives.
One way to avoid probate is to put your property into a living trust. A living trust is a legal document you create to hold property, such as brokerage accounts and real estate. When you die, the property is transferred to your beneficiaries. This transfer occurs outside of probate, which could save your heirs a lot of time and money.
Take the time to set up a simple plan for yourself and your loved ones. Periodically review your plan and update your Will or Trust to reflect major life events, such as a divorce or the birth of a child. Consult with an experienced attorney to ensure that your estate plan is current and accomplishes all of your goals.