Take the Quiz: Is Estate Planning ONLY for the Rich?

Take the Quiz: Is Estate Planning ONLY for the Rich?

The length and intensity of this pandemic have made many of us more introspective.  Covid-19 has put a spotlight on our mortality.  One of the few positives of this Covid Era is that people are now more comfortable talking about their life and death with others.  Many of those with dependents worry about what would happen if they were taken prematurely by the Coronavirus.

There is a misconception that Estate Planning is only for the rich.  If you have possessions, you have an estate!  Their orderly care during your lifetime is referred to as Financial Management.  Their disposition after your lifetime is referred to as your Estate Settlement.  Deciding in advance how your estate will be disbursed is called Estate Planning.  Estate Planning is that simple.

5 of the biggest mistakes I have seen include:

  1. Thinking Estate Planning is Only for the Wealthy:  One school of thought says the more modest your estate, the greater your need to arrange for its careful handling and disposition, to stretch it further and help those closest to you.
  2. Thinking that New York State Laws Will Suffice:  Leaving matters up to the state can be dangerous, short-sighted, and COSTLY!
  3. Not Making a List of Assets:  Making a list of your possessions in writing is the first step toward developing a cohesive plan for distribution.  This is referred to as an “Estate Inventory” or an “Estate Directory,” helping your beneficiaries by listing your assets and where to find important documents, etc.
  4. Not Forming Your Estate Team of Advisors:  After drafting your list of assets, the next step toward Estate Planning is to assemble and confer with a team of advisors.  This team should include a trusted estate or elder law attorney, an insurance advisor and/or financial planner, and a tax professional. 
  5. Thinking a “Will” is the way, or not having a Will at All:  According to legal zoom, less than 50% of American adults have a written will.  These numbers were even lower before the pandemic.

Having assets go through your will is the worst way to distribute your assets!  The best way is to have designated beneficiaries for each of your assets.   This is where valuable tools such as life insurance, annuities, and trusts come into play.  One of the most important qualities of life insurance and annuities are that they have specified beneficiaries.  They also bypass probate, and court fees and are protected from lawsuit creditors. 

Probate is the process of “Proving Your Will,” processed by the courts.  It is a slow, lengthy and costly procedure.  Also, it is not a private matter, meaning your probated assets can be viewed by anyone as public record.  After your passing, the nosey neighbor can legally look up your assets that passed through your will!

As an advisor, I cannot over emphasize how important it is to plan your estate.  You can leave a planned legacy (even if it is modest) or an unplanned mess that your beneficiaries will need to sort out; the choice is yours!

Take this quiz below and let me know how you do.  Of course, please consult your advisors before making any changes to your assets.  Feel free to reach out to me at [email protected].

  1. Estate Planning is:

A. Only for the rich 

B. Vital for anyone with assets

C. required by law

  1. The First Step of Every Estate Plan is:

A. Prepare a List of Personal Inventory

B. Draft a Will

C. Make a list of Insurance Policies

  1. Estate Planning Experts Include:

A. Actuaries

B. IRS Agents

C. Life Insurance Advisors

  1. Experts Say the More Modest Your Estate:

A. The Greater the Expenses

B. The Shorter the Will

C. The Greater the Need for Careful Disposition

  1. Good Estate Planning Involves:

A. Relying on Do-It-Yourself On-Line Forms

B. Owning Sufficient Assets

C. Financial Management During Your Lifetime

Answers: 1. B  2. A  3. C  4. C  5. C