In my experience, estate planning is one of the areas of personal finance with the most widespread confusion. Unfortunately, this can lead to costly mistakes in time, money, and stress on people’s families. Here are ten of the estate planning myths I hear most often:

1) Estate planning is just for the wealthy. This myth comes from the focus of so many attorneys and financial advisers on the federal estate tax, which isn’t an issue until your estate surpasses $12,920,000, an amount that most of us would characterize as pretty well-off, if not downright rich. This focus makes sense for estate planning professionals since so much of their business is centered on the estate tax, but estate planning is also about making sure that your finances are taken care of if you’re incapacitated, that decisions about your health care are carried out the way you’d like even if you’re not able to make them, and that your children and other heirs are taken care of when that time eventually comes. Estate planning is for anyone who may become seriously ill or pass away. In other words, it’s for everyone.

2) You’re too young for estate planning. We never know when we might need estate planning and by then, it will be too late. For example, history is replete with the stories of celebrities who unfortunately died before creating a will, many of them at a relatively young age.

3) If you pass away without a will, the state will get your assets. If the last two myths can lead so many to inaction, it always amazes me that this myth hasn’t led to a boom in the will-making business. If you pass away without a will, each state will apply its “laws of intestacy” to determine who will get what, so if you don’t like that result, get a will drafted. If you’re fine with it and have minor children, get a will anyway. That’s because the will also allows you to determine who would be the guardian of your children if that need should arise, which is probably not a decision you want a court to make for you.

4) If you have a will, you don’t have to worry about probate. This may be wishful thinking as probate can be a long and expensive process in which one or more courts decide who will inherit your assets. While a will provides the court with guidance on your wishes, it doesn’t actually avoid the process altogether. Since a will is public information, it can also be easily contested in court, adding more time and cost. In addition, if you have real estate in more than one state, each property may have to go through probate in its respective state.

5) You need a lawyer to draft these documents. For health care decisions, you can get a free health care directive from your hospital, draft and store one online for free at MyDirectives, or download a state-specific form from the National Hospice and Palliative Care Organization here at no cost. Another resource for health care decisions is the Five Wishes, which is a popular, low-cost living will form made available by the non-profit Aging with Dignity organization. You can draft other legal documents like a power of attorney and a simple will for free at sites like DoYourOwnWill.com or Free Will. Your employer may also offer these documents at no or low cost as an employee benefit.

6) No one needs an estate planning lawyer at all. While these documents may cover most common situations, there may be a complicating issue warranting legal advice that you’re not even aware of. That’s why it’s still a good idea to at least run these documents by a qualified estate planning attorney, which may cost you less than having the attorney draft them all from scratch. You can search for an attorney by asking for referrals from family, friends, and other professionals, by using the lawyer referral service of your local bar association, or by searching the membership of organizations like the American Academy of Estate Planning Attorneys and the National Network of Estate Planning Attorneys. Finally, don’t forget to ask your employer about any discounted legal services they may offer.

7) To avoid probate, you have to draft a trust. One area in which you’re most likely to need an attorney is drafting a trust. Avoiding probate is one of the most common reasons people do this, but there are cheaper and easier methods that may be sufficient for your needs.

First, jointly owned property (like what you own with your spouse) generally passes to the other owner(s) without going through probate (unless it’s a “tenancy in common”). Second, life insurance, annuities, and anything in a retirement plan like a 401(k) and IRA avoids probate as long as there is at least one living beneficiary listed. Some states also allow you to avoid probate by adding beneficiaries to bank accounts with a “payable on death” registration and to brokerage accounts, real estate, and even vehicles with “transfer on death” registrations. You can see what’s available in your state here. Finally, each state has methods to speed up or even skip probate for “small estates,” which in some states can be quite large.

8) Trusts avoid estate tax. Most trusts do not help you avoid estate taxes in and of themselves. However, if you’re worried about having a taxable estate, be sure to seek qualified legal advice (your nephew who just graduated from law school with a focus on criminal law doesn’t count) since certain trusts can be used as part of a strategy to reduce and even eliminate estate tax liability.

9) You don’t have enough money to worry about the estate tax. This may be true at the federal level, but some states have their own estate tax with much lower thresholds. When you add in the value of your home, life insurance proceeds, and retirement accounts, those thresholds may start looking a little too close for comfort.

10) You’ll have to pay a gift tax if you give someone over $17k per year. Anything (except for money paid directly to a charity, 529 plan, or a medical or educational institution) over $17k that you give someone (other than your spouse) in a single year simply reduces your federal lifetime gift and estate tax exclusion amount (currently the $12,920,000). Only after you use up the entire exclusion amount do you actually have to start paying anything. In other words, you’d have to give away quite a bit. That being said, you would still have to file a gift tax return and then keep track of how much you’ve reduced your lifetime exclusion amount by, so you might want to stay within the $17k annual exclusion amount just to avoid that hassle.

As you can see, there are lots of misconceptions out there about estate planning. It’s understandable as it can be complex, constantly changing, and removed from our everyday lives. However, knowing the truth about these myths can help you avoid numerous mistakes.

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