One of the most difficult things to do in life is to plan your estate. After all, it’s the recognition that you will eventually die. The very thought keeps people from moving forward. For others, it means reaching out to an attorney to develop an estate plan.
However, there are many myths surrounding the subject of estate planning. And, this hinders too many people from making the mistake of not going through with it. What are the most popular estate planning myths? Are they keeping you from putting together an estate plan for your family?
1. Estate Planning Is For The Rich Only
When people hear about estate planning on the Internet or in the news, it’s usually dealing with a rich person’s lack of estate plan, mistakes in the plan or family members fighting about the estate plan. This brings attention to estate planning and the thought that an estate plan is more for rich people than anyone else.
Yes, wealthy individuals need an estate plan and have the kind of money that ensures the plan is properly prepared. However, people who are not rich (living a moderate lifestyle) never consider estate planning because they don’t believe they have the possessions that warrant such an important document.
Wrong! Wrong! Wrong!
Whether you’re rich or barely scraping by, estate planning is a necessity. It’s not just about money. And, it’s not just about property and money distribution at the time of your death. Estate planning is also about if you’re suddenly incapacitated and cannot handle things on your own. The plan can stipulate who will make these decisions for you.
Without an estate plan, the court will intervene and appoint someone to make these financial and medical decisions for you. It’s a time-consuming and tedious process that can cause strife within a family about who should and should not be designated and what decisions should be carried out.
Whether you live moderately or frugally, you need to consider who will get your property and money upon your death. State law will divvy them up without any plan in place, and it’s a guess as to what you actually wanted. If you fail to stipulate your wishes, the state will make stipulate them for you.
2. Your Spouse Will Get Everything Even Without An Estate Plan
It’s common for married couples to own joint bank accounts and property. When one spouse dies, the other spouse automatically owns the property they have a joint stake in. This is the tactic most people prefer.
This is a dangerous approach to handling your affairs. It’s convenient to pass your property and money onto the surviving spouse, but there is no protection for them. If your spouse dies and you’re sued for a car accident, you could lose all you owned if the joint accounts become entirely yours. These accounts then become available for creditors to use for judgment satisfaction.
Plus, if you die and your spouse remarries, the joint accounts become theirs as they wish to do with without any thought to your wishes or your children. It means the new spouse can use the money to purchase what they want instead of going to your children. Blended families are prevalent, and this is an issue that’s quite concerning for millions of people.
3. You Can Avoid Probate So Long As You Have A Will
It would be nice if a will solved all the probate issues you can have, but it just doesn’t. Even if you create the will yourself or hire an experienced lawyer to do it for you, probate is still in your future.
A will can be effective in naming the person to handle your estate after you have died, how the property and money are divvied up and determine who will care for any minor children. A will, however, will need to be submitted to probate court to start the distribution process. The court’s involvement depends on the circumstances, but nothing stays private since it’s a public record matter.
For some states, if the monetary amount of your estate is below a certain threshold, anybody with any stake in your estate can file a petition with the court and ask it to distribute any assets you had upon your death. All without having to go through probate court. Before any assets are distributed,
If there are any interested parties in the estate, you will likely need to appear in court and deal with formal legal notices before anything is distributed.
In some states, you can submit an affidavit to collect and allocate the assets if the amount doesn’t exceed a specific threshold. A successor with priority (spouse or heir) can sign the affidavit and not involve the courts at all. For other states, the document must be submitted to the court. Affidavits must be submitted after a period of time, usually several days to months after you’ve died. Once time has gone by, the successor will sign the affidavit and submit it so your assets can be distributed to your heirs.
With supervised probate, a probate judge will handle the administrative process and sign off on any named personal representative’s decisions and actions. While in supervised probate, every necessary documentation must be submitted to probate court and then mailed to interested parties.
Every time an action is necessary, the personal representative must file a legal form and send it to interested parties. This is a costly and tedious process. And, this can open up a new can of worms that can cost you legal fees and bring on family arguments.
Unsupervised probate may be worthwhile if everybody involved gets along and there is no drama. With this scenario, a court doesn’t supervise the process, but a personal representative will still need to take certain actions without the need to file documents every step of the way. This option isn’t as costly or difficult to wade through; it’s still a laborious, public process.
If you have questions about the estate planning process, including probate, we can answer your questions. We will work with you to prepare an estate plan that protects you and your interests as well as your family when the inevitable happens. You can reach out to us today!