Estate planning can be a complicated process. Deciding to move forward with an estate plan requires us to face that we will not live forever, which stops many people in their tracks. Others talk themselves out of seeing a qualified estate planning attorney because of the following myths.
Myth #1: Only the Rich Need an Estate Plan
When we hear about estate planning on the news or read about it on the internet, it is usually regarding a celebrity who had no estate plan, made an error in their estate plan, or has family members angry about the plan. The topic catches people’s attention. After all, wealthy people have so much that they need an estate plan and can afford to have it done correctly. Many people assume that their possessions are not worth enough to have an estate plan.
This myth could not be further from the truth. Proper estate planning allows you to determine who gets your money and property upon your death, but it also addresses what happens if you become incapacitated and need someone to make decisions for you. If you do not have an estate plan, the court will appoint someone to make your medical and financial decisions for you.
Even if your means are modest, you should consider who gets your savings when you die.
Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything
Jointly owning property and bank accounts is common for many married couples. If a couple owns accounts or property jointly or as tenants by the entirety, when one spouse dies, the survivor automatically becomes sole owner.
Many people prefer this approach, but it can be dangerous. It is convenient for money and property to pass automatically to a surviving spouse, but outright distribution offers no protection. What happens if you have a car accident and get sued after your spouse dies? Suppose the jointly owned money and property automatically become yours. In that case, they are available to creditors to satisfy a judgment against you.
If your spouse remarries, the brokerage account you owned jointly becomes solely your spouse’s. Your surviving spouse’s new spouse could buy a beach condo with the money you wanted to pass to your children.
Estate planning does not mean you must disinherit your spouse. It just means the two of you can plan what happens to your joint property and accounts when either of you dies, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.
Myth #3: A Will Avoids Probate
Many people believe that, once they have created a will, they have avoided probate. Unfortunately, they are wrong. A will is an effective way to designate a person to wind up your affairs after you have passed, but it must be submitted to the probate court to begin the process of distributing your money and property. The level of the probate court’s involvement can vary depending on the circumstances, but because the will becomes a matter of public record, the process is not private.
In supervised probate, the judge oversees every step of the administration process and must approve your trusted decision maker’s actions. All required documents must be filed with the probate court during supervised probate and then sent to interested people. The process can be time-consuming and expensive. Each time the personal representative takes an action, they have to file a legal form and send it to the interested parties. In contentious situations, this opens up the possibility for disagreements and additional attorneys’ fees.
When there are no controversies and all the parties get along, unsupervised probate administration might be the best option. Although a court does not supervise the administration, there are still actions the personal representative must take, but they might not have to file documents for each step. Filing certain documents, such as an inventory of your accounts and property, with the court and the interested parties might be required.
The attorneys at Austin and Pethick are right there with you to answer questions about estate planning, the estate planning process, or probate. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected.