Common Myths About Estate Planning
I Don’t Need an Estate Plan, My Spouse Automatically Gets Everything When I Die
IT’S A MYTH – Only assets that are titled in your spouse’s name go to your spouse. And for tax purposes, that is the worst way for your spouse to get your assets. If you die without a trust your estate goes to probate and your spouse does not automatically get everything. First, depending on the size of your estate, court costs, and legal/accounting fees can eat up 3%-7% of your entire estate (the value of your home and everything you own). Then, all your creditors get a chunk. Don’t think you have creditors, think again. Anyone you’ve ever owed money can try to make a claim, valid or not. And then there are the new creditors, such as medical bills, accident victims if you die in a car crash, etc. And finally, there are the claims of the children from both your current marriage and also any prior marriages, and your siblings. Your spouse will probably get the largest share, but he/she will not get it all, not even close. And of course the process can take 12-24 months. Even if your spouse gets everything, who gets it when your spouse dies? This can all be avoided with a trust-based estate plan.
I Can’t Afford a Trust-Based Estate Plan
IT’S A MYTH – In fact you can’t afford not to have a trust-based estate plan. A proper trust-based plan will reduce your legal fees, taxes, and other expenses associated with your long term care, guardianship, and death far more than it costs to create the trust. Not to mention reducing the taxes and fees for your children after you are gone. With Legacy Architects you do not have to worry about crazy hourly rates, because we do not bill by the hour. We charge a fixed affordable flat rate to create your trust-based plan, and we don’t charge for phone calls from you or from your financial advisor. With Legacy Architects you will know exactly what it will cost to create your customized trust-based plan and to keep it updated before you ever start the process.
Trusts Are All The Same, I’ll Save Money Doing It Myself On the Internet
IT’S A MYTH – All families are different and your trust should be customized to meet your family’s needs. Off-the-shelf forms, or internet forms will not work the way you think they do. The great deception with
do-it-yourself forms is that you think that your family is protected, but you won’t discover that it doesn’t work until you are disabled or die, and then it is too late to fix it. Convenient for the company who sold you the trust, you won’t be around to complain when it doesn’t work. There are hundreds of options with a trust-based estate plan and attorneys spend years in college and hundreds of hours a year reading and researching to keep track of all the options and legal ramifications of each option. If you get one wrong, when you die your family could spend years in court or dealing with the IRS, or lose everything to creditors. If you don’t know what all the options are, how will you know if you want to include them in your trust? And finally, your trust must be kept up-to-date with the law as it changes, and with the changes in your family and finances in order for it to work. Will you remember to keep it up-to-date each year? Will the do-it-yourself form contact you when the law changes that makes it obsolete? It is not the paper document that makes a quality estate plan that works. It is the counseling given to the client, and the exchange of information and ideas between an experienced attorney and his client that produces an estate plan that works. But even a perfect trust must be kept up-to-date through the years or it will no longer work the way it was originally intended at the moment it is needed. A change in tax, creditor, or disability law, or a marriage, divorce, death or birth in your family can all cause your trust to fail in its purpose. That is why it is so important to work with an attorney who provides a formal trust maintenance program for his clients. No off-the-shelf or internet trust form will keep itself up to date. You may feel good about saving a few dollars by using a do-it-yourself form, but you are fooling yourself, and your family will pay the price later.
My Spouse Will Be My Guardian, So I Don’t Need A Disability Plan
IT’S A MYTH – In Michigan your marriage license does not automatically give you guardianship over your disabled spouse. In order to have full guardianship over someone, you must first have a competency hearing. If the judge decides that you are not competent, they will then appoint a court appointed guardian. There is a presumption in favor of the spouse, but any family member can challenge, including children from prior marriages. Even if your spouse is appointed as guardian, he/she will now have to make annual accounting reports to the court for the rest of your life. And of course, after the first spouse dies, then what plan is there for the surviving spouse? All of this can be avoided with a proper disability plan.
I Don’t Need An Estate Plan, I Gave a Power Of Attorney To My Children
IT’S A MYTH – A power of attorney is only valid while you are alive. And if it is not properly drafted it may be void if you are declared not competent. Once you die all powers of attorney that you granted are void and useless.
I Already Have A Disability Plan Because My Children Have A Power of Attorney From Me
IT’S A MYTH – A power of attorney is NOT a disability plan. A power of attorney is a blank check, and it is the worst way to plan for your disability. Most powers of attorney take effect immediately when you sign them, even if you are not yet disabled, and they are simply a list of authorities, with no limitations, no instructions, no guidance, and no supervision. There is nothing in a power of attorney that tells the authorized individual what you want them to do, or how to do it. There are many types of powers of attorney, and you need more than one. Recently some financial institutions have refused to accept older powers of attorney. Most powers of attorney do not provide for guardianship, but rather only specific decision making authority, which may or may not address all your disability and long term care issues. If you have multiple people authorized on a power of attorney the wrong way, that can cause a fight. And of course, since a guardian is not appointed, other family members can still challenge for guardianship. All this can be fixed with a proper disability plan.
I Have A Will So My Estate Will Not Go To Probate.
IT’S A MYTH – A Last Will guarantees that your estate goes to probate. Only a trust can avoid probate.
My Parents Can Avoid Estate Planning By Putting Me On Their Deed and Accounts.
IT’S A MYTH – Having your name on your parents’ assets creates a whole list of legal, financial and tax problems for them and you that are worse than probate. They can all be avoided with an estate plan. First, you are now responsible for the capital gains tax on all of your parents’ assets after they die. For example, if they put you on their deed in 1995 when the home was worth $70,000 and when they die it is worth $170,000, because you are already the owner, you assume responsibility for the capital gains tax on $100,000 that could have been avoided with an estate plan. The same would apply to the capital gains on all of their investments if you are listed as an owner while they are alive. Perhaps more importantly, if you are listed as an owner to avoid probate, then you are legally an owner for all other purposes. That means your parents’ assets are your marital assets if you get a divorce and your ex-spouse can make a claim against your parents’ assets. The same is true for all your creditors. If you file bankruptcy, or are sued for a serious car accident, your parents’ assets can be lost to your creditors. If you become disabled, then your spouse or children will have control of your parents’ assets. Is that what your parents want? Your children can suffer as well. When you complete the federal financial aid application for your child’s college you must include all of your parents’ assets on the application, which in most cases will disqualify your family for college financial aid. If you leave your parents’ assets off the application because you think that they are “not really yours”, you will be committing fraud on a government application. This is true in the case of your Medicaid application. Are you 65 with an 85 year old parent? Are you on that parent’s accounts and deed? Then you may have to include all those assets on your Medicaid application which means you probably will not qualify. Because of the five year look back rule, simply taking your name off the assets will not solve the problem. Both you and your parents need a plan.
I Am Not Rich, So I Don’t Need A Trust-Based Estate Plan
IT’S A MYTH – When any so-called financial expert says you don’t need a trust because you are not rich, or because you don’t have an estate tax problem, you know that person is not qualified to discuss estate planning. The amount of your wealth and assets is the least important factor when deciding if you need a trust-based estate plan. Your only questions should be: (i) do you want to protect your loved ones from legal and financial turmoil, (ii) do you want to protect your assets and to have control over what happens when you are disabled, (iii) do you want to keep your financial and health matters private, (iv) do you want to protect your legacy from your creditors, and your children’s and grandchildren’s creditors, (v) do you want to reduce the cost of settling your estate, and (vi) do you love your family? If you answered yes to any of these questions, then you need a trust. And, oh yeah, there are still all sorts of great tax benefits too!
The Estate Tax Exemption Amount Solves All My Estate’s Tax Problems
IT’S A MYTH – First, the estate tax (death tax) exemption is not automatic and its application can be complicated. Even if you have a small estate, documents must be filed in a timely manner in order to take advantage of it. If your estate is exempt from the death tax, there are many other types of taxes that negatively impact your estate, your spouse, and your heirs. A quality estate plan can significantly reduce those other taxes for your spouse and children during the years following your death. And of course the State and Federal tax laws are always changing. Just because you qualify for an exemption this year, can you be sure you will qualify for an exemption (or that there will even be one) the year you die? Only the law in effect on the year you die matters. A proper trust-based plan, with a formal Maintenance Plan is the only way to ensure your estate will take advantage of tax laws in effect when you die. If the tax law changes will you know or have time to get an estate plan before you die? The current Estate Tax is 40% of everything in your estate.
I Have A Simple Estate So Probate Will Be Easy
IT’S A MYTH – No one has a simple estate. There are always complicated family and asset matters. Once a probate estate is opened it will stay open for at least five months, but in most cases it takes 12 -24 months to get through the process of completely settling a probate estate. Court costs, legal, accounting, and other fees can easily reach 3-7% of everything in your estate. Your family will need to spend a lot of time dealing with legal, tax and financial issues. The only way to avoid probate is with a trust.
When My Parents Died We Did Not Go To Probate And There Were No Problems
IT’S A MYTH – Everyone has a story like this about a friend or family member who did not go to probate when their parents died and they “got away with it” and had no problems. The problems are still there; they just have not surfaced yet. There is no “probate police” or agency that tracts what happens when you die, so many of the problems will not be obvious right away, and many “problems” go unrecognized because you did not know there was an easier or better way. For example, if you or the grandchildren just move in to your parents’ home without probate, the problems may come much later when: (i) you try to sell it but don’t have legal title, (ii) you get caught using your parents’ homestead exemption and have tax penalties, (iii) you have to pay income tax on 100% of the value of the home when you sell it, instead of only on the gain since your parents died, or (iv) you find out the home owner’s insurance is void after the home is damaged. There are many other legal, financial, and tax problems that can arise if you just ignore the probate process, and most of them will be felt by the grandchildren, not the children of the deceased.