Top 10 Estate Planning Myths

will, living will, last will, estate, estate planning, kenosha, racine, milwaukee, westosha, wisconsin

“All trusts avoid Estate Tax.”

A trust is a contractual agreement between you and your trustee to carry out the instructions contained in your trust. A trust will not help you avoid taxes unless specific terms are added for that purpose.

“I don’t have time to make a plan.”

The typical planning appointment only takes about an hour. In that time one of our experienced estate planning attorneys can formulate a strategy that is custom-tailored to your needs and goals.

“I don’t know what to do; it is too confusing.”

One of our estate planning attorneys can give you a detailed, yet easy to understand, explanation as to what you should do and how your custom-tailored estate plan will work for you.

“If I don’t have a will, the State will get everything.”

Without a will, property will be distributed to a person’s next of kin in accordance with a statutory priority list. The statutory list rarely matches a person’s desire for the distribution of their property.

“Having a will avoids probate.”

A will must be probated for it to be effective. The general purpose of probate is to transfer title to assets that a person owns at the time of his or her death. Probate proceedings must be initiated to appoint a person to act on behalf of a deceased person in carrying out the terms of a will.

“A will covers all of my property.”

A will only covers property titled in a deceased person’s name at the time of death. Certain property such as jointly held assets, life insurance, bank accounts, and retirement plans will pass to the surviving owner or the named beneficiary designated on the policy or on the accounts. As a result, a will does not affect the transfer of those types of property. A will is an important part of an estate plan, but it must be drafted to work with other methods of transferring assets.

“I can complete my own estate plan.”

There are advantages and disadvantages to most forms of estate planning. Many kits and do-it-yourself software programs allow you to create your documents. However, estate planning is more than just creating a form document. You cannot create an effective document without understanding how it will work at the time it is needed most. In most cases, a few simple mistakes by well-intentioned people result in thousands of dollars in legal fees and court costs to rectify in the end.

“I don’t need to plan because all of my property is owned jointly with another person.”

Sometimes owning property jointly with another person is a good idea. Owning property as joint tenants can solve several estate planning problems, but many people do not understand the implications of joint ownership. For example: (1) transfers to a joint tenant can be exposed to federal and state gift tax; (2) joint tenancy does not avoid probate, it just postpones it until the death of the survivor; (3) joint tenancy may not take advantage of the estate tax exemptions available to both tenants; (4) jointly owned property is subject to the judgment creditors of all joint tenants; (5) joint tenancy will result in the complete transfer of ownership to the surviving owner, even if that was not intended by a deceased owner; (6) joint ownership can affect qualification for public assistance programs such as Medicaid; (6) all owners must agree to sell a jointly-owned asset; (7) all owners have equal access to a jointly-owned asset, even if it is a bank, stock or other cash accounts.

“My family doesn’t need an estate plan, everyone gets along.”

That may be the case now, however, there is no guarantee that when given the opportunity to receive money or property your family members will be able to work it out amongst themselves. Don’t make your family members fight for their inheritance. A well-done estate plan is the best way to maintain family peace and combat hostility within the family unit.

“One estate plan is good for everyone.”

The choice to use a trust, will, or other estate planning technique depends on a variety of factors. The decision to draft a will or trust requires careful planning tailored to your situation.

“Estate planning is only for the wealthy.”

Many factors other than wealth affect the need for estate planning, such as: (1) caring for a minor or disabled child; (2) transferring ownership of property in accordance with your desires; (3) caring for a surviving spouse; (4) transferring closely held business interests; (5) transferring ownership of property in another state; (6) charitable giving; (7) avoiding probate; (8) avoiding taxes; and (9) care of pets. These are only some of the reasons to plan your estate. Everyone has his or her objectives, but the size of an estate is not the only reason to plan.

“I am too young to plan.”

True, if anyone knew when they would die or become incapacitated.

“I already did an estate plan years ago.”

On average, a person should look at their estate plan at least every three years to make sure that everything is still in good working order. Also, an estate plan may need to be revised upon the occurrence of any of the following: marriage, divorce; major net worth increase; birth of a child; death in the family; child reaching age of majority; birth of a grandchild; residency change; tax law change; state law change; death or incapacity of a named personal representative, trustee or guardian; major health change; change in insurability; change in beneficiary attitudes; irresponsibility or substance abuse problem of a child or other beneficiary; change in business interest or retirement. Remember that estate plans are not one time fixes to every problem and as different issues arise, the plan may need to be revised to accommodate them. If you have a question as to whether or not your existing documents are correct, contact us today for a complementary checkup.

“If I cannot afford long term care, Medicaid will pay it for me at no cost to me.”

If you meet certain financial requirements, Medicaid will pay for your long term care if you need it, however, Medicaid does expect to be paid back from your estate upon your death. The effect of this is that the assets that you worked so hard to gain during your life will go to the government first rather than to your family. This can be corrected with proper planning.

Contact our lawyers today.