What are Common Estate Planning Myths?

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Estate planning myths are quite prevalent.

There is a lot of confusion surrounding the laws regarding trusts and estates.

Well meaning people speak out of turn.

Unqualified people give advice.

According to a recent Cherokee Tribune & Ledger-News article titled “I’m dead, now what? Myths about deaths in Georgia,” these estate planning myths can lead to problems.

Although the article focuses on Georgia law, the myths cited are rather applicable to any state.

Where are common myths?

Believing estate planning myths can cost you money and time.
Educate yourself to avoid falling victim to estate planning myths.

If there’s no will, a spouse inherits everything.

This would seem ideal.

Unfortunately, it is inaccurate.

Without a last will and testament to direct your assets through probate, the laws of the state will determine your heirs.

Whether your spouse splits assets with your children will depend on your state of residence.

The safest thing is to create a last will if you want your assets to pass fully to your spouse, in addition to making sure your non-probate transfers are in alignment with that objective.

This is especially important if you have minor children who would inherit.

If your surviving spouse needed to use the inheritance belonging to the children on their behalf, your spouse would need to bring a budget before the court to be approved.

Yikes!

A will negates the need for probate court.

A last will is not used to bypass probate.

Instead, a last will is used to direct assets through probate.

The executor must submit a last will to the probate court and the court must approve the last will for it to become legally effective.

Because the last will is filed in probate court, it becomes a public document.

In order to bypass probate and keep your affairs private, you would need to include a fully funded revocable living trust as part of your estate planning.

Alternatively, you could carefully arrange for your assets to transfer by various other non-probate transfer methods upon your death.

The state takes all of your assets when you die intestate.

This is definitely an estate planning myth.

The laws of intestacy do not involve the state taking the assets of a deceased individual.

Usually, these laws involve disbursing assets to the closest relatives.

The government will take your assets for Medicaid payback or if you have no living relatives.

On the other hand, if you have no relatives within a certain degree of relationship, then your asset may “escheat” to the state.

The family gets stuck with the debts.

This is not a complete myth.

Typically, family is not responsible for debts.

The money will come out of the estate of the decedent.

This means family members will inherit less.

If there are remaining debts, then the family is not usually responsible.

An exception would be if the surviving spouse was a joint borrower or co-signer.

Understanding these estate planning myths is important to protect yourself from costly mistakes.

Work with an experienced estate planning  attorney to get your affairs in order.

Reference: Cherokee Tribune & Ledger-News (Feb. 1, 2020) “I’m dead, now what? Myths about deaths in Georgia”

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