While an estate plan is one of the best gifts someone can give their family in case of death or incapacitation, many people don’t want to talk or even think about it. Besides the death factor, many people avoid estate planning due to the misconceptions and myths associated with the concept.
Unfortunately, these widespread lies can lead to costly mistakes, and you could leave your loved ones fighting for the property after your death. While there are many lies and myths about estate planning, below are some of the most common:
Myth #1: I’m too young!
False! While we are aware of the uncertainty of life, we all like to think that we will live to a ripe old age. The fact is you could die young due to an unexpected illness or an accident. You could also become incapacitated. Essentially, life events can leave you with no or very little time to make any arrangements about how your possessions should be distributed among your loved ones.
There are many tragic stories of people dying at a relatively young age without a will, plunging their families into a fight for property. For instance, a young man risks pitting his parents or siblings against his young family if he were to die without an estate plan.
Accordingly, no one is too young to have an estate plan. Essentially, creating an estate plan while young and healthy is beneficial in many ways, including allowing you to appoint a guardian(s) for your minor children. Regardless of your age, having an estate plan is one of the best things you can do for yourself and your family.
Myth #2: Estate planning is only for the rich!
False! The reality is that an estate plan can be hugely beneficial to anyone regardless of how much they own. Even though the myth about estate planning and the wealthy focuses on estate taxes, estate planning is more than just paying taxes.
Estate planning involves ensuring your possessions are distributed as per your wishes in case of incapacitation or death. Even if you are not wealthy, you would not like to think of a situation where your hard-earned finances will be mismanaged upon your death. Similarly, you would not want to leave your family scrabbling for your property.
Estate planning is for everyone, not just the wealthy. Everyone would like to have some control over what happens to their assets after their death or incapacitation. Estate planning not only allows you to have control but also helps avoid unnecessary family disputes, especially at a time when your loved ones are likely to be grieving your death.
Myth #3: If I die without a will, the state will get my assets!
False! Even though this is a myth, it is interesting that the fear of losing their hard-earned possessions to the state does not make people consider estate planning.
If you die without a will, you are said to have died ‘intestate’ and automatically become subject to your state’s intestacy succession laws. The Texas laws controlling the intestacy probate process are found in Texas Estates Code, formerly the Texas Probate Code. Essentially, the intestacy succession laws determine how the deceased person’s estate will be distributed.
The Texas intestacy laws allow for the distribution of the deceased person’s estate based on a decreasing level of connection to the person. For instance, spouses or children before parents or siblings. Suppose there are disputes as to the rightful heirs. In that case, the law also allows for a judicial determination of heirship where the probate court determines or declares the identities of the deceased person’s heirs.
Essentially, the state does not get your assets if you die without a will; it only oversees their distribution. However, it is advisable to have an estate plan in place to protect your loved ones from the unnecessary, long, and often expensive intestacy probate process.
Myth #4: If I have a will, I don’t have to worry about probate!
False! As a legal document that outlines how you would like your assets distributed after your death, a will is one of the most important estate planning tools. Besides giving you control over what will happen to your property after you are gone, it also allows you to appoint an executor to carry out your wishes. However, a will does not oversee the distribution of all your assets.
Primarily, assets that sit outside a will are distributed through the probate process. The probate process involves validating your will and transferring some of the assets that the will cannot distribute. Besides distributing these special classes of assets, including life insurance policies with designated beneficiaries, the probate process is also helpful where there are disputes and complications. Since probate is usually a long and often expensive process, many people would readily avoid it.
However, despite the importance of a will as an estate planning tool, it will not necessarily help you avoid the probate process. Essentially, you will still have to worry about probate, even with a will. However, you don’t necessarily need to worry about probate if you have a well-crafted estate plan that you also regularly update.
Myth #5: I’m married and don’t need to plan!
False! While marriage certainly makes the distribution of assets easier, many marriages do not usually last till death. So many things can change in a marriage that you require an estate plan to protect yourself and probably your children in case of unexpected events, including divorce or the death of a spouse.
Mostly, the myth that a married person does not need an estate plan is based on the fact that their assets become community property in marriage. Even though Texas is a community property state where most property acquired during the marriage belongs to both spouses, certain assets remain separate property.
Accordingly, it is important to have an estate plan that helps distinguish separate property belonging to an individual spouse from community property owned jointly by both spouses. Besides making the division of property easier in divorce, an estate plan gives individual spouses control over their separate property.
For instance, a spouse is free to leave their separate property to their children, not necessarily the other spouse’s children. Essentially, there are so many situations in a marriage that without an estate plan are likely to mess up your finances when alive or leave your loved ones without protection in the event of your death or incapacitation.
Myth #6: My family will do the right thing!
Hmmm. The best-case scenario is that your family will get along, respect your wishes, and they will not fight over your property after you pass away. However, this is not usually the case. Even for a family that has always been peaceful and friendly, property division can divide the family.
Most families are complicated, and dynamics such as sibling rivalries and other relationship tensions play a significant role in property division. Family disputes usually lead to lengthy, expensive, and unnecessary court processes. Hoping your family will do the right thing after you are gone is usually wishful thinking.
Accordingly, you should create an estate plan to mitigate any potential disputes. An estate plan allows you to explicitly state your wishes, including stating who should get what when you die. Besides avoiding disputes that can potentially break up your family, an estate plan helps you protect vulnerable members of your family, including non-biological or adopted children.
Myth #7: If I have a trust, I don’t need a will!
False! As estate planning tools, both a will and a trust help transfer your property or estate to your heirs or beneficiaries. While a trust allows you to avoid probate for certain assets, it does not do everything that a will does. Besides the transfer of assets, a Will also allows you to do other things, including naming a guardian for your minor children.
Whereas a will becomes active when you die, a trust becomes active the moment you create it. Accordingly, you will lose total control over any assets or property you transfer into a trust. Additionally, irrevocable trusts cannot be altered once they are created. To avoid losing control over all their assets, people keep some assets, including cars and some bank accounts outside trusts.
Since a will is only active after death, it is useful for people who need to continue using or controlling their property. For instance, a nursing home resident who has put their property in a will can quickly sell it to pay for their long-term care expenses. This is not possible for assets transferred into a trust.
While a trust is just as important as a will, it is necessary to have a will even with a trust. A well-crafted estate plan includes both legal documents. A ‘pour over’ will mostly transfer property not included in a trust to the trust after you die.
Zarazua Law can help!
Whether you are old or young, wealthy or not, you will leave behind an estate when you die. Estate planning involves stating how you would like your assets distributed once you die or become incapacitated. Essentially, estate planning allows you to live out your legacy while still alive and to protect your loved ones in the event of your death or incapacitation.
Contact us today at Zarazua Law for a free consultation on how we can get your estate planning started!