ESTATE PLANNING MYTHS

Reality: The true situation, the real situation

What follows are twenty-one of the estate planning myths estate planning attorneys encounter on a regular basis. These myths are followed by the reality behind such myths. I will explain why the myths are untrue. While not every person has heard (or believed) every one of these estate planning myths, I’ve rarely encountered someone who has not heard, believed, or even espoused at least some of these misconceptions.

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Reality: Reality: If you own anything, you have an estate.

Everything you own is part of your “estate”; this includes your home and any other real estate (even if there’s a mortgage on it), bank accounts, investments, retirement accounts, life insurance, business interests, automobiles, boats, furniture, gun collection, stamp collection—the list goes on. No matter how many or how few things you have in your […]

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Reality: Reality: If you have any property or people you care about, you ARE old enough to consider estate planning. This is ESPECIALLY true if you have minor and/or special needs children or other dependents.

If you were to become disabled or die today, what would happen to your stuff and your family? If you’re like many people who have not done any estate planning, a judge will likely come up with answers to those questions following a court proceeding that could be both long and expensive. If you have […]

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Reality: If you’re reading this, you’re probably not dead…:), so there is still time!

Some people mistakenly assume estate planning is solely financial planning for retirement. Of course it’s wise to start financial planning early in life and prepare for retirement many years ahead of time. However, estate planning includes far more than just financial planning. Estate planning is life planning, which includes making proper, well-planned provisions for the end […]

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Reality: Estate planning is Life Planning.

It’s not uncommon for folks to consider estate planning solely as death planning—who will get their stuff when they die. While estate planning does address this limited question, estate planning is much more than just end-of-life planning. Proper estate planning is about planning for life, including what happens to you, your family, and your property […]

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Reality: This is NOT do-it-yourself stuff!!

In our society, we accept the notion that certain things should be left to specialists, those with the education and training to handle highly technical matters. We understand that with some of this “complicated” stuff, if mistakes happen, the results can be very serious, painful, or irreparable (meaning you may not get a do-over). Among […]

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Reality: You can do this, but it most likely is NOT the right decision for you and your family because it will likely lead to undesired and unintended results.

As mentioned above, the practice of putting a son or daughter or another family member or friend on a real estate deed, bank account, or other asset is quite common and not a new idea. This practice has been around for years, and sometimes it’s worked out okay, at least in the short term. But […]

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Reality: Estate planning is actually more important and relevant for “regular” folks.

If I had a fortune to support my family and myself, it might not make all that much difference if a sizable portion of my fortune was lost or taken away from me or my family. Consider the case of Microsoft’s Bill Gates, one of the wealthiest people in the world. At one point, his […]

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Reality: You can probably afford what you deem to be important and NOT hiring an attorney may eventually cost you, your loved ones and/or your estate FAR more in the end.

It’s a general rule that attorneys aren’t inexpensive. But it’s my and your experience that most of us find a way to pay for the things we value and see as important in our lives. Here’s another personal experience to make the point: earlier this year, I met with a very nice married couple. At […]

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Reality: You determine the details of your estate plan.

A good estate planning attorney will counsel you about your individual circumstances, your family situation, your objectives, your values, and what you want to accomplish through your planning. Your attorney will then explain your options and let you choose how to proceed. Most of the estate planning options available and utilized result in people retaining […]

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Reality: For most people, it is just “business as usual” after they have implemented their new estate plan.

As noted above, you’re in charge of your estate plan. You get to choose the design and implementation of your plan. It’s as if you’re having a new house built; in this case, your attorney acts under your direction to “build,” as it were, the type of structure you request. If you choose to simply […]

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Reality: If you choose the right attorney, estate planning should be a pleasant and enjoyable process and in the end, you may end up saving FAR MORE money with the attorney than what it would cost to do it yourself!

Let me tell you a little secret about being an attorney. For me, by far, the least favorite part of my job as an attorney is dealing with other attorneys! I enjoy clients, and I can handle judges and other professionals, but some attorneys are just not pleasant creatures. ☺ I’ll let you in on […]

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Reality: If you perform your own surgery form a YouTube video, then feel free to follow the same approach with your estate plan. Otherwise, this may not be the best approach.

Again, just because you can do something does not mean you should. I might be able to pull out a problem tooth with a pliers, but I know any dentist will do a much safer and more reliable job of that. I’m a huge fan of the Internet and all the information and other resources […]

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Reality: If you’re also ok with your grandmother’s clothes, then her trust should also “fit” you just fine.

This myth is a variation on myth 5, the self-help myth, and myth 12, that you can download the legal forms you need from the Internet. One middle-aged client of mine told me her older sister was planning on just taking her mother’s forty-year-old trust, copying the pages, changing the names, and voilà, signing it […]

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Reality: If your estate plan is more than 5 years old, it is almost certainly out of date and perhaps worthless.

Just as houses do, estate plans require periodic maintenance. This is due to a variety of factors but mostly to changes in people’s circumstances and changes in the law. Let’s talk about changes in your life and the lives of your loved ones. Life is all about change. Children grow up, adults grow older, and […]

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Reality: If your assets are not legally transferred into your trust, you are sitting on a VERY expensive stack of papers—your trust is worthless and totally ineffective.

A dirty little secret in the estate planning community is that a very large percentage of trusts are the legal equivalents of empty vaults—they’re worthless. Imagine someone spending a great deal of time, effort, and money to construct a vault for valuable assets but failing to actually move those assets into the vault. They remain […]

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Reality: You may be right, as long as you understand and are willing to accept the limitations of a Will-based plan.

A Will is perhaps the most common estate planning option. It can be fairly simple for your attorney to create a valid will, and this can often be done for a relatively small fee. Part of the reason for this simplicity is that a Will is simply a letter of requests to the probate judge […]

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Reality: Be VERY careful here. A Power of Attorney can serve a useful purpose, but it can also be a VERY dangerous thing!

A property power of attorney is another common estate planning option and a tool we utilize as “backup” protection in almost all our customized estate plans. Like wills and trusts, you can find all types and varieties of powers of attorney, and you can even download a power of attorney form from LegalZoom or other Internet […]

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Reality: Beneficiary designations might work for some of your assets, but will not work for other assets.

With certain assets such as life insurance, retirement accounts, other investment accounts, and some bank accounts, you have the option of designating beneficiaries to whom the proceeds in those accounts will be paid upon your death. It’s a very good idea to utilize such beneficiary designations, but there are also several cautionary items to note […]

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Reality: If something sounds too good to be true, it probably is and this has direct application with regard to much of the “noise” about asset protection.

Please first refer to the earlier discussion in this book about the different types of trusts, including the differences between revocable and irrevocable trusts. Most of the “asset protection” trust structures (if we’re talking about asset protection for the maker of the trust) involve irrevocable trusts. This is consistent with the law in most states […]

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Reality: This might seem like a good point and perhaps you are right that YOU won’t care. On the other hand, those that you leave behind will likely care very much!

This myth encompasses many of the points I made earlier in this book, especially the one about proper estate planning involving planning for life; it’s not just about planning for death and what happens afterward. Given this reality, focusing solely or even primarily on what happens after your death is not the correct perspective. Even […]

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Reality: Few of us are as angelic as our parents believe.

Parents will often overestimate the generosity and selflessness of their children. This miscalculation can lead to big problems. For example, parents may elect to choose one or a couple of their children to be in charge of their property and this type of “planning” may be done on an informal basis, with no legal documents, […]

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