Common Myths About Estate Planning
A great deal of confusion remains over what constitutes a proper Estate Plan. Rumors, statements taken out of context, gossip, some bad characters that have milked the innocent, and even turf battles over business interests have created widely held beliefs that may not be accurate. These stories that have become myths may be harmful to you and your loved ones.
One myth is that if you have a Will, probate will not be required, and your assets can be transferred immediately to the beneficiaries . Probate is a court process for gathering your assets together after you die. The person you appoint as a personal representative will pay your liabilities from the assets and then distribute what is left to the beneficiaries you describe in your will. Probate occurs in the state of your legal residence and any state where you own real property. The procedures, and the cost of probate, are determined under your state’s laws. Because it is a court proceeding, the probate of your estate is part of the public record. This means that anyone who wishes to access your records may do so. A will is the vehicle you use to appoint your personal representative to execute it. A will has no effect anywhere except in probate court.
A second myth, is that if you don’t have a “large” estate, you need no Will. Many people also believe that if there is no Will, all the decedent’s belongings will go to the surviving spouse. A Will provides legally binding guidelines on how to distribute your probate property after your death. It also names the person you want to administer your estate. If you have no Will, then state law (the state where you are a resident at the time of your death) makes decisions for you. Depending on your circumstances, your estate may or may not go to your surviving spouse.
Your will only impacts probate property. If you own property titled with another as joint tenants with right of survivorship (JTWROS), then at the time of the first owner’s death, the survivor owns all of the property by virtue of the JTWROS. Likewise, if your assets have beneficiary designations, like an IRA, Life Insurance, Annuity and similar types of accounts, then those assets pass to the beneficiary named in the designation. Still other property passes by Transfer on Death or Payable on Death designations. That property is not probate property because it passes to the survivor or beneficiary outside of the probate process.