An estate plan, which has a revocable living trust as its centerpiece, will dictate how your property will be distributed, who will care for your children and/or your pets, and most importantly, who will make financial and medical decisions in the event you become incapacitated or die. Simply put, estate plans are in the best interest of every family. The following are 6 common myths about estate planning to watch out for.
- MISPERCEPTION: If I do not have a will or a trust, everything I own will go to the state of California.
REALITY: Your assets do not go to the state of California. In fact, California has “intestate succession” laws that will transfer your assets to your closest relatives. In other words, California makes a will for you. The intestate succession laws aim at distribute your property in a manner that follows your bloodline, but of course, this often times is not to the wishes of the decedent or the family.
2. MISPERCEPTION: Wills are all I need in estate planning.
REALITY: Wills only take effect at death. They do not speak during incapcity. Prior to death, your fiances and health need to be managed by someone you know and trust if you are unable to care for them or yourself. Naming your successor trustees, financial agents, and health care agents (AKA the people in charge of your financial health care matters for you) is the one aspect of estate planning NOT covered by wills. Therefore, since well over 50% of the US population will experience some level of incapacity over their retiring lives, incapacity planning is crucial.
3. MISPERCEPTION: Using a will means that I get to avoid probate.
REALITY: Wills force probate and there is a lot of waiting in probate during which creditors file claims and trustees pay debts and taxes. The average probate takes about 15 months. Not until then do the beneficiaries of the probate estate receive their distributors. Probate is also expensive, with court costs and attorney’s fees set by statue.
4. MISPERCEPTION: A living trust eliminates estate tax.
REALITY: Estate taxes may be minimized by your living trust, but to minimize taxes, you will most likely need specific tax planning.
5. MISPERCEPTION: I am single and/or do not have kids, so I do not need an estate plan.
REALITY: You will still need to identify your incapacity team, which consists of people you trust to care for you when you are unable to. If you fail to plan for you incapacity, you may end up in a conservatorship which is equivalent to a probate; state laws take control, which may not always be in your best interest.
6. MISPERCEPTION: Estate planning is only for the wealthy.
REALITY: This is completely false. Estate planning is not only about wealth and the distribution of it. It is about having a plan for if or when you become incapacitated, having a plan for your loved ones, and having a plan to protect your interests. Ultimately, estate planning is part of life planning.
Should you have any questions or would like to learn more, please feel free to call our office at 650-572-7933. Our experienced and knowledgeable staff will be able to help you with your needs or concerns.