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Estate Planning Myth Busters

Nov 28, 2012 | Estate Planning & Probate

Estate Planning Myth Busters

By Estate Planning Practice Group
SAALFELD GRIGGS PC

 

Clients sometimes make assumptions about their estate plan that can cause problems at a later date. If you can avoid making such assumptions, you will save yourself and your family time, money and hassles. Let’s see if you can guess if the estate planning assumptions listed below are true or false . . .

 

  • If two of your children don’t get along now, they will get along better after you die if you name them Co-Trustees in your estate plan.
  • Your loved ones will be able to easily locate where you keep your estate planning documents, asset titles, financial records, passwords, etc.
  • Your spouse won’t change his or her Will and give your property to a new spouse after you die.Your children will always pay back the loans that you make to them.
  • Your children will enjoy being co-owners of the same business or piece of real estate after you die.
  • If you give money to your child because his or her business needs cash you will save the business.
  • None of your children will mind if you gift to their siblings.
  • Wills avoid probate.
  • Living Trusts are not subject to your creditors.
  • If your spouse is a not a citizen of the United States you can transfer any amount to them without gift tax or estate tax.
  • It is acceptable to name minors as outright beneficiaries on your life insurance and retirement accounts.
  • You can bequeath an unlimited amount to grandchildren without generation-skipping tax.
  • If you put your house in joint names with a child it will be safe from your child’s creditors, qualify for the full capital gain exclusion on sale, and won’t be a gift for gift tax purposes.
  • You can bequeath assets to a disabled child who is on Supplemental Security Income (“SSI”) without loss of these government benefits.
  • Your children don’t need to name Guardians or Trustees for their minor children.
  • If you get divorced you don’t need to update your estate plan. Your ex-spouse will act reasonably if they remain a beneficiary on your life insurance.
  • You don’t need to name contingent beneficiaries on your life insurance or retirement plans.
  • You have a long time to sell assets to pay death taxes.
  • If you want to amend your Will you can just cross out provisions and make handwritten insertions.
  • Your Will or Trust covers all your property so you don’t need to coordinate your pension, IRA, and life insurance with your Will or Trust.
  • The life insurance you own passes death tax free to your beneficiaries.
  • If you would like to protect the inheritance of a child who is getting a divorce, you can just leave the child’s inheritance to them outright, instead of in trust.
  • You will lose control if you place your assets in a Revocable Living Trust.
  • You don’t need a Living Trust if you have under $1 million in assets because probate is only for large estates.
  • If you name your estate as beneficiary on your life insurance that means that it will not go through probate.
  • If you are a co-owner of a business you don’t need a Buy-Sell Agreement to address issues like how each co-owner can transfer their interest during life or at death and how the surviving co-owners can purchase a deceased owner’s interest.
  • You don’t need to put much thought into who should be your Personal Representative and Trustee.
  • If you are married and have a combined estate over the death tax exclusion ($1 million in Oregon) you can save death tax for your children by leaving everything to your spouse outright, instead of to a Bypass Trust.
  • By giving a lot of money after your death to your children who are not yet mature, your children will mature faster.
  • If you have a family business the best succession plan is to simply die in the saddle.
  • It is better to keep your children in the dark about your estate plan and let them be surprised.
  • Your children will easily come to an agreement regarding the use of a vacation home, including when it can be used and by whom, whether or not a child can will their share in the home to a spouse, whose kids can use it without the parents being there, how to handle purchases and expenses, etc.
  • An irrevocable trust means a trust you can readily revoke.
  • You can wait to update your estate plan until after you are admitted to the hospital. You will be more relaxed and clear thinking lying down.

If you have ever assumed any of the above about your estate plan, you should revisit your plan now to avoid the problems that will arise down the road. Please call a member of our Estate Planning Group if you would like more information.