Estate planning is one of the most important things you can do for your loved ones. But there are many myths that surround how to handle it correctly. Falling prey to those myths could mean that your estate is not as protected as you would hope for, or that your assets do not go where they were intended to after your passing. By recognizing and understanding these myths, you can make the right choices to properly protect your estate and feel confident that the assets you have will be handled correctly after your death.
1). Without a Will, the Government Will Take Your Things
This just isn’t true. If you have any heirs at all, your property will go to them. Which of those heirs it goes to depends on the state you live in when you pass away. In some cases the spouse gets everything, and in other cases it’s more evenly divided. The only way the government gets your things is if there are no heirs to your estate at all.
2). Your Kids Will Lose Everything Trying to Pay the “Death Tax”
The “death tax” doesn’t even come into play unless there are more than $5,450,000 in assets. Most people do not have that much, so they will not be subjected to the tax. For those who cross over that financial threshold, the first $5,450,000 will not be taxed, and a married couple can each take that exemption, raising it to $10,900,000.
3). A Trust Will Save You Money Over Probate
The trust may make things a little bit easier by helping you avoid probate, but that does not mean you will save any money. Some people who create trusts end up spending more than they would if they allowed the will to be probated. The key to protecting your assets is how your trust or will is set up, not specifically which of those options you have chosen. Talking to an estate planning professional can help you decide which choice will be best for you and your heirs.
4). Estate Planning Will Protect Your Assets
Many people believe that having a good estate plan will protect their assets even when they are alive, but that is basically not accurate. Those assets are still subject to things like lawsuits during your lifetime. It is only after you pass away and your estate has been legally transferred to your heirs that lawsuits brought against you or your estate would not involve those assets. At that point, those assets no longer belong to you or your estate, and are legally the property of other people. During your lifetime, there are other ways to keep your assets safe that do not involve estate planning.
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ABOUT THE AUTHOR
Bob is a Principal and Shareholder of Brown Schultz Sheridan & Fritz. He provides tax, audit and specialty business consulting services to his clients and specializes in assisting privately owned businesses achieve their success.