Wichita Estate Planning Lawyer Exposes Seven Common Myths [Part II]
July 3, 2014
This is the second installment of our two-part blog post designed to expose common misconceptions about estate planning issues. These erroneous assumptions often lead to mistakes that can have negative consequences for both you and your family. The information provided in this two-part blog post is intended to dispel these myths which can prevent ill-advised estate planning strategies. If you have specific questions about fashioning estate planning solutions for your unique circumstances after reviewing this blog, we invite you to contact an experienced Kansas probate attorney at the Weber Law Office, P.A.
Myth 4 – The state will take my assets if I die without a will or alternative estate planning instrument.
While it is never advisable to pass away without a will or trust, the state cannot claim ownership of your legacy if you have not prepared an estate plan. Kansas intestacy law will determine the disposition of your estate if you do not have a will or trust. If you are married without children, your assets will pass to your spouse. Anyone with kids really needs a will because you can indicate who you wish to serve as a guardian for your minor children if you pass away or otherwise lack the capacity to take care of your kids.
Myth 5 – Unless I set up a trust, my estate must go through probate.
While a trust is a common tool used to avoid probate, the necessity for probate will depend on the nature of your assets. If you have a modest estate, you might be able to use an expedited estate planning process intended for small estates which is available in many states. If you do not qualify for this option, you still might be able to pass your assets outside of probate without a will or trust depending on the nature of your estate. If you and your spouse own your home as “joint tenants with the right of survivorship,” your home will pass to your spouse. Assets like an IRA, 401K, life insurance policy, annuities or saving accounts can be passed via a beneficiary designation. However, sometime marital property law or other legal requirements can interfere with this strategy, so you should seek legal advice before relying on this strategy.
Myth 6 – Once I have had a living trust drafted, I can expect that my assets will pass to my beneficiaries as indicated by the trust agreement.
This mistaken assumption leads to one of the most common mistakes involving living trusts by individuals without legal counsel. While artful drafting of the trust agreement is important, the process of creating a trust also involves formally transferring property into the trust. For example, title to motor vehicles or real estate must be placed in the name of the trust. Many people that rely on typing services or so-called “document preparation services” never complete the process of transferring assets into the trust. If this step is not completed, the trust agreement provides essentially no benefit.
Myth 7 – If we add our child’s name to our home, this is the best way to facilitate passing our home when my spouse and I pass away.
While it is true that assets can be titled to effectuate their passing to a joint tenant or with a beneficiary designation, this approach can have adverse consequences if you do not seek sound legal advice. While this strategy is common for passing a home to a surviving spouse, the decision to also add an adult child can expose the property to your child’s liabilities. If your adult child is involved in a car accident that results in a large judgment, the judgment creditor might be able to enforce the debt against your home. Similarly, your child’s creditors might attempt to enforce a judgment against your home by placing a lien on the property. If you child gets into deep financial trouble necessitating a bankruptcy, the joint tenancy can complicate the bankruptcy process. This approach also can have adverse tax consequences depending on the circumstances.
If you have questions about estate planning issues, we welcome the opportunity to talk to you about an estate plan suited to your needs and goals. We invite you to call us or submit an inquiry form through this website to schedule your initial consultation.