Five Common Misconceptions About Estate Planning
Below are the five most common myths about estate planning that I have encountered when discussing with my family, friends, and clients over the years.
“Even if I die without a will, my spouse will inherit everything I own.”
If the two of you have children (or children from a previous relationship), the children will be entitled to part of the estate based on Tennessee's intestacy statutes. This can cause problems if the children are underage, disabled, estranged, have creditor issues, or do not get along. It may also come to a shock to the surviving spouse.
“I do not need a will because I already wrote my own (or found one online).”
Every competent person has the ability to draft their own will. However, it is very common for these wills to be improperly executed, contain ambiguous language, not dispose of all of the property, omit successor designations and “what if” scenarios, and/or fail to coordinate probate vs. non-probate assets. Any of these can create discord and additional expenses after someone passes away.
A will is not the only estate planning tool available, and a simple will found online may not be the best document for your situation. Depending on your age, health, financial status, or family makeup, a more comprehensive estate plan could be more beneficial for you and your family.
“Estate planning is only for the wealthy”
Some of the most drawn out and contentious cases I have managed involved modest estates with inadequate estate plans. Furthermore, estate planning is not simply creating a will. It involves addressing who will make healthcare or financial decisions for you if you become incapacitated; who will take care of your children if something happens to you; or who will manage your estate when you pass.
“I am too young to worry about estate planning”
This thought is more common and understandable. When we are young, we focus more on immediate life challenges. Starting a career, getting married, taking care of young children, buying a home, and everything else that comes with adulthood takes priority. There can be little time to planning for the future.
Unfortunately, tragedies and life-changing events can occur at any point in our lives. Even a relatively inexpensive and simple plan can protect your family and your property from unnecessary confusion and expenses.
“Having a will means that probate is unnecessary.” or “I have a living trust so probate will be unnecessary”
Having a will does not mean that probate is unnecessary. In fact, probate is the process of proving a will in court. The appointed executor is the only person authorized to manage the assets and debts of the estate during this process.
Having a valid revocable living trust can avoid probate. However, a revocable living trust only manages the property that is actually owned by the trust. Many people have set up living trusts but failed to place all (or any) of the relevant property into the trust. This means that your executor/trustee must still go through the court to (1) transfer the property through a “pour-over” will; or (2) otherwise distribute all probate assets using Tennessee intestacy laws.