Estate planning is an area of law fraught with misconceptions regarding the transfer of property, the costs, and instruments utilized to achieve your objectives. Below are a few of the common misconceptions surrounding estate planning and the truth behind the matter.
- I do not need to plan for my death because everything I have goes to my spouse when I die anyways, right?
Wrong. This is one of the biggest misconceptions about estate planning and the transfer of property at death because it seems to be the most logical conclusion. However, in Missouri, if you die without any sort of estate planning (i.e. a will, a trust or non probate transfers), you are considered to have died intestate and the property that passes through probate will be distributed as follows:
– If your spouse survives you and there are no surviving children or their descendants, then your spouse gets the entire estate.
– If your spouse survives you and there are surviving children or their descendants, all of whom are children of you and your spouse, then your spouse gets the first $20,000.00 plus ½ of the balance of the estate.
– If your spouse survives you and there are surviving children or their descendants, one or more of whom are not children of your spouse, then your spouse gets ½ of the estate.
As you can see, your spouse will not receive all of your estate unless you have no children at all. Consequently, it is imperative to implement some form of estate planning so that you do not fall within the intestacy laws and are able to distribute your property in accordance with you wishes. Most often, individuals want their property to transfer to their spouse and then let the spouse transfer the property to your children upon her death. However, if you were to die without a will or a trust, this would not be the case and your spouse may not be adequately provided for upon your death.
- If I have a will, I avoid probate.
Wrong. This misconception is likely brought on by a lack of quality information promulgated to the general public. One of the drawbacks of a will is that it does not avoid probate. However, utilizing a will does allow you to determine how your assets are distributed and to whom they are distributed. Consequently, although a will does not avoid probate, it does accomplish your wishes in an effective and efficient matter without relying on the default Missouri intestacy statute. Therefore, a will is one of the most important documents in estate planning because it allows you to accomplish your goals in a cost effective manner.
- A revocable living trust is only for the ultra wealthy.
Wrong. With all of the talk surrounding “trust fund babies” and the wealthy utilizing trusts to avoid estate taxes, many people assume that a trust is an exotic estate planning tool only utilized by the wealthiest individuals. However, this is incorrect because a revocable living trust is beneficial to everyone. A trust is a preferred estate planning tool because it provides you with the greatest flexibility as to how and when the beneficiaries of the trust receive the assets. With a revocable living trust, you can place age, time, educational, financial or other restraints on how and when the beneficiaries receive the trust assets. Additionally, a trust is a great estate planning tool because it avoids the probate process, thus not subject to probate fees, and it drastically limits the exposure of your financial affairs to the general public. Accordingly, a trust can provide great benefits for all people, not just the ultra wealthy.
- All of my property will be distributed pursuant to the terms of my will.
Wrong. Although most of the property described in your will is distributed pursuant to the terms of your will, this is not always the case. For example, if you hold property in a joint tenancy with rights of survivorship, the property will automatically pass to the remaining joint tenants and will not be distributed pursuant to the terms of your will. Therefore, it is always important to recognize the forms of property ownership in which you own property and make sure that your property is distributed according to your wishes. Additionally, property with a beneficiary designation will trump the dispositions by a will. For example, if you have a bank account with a friend listed as the designated beneficiary and your will attempts to transfer the bank account to your child, the bank account will be transferred to your friend because the beneficiary designation will control the disposition of the bank account. Therefore, it is imperative to make sure that your property does not have outdated beneficiary designations or designations that you want to change. Making a few minor changes to beneficiary designations can save future headaches and ensure that your property is distributed to the person that you desire.
If you have any questions or concerns related to estate planning, please call us at (636) 386-8322. A St. Louis estate planning attorney with the Bolinger Law Firm, LLC will work with you to help you achieve your goals and provide sincere advice to guide you through the estate planning process.