By Richard Nevins
Attorney at Law
Estate Planning can be a complicated area of the law where myths abound and mistakes can be harmful to you and your loved ones. Here is a list of common myths about estate planning.
I don't need a will because I don't own very much.
If you don't create a valid Will, the state of California has a series of laws, known intestate succession, that will determine where your assets go and who will control everything that you own. State law may not distribute your assets to the people you want to have them. If you want to nominate a guardian for your children, then you need a will.
Many people wrongly assume that the only important asset is money, when in reality some of the most difficult family disputes involve the inheritance of personal possessions, like family photographs and heirlooms.
I don't need an estate plan because I hold all my assets jointly with another person.
This is one of the most dangerous ways to plan your estate. When you add another person to your bank account or to your real estate as a joint tenant, you are exposing that asset to every current and future creditor of that new joint tenant. The asset will also be exposed to gift tax, capital gains tax and estate taxes. Joint ownership does not avoid probate. Probate is delayed until the last joint owner's death.
If I have a good Will, probate will not be required, and my assets can be transferred immediately to the beneficiaries of the Will.
In fact, having a Will mandates a probate in most circumstances and the assets may not be transferred to the heirs for months or years.
Probate is a court proceeding to transfer title from the decedent's name to the living beneficiaries. Probate occurs in the state of your legal residence as well as in any state where you own real property. The length of time to complete a Probate varies, but can take six to eighteen months, on average.
If my assets are few, I will avoid probate.
In California, if you have a house worth more than $100,000, your estate will probably require probate, unless you use a Living Trust or some other probate-avoidance technique.
A Will covers all my assets.
Wills do not cover assets held as joint tenants with right of survivorship, retirement plans, annuities, life insurance, bank or investment account with transfer on death designations.
I can do my own estate plan.
Estate planning is more than just creating documents. It is understanding the big picture and how the legal documents will work in concert with the assets at the time they are needed.
You can't afford to rely on myths when it comes to your estate. Find out the facts, plan carefully and execute a plan to provide you with peace of mind and security for your loved ones.
Richard Nevins has been an attorney for 18 years. His law firm provides legal advice in estate planning and small business law. For more information, please visit his website at www.RichardNevins.com