Estate planning is one of the most important things you can do for your family. Despite its importance, many people are ignorant about how Wills and probate actually work. Ignorance may be bliss, but it’s deadly when it comes to planning for your future.
Here are some common myths about wills and probate followed by the actual truth.
MYTH: "I don't need a Will because I don't have many assets."
-
This is a common misconception. Regardless of the size of your estate, having a Will allows you to dictate how your assets will be distributed, name guardians for minor children, and choose an executor to handle your affairs. Without a Will, the state's intestacy laws will determine the distribution of your assets, which may not align with your wishes.
MYTH: "Once I create a will, I can't make any changes."
-
Wills are not set in stone. You can revise or update your Will at any time as long as you are mentally competent. Major life events like marriage, divorce, the birth of a child, or the acquisition of new assets often necessitate changes to your Will. You should review your estate plan every year to make sure that it still meets your desires.
MYTH: "Creating a Will avoids probate."
-
A Will does not bypass probate. Probate is the legal process of authenticating a Will, paying debts, and distributing assets. However, having a Will can streamline the probate process because it provides instructions to the court on how to distribute your assets. Most states have adopted more efficient probate processes for smaller estates, but that only applies if you have a Will. If you die intestate, then your beneficiaries may wait a long time for the estate to settle.
MYTH: "Probate is always time-consuming and expensive."
-
While probate can be time-consuming and costly in some cases, it is not always the case. The complexity of the estate, the presence of disputes, and other factors can influence the length and cost of probate. Proper estate planning, including the use of trusts and beneficiary designations, can help minimize probate costs and time.
MYTH: "I've created a living trust, so I don't need a Will."
-
While living trusts are useful estate planning tools, it's still recommended to have a Will. A will acts as a "safety net" to address any assets that may not have been transferred into the trust properly. It can also name guardians for minor children and provide instructions for any assets that may not be included in the trust. This was a step that Paul Walker missed. He formed a trust for his assets but never formally transferred his assets into the trust. Then all of his personal details went through the probate court where they became public.
MYTH: "I can disinherit my spouse or children."
-
In many jurisdictions, spouses, and children have legal rights to inherit a portion of the deceased's estate, even if they are not included in the Will. These rights vary by jurisdiction, but it's important to understand the applicable laws in your area. Generally, a person cannot disinherit their husband or wife. However, you can ask your future spouse to sign a prenuptial agreement limiting their inheritance rights. After the marriage, you can ask the spouse to sign a postnuptial agreement that can limit what the person inherits. These agreements are contracts that a court will validate. (And if all else fails, you can always divorce your spouse!)
MYTH: “I’m too young to make a Will.”
-
Less than a third of Americans have some sort of estate planning document. This is partly because people believe they are too young to have a Will. It’s tempting to think that you won’t pass away at an early age. It’s also easy to believe that estate planning can be delayed until some future point. However, statistics show that at least 25% of people over age 65 still don’t have a Will. Clearly, some people delay writing their Will for so long that it simply never gets done. Delaying the estate planning process can have calamitous results for your family. No matter what state of life you’re in, you should have a Will. Since FastWill can help you make a legally binding Will in just minutes, you have no excuse not to move forward.
MYTH: “My spouse is entitled to everything by law anyway so I don’t need a Will.”
-
Just because you’re married doesn’t mean you don’t need an estate plan. In fact, it’s disastrous for a married person not to have a Will. Do you want your spouse to be subject to the dictates of probate court, or do you want that person to have exactly what you intended? Without a Will, there’s no guarantee the courts will follow your exact wishes. Many people are surprised to find out that in their state, children inherit a mandatory part of an estate by law. And they are further shocked to discover that the share inherited by minor children can’t be used by the spouse to support those children. That’s why you need a Will, to make sure your spouse isn’t left destitute.
MYTH: “My spouse or lawyer is my power of attorney so no Will is necessary.”
-
A power of attorney isn’t a substitute for a Will. A POA is a legal document that gives a third party authority to act on your behalf. A POA is a helpful tool that you can use to make sure that someone else can manage your affairs while you are alive but too incapacitated to make your own decisions. A “durable” power of attorney is a legal instrument that gives someone, like your lawyer or spouse, the right to act on your behalf. When you pass away, the POA is dissolved. Legally speaking, a POA doesn’t become a Will when you die. If you die while a POA is in effect, your estate still goes through probate. A Will allows you to name your lawyer or spouse or someone else as executor.
In Conclusion: Learn the Facts!
If you want to learn more about planning your Will, check out FastWill’s blog posts about how to protect your legacy.
