For some, estate planning can be quite a confusing topic. The confusing nature of estate planning is often compounded by various estate planning myths that people hear from friends or family members who are not knowledgeable about estate planning law. Below are several of the more common estate planning myths, as well as the truth behind them.
Myth: If I Have a Will, My Estate Will Avoid Probate
Conversely, all property transferred via a will is guaranteed to go through probate. Through the process of probate, a court oversees the distribution of a person’s estate and ensures the decedent’s wishes, as outlined in the will, are carried out.
Myth: A Life Insurance Payout Will Not Trigger Estate Taxes
When the government determines the value of your estate for purposes of estate taxes, all of your assets are included. This necessarily includes the amount of any life insurance policy that will be paid out upon your death.
Myth: I’m Too Young for Estate Planning
Individuals should put estate plans in place upon reaching the age of 18 and continuously update the plan until death. Importantly, we never know when we will need an estate plan, and delaying planning can often have disastrous consequences.
A Revocable Trust Will Protect My Assets from Creditors
A revocable trust is an estate-planning tool that provides the owner with many benefits. However, it will not hide or otherwise protect assets from creditors or liability stemming from lawsuits. This is because a person remains in full control of any assets he or she puts into a revocable trust.