Estate planning is a complicated area of law. As a result, there are many myths about the law that can be harmful to you and your loved ones. Here are some common estate planning myths and facts:
Myth: Probate is not required if I have a Will and my assets can be transferred immediately under my Will.
Fact: Having a Will (without a properly funded Trust) pretty much mandates that you have a probate. When probate is required, the assets may not be transferred to your heirs for months, or possibly even years.
Myth: I don’t need a Will or Trust if I have a very small estate in Arizona.
Fact: Although Arizona does have small estate probate exemptions, very few estates fall into this category. The small estate exemption only applies if the deceased person had $75,000 or less in personal property or $100,000 or less in real property. However, even if an estate qualifies for the small estate exemption, if a person doesn’t have a Will, their property will pass pursuant to Arizona law. As a result, there is no guarantee that your property will go to the people you want to inherit your property.
Myth: A Will disposes of all of my assets.
Fact: Many assets pass as a result of designations outside the Will. For example, if you own property as joint tenants with right of survivorship, the surviving joint tenant will receive that property, not the person named in your Will. Other examples of property that passes outside a Will include life insurance, retirement accounts, and accounts with “transfer on death” or “pay on death” designations.
Myth: I can prepare my own estate plan.
Fact: While you know where you want your property to go and who you want to make your decisions, if you prepare your estate plan on your own it might not work out that way. Preparing an estate plan is more than just creating documents. A well drafted estate plan requires a look at how all of the individual documents will work together with your assets when they are needed.
Myth: I don’t need an estate plan because all my property is owned jointly with someone else.
Fact: This is a bad idea for a number of reasons. First, it exposes your assets to the other person’s liabilities and creditors. If the other joint owner has a creditor issue, the creditor can try to get the assets jointly owned with you. Second, there are a number of possible unintended tax ramifications in that it could expose the asset to gift, estate and capital gains taxes. Third, it does not avoid probate, but only delays probate until the last joint owner passes. Fourth, the property will transfer to the surviving joint owner when the other joint owner passes. This may not be the person who the deceased intended to receive the property.
When it comes to protecting yourself and your loved ones, you can’t afford to rely on myths. Now that you know the facts, call Arizona estate planning attorney Abigail Neal at (480) 699-7992 to get started on your fixed fee estate plan today.