Myths of Estate Planning
Perhaps because so many people avoid thinking about estate planning, there are many persistent myths about this area of the law. Here are some of the most common myths of estate planning that you should be aware of.
Myths of Estate Planning | A will gives me complete power over where my assets go when I die
Even people who accept that they need more than a will for a comprehensive estate plan can still overestimate the legal power of a will. While people unfamiliar with estate planning often think of a will as a straightforward and unfettered statement of their wishes, this isn’t the case.
You cannot, for example, disinherit your spouse with a will. A spouse will always be entitled to one half of your “wealth” (broader than your estate). This is called a “right of election.” If you attempt to use your will to give your spouse less than one half of your wealth, or if you miscalculate in your will such that it leaves your spouse less than one half of your wealth, your spouse may exercise this right of election and override the terms of your will. You cannot unilaterally refuse this right of election. The only way around it would be through an airtight pre-nuptial or post-nuptial agreement.
A will only affects what happens after you die. Proper estate planning includes end-of-life planning. You should have a power of attorney and a healthcare proxy to make medical and legal decisions in case you become incapable of either. You cannot assign such powers in a will. Also, a will is not the proper place to put your funeral and burial wishes. The probate process will occur afteryour funeral. Make sure you discuss these arrangements with family and friends, and consider stating your wishes in a separate document. You can talk to an estate planning attorney about the best ways to make your funeral and burial wishes a reality.
Myths of Estate Planning | A trust is only worthwhile if you are very rich
When people think of “trusts,” they often think of the very wealthy – of annual investment incomes and “trust fund babies” and all the trappings associated with the leisure class. They might even think a lawyer would decline to set up a trust for assets below a certain threshold.
This is all misleading and misled. Almost anyone can set up a trust. If your debts are larger than your assets when you die, then creditors will make claims to your estate – but even in this case you may be able to use a trust to pass assets on to your loved ones before creditors come to seize them.
Even if you only have a few thousand dollars to pass on, a trust could be worthwhile. If your beneficiaries are young, and if you appoint a capable trustee, those funds could grow significantly after your death and make a much bigger impact than you might realize when your trustee finally distributes them.
Contact our experienced New York estate planning lawyers today to schedule a consultation.