The Top 6 Estate Planning Myths Debunked
Put simply, a Living Trust ensures that once you’re gone your final wishes will be known and properly implemented. What surprises many young people and elders alike is how many families can benefit from having a Living Trust.
Below I debunk six of the most common myths about Living Trusts.
- Estate Plans don’t need updating. There are dozens of reasons your Living Trust could become invalid or outdated over time. For example, your asset schedule could be out of date, there could be changes in family status, financial status, name changes, dead executors or beneficiaries, new grandchildren and many more changes that can affect your estate plan. It’s a good idea to review your Trust with an Estate Planning attorney every five years.
- Estate Plans are only for rich people. A Living Trust is much more than a plan for how to divvy up your estate, it leaves instructions for loved ones on who will be responsible for taking care of minor children, who will take care of your affairs should you become incapacitated and who will get your prized possessions. A Living Trust can even protect your assets from nursing home expenses and protect your heirs from creditors. It’s also a good idea to leave instructions to survivors about how you want your social media accounts managed and by whom. As you can see, nearly everyone can benefit from a Living Trust, not just rich people.
- Estate Planning is to be done as part of your retirement plan. Many of the clients we meet for the first time are preparing their Living Trust as part of their retirement plan. Waiting this long can be a huge mistake for your family! The best time to create your first living trust is when you first start a family, as a trust is the best way to protect your children in case of your incapacity or death.
- Estate Planning is only for old people. As I stated in #3, Living Trusts safeguard young families should the unthinkable happen. Think of a living trust as your voice after you’ve passed away or become unable to make decisions for your children, finances or your own healthcare. Having a valid Living Trust in place will prevent your loved ones from having to make difficult decisions – guessing at your intentions- should something happen to you. It also can prevent lengthy, drawn out, expensive and contentious court battles over things like custody, debt, inheritance, etc. Most people don’t actually want a young person to control a lot of money – with a trust you can appoint a responsible person or bank to manage the finances of your children (or grandchildren) until they are older and more responsible.
- Estate Plans, Trusts and Wills are expensive to set up and maintain. Living Trust estate plans are normally set up for a modest, fixed fee. There is no annual maintenance fee. This cost is nominal compared to the cost of probate. Probate is the process surviving family members and loved ones must go through to settle your estate in court in the absence of a valid estate plan. This process can take years and can cost tens of thousands of dollars. In some circumstances trusts can also reduce or eliminate capital gains taxes, gift taxes, and offer other protection for your assets.
- Trusts don’t come in pretty colors (true story!). Living trusts aren’t pretty, quick, fast or as easy as some online estate planning services would lead you to believe. A Trust is perhaps the single most important legal document you will every create. Do you really want to leave that to chance, working with a faceless chat box on an estate planning website, a paralegal or other non-attorney? Sure it may seem like a good idea to save a few bucks, but in the end, it could cause years of hardship, expense and legal battles for your surviving loved ones. Don’t be fooled by showy online resources that over-promise and under-deliver. Hire an attorney who is a State Bar Certified Specialist in trusts.
If you have questions about getting started with a Living Trust, Estate Plan or Will in California or would like your existing plan reviewed contact us to schedule a consultation.