The Seven Dumbest Things People Are Told About Estate Planning - Part Two

Part Two

In our family estate planning & elder law office, we often find that people have misconceptions about estate planning that they get though the internet, their friends, and even other professionals.  There are various problems with the Part 2 topics below, but the most fundamental one is that believing any one of them may lead to bad decision-making. 

4. Talking about estate taxes is a waste of time.

For a majority of Americans, in the current tax year, estate taxes are not an issue – the exemption is currently at 5.49 million dollars. Every dollar above that exemption amount is taxed at a 40% tax rate for estate or “inheritance” taxes. So for those that have less, estate taxes aren’t an issue. This year.

That being said, Congress can change the estate tax exemption (they say they won’t – do you believe anything Congress says these days?). Unless you know that you will die in 2017, you can’t know what the estate tax exemption will be, or whether it will affect your family.  Less than 15 years ago, the exemption was below a million dollars. For many, if the estate tax returned to 1990’s levels, there would be a tax issue.

5. You need to give your assets away to protect them.

This is one of the most potentially devastating pieces of “advice” that many people believe to be true.  Giving assets away is a complex topic that can have repercussions on many levels, including inability to receive benefits for long term care and a loss of lifetime savings.

 6. Your power of attorney can take care of everything.

First, it’s important to understand this most basic legal concept:  A power of attorney dies with the person that gives the power.  In other words, a power of attorney no longer works when a person dies.  Additionally, most powers of attorney place limits on the person receiving the power in a way that actually prevents the power of attorney from being able to take certain important actions on your behalf, particularly when it comes to the need for long term care.

7. If you have a will, you won’t need to go through probate.

This is possibly the most pervasive myth out there.  A will is not a probate avoidance device; on the contrary, it is meant for probate.

If you missed Part 1 of The Seven Dumbest Things People Are Told About Estate Planning, click here. 

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The information in this blog is not intended to be, nor should it be, construed as legal advice. It is for informational purposes only. For advice, specific to your situation, consult with a qualified attorney.