There are times when people seek legal counsel for what they perceive is the easiest or cheapest form of estate planning. I receive calls from older parents who consider just adding children to bank accounts. Myths about Last Wills and Testaments and estate planning exists and needs addressing.
MYTH #1 NO NEED FOR A WILL
One of the most dangerous misconceptions is the myth that estate planning exists only for the wealthy. Let’s take a look at why everyone needs an estate plan in place.
People have “stuff.” Everyone owns tangible personal property. Some belongings may carry sentimental value. You may own item(s) handed down from parents or even grandparents. Generation item may be very valuable and carry family memories. Often the worse family fights come from arguments over personal belongings that more than one person wants. Long-lasting, hard feelings over family property may cause permanent broken relationships.
A Will makes your wishes known.
A Last Will and Testament provides for gifting or distribution of specific property to a named person. If the person dies before inheriting, the Will names descendants or other family members. Taking care of personal belongings such as jewelry, memories, or even furniture is a plan that helps keep family peace. A Trust keeps your bequests private and out of probate. A Will and a Trust are tools that makes your wishes known and your wishes kept.
MYTH #2 IT’s Only for Death.
Today, incapacity is one of the main concerns facing Senior Citizens and the Elderly. A person may suffer a life altering stroke, brain injury from a personal injury or car accident, start showing signs of Dementia, or be diagnosed with Alzheimer’s. An estate planning is revocable and changes to meet your life stages and needs. It safeguards you and your wishes during your life.
An estate plan is not just for death.
In the United States, nearly 6 million Americans live with Alzheimer’s. Alzheimer’s increases over the age of 65 years old and 1 in 10 struggle with incapacity Women tend to have a higher risk However, there are 200,000 cases each year of new cases for people under 65 years old with cases in people who are in their 30s, 40, and 50s. An estate plan with financial and health care powers of attorney protects a person during life..
MYTH #3 LLC is Enough
What about estate planning when you own a small family business? Small business owners mistakenly believe that a Limited Liability Corporation replaces the need for an estate plan. An LLC is not a substitute for putting a will and trust in place for beneficiaries. Many LLCs fail to write a business operation agreement.
An LLC is not a substitute for an estate plan.
The Articles of Incorporation sets out the owners and who runs the business. Missouri requires every LLC to have an Operations Agreement (OA)which sets out duties, contributions, and an action plan to avoid conflicts. Often business owners form an LLC but do not complete an OA, which causes problems. Buy-Sell Agreements complements an estate plan but does not replace one.
MYTH #4 LET’S ADD THE CHILDREN
Another myth concerns adding children to accounts. Too often, parents add children to their bank checking and savings account. Joint ownership of financial accounts is not a safe solution for parents. First, the other person’s creditors will reach into your account for payments of debts. It is your money and your account, but you opened it up to your children. Your savings may end up paying someone else’s debts. Second, if you become incapacitated, your children’s money may be counted as a money resource for your long-term health care needs.
A financial power of attorney plus estate plan is best.
A durable power of attorney with an estate plan protects you and your money. A child may still access to help you write checks and pay bills; but it is not looked at as their money. A payable on death for the account is part of an estate plan.
Adding a child to the title of your house is not a good option for you. Why not? Now your child legally owns part of your property. Now you open yourself up to bankruptcy claims, creditor issues, and you may cost your child increased tax issues. Your child will now be on the title, you die, your child pays tax on the step-up basis.
Adding a child to your accounts and to a deed is not an estate plan. It does not help you and may cause you financial issues, or even loss of the property that you worked hard to own.
You worked hard for what you have. Don’t leave your estate assets to chance. Create your estate plan today. A legacy plan in place is peace of mind. Protect yourself, your assets, and your family. Call me at 314-332-0011 for a complimentary consultation or book now.