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The Myth of the Month....

These are some of the most common misconceptions concerning estate planning, matters routinely dealt with by Attorney Roy Wilkes.

Without adequate planning, assets can be decimated by the crippling costs of nursing home stays, wills move ponderously through the probate system at great expense and open to public scrutiny, money is paid out unnecessarily for federal estate taxes, and much more. None of these things need to happen.

Living trusts are fast becoming the estate planning option of choice for people who wish to save money and avoid the complications of probate. Our clients are coming to us more sophisticated than even a decade ago, but people still have many misconceptions about estate planning. The Roy Wilkes Elder & Disability Law Firm, P.A. feels it's time to debunk the myths!

These are some of the most common misconceptions concerning estate planning, matters routinely dealt with by Attorney Roy Wilkes.

MYTH 1:
TRUSTS ARE FOR RICH PEOPLE
This used to be true, but because of changing demographics, trusts now hold many advantages for average people, essentially for anyone having assets of $100,000 or more, including property. Trusts allow you to minimize estate taxes. Trusts also allow you to avoid probate, which can be extremely costly. Trusts are much faster than wills: In New Hampshire, the probate process usually takes from 12 to 18 months to complete, while in accordance with the terms of a trust, assets can be distributed almost immediately. Trusts ensure privacy: Unlike the proceedings of probate courts which are open to the public, the terms of a trust are not. Since trusts are much more difficult to challenge than wills, trusts provide protection from unhappy heirs who have been cut out of an inheritance.

MYTH 2:
I WANT TO ENSURE MY CHILDREN RECEIVE MY ASSETS, SO I AM PUTTING THEIR NAMES ON MY HOUSE AND ACCOUNTS
While this approach to passing on assets may be appropriate in general for spouses, you should never put assets in a child's name to avoid probate or for any other purpose. This results in joint ownership, and your assets are subject to any liabilities, which may accrue to your child. The child may undergo financial reverses resulting from being laid off, for example, or from any of a number of reasons. If the child falls behind in payments and is taken to court by creditors, or if he or she declares bankruptcy, or is divorced, your assets, which are actually not yours but are jointly owned with your child, can be greatly reduced or even totally lost.

MYTH 3:
IF YOU ESTABLISH A TRUST, YOU WILL LOSE CONTROL OF YOUR ASSETS.
On the contrary, one of the advantages of trusts is that during your lifetime you act as trustee and beneficiary, and you retain complete and total control over your property. You can buy, sell, or do whatever else you wish with it, just as if the trust did not exist. You can also make changes to the trust at any time.

MYTH 4:
IT DOESN'T MATTER WHETHER A TRUST IS FUNDED OR UNFUNDED
You should almost never have an unfunded trust. It is like a car without gas. With an unfunded trust, the title to your assets, such as your home and your bank account, will not have been changed into the name of that trust. Thus, because the trust contains no assets, it cannot protect them.

MYTH 5:
IF YOU HAVE A SPECIAL NEEDS CHILD, ONE WITH DOWN'S SYNDROME, MS, OR OTHER SERIOUS DISABILITY, YOU MUST EITHER LEAVE MORE ASSETS TO ANOTHER CHILD TO TAKE CARE OF HIM OR DISINHERIT HIM SO HE WILL STILL BE ELIGIBLE FOR PUBLIC BENEFITS PROGRAMS
The first course of action leaves a great deal to chance since any number of circumstances, even including the death of the other child, can prevent the benefits from reaching the special needs child. The second option could be disastrous. It is far preferable to establish a special needs trust, which allows inherited money to be used to supplement government programs, not to take their place. The money in the trust can be used to provide important quality of life amenities, extras, if you will, and is not to be used for the basic food, shelter and medical care provided by public benefits programs.

MYTH 6:
EVERYONE WILL END UP IN A NURSING HOME AND WILL STAY THERE FOR YEARS.
Extended nursing home stays constitute one of the major concerns families have. They envision ruinous costs that will consume their assets. In actuality, statistics show that only 50% of women and 30% of men will enter a nursing home, and their average stay will last less than three years.