by Allison L. Byrd
Having a professionally prepared estate plan is a crucial part of planning for the future. A well-crafted Will-based or Trust-based plan can provide security and other protections for one’s beneficiaries, can help to avoid significant expense and inconvenience to them, and can provide peace of mind to the person making the plan. However, there are many misconceptions about how and why to go about forming an estate plan, and about how the plan can affect loved ones and beneficiaries after a person’s death. In the interest of dispelling some of the more common misconceptions, here are a few things to consider when thinking about your own estate planning.
1) The myth: Only wealthy, ill, or elderly people need an estate plan.
The reality: Nearly everyone can benefit significantly from having a well-crafted estate plan, and many will need it sooner than they think.
We all like to think that we’ll live forever. While you may be among the fortunate ones who live to a ripe old age with all your faculties intact, there is always the possibility that you may become incapacitated or die at young age due to an accident or the sudden onset of an illness that leaves you precious little time to do any planning for the benefit of your loved ones. Making an estate plan when you are young and healthy has a number of benefits. First and foremost, upfront estate planning ensures that you have a plan in place if you have an unexpected illness or accident. It also helps to ensure that your loved ones receive your assets with a minimum of taxes and expenses subtracted. If you have children under age 18, a Will can make known your choice of guardians for those children if you die before they reach the age of majority. Having a well-crafted estate plan in place allows you to have some control over what happens to your estate assets after your death and takes the burden and expense of decision-making off of your loved ones at a time when they will no doubt be grieving and unprepared to take on such a burden.
“So,” you may say, “there are good reasons, after all, to make an estate plan even if I’m not currently ill or elderly, but what’s the point in having a plan if I have very modest assets?” The truth is that the property you leave behind, however meager, must go somewhere, and having an estate plan in place allows you to decide what happens to that property, rather than having the law dictate what happens to it. The more decisions you make in a properly drafted and executed Will or Trust, the fewer decisions will be left up to the legislature or a probate court to make for you, and the more control you will have over what happens to your property.
2) The myth: My attorney will read my Will aloud in a musty, mahogany-paneled room, while my loved (or not-so-loved) ones are gathered ‘round in rapt anticipation.
The reality: It doesn’t work that way.
You’ve probably seen many movie scenes in which a deceased person’s family members are gathered at the office of the person’s attorney, eyeing each other suspiciously and waiting anxiously for the attorney to read the Will aloud and tell them if they are to receive anything. For a few amusing examples of this myth in film, take a look at these three movie clips:
While the reading of a Will in this manner makes for good dramatic action in a movie plot, it is rarely, if ever, what happens in real life. Assuming you’ve made a Will and that you have left instructions with your chosen Executor about where to find it, someone is going to be reading your Will after you are gone, but it won’t be with all your relatives present and your attorney doing the reading. Under Georgia law, all Wills are required to be filed with the probate court of the county in which the Will-maker (the “testator”) died. Depending on what type of property you have when you die, whether and how you owned it with anyone else, and how it is titled, the Executor of your Will may or may not have to go through a longer probate process to prove the validity of the Will and to obtain the authority needed to gather your assets, make sure all expenses and taxes are paid, and distribute the rest to the beneficiaries you designated in your Will. Anything filed with the probate court will be of public record and open to anyone to view, so, if this is a concern, you may want to consider having an estate plan that is based on one or more living Trusts, which typically provide more privacy than a Will-based plan.
3) The myth: It’s not worth the expense to have a trained and experienced estate planning attorney draft my estate planning documents when I can do it myself or use less expensive online Will-preparation software.
The reality: It’s well worth the up-front expense to have the advice of an estate planning attorney and a professionally prepared estate plan drawn up.
Every estate planning attorney has heard plenty of horror stories play out in real life when someone dies without a comprehensive estate plan in place. Well-crafted Wills and Trusts can significantly decrease or eliminate the chances that a relative who is upset or disappointed with your decisions will seek to challenge your plan in court, and that’s an important benefit when you consider that even an unsuccessful challenge can cause a great deal of trouble to your survivors, expense to your estate, and delay to the distribution of your property. Skimping on effective up-front planning, and going without the advice that is critical to making the best decisions, can result in much higher administrative costs, much more trouble and inconvenience to your survivors after you are gone, and protracted and expensive court disputes between family members. By assuming the lesser up-front expense of putting a professionally-crafted estate plan in place, you spare your loved ones the unwelcome trouble and expense of having to hire attorneys to sort things out or handle disputes after you are gone.
4) The myth: Once I’ve made an estate plan, and signed a Will and/or Trust, I will never need to think about it again!
The reality: You will need to review your estate plan every few years with your estate planning attorney to make sure it still accomplishes what you want and that it is updated to reflect changes in the law and changes in your life.
Too often I see clients come in with estate planning documents which were adequate and effective when made, but have become woefully out-of-date and no longer accomplish what the clients want. Your assets may change significantly over the years. Marriages may form or fall apart. Children may be born or lost to tragic circumstances. Perhaps you have remarried and now have a blended family that includes step-children or step-grandchildren. Even if you have no drastic changes in your family structure, people whom you have chosen as your fiduciaries (your Executor, Trustee, Financial Agent, or Health Care Agent) may no longer be available to fulfill those roles. You may have changed your mind about how and to whom you want your property distributed after you are gone. Finally, laws can and often do change in ways that can affect your existing estate planning documents. For all of these reasons, it is important to review your estate plan and discuss any changes in the law with your estate planning attorney every few years (or sooner, if circumstances require), and to update them when necessary to make sure your plan still accomplishes what you want with a minimum of trouble and expense to your surviving loved ones.
5) The myth: My Will or Trust will govern what happens to all my assets.
The reality: Your Will may not govern what happens to all your property. That depends on how your various assets are owned and how your beneficiary designations on certain accounts are structured.
There are two broad categories of property that a person may own at his or her death: probate property, and non-probate property. A person’s probate property (the “probate estate”) contains any assets that the person owned in the person’s own name at his death (including his share of any asset that he owns jointly with another person as tenants in common), and that do not pass to a beneficiary other than the person’s estate by a beneficiary designation. The probate estate will not include assets that pass directly to a beneficiary other than the person’s estate by a beneficiary designation, and it will not include any assets that the person owns with another person as joint tenants with rights of survivorship, if the other owner survives the deceased person. Only assets that become part of a person’s probate estate at his death will be controlled by his Will.
A comprehensive estate plan drawn up by an experienced estate planning attorney will include not only a well-drafted Will and possibly one or more Trusts, depending on your needs, but will also include critical advice about how to structure the ownership of your property and how to set up your beneficiary designations on retirement accounts and life insurance policies, so that these items are properly coordinated with your estate planning documents to accomplish the overall estate distribution that you intend.
6) The myth: If I don’t have a Will, my survivors will be able to avoid the probate process.
The reality: Even if you don’t have a Will, someone may still need to go to probate court to be able to administer your estate.
Whether it’s necessary to get a probate court involved in an estate depends on the types of property that are in the estate and how they are owned. As discussed above, a Will can only direct what will happen to property that is part of your probate estate. If you have no probate estate at your death, it may not be necessary to probate your Will. On the other hand, if you do own probate property at your death and you don’t have a Will, then any interested party (family members or creditors, for example) can petition the appropriate probate court to become the Administrator of your estate, so that your probate property may be administered and distributed according to law. (When there is a Will, the person who administers the estate is called the Executor, and when there is no Will, the person who administers the estate is called the Administrator, but both positions have essentially the same duties and responsibilities.)
7) The myth: I must avoid probate in Georgia at all costs!
The reality: If you live in Georgia, your estate plan need not be primarily focused on avoiding the probate process.
Probate in Georgia is one of the least expensive, quickest, and least troublesome probate processes in the United States. There may be other reasons to avoid probate (a desire for privacy, or a need to reduce the risks of post-death disputes, which are common with blended families, for example), but filing fees in the probate courts of Georgia are fairly minimal, and various legal forms are provided by the court system to anyone who needs to petition the court. The process is designed to be navigable by petitioners who are not using an attorney, though having an attorney helps to ensure that the petitioner is aware of all that has to be done, for example: making the required publications and notices, setting up an estate account, getting an employer identification number (“EIN”) from the IRS for the estate, paying administrative expenses and any taxes that are payable, allowing a certain amount of time for creditors to come forward and make claims before the estate gets distributed, etc.
A petitioner can usually obtain a court order appointing her as Executor or Administrator in short order (typically, anywhere from immediately to a couple of weeks after filing the petition), and, barring any Will challenges or other complications, a probate administration in Georgia can be wrapped up in as little as six months, depending on the diligence of the Executor or Administrator in moving things along.
8) The myth: Everything will go to my surviving spouse when I die, anyway, so I don’t really need to have a Will or a Trust.
The reality: That’s not the law in Georgia.
In Georgia, the heirs of a person who dies (a “decedent”) are those people who would be entitled under Georgia’s intestate succession laws to receive a decedent’s probate estate if the decedent died without a Will. At the top of the list are the decedent’s spouse and children. If there is a surviving spouse but no then-living children or other descendants, then the surviving spouse is entitled to receive all the decedent’s probate estate property. If there are surviving children or other descendants but no surviving spouse, then the decedent’s children will inherit all the decedent’s property, with the descendants of any deceased child taking that child’s share, per stirpes.1
However, if the decedent is survived by a spouse and by any children or descendants of the deceased spouse, the spouse must share equally with each of the children, with the descendants of any deceased child taking that child’s share, per stirpes, provided that the surviving spouse is entitled to receive at least one-third of the decedent’s estate. So, if you are survived by a spouse and any descendants, and you did not make a Will, then your spouse will not receive all your property. If you have descendants and you want your spouse to receive all your probate property after your death, you will need to have the appropriate estate planning documents in place to accomplish that desired distribution of your probate property. (See #5 above for the disposition of non-probate property.)
9) The myth: Treating my kids fairly means that they should all get an equal portion of my estate, regardless of their individual circumstances.
The reality: Sometimes the truly fair thing to do is to distribute property unequally. The goal is to have an equitable, not necessarily an equal, distribution of property.
Anyone who is a parent with more than one child knows that each child has his or her own strengths and challenges. Sometimes the challenges come in the form of physical or mental disabilities, and sometimes in the form of financial irresponsibility. There are times when a child needs more support than his or her siblings need, and in these cases, it’s important to recognize that an equitable distribution of property among the children may not necessarily call for an equal distribution of property.
Often, parents with a child who has special needs decide to distribute their property evenly among all their children, or even to disinherit the special-needs child, assuming that the more typical siblings will use the inherited assets, along with their own assets, to take care of their special-needs sibling, but this fails to take into account the possibility that those more typical siblings may face challenges of their own in the future or that they may not be able, available, or willing to take care of their special-needs brother or sister indefinitely. The better plan is for the parents to make special provisions for a special-needs child in their estate plan. Doing so helps to ensure that the special-needs child is taken care of, no matter what happens to the other children. And for those times when siblings are present, willing, and able to care for their special-needs brothers or sisters, parents can significantly ease the burden on those caregivers by engaging in special needs planning.
10) The myth: My family members all get along well, so I’m SURE there will be no disputes over my property after I’m gone.
The reality: <guffaw!> Family members that you least expect to fight will often fight.
Parents are often blind to, or foolishly choose to ignore, persistent sibling tensions and rivalries. Blended families that form when a parent remarries after a divorce are especially vulnerable to disputes over property when that parent dies and leaves all his or her property outright to the surviving second spouse. In such situations, the parent who remarries should understand that leaving everything outright to the second spouse may effectively disinherit the children from the first marriage. You may think, “Well, don’t married people usually leave everything to each other anyway, even when their only children are those they had together?” Well, yes, that’s often the case. However, children are far less likely to challenge a parent’s Will when their other parent receives the estate, since it’s highly likely that the surviving parent will leave the remaining estate to those children in turn when that surviving parent dies. On the other hand, children who are not the descendants of the surviving spouse are far less likely to receive anything when that surviving spouse dies, since the surviving spouse can, and often does, change his or her estate plan after the first spouse’s death to leave everything to the surviving spouse’s own children when that surviving spouse dies. Children who are disinherited are far likelier to challenge a parent’s Will when it leaves everything to a surviving spouse who is not their parent.
Even non-blended families can end up fighting over property once both parents are gone, especially if the duties and responsibilities of caring for elderly parents were not shared equally by the children. Those who assumed the bulk of the caregiving responsibilities may feel entitled to a larger share of the deceased parent’s estate, and may be resentful of neglectful siblings who end up getting an equal share of the estate.
Trust planning can be very helpful, especially with blended families, to ensure that property passes in such a manner as to reduce the chances of family disputes that may lead to ugly and expensive court battles and broken family relationships. So why “court” trouble or “pass the buck” when proactive and professional estate planning is available?
Now that you are in-the-know about these common estate planning myths, you’ll understand why the motto of Morgan & DiSalvo, P.C. is, “Life Happens. Plan for it.” How can we help you plan for the future?
1“Per stirpes” means that a share created for a deceased person will be divided into equal shares for that person’s children, with one share for each then-living child and one share for each then-deceased child who has at least one then-living descendant. No share is created for a then-deceased child who does not have at least one then-living descendant. Any share that is created for a then-deceased child is then further divided into shares for that deceased child’s children in the same manner.