Putting together an estate plan can seem intimidating. It doesn’t help that there are estate planning myths out there that can distract or prevent someone from putting together a proper plan. Here are a number of estate planning myths debunked.
I don’t need a Power of Attorney because I’m married. A spouse does not have the automatic right to make financial decisions for you if you became incapacitated. Certainly, a spouse can access joint accounts, but there are many other items that cannot be handled without being your agent. An agent under a comprehensive Power of Attorney can handle all financial items, such as accessing retirement accounts, transferring assets, creating a trust, and dealing with insurance.
The agent under my Power of Attorney can make medical decisions for me. A Power of Attorney only grants an agent the authority to make financial decisions, not medical decisions. A separate Health Care Proxy is necessary to appoint an agent to make medical decisions.
I’m too young to need an estate plan. Life can be unpredictable, and illnesses or accidents can happen to the young as well. Every adult should have core documents in place, including a Power of Attorney, Health Care Proxy, Living Will, and Last Will and Testament. These will set forth your wishes as to who would make decisions for you if you became incapacitated, and how your estate will be handled and distributed upon your passing.
Disabled or special needs individuals can’t receive inheritances. Some types of government benefits (SSI and some Medicaid, for example) that disabled individuals receive require them to have limited assets in their name. While they should not be left a direct inheritance, a supplemental needs trust can be created to hold an inheritance. If properly established, the assets inside a supplemental needs trust will not count against them for most government benefits.
Even if I don’t have a Will, my spouse will inherit my assets. If you die without a Last Will and Testament, New York law provides for a series of “default” heirs. For example, if the decedent is married and has children, then the first $50,000 plus half of remainder of their estate passes to their spouse, and the other half of the remainder passes to their children. So in some cases all of the assets would not pass to a spouse. That is one of the reasons it is essential to have a Will to make sure your wishes are followed.
The most important part of estate planning is avoiding taxes. While taxes are a part of estate planning, for most people they are not the most important aspect. The New York estate tax exemption is currently $6.58 million (2023), meaning that few people are subject to it. Often, the focus of estate planning is ensuring your wishes are followed, planning for incapacity, and protecting your assets. Even those with modest assets need planning.
A trust always avoids probate. Upon the creator’s passing, the assets in a trust pass outside of probate. But many neglect to take the necessary steps to actually re-title the appropriate assets to their trust. Assets outside of a trust that are not joint and have no designated beneficiary will not avoid probate. Part of having a complete estate plan is to review all of your assets to ensure that they are accounted for.
Don’t let these estate planning myths keep you from a comprehensive estate plan. The experienced estate planning attorneys at Kurre Schneps LLP can help guide you to the right path. Contact us today for a consultation.