In this episode, Tim explores and dispels some estate planning myths.
Podcast Transcription:
WRVO Producer Mark Lavonier:
This podcast is part of the series Estate Planning Pro Tips, hosted by attorney Tim Crisafulli of Crisafulli Estate Planning and Elder Law, P.C. An estate planning, probate, and elder law firm serving clients throughout Central New York. A former school teacher, Tim explains complex legal subjects in an easy-to-understand way. The commentaries focus on essential aspects of estate planning, such as wills, trusts, asset protection, long-term care, and probate. And now here's Tim.
Tim Crisafulli:
In two decades of practicing in the areas of trusts, estates, and elder law, I've noticed certain recurring myths. Here are a few of my favorites.
First, I can avoid probate by having a last will and testament. Well, nothing could be further from the truth. Probate is the court-mandated process of determining whether a will is valid, appointing an executor, and then fulfilling the terms of the will. This means that having a will does not avoid probate; rather, probate is the legal process to implement the terms of a will.
Speaking of wills, my second favorite myth is that a person's last will and testament controls where all of their stuff goes. Again, wrong. This is because when a person dies, there are many types of assets that are not affected by a person's will. Rather, those assets already know where to go regardless of whether there is a will and regardless of what it says. For example, an IRA or life insurance policy with a designated beneficiary goes directly to that beneficiary regardless of what the will states.
This realization recently led to much wailing and gnashing of teeth in my office. A person came in with a copy of her late parents' will, which left everything equally to the decedent's four children. Yet, her brother was keeping $250,000 worth of life insurance proceeds all to himself. She wondered why her brother was not sharing the life insurance policy even though the will clearly called for a four-way split. You can imagine her disappointment when I explained that the beneficiary designation controlled the life insurance proceeds, and the will controlled only those things that her late parent owned individually with no designated beneficiary. She wasn't happy.
Another favorite myth of mine is near and dear to married people. It is the false belief that all assets automatically pass directly to the surviving spouse when the first one dies, even without any will or other planning. Again, not true. If a married person leaves behind a spouse and children, then any assets that are not jointly titled, do not have a designated beneficiary, and do not pass in accordance with a valid will are actually divided among the surviving spouse and the children. Specifically, the surviving spouse gets the first $50,000 plus half of the rest. The children split the other half, no matter their ages and no matter what the deceased spouse wanted.
In the realm of estate planning, myths and misconceptions abound. A visit with an estate planning and elder law attorney can set you on the right path.
