“Be miserable. Or motivate yourself. Whatever has to be done, it’s always your choice.”
– Wayne Dyer
Hi Collin County,
Happy New Year!
It’s a slow week around here, after Christmas. Santa managed to find four(!) Zhu Zhu pets, so the younger two girls were very excited. (Our oldest couldn’t have been bothered about them.) The kids have torn through all the rest of their presents and are now working through those gift cards they’ve racked up. My folks are down visiting my sister in College Station and we have my mother in law in town now. When she came in this week, she said she felt like she was checking in to the Miller Hotel! We sure do love do have our folks come to visit – I just wish we could talk them into living closer!
Believe it or not, there is quite a bit of talk right now about estate tax in some circles. The estate tax is set to expire at the end of this year, but that was only going to last for another year until it came back in 2010 at a much lower rate. That is still the law right now, but no one thinks it is going to last – Congress just hasn’t gotten around to “fixing” it right now. Here’s an article from two weeks ago about this confusing process from the WSJ:
http://online.wsj.com/article/SB126090367887892391.html
Not much has changed since then.
But no matter what Congress does or doesn’t do, it won’t matter for most people because Estate planning is MUCH more than avoiding the estate tax.
In my opinion, this is why so many regular families get taken by surprise when they least expect it–after all, their estate wouldn’t be subject to the estate tax.
But then they get socked with all kinds of other fees, maybe even placed in probate and their wishes aren’t honored by the courts.
All because they never went through the process with someone like us.
Now, most of our clients know this already, which is why this email is perfect to send to your friends and extended family. It’ll be a true gift–peace of mind!
So, in that vein, I’m continuing my series from a couple weeks ago and doing some “myth busting”. Read on…send your feedback…
Aaron Miller’s
“Straight Talk” Personal Strategy
Part 2: Common Myths About Estate Planning
A few weeks ago, I wrote about these common myths–still held by the majority of Americans.
In fact, as of this writing, it’s a fact that almost 60% of Americans don’t have a basic will, and that’s a big problem.
Much of the reason for this is because of misconceptions about estate planning, and I dealt with two already:
Myth 1. Only rich people prepare estate plans.
Myth 2. Everything goes to your spouse, if something happens.
Well, I’ve got three more for you to chew on, and dispense with.
Myth 3. After I create my will or living trust, there’s nothing else to think about.
Well, if you follow this line of thinking, it could lead to a lot of problems. For instance, once you set up a trust, you need to re-title the assets you want to transfer to the trust. Otherwise, the trust doesn’t help a thing.
On top of that, families need to periodically update their will or trust to reflect major life events, such as a divorce or the birth of a child. You’ll also want to revisit your estate plan if you move to another state.
In fact, it’s a good idea to meet with us every 3 years to make sure your plan is fully up-to-date. (Which, incidentally, we provide free to all of our clients. Ask us about that.)
Myth 4. If I have a will, my estate automatically won’t go through probate.
Well, again–that’s not the case. Probate is a process in which a court determines whether a will is actually valid and ensures that relatives and creditors are notified. This process can take several months and drain money from your estate.
So here’s one way to avoid that entirely–create that living trust. Essentially, a living trust is a legal document you create which holds property (such as brokerage accounts and real estate). When you die or are incapacitated, the property is smoothly transferred to your beneficiaries. This transfer occurs outside of the probate process, which can save a TON of hassle.
Not everyone needs one of these documents, but it’s something which you can’t paint over with a broad brush. Which is why it’s important to walk with a competent guide on these matters.
By the way, if you own property in more than one state, a living trust is a no-brainer. Going through probate in multiple states can be a nightmare.
Another advantage to a living trust is privacy. A will is a public document, and anyone can come to the probate hearing to see if any fights break out. Living trusts aren’t published in any courthouse, so people can’t gain easy access to them. That’s quite nice.
Myth 5. I could be held responsible for a deceased parent’s debts.
No, you’re not responsible for credit card debts from your parents.
In general, children aren’t responsible for a deceased parent’s debts, and in some cases spouses are often exempt as well. Again…you can’t paint it with a broad brush. But as a general rule, the estate is responsible for paying debts. If there isn’t enough in the estate to cover the amount owed, the debts usually go unpaid.
Most of all, we’re here to help.
To your family’s wealth, health, and happiness!
Aaron Miller