“MY ESTATE ISN’T LARGE ENOUGH TO WORRY ABOUT ESTATE TAXES.”
The federal estate tax is a tax on everything the decedent owned or had the right to control on the date of death. Additionally, the amount of tax due, if any, is determined by subtracting allowable deductions and credits from the gross estate.
IF I GIVE AWAY ASSETS, THE RECIPIENT HAS TO WORRY ABOUT THE TAXES.
The gift tax is on the donor, not the donee.
“ESTATE PLANNING INVOLVES ONLY MY PERSONAL ASSETS.”
A good estate plan includes business succession planning.
“I HAVE A TRUST SO I DON’T NEED A WILL.”
While a trust may be the primary document in a comprehensive estate plan, it requires a certain amount of effort by the settlor to make sure everything gets titled into the trust. Therefore, it is always advisable to have a will to serve as a back-up to make sure everything goes as planned.
“EVERYONE NEEDS A REVOCABLE TRUST.”
The Revocable Trust is a useful tool for the avoidance of probate and estate taxes, but both can be avoided with other tools as well. Each family’s circumstances should be independently evaluated.
“IF I BECOME INCAPACITATED, MY SPOUSE CAN TAKE CARE OF MY AFFAIRS.”
A spouse does not have the legal authority to handle their spouse’s affairs. This being said, steps can be taken to ensure that this does occur in the case of your incapacity. Alternatively, you may wish to nominate another trusted individual to serve in this capacity.
“SETTING UP A CORPORATION OR A LIMITED LIABILITY COMPANY WILL PROTECT ALL OF MY PERSONAL ASSETS FROM THE RISKS OF THE BUSINESS.”
This legend is only partially true, and only then rests upon many assumptions that are often taken for granted. First, one can rarely avoid liability for their own acts of personal negligence. Second, in order to hide behind the “corporate shield” so to speak, certain business formalities must be followed.
“IF I DIE WITHOUT A WILL, THE STATE WILL COME IN AND TAKE EVERYTHING.”
Again, in most cases, nothing could be further from the truth. If you should die without a will, there are certain laws that will pass all of your possessions to family members. These are called the laws of intestate succession. Generally, only if there are no family members within a certain consanguinity, will your assets be given to the state.
“WHEN I DIE, EVERYTHING GOES TO MY WIFE SO I DON’T NEED A WILL.”
This statement is awfully simplistic in today’s society, and in Missouri, your wife may NOT get everything. The fact is, the State of Missouri will decide who gets your property. This does not take into account whether or not there are any children or what their ages are, whether there are children from previous marriages, among other issues. In our view, it is always better to plan things out exactly how you want things to go, and the only way to do that is with an adequate estate plan.
“HAVING A WILL AVOIDS THE PROBATE PROCESS.”
This statement is simply not true. A will is not designed to accomplish this task, rather, its purpose is to determine who receives the property at one’s death that is in their probate estate. However, there are methods available than can help avoid the probate process entirely or minimize the extent that some assets are included in a probate estate.