monthly cover
Senior Spectrum Newspaper
March 2018
Current Golden Pages Cover
Golden Pages
Current Generation Boomer cover
Generation Boomer

Senior Spectrum Publications

Clearing Up the Misconceptions about Wills and Trusts
by Gerald M. Dorn, J.D., EPLS, AEP
top of page
Gerald Dorn
Gerald Dorn

The purpose of estate planning is to make sure you and your family are prepared for the possibility of incapacity and the inevitability of death. Estate plans involve several different legal documents, including wills and trusts. These estate planning tools can be customized so they provide the best protection for you and your family. There are misunderstandings that many clients have regarding what an estate plan can actually accomplish. In fact, there are several myths regarding wills and trusts that need to be dispelled. Let our Reno trust attorneys clear up these misconceptions.

No. 1: – Only the wealthy need a will

One very common myth is that people who are young and not particularly wealthy don’t actually need a will. However, the reality is that each of us has an estate, no matter how large or small. So, everyone needs a will. An estate is comprised of all the personal property, money, bank and retirement accounts, insurance policies and real estate that you own. You can dispose of your estate through a will, but if you don't have one, the laws of intestate succession will dictate how your property will be disposed. If you want to have a say in who gets your property after your death, then you should create a will.

No. 2: – I don't have much to give away, so why create a plan?

Some people believe that, because they only have a few possessions and do not own a home, for instance, there is no real reason to create a will. What those people do not consider is that, regardless of value, personal possession can have sentimental value as well. Who should get your family heirlooms, your family photos or your wedding ring? Those are things that are part of your estate and should be considered.

No. 3: - A trust can serve as a tax shelter for the rich

Trusts are not tax shelters, contrary to what many clients think. While it is true that trusts can provide some tax benefits, they are not generally known to be tax shelters, with the exception of a Charitable Remainder Trust. That particular type of trust is intended to encourage charitable giving while providing very favorable tax treatment. The primary goal of trusts is to ensure that there will be funds available for your family in the future. Trusts can help your family avoid the probate process and prevent the need for a guardianship in the event of your incapacity.

 

No. 4: - If something happens to me, my family will take care of my kids

Probably one of the most common assumptions people make is that their family members will automatically step up and take care of their children. Although we would all hope that would happen, you really can't predict whether the right people will be willing or able to do so. In reality, if you don't include provisions for your minor children in your estate plan, then it will be a judge who makes the decision for you. The judge may not share your family values or religious beliefs. However, if you identify a guardian for your children in your will you have a say in your children's future.

No. 5: – Once I sign the trust document, everything is done

Once a trust has been created, there is one final and very important step – funding the trust. All of the property you want included in the trust must actually be transferred to the trust. This is called funding the trust. In many cases funding basically means changing the ownership of the property from you individually to you as trustee of the trust. How a particular piece of property must be funded to the trust depends on the type of property.

Don't forget to update your will

After you have created your will you need to continue to review it so that it can be updated as needed. Certain situations can change throughout your lifetime, including marriage, the birth of a child, or the death of an heir. These types of situations typically require a change in the terms of a will or other aspects of your estate plan. Wills can be modified, so make sure you review your will periodically.

Don't forget to include incapacity planning

Incapacity can be caused by an accident or illness. It can be temporary or permanent. Regardless, a living trust and appropriate medical directives allow you to be prepared for the possibility of needing assistance by identifying someone to manage your finances and medical care.