Myths & Truths in Estate Planning

“Leaving someone in my will a nominal amount will avoid a will contest.”

Who can contest a will is governed by the laws of the State. In most cases, it is the distributees (those who can take under the law if there was no Will). Leaving someone a dollar, ten dollars or a thousand dollars cannot prevent a Will contest. Only a well-executed Will can lessen the chance of a Will contest.

“I cannot leave anything to my disabled child in my Will.”

By creating a Supplemental Needs Trust in a Will or a Trust during life can provide for your assets to be able to be available for your child’s care while not having them lose their governmental benefits.

“By jointly titling all my assets, I don’t need a Will.”

That is not completely accurate. Property that is jointly titled passes by operation of law to the joint tenant upon your death but what happens if that person dies with you? If the joint tenant dies with you, the property would pass under the State laws to your next-of-kin depending on the laws of the State since there is no Will. The people receiving your property may not be the people you want to receive your property.

“I get an income tax deduction when I make gifts to my children and their children.”

Annual gifts are not deductible on your income tax return. Only gifts to a qualified charity based on the federal and state income tax laws are deductible. Gifts are not deductible nor will the recipient have to report the gift as income.

“A Power of Attorney authorizes my attorney to sign for me.”

A Power of Attorney authorizes your agent, a person whom you trust, to act on your behalf in financial matters. The agent need not be an attorney and in most cases, is your closest and most trusted family member or friend. An attorney should prepare the Power of Attorney to ensure that it is fully understood and it is properly executed but an attorney need not be appointed as the agent.

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