Mark Twain may have said it best: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
How do most people know something for sure? They hear it from their next-door neighbor, barber, dentist, and Facebook community, of course. The trouble is most of the talk just ain’t so.
Here are some of the more common misconceptions.
Common Estate Planning Misconceptions
1. “I don’t need a will; everything will go to my spouse anyway.”
This might be true if you have no separate property, and all your spouse’s children are also your children. The trouble is that you still have to prove those facts, most likely in a Probate Court. The Court will determine the identity of the heirs and establish who owns your property. The cost will be at least three times what a will would have cost you, and the time and effort involved will be enormous.
Many people do not have such a simple fact situation. If you have children from another relationship, then they, not your spouse, will inherit all of your community property.
If you own real estate that is your separate property, then your siblings will inherit it.
This may not be the result you intend. It most certainly will not be the result your spouse expects. Few spouses want to be in a co-ownership situation with stepchildren or in-laws.
2. “It’s in both our names, so it will go to me if my spouse dies.”
Maybe and maybe not. You will have to look at this asset by asset. There is no automatic survivorship on any asset, even if it is your homestead. For an account held jointly with your spouse with the right of survivorship, then yes, you will receive the account outright when your spouse dies. If your spouse has an account in her name only, and she names a beneficiary on the account, then you will not receive all of it. Merely owning an asset with your spouse does not mean you receive that entire asset when you die.
Texas law presumes against a right of survivorship, not in favor of one. For property to pass by the right of survivorship, the account agreement or other documentation must specifically provide for it.
Texas has some excellent tools to pass ownership of real estate on death, including transfer on death deeds and revocable living trusts, in addition to the traditional will.
3. “It is in my name, so it is mine.”
Maybe if you’re single, but definitely not if you are married. Texas is a community property state. Property acquired during marriage, out of your earnings is community property, owned by both spouses. This includes property held in only one name. Your 401k and IRA may just be in your name, but your spouse could own an interest in it that must be divided on divorce or death.
4. “The trust will take care of everything.”
This might be true if all of your property has been transferred to the ownership of the trust, but one of the most common problems with revocable living trusts is failure to transfer ownership of the property to the trust during a lifetime. The trustee can only manage assets that are actually held in the trust. Everything else must pass by beneficiary designation, survivorship, or probate.
Avoid Estate Planning Mistakes With Hammerle Finley Law Firm
What is the real danger of these misconceptions? Cost, hassle, and a complete failure of your legacy. As Benjamin Franklin cautioned us centuries ago: “If you fail to plan, then you are planning to fail.”
If you or a loved one need assistance with estate planning, schedule a consultation today.
Attorney Robert Morris is an attorney at Hammerle Finley Law Firm, offering services in estate planning, probate, guardianship, estate and trust litigation, and Medicaid. Contact him at (972) 436-9300 or schedule a consultation.
The foregoing does not constitute legal advice.
