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It's not what you know...
It's what you don't know you don't know that's the problem.
We've compiled a list of some frequently asked questions regarding estate planning and provided some thoughts for your consideration. This list is not comprehensive. You can get a lot of useful information on estate planning at this site, but in every case, you need expert assistance to put an effective estate plan together. If you do not know about a law that will affect your plan, how would you know to seek information about it? That’s why we say “Its what you don’t know you don’t know that’s the problem.” So while this information is provided for your convenience, it is not meant to replace your attorney or financial advisor. For you to get an effective estate plan that is custom designed for your unique situation, who you know is more important than what you know.
Q. Doesn't a will provide all the estate planning I need?
Q. Won't my jointly owned property pass directly to my spouse or heirs?
Q. Doesn't a beneficiary designation guarantee my insurance and pension funds are given to the persons I designate?
Q. I thought estate taxes were repealed in 2001. True or false?
Q. How long does it take to prepare an estate plan?
Q. Doesn't a will provide all the estate planning I need?
A. In a word, no. A few of the pitfalls of relying solely upon a will for your estate planning include:
- Wills offer no planning or direction for you or your family if you become disabled.
- Wills most often do not control life insurance proceeds, retirement benefits or jointly owned property.
- Wills may not be effective when their makers move to or own property in another state.
- Wills are easily challenged by unhappy relatives.
- Wills are fully public once probated, exposing your will and affairs to anyone who wants to know.
Q. Won't my jointly owned property pass directly to my spouse or heirs?
A. While holding property as a joint tenant with a right of survivorship is very popular, there are cases where it is very dangerous. Owning property as a joint tenant with a right of survivorship does not avoid “living probate”, which could arise if one of the joint tenants is incapacitated. Relying on joint tenancy as a sole estate planning method could result in your joint tenancy property passing to unintended heirs. Joint tenancy also does not avoid “death probate”, it only delays it. In addition, there may be unintended gift and estate taxes incurred if joint tenancy is used between non-spouses or with children.
Q. Doesn't a beneficiary designation guarantee my insurance and pension funds are given to the persons I designate?
A. Probably yes, but that is not always a good thing. Designating your beneficiaries on a standard form often means losing control of a major part of your estate. It does not enable you to leave instructions or provide guidance to your loved ones. In addition:
- The wrong beneficiary is often named in the beneficiary designation.
- A beneficiary designation won't protect your spouse and children from creditors or unscrupulous people.
- Equal distributions from a beneficiary designation can cause unequal results that won't meet your family's special needs.
Q. I thought estate taxes were repealed in 2001. True or false?
A. True, however The Economic Tax Relief Reconciliation Act of 2001 does not immediately repeal estate taxes. Instead, new exemption rates will be applied in phases until the year 2010 at which time estate taxes will be officially repealed, but then in 2011 the estate tax comes back in the same form it existed prior to 2001. Whether estate taxes will ever be completely eliminated is still up to speculation, but seems unlikely when you consider that since 1986, there have been nearly 7,000 changes to the federal tax code indicating that at any time, the repeal could be weakened or done away with in its entirety. The important thing to remember is there are far more important reasons to prepare your estate plan than saving estate taxes. From strictly a tax standpoint, planning for income taxes in your estate plan can be a far greater benefit to your family than planning for estate taxes.
Q. How long does it take to prepare an estate plan?
A. While every estate plan varies in complexity, the typical planning cycle is 2-4 weeks from initial consultation to the witnessed signing of documents.
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