Addressing Common Misconceptions
Addressing Common Misconceptions
Common Misconceptions About Estate Planning
Two of the most common misconceptions about estate planning are that having a last will and testament allows your heirs to avoid probate, and that in a community property state, upon the death of a spouse, estate property automatically transfers to the surviving spouse. Both of these ideas are not true, and cause confusion for people after a loved one dies.
What Happens After I Die?
No matter what religion you are, we all wonder what happens when we die! We can only address this from a legal point of view, but certainly having an estate plan of some kind will help your loved ones through what is already a difficult time. One of the most common documents we think of, when we think of estate planning, is a last will and testament. This is not the most useful document, in fact, because a will is not valid until a judge says it is. Many people think having a will helps your heirs avoid probate, but a will, by its very nature, guarantees that the heirs will be in probate court if there are any assets. A will does not come into effect until 1) you die and 2) A judge confirms your will is valid.
What is a Last Will and Testament?
Basically, a last will is a set of instructions for the probate court, stating how to manage your property, how to pay your bills, and how to distribute your property when you are gone. Probate is a legal proceeding wherein a judge enforces the will instructions to transfer property after death. Probate hearings become public, so all your property and financial status becomes part of a public record.
The Steps to Confirming a Will
After a death, there is a five day waiting period, then someone must file a petition asking the court to confirm the validity of the will and designate a personal representative or executor of the will. There are several documents to file at this time including the original will, date and time of the death, proof of authority to petition the court, and paperwork confirming that there are no other requests for probate, no other competing wills, and whether a bond is required or specific notices to be sent. In this process the executor of the will must accept the court’s jurisdiction and a judge signs a statement authorizing that person to act on behalf of the estate.
Transfer of Property is Not Automatic
In a community property state, many people think that when one spouse dies, their property is automatically transferred to the surviving spouse. Community property laws create a presumption of equal ownership. During probate, whether or not there is a will, you still have to take the affirmative step to have the titles of all assets transferred into the spouse’s name. In Idaho, a probate must be filed within three years of death. After three years, there is other paperwork to file and other actions to transfer titles, which are more time consuming and expensive.
Use a Trust to Bypass Probate and Re-titling Property
When you create a trust and retitle assets to that trust, the death of a spouse doesn’t affect the ownership and thus require a probate. Either surviving spouse is the beneficiary of the trust, the language of the trust dictates distributions. Since a trust needs no review by a court to make it effective, there is no probate required. A trust keeps your family business private, and a trust settlement will never be part of the public record.
If you have further questions please contact us at Capital City Law. We would be happy to assist you.