Estate Planning: Helping Protect Your Interests

Estate Planning Misconceptions of Small Business Owners

Rachel A. Quinley

Rachel A. Quinley




estate planningEstate planning is the process of making advance arrangements regarding your assets if you become incapacitated and determining asset distribution upon your death. It sounds simple, but many misconceptions about estate planning exist.

Misconception #1: I will avoid probate because I have a will.

A will only applies to your assets without named beneficiaries and does not help you avoid probate after your death. Assets held solely in your name without named beneficiaries must go through probate, a court-supervised process to inventory your assets, pay your debts, and distribute the remainder of your assets to your heirs or beneficiaries. Assets that pass-through probate are subject to court costs, attorney’s fees, and personal representative or executor fees. The process typically takes at least one year.

Misconception #2: My will alone determines how my assets will be distributed after my death.

Many people believe that their wills ultimately decide what happens to their assets after death. However, regardless of the terms of your will, your assets will pass to the joint owner or named beneficiary(ies) (a/k/a Payable On Death or Transfer On Death) on any bank account, life insurance policy, retirement plan (401k), or similar account with a named beneficiary designation.  A good estate plan ensures that such assets are distributed as you wish.

Misconception #3: My trust will allow my estate to avoid probate without being funded.

Merely creating the trust is not sufficient to avoid probate. It is important to meet with an estate planning attorney to discuss ways to avoid probate, such as creating a revocable living trust, and to make sure your plan is consistent with your wishes. Your attorney can also help ensure that the trust is properly funded, with your assets placed into the trust or with the trust named as the beneficiary of your assets.

Misconception #4: Estate planning only deals with my assets after my death. Continue reading »

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