Myths_Part1

Myths of Estate Planning Part I

Do you remember when your children were going through grade school and they studied Greek and

Roman mythology? There were so many myths. Often a myth is rooted in some fact, but there has

been a distortion, so that it has become a falsehood that is believed as though it were fact. There are so

many myths associated with estate planning! We will be exploring a few of them.

MYTH #1: OWNING EVERYTHING WITH MY CHILD MAKES ESTATE PLANNING

UNNECESSARY

WRONG! There are too many problems associated with this band-aid approach to estate planning.

When you put a child on title to your assets you subject that asset to any of his/her problems. If a child

gets divorced, his/her spouse might make a claim against YOUR house and investments. If your child is

in a car accident and is sued, the victim might try to recover against YOUR assets. If your child goes

bankrupt, the court might consider that creditors may make a claim against YOUR assets.

If you have more than one child, but you put only one child on title to your assets, you might be

expecting the child on title to “do the right thing,” and share your estate with his/her siblings when you

are gone. This may or may not happen. Legally, there is no obligation to for him to share among your

other children. It may be that one child has had both the blessings and burdens of being the “on-site”

child. If your other children have not attentively contacted you for Mother’s Day/ Father’s Day/

birthdays, etc., your on-site child may be particularly un-inclined to share, and perhaps justifiably so!

You are entitled to dispose of your assets exactly as you want to, and you should do so through a

legitimate estate planning vehicle. More on that later.

MYTH #2: IF I HAVE A WILL, I AVOID PROBATE.

WRONG! A will does many things, but it does not avoid probate! The will names the executor of your

estate. The executor or personal representative is the person responsible to wind down your affairs.

The will provides “who gets what and how;” this is your plan of distribution. If your probate estate is

over $100,000 your assets are subjected to the probate process. Effectively, a judge looks over the

shoulder of your executor to confirm that the executor is abiding by the law and by your requests.

MYTH #3: PROBATE ISN’T THAT BIG A PROBLEM.

WRONG! Why would you want to avoid probate? Time and money! That is what probate costs. It

takes 1-2 years for the average probate to wind its way through the probate process in San Bernardino

County. Fees for the attorney and the executor are the same: 4% of the first $100,000, 3% of the next

$100,000, and 2% of each additional dollar up to $1,000,000. A $500,000 probate estate will have

fees of $26,000. There will be additional court fees and costs that may amount to $4,000+. In our

next article, we’ll look at a few examples of the ramifications of the probate process.

Albrektson Law Offices

414 Tennessee Street Suite V

Redlands, CA 92373

909-335-9658