Monday, December 19, 2011

Two Common Houston Estate Plan Myths -- BUSTED

By: Kimberly Hegwood, Wills and Estates Lawyer in Houston, TX

As of this writing, it's a fact that almost 60% of Americans do not have a basic will, and that is a big problem.

One of the big reasons that most families don't yet have this kind of plan in place is because of some incorrect thinking about whether it is right for them, or if it is even necessary. And sure --some people just have not gotten around to creating a will or trust. Others think they don't need an estate plan because they are not "rich".  

But here is the problem--if you continue without an estate plan, you could leave a legacy of bad feelings and attorneys' fees.

So I wanted to speak to some of the more common misconceptions out there. I will start with a couple big ones this week, and when the time is right, address a few more in 2012...

MYTH #1: Only rich people prepare estate plans.

Do you own ANYTHING? Because if so, you need a will. You see, a will allows you to designate who will receive your property should anything happen. Continuing without one ensures that your assets will be distributed under the terms of your state's "intestate succession" laws. That means your money and property could end up with family members you have not spoken to in years, instead of who you would really like to see control your assets.

I won't go into all of the different components of a will, trust, medical power of attorney, directive to physicians, etc., as my purpose here is to emphasize that failing to plan is simply a decision to trust your assets to government bureaucrats who do no know you from Adam.

Even if you think your situation is pretty straightforward, you may feel more comfortable hiring a lawyer to guide you through the process.

MYTH #2: Everything goes to your spouse, if something happens.
 

Unfortunately, that is not always the case. We deal with clients from different states around the country, and state laws vary. In fact, in most states, if you continue without a will (intestate), your inheritance will be divided among your spouse and your children. In New York, for example, when someone dies intestate, the spouse gets the first $50,000 of the estate and what is left is divided 50-50 among the spouse and the children.

You can imagine how this could create all kinds of problems, particularly if your spouse was financially dependent on you or you have children from a previous marriage.

I will send a few more in the future, but I hope you can already see that things are not always as we "think". And don't miss the chance to take advantage of the time and focus you will already be applying to your preparation for tax season, by moving towards getting your estate plan done (or updated) in 2012, after you have already done the hard work of gathering all of your documents. It is actually the perfect time for it.