There are numerous myths regarding La Probate Law and estate planning. It is important to clear these misconceptions so that people are not afraid to opt for probate and estate planning.
Estate Planning is for the Rich and the Old –
Many people associate the word ‘Estate’ with a huge mansion having swimming pools and tennis courts. In reality this is not true. No matter how big or small your estate is you need to plan it out. Estate planning involves planning your finances and managing your assets in case you are unable to do so at a certain point of your life. It also includes planning for your children so that they are taken care of irrespective of the fact whether you are living or dead. These plans will also aid you in providing health care benefits to you. Thus this planning is required for everyone and not just for the elite. There is no suitable age for estate planning. Once you reach 18 years of age and you die without a Will, the state will rule your assets under the laws of intestacy. The laws of intestacy determine the division of assets among your family members. These laws will also decide about the guardian of your children if they are minor. You will never want just anyone to become the guardian of your children. So it is always better to protect your assets with the guidance of LA Probate Law professionals when there is time and not wait for the future.
Probate can be avoided if there is a Will –
This is a common misconception that prevailed for years. Probate is a process of verifying and validating your will in court. So whether you have a Will or do not have a Will, you might have to undergo probate process. Once the legitimacy of the will is proven in court then your heirs or beneficiaries will get their respective shares. The amounts are paid after deducting the debts, legal expenses and any taxes applicable on the estate. Though this process is lengthy and expensive, it is generally the best way to settle disputes and disagreements among beneficiaries. However there are some cases where the assets pass on to the beneficiaries without probate. In jointly owned properties, if there is no clause for ‘tenancy in common’ then usually, the asset passes onto the surviving owner. Life insurance, annuities and funds from retirement plans generally go to the listed beneficiaries without going through the probate process. Sometimes many owners add a term called “payable at death” to their bank accounts, real estate and even vehicles. Due to this clause, the beneficiaries get their entitled properties without moving to the courts. Seek the help of an LA Probate Law specialist so that your assets are transferred to your chosen beneficiaries without any difficulties.
Trusts can be used to avoid taxes –
A living trust or any other form of trust can be sought to reduce taxes but they can never be used to eliminate taxes altogether. A revocable trust is useful when you want to transfer your assets to your heirs in a smooth and cost effective manner. You can add special features to the trust to manage your heirs so that they are not able to waste your hard earned money. Provisions are there which allow you to take control of the amount that they can withdraw at a certain age. The estate tax is calculated as a whole on your entire savings, properties and even insurance proceeds. So calculate all your assets beforehand so that you know how much you will be charged as taxes. Some people think that life insurance is tax free to the beneficiaries. The federal estate tax is levied on all those properties which you leave to be passed to your next generation. You also need to consider gift taxes. Every state has set a certain amount after which a gift tax is added. If you stay in Los Angeles then knowing about LA Probate Law will help you to plan better for taxes.
There is no need to coordinate retirement plans or pension plans with the estate plan at regular intervals of time –
It is important to make sure that your retirement plans are aligned with your estate plans. For example if you have named your estate as the beneficiary for IRAs and Pension plans, then a lot of money can be deducted in the form of taxes. There will be meaningless delays and your assets will have to go through the expensive probate process. Instances of divorce and remarriage are not uncommon anymore. Many a times, there are situations where the concerned individuals passed away without changing the names of the beneficiaries. You need to fund your living trust if you have any from the very beginning. Generally if you are buying a property then it has to be in your name. After the financing process, the property must be transferred under the name of the trust. Failure to do will cause innumerous problems in the future. Appoint an LA Probate Law expert who has experience and knowledge about probate law and estate planning so that no clause is missing while drafting the documents. You will not have to worry about your plans; rather he will make the necessary amendments for you and your family. Even if you are designing the document, make sure you verify all your documents by a skilled attorney.