For probate and estate planning lawyers, meeting people who hold some significant misconceptions about the probate process is quite common. For whatever reason, probate is an area dot the law that is almost completely unknown to the average person. Though many people have heard the term “probate,” few have a firm grasp of what it involves. Further, the popular misconceptions surrounding the topic often lead people to hold a skewed view of what probate is.
This week, let’s take a closer look at some of the more popular misconceptions and why they are inaccurate.
Your estate won’t go through probate because you made a will.
The notion that a will avoids probate is not only inaccurate, it’s completely false. If you make a last will and testament, the document you create has to comply with the law. Because you retain the ability to rewrite or modify your will as long as you remain mentally competent, your final last will and testament can not be determined until after you are dead. In order to determine what your final wishes are and whether the document you created qualifies as a last will and testament, a probate court has to get involved. If you create a will, that will absolutely must be probated.
Your estate can avoid probate because you have created a revocable living trust.
This misconception is partially based on truth. It’s true that a revocable living trust will allow your estate to avoid probate, and possibly do so completely. However, the act of creating a revocable living trust does not, by itself, provide probate-avoiding benefits.
Every revocable living trust is only as good as you make it. In order to give your trust the ability to allow your property to avoid probate, you have to follow through on the funding process. The funding process is the set of steps you have to take to transfer the property you own as an individual into the trust’s name. Though it might seem minor, this step is all-important if you want your trust to allow your estate to avoid probate.
My will and my living trust will let me avoid estate taxes.
This misconception is absolutely false. Neither a will nor a revocable living trust will provide any tax mitigation benefits. While most people do not have to worry about paying any estate taxes because the federal exemption limit is so high, those that might be subject to the tax cannot avoid it through these two estate planning devices.
If estate tax mitigation or reduction is important to you, there are other tools available. However, you and your attorney will have to determine which tools are best for you and your individual circumstances.