Happy April Fools’ Day!

Today is day full of trickery and pranks, but hopefully these following estate planning myths won’t fool you. 

Myth 1: Young people don’t need estate plans.

A lot of media centered around estate planning focuses on elderly millionaires leaving behind their expansive estates. However, estate planning can be extremely useful for people from all walks of life. Regardless of the amount of assets you own, estate planning can make sure your assets pass to the people you want them to and pass to your beneficiaries in ways that make sense based on their age and abilities (i.e., giving money to minor or incapacitated beneficiaries in a way that benefits them without giving them money outright). Estate planning also can help reduce the administrative burden for your loved ones at death or should you become incapacitated by giving them the power to take care of you and your assets without the need for court intervention. 

Myth 2: A Will avoids probate.

When it comes to estate planning, people are often trying to create the simplest plan that achieves their goals. This often takes shape as people avoiding using trusts and just creating a Will. Although Wills are useful estate planning documents that can name guardians and conservators for minor or disabled children and dictate the disposition of your assets at death, Wills do not avoid probate. In fact, the reverse is true where a Will needs to be probated to be enforced. It’s possible that a Will-based plan is the best solution for your estate planning goals, but that decision should be made after weighing the probate burden placed on your loved ones. 

Myth 3: The Guardians named in your Will become immediately effective upon death.

If you have minor or disabled children, one of the most important estate planning steps you can take is naming permanent guardians in your Will. These guardians are the people that you would like to take over raising your children if something happens to you. However, it’s important to note that these guardian nominations do not immediately become effective at your death. Instead, your named guardians must go to the Probate and Family Court to petition to become your children’s guardian legally. Being named in your Will simplifies the process for your nominated guardian but does not remove the court involvement. The issue then becomes having a gap in time between your death and the appointment of a new guardian. To fix this, you can appoint an emergency temporary guardian that will become immediately effective for 60 days following your death or incapacity, filling in the gap in time while waiting for the court. This is done in a separate estate planning document, sometimes called a Parental Appointment of Temporary Agent.

Myth 4: Naming minor children on a beneficiary form is a good way to avoid probate.

A common way to avoid probate is to name beneficiaries on your various bank, retirement, and investment accounts. At your death, the asset will pass to the named individuals or entities (if they are still alive) without the need for court involvement. However, there is an extra wrinkle when minor children are named as beneficiaries. Because minor children cannot own assets like an adult (unless they are legally emancipated), there will need to be a court process to appoint a legal guardian for the child to receive the asset where they are named as beneficiary. The account will ultimately go to the minor child’s benefit, but there will still be the need to go to court and pay legal fees, similar to the child receiving the asset via probate. A great way to avoid this issue is to use a trust. A trust can be named as a beneficiary on an account and direct the trustee to use the account assets for a minor child’s benefit without the need for any court involvement or delay. 

Myth 5: Your spouse automatically becomes your health care agent.

Your health care agent is the person who steps in to make medical decisions for you if you are unable to make them yourself. For children or other people with legal guardianship over them, their legal guardian makes those health care decisions. However, for emancipated adults, there is no automatic person who makes those decisions for you. This is still true even after you get married. Your spouse is not your health care agent by default. Thus, you need to create a Health Care Proxy if you would like to name your spouse or any other person such as a sibling, parent, or friend, as your health care agent.