As in most areas, myths, misconceptions, and misunderstandings abound in the estate planning arena. Read on for five common estate planning myths.
Myth No. 1 – If you have a Will your Estate will not need to go through Probate. Many people think that if they create a Will, their estate will avoid probate. This is not true. Probate is the court process of changing the title on assets when someone passes away. Assets that are owned in a deceased person’s individual name and for which there is no named beneficiary are no longer accessible once the owner of the asset has died. This is the case whether or not the owner of the asset had a Will. A Will allows the maker of the Will to choose who will receive his or her probate assets. However, a Will does not avoid probate.
Myth No. 2 – A Couple that lives together for 7 years in Massachusetts will be deemed Married under Common Law. While common-law marriage does exist in some states, Massachusetts is not one of them. No matter how long a couple lives together, neither Massachusetts nor the federal government will recognize them as married. This is important to understand because a non-spouse has no inheritance rights (unlike a spouse), nor is a non-spouse partner entitled to Social Security benefits or pension benefits that a spouse is entitled to receive. Of course, partnered couples are not prohibited from leaving assets for the benefit of each other. The key is they must take steps to make that happen; it will not happen under the intestate law in Massachusetts.
Myth No. 3 – If a Trust is irrevocable, no distributions can be made from the Trust. An Irrevocable Trust is an excellent planning tool for some circumstances such as tax planning and long-term care planning. Many people think that if a Trust is irrevocable that means that no distributions may be made from the Trust. This is not true. For example, an Irrevocable Income Only Trust is an irrevocable Trust often used to preserve assets from needing to be spent down on long-term care costs. The way that it works is that the maker of the Trust transfers assets to a Trust that strictly prohibits distributions of principal from the Trust to the Trust maker but permits distributions of income. For example, if I had rental real estate and transferred it to an irrevocable Trust, I could continue to receive the rental income, but I could not receive a distribution of the property.
Myth No. 4 – The law authorizes a Parent to collect an Inheritance on behalf of their Minor Child. Leaving money directly to a minor (under age 18) creates an administrative nightmare and should be avoided. A minor is not legally able to own assets. As such if a minor is the beneficiary of an estate or is named as a beneficiary of a retirement account or life insurance policy, a legal representative for the child will need to be appointed by the court in order to collect that inheritance. While the parent of the child may be the best person to serve in that role, it is not automatic. The parent must petition the court to be appointed as the child’s conservator. The court will investigate whether the parent is a suitable person to receive the funds for the minor and if the Judge finds the parent a suitable custodian for the funds, the court will issue a decree appointing the parent as the child’s conservator. At that point, the parent may collect the inheritance on behalf of the child. But it doesn’t end there. The parent, in her capacity as the conservator for the minor child, must file a report (called an accounting) with the court on an annual basis itemizing all of activity in the child’s account (i.e., earnings and disbursements) during the prior calendar year. The court may appoint a guardian ad litem to review the accounting submitted by the parent-conservator and that person may challenge the parent’s management of the funds. All of this is time-consuming, expensive and aggravating. To add insult to injury, once the minor turns 18, he or she is entitled to receive the assets outright and is free to do with them as he or she wishes (think fast cars, spring break, and lots of shopping). Creating a Trust to receive assets passing to a minor, or even to a young adult beneficiary, is the best way to ensure that the court is not involved in the process, that the person you want to manage assets for the beneficiary is able to do so, and that the beneficiary may use the assets only for purposes you decide are important and/or at ages that you dictate.
Myth No. 5 – Just because you are an Heir does not mean you are Entitled to Anything. For the most part, people in our country have the right to leave their estate to whomever they wish. There are some exceptions to this general rule. For example, in Massachusetts we have a statute that protects a surviving spouse from being disinherited. In addition, there may be situations where someone is legally obligated to benefit someone via their estate (e.g., a divorce agreement to leave assets to a former spouse or for the benefit of children). Assuming those situations do not exist, a person is free to leave their estate to whomever they wish; they are not obligated to leave their estate to their family members, not even to their adult children. While an heir may have the right to contest a Will or challenge a Trust, there are specific and limited reasons that someone will be successful in doing so.
The above are just five of the many misconceptions we hear from clients who are starting the estate planning process. If you have been relying on your friends and neighbors to advise you about your estate plan, you may want to reach out to an experienced estate planning attorney to learn the real scoop. Please call us or email us to schedule an appointment with one of our experienced estate planning attorneys who will debunk those myths and advise you about the best way to plan your estate.
Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate and Trust settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit our website at www.ssbllc.com or call 781/461-1020.
February, 2025
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