A s a family estate planning attorney, clients often come to me with ideas about wills & trusts that they learned from friends, neighbors, and the internet. I’ve come to realize that a lot of people think they know about wills & trusts – but they don’t. Unfortunately, most people don’t ever find out they don’t know, because by the time it comes to light, it’s simply too late.

Here are some frequently misunderstood facts about wills & trusts:

1.  Many people think that if they have a will, they will avoid probate…not true.  A will is, essentially, your ticket into probate court.

2. Everything that your will says is completely public. Even worse, any property that passes through a will is public record. This can be bad for those left behind, because this tells the whole world things about your loved ones you may wish to keep private – for their sake.

3. What is probate? I tell my clients the TRUTH: “Probate is a lawsuit you file against yourself, with your own money, on behalf of your creditors.” What this means is your creditors, not your family, will get first dibs on your property.

4. A will only controls what you own in your sole name when you die. If you have assets that are jointly owned, or have beneficiary designations (IRA’s, 401Ks, bank accounts) the property passes according to different rules – and they may not be the rules you intended.

5. A will is subject to what we call “the State’s rulebook.” What this means to you is that, regardless of what the will says, probate is a court process that means your property passes according to the timeframe and the rules the State has…not your rules.

6. On the other hand, a trust, if written properly, is your rulebook. It gives your family your rules for life, disability, and death.

7. Unlike a will, a trust remains private.

8.  Many people believe that a revocable living trust protects them – but this is a false belief.  Revocable trusts provide NO asset protection to you during your life.

9.  There is such a thing as an “irrevocable trust” that also allows you complete control over the assets inside of it! This version is special purpose trust.

10.  The special purpose “irrevocable trust” DOES allow you to protect assets during your life – to avoid lawsuits, but even more importantly, to avoid nursing home poverty!

Nicole Wipp is the founder and lead attorney of the Family & Aging Law Center, a family estate planning and asset protection firm.  Nicole is frequently sought out for her expertise, and she has appeared on radio shows nationwide and in such publications as Forbes, Inc., and the Huffington Post.

To learn more about Nicole, visit www.miestatelawyer.com.

 

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