Estate Planning Myths and Facts
Myth #1: I’m single without children. I don’t need a will yet.
Fact: You are just as likely, if not more so, to need a will than someone who is married. Without a will, your property may not pass to the people you intended. Without a named personal representative, your relatives will be left scrambling to find your assets and open a probate action.
Myth #2: I need to take extensive steps to avoid paying estate taxes when I die.
Fact:Â There are many important reasons to properly plan for your death, but tax avoidance is rarely one of them.Â Last year, 99.86% of all estates paid no taxes. The estate tax exemption is currently $5.34 million per person.
Myth #3: I’ll have to pay gift taxes if I give someone more than $14k per year.
Fact: Probably not. Any amounts you gift over $14k will simply reduce your lifetime gift/estate tax exemption You also will not pay gift taxes on gifts to your spouse, to charities, or to 529 college savings plans.
Myth #4: I can create my own will, and it will be enforceable if I write it out in my own handwriting and sign it.
Fact: A handwritten will signed without witnesses is a “holographic will.” Some states still recognize holographic wills as valid. However, Wisconsin does not. In order for a will to be enforceable in Wisconsin, it must be signed by the person whose will it is (the testator), and also by two witnesses who saw the testator sign and can vouch for their competence. The attorney who drafted the will can be a witness, but the witnesses cannot be beneficiaries of the will or their spouses. The witnesses must be legally competent, but they do not have to be over 18 or residents of Wisconsin. If the signing of your will was not properly witnessed by two people, it will be invalid and a court will not enforce it.
Myth #5: In my will, I can include instructions about who should make decisions about my burial, and what kind of funeral I would like to have.
Fact: It is a poor idea to put these types of instructions in a will. They may not be enforceable if contained in a will, and many wills are not read until after the funeral has occurred. Rather, in Wisconsin, you can complete an Authorization for Final Disposition. This is a state-created form that you can download and complete on your own. Click here to download the form.
Myth #6: Once your estate plan is done, it’s done for good.
Fact: You should re-visit your estate plan every few years. This doesn’t necessarily mean going to an attorney and completely rewriting your will or trust, but you need to make sure it still accomplishes your goals. Estate laws, particularly tax laws, are complex and change often. You may have had children since you last wrote a will, or perhaps your children are now adults. You may own new property or have new types of investments. You may have thought of new charities, or different relatives, to whom you want to bequeath money.