Debunking Estate Planning Myths, Continued

 Posted on March 29, 2017 in Estate Planning

Last week, we started a discussion about common myths that many people believe about the process of estate planning. In that post, we talked about how it is never too early to begin estate planning and why probate is not always a terrible thing. Unfortunately, there are a number of other misconceptions that can cause unsuspecting individuals to make preventable mistakes as they draft their estate plans. Let’s look at a few more:

Myth: If I Die Without a Will, the State Will Take Everything

While there is no question that estate planning is important, it is not uncommon for some people to develop a plan only out of fear. Such individuals often believe that if they do not draft a will or create an estate plan, their property will be seized by the government and not distributed to their family members.

Reality: Illinois law requires the state to distribute intestate property to your spouse, children, and other family members through the probate process. Intestate property is any property that is not accounted for in a will or another estate planning instrument—not including investment or retirement accounts that already include beneficiary provisions. The issue with relying on intestacy laws, however, is that you relinquish control of your property. You also lose the ability to consider charities or loved ones who are not legally related to you. In short, the state does not get to keep your property if you die without a will, but an estate plan allows you full control over your assets, even after your death.

Myth: I Will Have to Pay a Death Tax

During the recent presidential election, the candidates regularly argued about the existing estate tax structure. As a result, many people assume that the government will claim a portion of their estate when they die; hence, a death tax.

Reality: Estate taxes only apply in certain situations and can be largely avoided. It is true that some individuals will be subject to federal and state estate taxes. The current thresholds, however, are fairly high: Illinois estate taxes only apply to estates valued at more than $4 million while the federal estate tax is applicable to estates valued at more than $5.49 million. President Donald Trump has indicated his intent to eliminate the federal estate tax, but that has yet to happen. In the meantime, there are ways that your estate plan can be structured so that even if you have significant wealth, you may be able to limit your estate tax liability.

Contact a Skilled Attorney

If you have questions about the intestacy laws in Illinois or your potential estate tax liabilities, contact an experienced estate planning attorney in DuPage County. Call 630-426-0196 for a confidential consultation with A. Traub & Associates today. We can provide the answers you need and the personalized representation you deserve.

Sources:

https://www.entrepreneur.com/article/191796

https://www.forbes.com/sites/ashleaebeling/2016/10/25/irs-announces-2017-estate-and-gift-tax-limits-the-11-million-tax-break

https://www.aol.com/article/finance/2017/01/23/how-trump-s-estate-tax-proposal-might-affect-the-wealthy/21660860/