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Pumpkinheads Afoot in Estate Planning

By October 27, 2011One Comment
Worried Pumpkin

Photo: Tim & Annette, Argentina

Wills, trusts and estate planning is a great subject for Halloween because of the trick or treat nature of the area. The treats are significant: peace of mind, retirement, healthcare, education, and family harmony. However, the tricks can quickly eliminate all or almost all of the treats for most parties involved.

Because so many people know someone who has a will and have at least heard of trusts and estate planning, many people know just enough to sound knowledgeable. Yet, many individuals also lack just enough knowledge to cause schisms if their advice is actually heeded.

So how can we be tricked? Let me count the ways:

  1. A living will is just as good as a healthcare power of attorney.
    Trick: A living will is subordinate to a healthcare power of attorney, unless the person holding the living will has a terminal illness or is in a basically vegetative state.
  2. My dad’s house is only worth $50,000, so I can file a small estate affidavit and skip probate.
    Trick: Sure. You can skip probate, if the house is in an Illinois land trust and let’s hope that Dad didn’t take out a second mortgage that the house is still subject to. If the house is still subject to a mortgage, you may have problems trying to sell it.
  3. Estate planning is only for the rich.
    Trick: I’m not sure who invented this one…maybe the Boyz on Wall Street. Nevertheless, please read this.
  4. After 7 years of living with my man, I can finally be put into his will as his wife and our child can inherit, too.
    Trick: Someone has put something in your water. Illinois hasn’t recognized common law marriages for decades, and your child…the inheritance issue is an even bigger trick in this regard.
  5. A trust will keep my creditors and the repo man away from my door.
    Trick: Not really. The repo man is coming and a trust will generally keep creditors away only if you don’t own anything, i.e., you are not the trustee nor are you the beneficiary of the trust assets.
  6. I won’t have to pay taxes if I put my assets in a trust.
    Trick or treat: If your assets are instruments that appreciate in a tax-deferred manner, then you may not have to pay estate taxes but you may have to pay income taxes.
    Trick: Depending on how the trust is structured and the relationships of the beneficiaries to you and each other, your beneficiaries may have to pay estate taxes.
  7. A will is less expensive than a trust.
    Trick or treat: If litigation is involved because of a will contest or claims are placed on the estate that need to be answered, that statement could be the costliest trick of all of the above, except maybe number 4.

Money saver tip: Be patient; your debt wasn’t created in a day so unless you win the lottery, it’s not going to go away in a day either.

One Comment

  • Dorothy says:

    I agree. I cant belveie how much the market has changed. Having just built a house, I am concerned about tyhe current market status once I put it on the market. I enjoy reading your blog. Keep blogging.

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