Common Estate Planning Misperceptions

Not understanding how the law works can lead to confusion and frustration.         

Often people have misconceptions about how the law and estate planning documents work. Here are some common misconceptions I run into:

  • Fiction: I have a financial power of attorney for my father. After he passes away, the bank will let me access his account to settle his affairs.

Fact: If you have a financial power of attorney for someone, when they die, the POA is terminated. It is no longer valid, and you cannot use it to have access to bank accounts.

  • Fiction: I am nominated in my mother’s Will to be her Personal Representative, so when she passes, I can settle her affairs.

Fact: When someone nominates another person to serve as their Personal Representative in their Will, that’s all that it is—a nomination. They are not authorized to act in that capacity until they file an application with the court and are appointed by the court to be the Personal Representative.

  • Fiction: I have a Will, so my kids won’t need to probate my estate.

Fact: The probate process is to determine if the Will is valid. To probate the estate and be appointed the personal representative, you must file an application with the court along with the original Will. The court reviews the application and Will and determines if they are in order. It then approves the application and issues Letters Testamentary. With the Letters, you can take whatever actions are needed to administer the estate of the deceased person.

  • Fiction: Here is one from Medicaid Law: If I am eligible for Medicaid, Medicaid will pay all the costs of my care.

Fact: When you qualify for Medicaid, Medicaid requires that all your monthly income—social security, pension, etc.—is paid to the facility for your care except for $109 for personal needs. Medicaid will make up the difference between what the facility charges for your care and what you must pay. If you are married, some of your income can be diverted to your spouse who remains at home to meet his or her needs.

  • Fiction:I need to put my property in a Trust to avoid paying inheritance tax.

Fact: An estate tax at the federal level is charged to all decedent’s estates when their assets pass on to their beneficiaries, whether they have a will or a trust. However, most estates won’t encounter the federal estate tax since it only applies to estates worth more than $11.7 million for 2021. Therefore, doing any kind of planning to avoid estate taxes for most people is unnecessary.

  • Fiction: When I pass away, my house automatically transfers to my spouse.

Fact: In many cases, your car and bank account automatically transfer to your spouse after you pass away, but your house is a different story. To have your house transfer to your spouse after you pass away you need a Deed that includes these 5 words: “with the right of survivorship.”

Understanding how the law and legal documents work can help you make better decisions—with less angst.

View our “Senior’s Guide to a Well-Planned Future” on our website! Packer Elder Care Law – with you for life!

Tom Packer is an Elder Law Attorney serving all Southeast Idaho. As part of his law practice, Tom offers Life Care Planning to deal with the challenges created by long-term illness, disability and incapacity. If you have a question about a Senior’s legal, financial or healthcare needs, please call us.

October 2021