In the unfortunate case that you or someone you know passes, it is important to understand the events that will follow. The estate planning attorneys at Snee, Mahoney, Lutche & Helmlinger have provided a list of 4 common misconceptions to help you avoid making costly mistakes.
1. Joint ownership is a good way to avoid probate.
Joint ownership with right of survivorship allows the jointly owned asset to automatically transfer to the other joint owner when one owner dies, avoiding probate. However, if both owners die simultaneously or if the surviving joint owner fails to add a new joint owner before he or she dies, the asset will go through probate before it can go to the heirs. In this example, it is evident that joint ownership may postpone probate.
2. I don’t have a will, so my family will not have to go through probate.
Contrary to popular belief, someone who dies without a will does not automatically have his/her assets reassigned to the state. Only in the rare case when a Maryland resident dies without any heirs does his/her estate pass by escheat to the state.
Many people use the terms heir and beneficiary interchangeably. An “heir” is the legal term for someone who receives a gift from the estate of a person who died without a will; a “beneficiary” is the legal term for someone who receives a gift as specified in a last will and testament. Maryland’s intestacy law sets the order of preference as well as the relative assessment of the gifts that an intestate person’s heirs or beneficiaries will receive.
3. If I become incapacitated, my executor will be able to handle my financial affairs.
A will, and the duties of its executor, can only go into effect after you die. If you become incapacitated, the instructions in your will are not relevant. The court will appoint someone, commonly referred to as a conservator or guardian, to take control of your assets and your care if incapacity affects your ability to conduct business. Actions of the conservator or guardian will be supervised by the court.
4. I have a will so my family will avoid probate when I pass.
A will goes into effect only if your property goes through probate after you die. A will does not defer probate. Think of it as a set of instructions for the probate court that will be validated if there is a probate.
To reiterate, estate planning is about making sure your assets will go to the people you want to have them with the least amount of delay and costs. Understanding these four misconceptions may ensure that your estate planning process runs smoothly. For more information on estate planning, feel free to contact the estate planning attorneys at SMLH.