Commonplace Estate Planning Misconceptions

          Some misconceptions regarding estate planning repeat themselves frequently enough to merit discussion because they are commonplace. 

          One misconception is that trust documents are filed with the County.  False.  Only trust transfer deeds transferring real property into the name of the trustee are filed with the County Recorder.  Nor are trusts are filed with the Court, unless someone were to petition the Court for an order regarding the trust and attach the trust as an exhibit.  Normally, trusts are administered privately by the Successor trustee who assumes office when the initial trustee (usually the settlor who established the trust) becomes either incapacitated or dies.

          Wills, however, are required to be lodged with the Court in the County where the decedent resided.  If a probate is required, or is necessary, and one is commenced, then the probate file – including the will – becomes a public record. 

          A second misconception is that if a person has a will then no probate is required.  False.  Having a will may require a probate for the will to be administered.  Unless the decedent’s probate estate has a gross value of less than $150,000 or the estate is left to the decedent’s surviving spouse (or registered domestic partner), the will is subject to probate.

          A third misconception is that wills are notarized.  False.   Unlike trusts, which are commonly notarized, wills are witnessed and are not notarized.  That is, two persons, who are disinterested in the terms of the will and are not beneficiaries must witness the testator signing his or her will.  Alternatively, the testator may later show each witness the will and acknowledge his or her signature after the fact.  The witnesses, in turn, each read and sign an attestation clause that makes certain declarations in order for the will to be a so-called, “self-proving” will.

          A fourth misconception is that powers of attorney continue to be effective after the person named as the principal in the power of attorney dies.  False.  Powers of attorneys become completely ineffective once the principal dies.  If a person named as an agent in the power of attorney dies, however, that agent may be replaced, if an alternative agent is nominated in the instrument. 

          A fifth misconception is that all trust assets go to the surviving spouse if the couple established a revocable living trust together.  Not always true.   Many married couples who established their joint living trust before 2002 still have so-called “A-B” or “A-B-C” Trusts.  These more complicated to settle trusts – that transfer the first settlor-to-die’s share of the trust into the irrevocable “B” and sometimes “C” trusts — were commonly used before 2002; the Estate Tax had the much lower threshold of $600,000. 

          A sixth misconception is that all powers of attorney are equal.  False on many accounts.  A power of attorney signed by someone who lacked capacity to sign the instrument or who signed under coercion is invalid.  A pre-printed power of attorney obtained from a stationary store will not address numerous issues covered by an attorney drafted power of attorney.  Generally, an attorney drafted power of attorney specifically address issues and purposes identified in the attorney client meeting.  A preprinted stationary power of attorney may or may not be adequate.

          A seventh misconception is that a copy of a will is as good as the original.  False.  A copy of a will is a mere copy.  It contains information but is no substitute for the original itself.  Unless a court is persuaded that the original will is missing but was not destroyed – and so revoked – a mere copy of the will is informational.

          Many more estate planning misconceptions exist.   People who proceed as their own attorney run the hazard of commonplace misconceptions regarding the law.  While engaging an attorney is costly, not engaging an attorney may prove to be even more costly.

Dennis A. Fordham, Attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at dennis@DennisFordhamLaw.com and 707-263-3235.

          Some misconceptions regarding estate planning repeat themselves frequently enough to merit discussion because they are commonplace. 

          One misconception is that Trust documents are filed with the County.  False.  Only trust transfer deeds transferring real property into the name of the Trustee are filed with the County Recorder.  Nor are Trusts are not filed with the Court, unless someone were to petition the Court for an order regarding the Trust and attach the Trust as an exhibit.  Normally, Trusts are administered privately by the Successor Trustee who assumes office when the initial Trustee (usually the Settlor who established the Trust) becomes either incapacitated or dies.

          Wills, however, are required to be lodged with the Court in the County where the decedent resided.  If a probate is required, or is necessary, and one is commenced, then the probate file – including the will – becomes a public record. 

          A second misconception is that if a person has a will then no probate is required.  False.  Having a will may require a probate for the will to be administered.  Unless the decedent’s probate estate has a gross value of less than $150,000 or the estate is left to the decedent’s surviving spouse (or registered domestic partner), the will is subject to probate.

          A third misconception is that wills are notarized.  False.   Unlike Trusts, which are commonly notarized, wills are witnessed and are not notarized.  That is, two persons, who are disinterested in the terms of the will and are not beneficiaries must witness the testator signing his or her will.  Alternatively, the testator may later show each witness the will and acknowledge his or her signature after the fact.  The witnesses, in turn, each read and sign an attestation clause that makes certain declarations in order for the will to be a so-called, “self-proving” will.

          A fourth misconception is that powers of attorney continue to be effective after the person named as the principal in the power of attorney dies.  False.  Powers of attorneys become completely ineffective once the principal dies.  If a person named as an agent in the power of attorney dies, however, that agent may be replaced, if an alternative agent is nominated in the instrument. 

          A fifth misconception is that all trust assets go to the surviving spouse if the couple established a revocable living trust together.  Not always true.   Many married couples who established their joint living trust before 2002 still have so-called “A-B” or “A-B-C” Trusts.  These more complicated to settle Trusts – that transfer the first settlor-to-die’s share of the Trust into the irrevocable “B” and sometimes “C” Trusts — were commonly used before 2002; the Estate Tax had the much lower threshold of $600,000. 

          A sixth misconception is that all powers of attorney are equal.  False on many accounts.  A power of attorney signed by someone who lacked capacity to sign the instrument or who signed under coercion is invalid.  A pre-printed power of attorney obtained from a stationary store will not address numerous issues covered by an attorney drafted power of attorney.  Generally, an attorney drafted power of attorney specifically address issues and purposes identified in the attorney client meeting.  A preprinted stationary power of attorney may or may not be adequate.

          A seventh misconception is that a copy of a will is as good as the original.  False.  A copy of a will is a mere copy.  It contains information but is no substitute for the original itself.  Unless a court is persuaded that the original will is missing but was not destroyed – and so revoked – a mere copy of the will is informational.

          Many more estate planning misconceptions exist.   People who proceed as their own attorney run the hazard of commonplace misconceptions regarding the law.  While engaging an attorney is costly, not engaging an attorney may prove to be even more costly.

Dennis A. Fordham, Attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at dennis@DennisFordhamLaw.com and 707-263-3235.