Atkins & Atkins
When it comes to wills and estates, there is a lot of misinformation out there. If you want to ensure that everything goes smoothly and that your loved ones are taken care of, it helps to understand a few basics about wills, estates and probate law. Here's a look at a few common misconceptions and some explanations of these issues.
1. Misconception: You Only Need a Will If You Have Significant Assets
Some people think that they only need to draft a will if they have a huge house, lots of investments and similar types of assets. That is not the case. Wills can be essential regardless of how many assets you have. In particular, if you have children or a business, a will can help outline what should happen to them.
2. Misconception: A Will Is the Same as a Trust
A will is a simple document that outlines who gets which assets and who gets custody of your children. You cannot include conditions in your will. For instance, if you want to set aside a certain amount of money that your children can't receive until they graduate from college, you can't do that with a will. You need a trust for that.
A trust actually starts before you die. The trust takes possession of certain assets and manages them based on your wishes. The trust also does not go through probate. Your survivors can't contest a trust like they can contest a will. You often need both a trust and a will.
3. Misconception: All Your Assets Go to Your Spouse If You Don't Have a Will
If you adore your spouse, you may want all your assets to go to him or her when you die, and some people assume that just happens automatically. Although that may happen in some states, that doesn't happen in Kentucky. If you die without a will, the state intestacy laws come into effect.
Under intestacy laws in Kentucky, your spouse receives half of your estate, and your children receive the other half of the state. The laws vary if you don't have a spouse or don't have children. For example, your spouse may receive half and your parents may receive half.
Note that these rules don't apply to assets that are owned jointly with another owner. They also don't apply to insurance plans or investments where you have named a beneficiary.
4. Misconception: You Don't Have to Leave Anything to Your Spouse
On the flip side of the coin, you can't leave nothing to your spouse. If you write a will that completely leaves out your existing spouse, he or she has the right to contest that will in probate, and in most cases, the courts will give your spouse at least something.
If you truly don't want your spouse to have anything after your death, he or she has to agree to that arrangement. He or she may have to sign a waiver and be involved in the drafting of the will.
5. Misconception: Everyone Has to Pay Estate Taxes
Worried that your heirs aren't going to get anything because estate taxes are going to eat up your assets? Luckily, that is another misconception. Approximately 99.5% of people do not have to pay an estate tax.
As of 2017, only estates worth more than $5.49 million are subject to federal estate tax. That amount doubles for couples. Most importantly, the tax only applies to amounts over the threshold. For instance, if your estate is worth $6.49 million, the tax only applies to the $1 million over the threshold.
On top of that, Kentucky has an inheritance tax. This only applies when distant relatives receive assets. For example, nieces and nephews have to pay a tax of 4 to 14% on inheritances over $1,000.
If you are ready to set up a will, we can help. We also set up trusts and help manage estates to shield them from estate taxes. Contact Atkins & Atkins Attorneys At Law to set up a consultation today.