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Misconceptions Concerning Wills and Trusts

wills and trusts
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         We constantly run across people who have obtained their “knowledge” about the probate process from relatives, co-workers, and now we must contend with “misinformation”  doled out on the Internet.    In 1709, Alexander Pope once wrote, “a little learning is a dangerous thing”. So is a little or a lot of misinformation.   A “Peanuts” cartoon showed Lucy taking Linus around the neighborhood and educating him.  One of the frames, Lucy tells Linus that a tree in front of them is known as a palm tree because you can wrap your palm around its trunk.   Charlie Brown says to Schroeder, “It’s going to take twice as long for Linus to finish school because he has to unlearn all the stuff Lucy is telling him.”   A number of people come to me with so many preconceived notions, that they eventually don’t believe that I am telling them the truth because I have de-bunked too many things they knew for sure when they called.   Just look at the effect WebMD has had on the medical profession.    I have a lot of very smart, well-known attorneys I share office space with.   Smart enough that when they have a probate question, they ask me.   It is important to formulate a game plan before beginning the process, rather than reacting when a crisis occurs.  Having the facts straight can save loved ones a lot of time and money not to mention mental anguish that I have seen so many times. 

There are quite a few myths that should be debunked.  Some people believe that if they have a Last Will and Testament prepared, it doesn’t have to be probated.   You make a Will so that all your valued relatives and friends know what you want to leave them.   It is the probate court’s job to look over the shoulder of the Executor and ensure everything is done properly.

People also have misconceptions about living revocable trusts.   In the 1960’s Norman F. Dacey had a multiyear best seller with “How to Avoid Probate”   He was championing the Living Trust.   

They can be a great tool to avoid probate.  They have also been vastly oversold.

Even though the Trust is created while the person is still alive, most attorneys will still recommend a so-called “Pour Over” Will, which specifically transfers all the assets to the existing Trust at their death.  Because the Will must be filed in the county of residence when the person died, it is public in nature.   The Trust does not have to be filed.  Privacy is a prime reason for a Trust.  

However, a Trust can also be a trip-wire.  If the Will is not filed, or it is filed but not probated, then the protections of probate do not attach.   For example, when you die, you create a CLAIMS PERIOD for all of the people who you owe money or people who decide they will try to collect monies you may owe or not, are given, in Illinois, two years to come after your assets. If you file the Will, pour-over or not, and open an estate (which is not the big financial burden that people imagine it to be, you are allowed to publish in a newspaper of county-wide circulation for Claims and cut the Claims Period by 75%.

I had two clients who had been remembered in the Will of a friend who left them what was for him a minor bequest, $50,000.00 each.  His attorneys ignored Probate and distributed all the money pursuant to the Trust.   Over a year later, the IRS came calling.   No Estate Tax Return had been filed and the Trust owed big time with severe penalties and interest.   My two clients were ordered to return over $23,000 each.  This decedent had named as Trustee a person who he thought would do a good job and protect his interests.   It didn’t work out and most Trusts contain provisions that the Trustee will not be liable for bad judgment or not knowing the law.

     It is my contention that a Will drawn with a  proper Executor who is granted independent administration (no supervision by the courts except to obtain Receipts from the people who received a legacy, can be just as efficient and economical as a Trustee.   In some instances, having a Trustee who lacks Letters of Office makes it more difficult to collect an asset.

     Many people do a great estate plan by just placing their assets in joint tenancy with their spouse.   But the survivor would be well-advised to make a Will if only to avoid having to purchase a surety bond for the second person’s estate.

     A Will always pays for itself by naming an Executor, making that person independent of court supervision and waiving the requirement for a Surety Bond.

Wills?   Always a good idea.

The Law Offices of David Blocher is a specialty law firm serving Chicago, IL and the surrounding areas specializing in elder law, probate administration, and estate planning services. Our attorneys take a keen interest in each case and offer personalized and attentive services to every client. If you need legal assistance in any of these areas, please feel free to contact us at  (312) 855-4477 or visit our website at http://www.blocher-law.com.