In our law practice, clients often come to us repeating incorrect information that they “heard.” Here’s the truth behind common misconceptions.
Having a Will does not avoid probate. Whether your estate needs to go through the probate court process is determined by what you own at death and how those things are titled. Your Will only controls certain property you own at the time of your death, and the probate process is sometimes required to collect and distribute those “probate assets.” Probate assets are those that do not have a joint owner, do not have a beneficiary named on them, and that are not in a trust. Generally, other assets will be considered probate assets and controlled by your Will and they would be subject to the probate court process, with limited exceptions for small estates. Your Will tells the court what should happen to those assets but doesn’t “avoid” probate. If avoiding probate is important to you, talk to an estate planning attorney about how best to keep your assets from being subject to probate.
The “State” will not simply take all of your assets if you don’t have a Will. If you die without a Will, it’s called “dying intestate.” Assets you own that have a joint owner or beneficiary designation will go to the joint owner or named beneficiary, and trust assets would be administered under trust terms. The rest of your assets would be controlled by intestate succession laws. These laws can get tricky depending on your family situation. It is a common misconception that, in the absence of a Will, the surviving spouse will inherit everything. While spouses are entitled to a little extra under the law, it may not be that they get everything. For example, if it’s a blended family, children from a prior marriage are entitled to a share. If there is no surviving spouse, children will generally share in the estate. If there’s a predeceased child, then grandchildren may be entitled to a share, too. If a person dies without a Will, and truly has no living relatives at all, however far out on the family tree branches, only then would the State be entitled to the assets under the laws of intestate succession. It is very rare for one to die in that particular situation.
Power of Attorney documents are just as important, and sometimes more important, than a Will, and there are two different kinds. Health Care Powers of Attorney and Financial Powers of Attorney are two different kinds of powers of attorney. These documents give legal power to someone you trust so they can make decisions for you if you’re too sick to do so. You should have one for financial transactions and one for health care decisions. It is highly recommended that every adult have both documents in place, no matter what your age. These two documents have different legal requirements to be valid, and it’s important to make sure you have a comprehensive and legally valid document in place before you become sick or incompetent. It’s also important to note that spouses can’t automatically access financial information and make financial transactions for one another just because they’re married. The fact that one is married does not give legal authority to their spouse to handle solely owned financial accounts or other solely owned assets, or even to sell or transfer jointly owned property. A legally compliant Financial Power of Attorney is a relatively inexpensive document that ensures that spouses can manage finances for one another if either is sick.
The “State” doesn’t automatically take your house if you or your spouse need Long Term Care (LTC). This is the most common misconception that we hear from clients in our office. It’s true that if you need to rely on MaineCare for your long term care needs, DHHS may have a right to make a claim against your property when you die, but that can only happen in certain circumstances. This process is called “estate recovery.” Estate recovery only applies to some MaineCare programs and not others. There are also exceptions to estate recovery. Even if there’s a valid estate recovery claim against your estate, it can only be for the value of the care you received. DHHS cannot simply take your house after you die, just because you needed LTC. With proper planning, and help from an attorney, most people can take steps to minimize the impact of estate recovery on their estate after they pass.