Misconception 1: Gifts are taxable to giver or receiver
A common misconception is that gifts during life are taxable on the giver or the receiver. Individuals can give away up to $19,000 to anybody, to as many individuals as they choose, each year, as of 2025. Above this amount, gifts are still not taxable to the giver or the receiver, but they must be reported on a Form 709 gift tax return. While gifts above $19,000 are not taxed, they do reduce the amount the giver can give away estate tax free at their death (the current federal exemption amount is $13.9
9m as or 2025). Therefore, as long as the giver does not give away more than $13.99 million in reportable increments above $19,000 throughout their life or at death, they will not pay a tax.
Misconception 2: Wills avoid probate
A second misconception is that wills let you skip probate. While having a will makes the probate process easier for family, assets that ordinarily pass through probate will still need to pass through probate if there is a will and no trust. A will “speaks at death” and is a roadmap for probate, not a way to avoid probate. Probate assets include real estate, tangible property such as vehicles, artwork and jewelry, and financial accounts without named beneficiaries. The only way to ensure that assets do not need to go through probate is to name beneficiaries on financial accounts and establish a trust to hold the other assets.
Misconception 3: Someone is the executor of a will immediately
A third misconception is that the person named as the executor (now known as a personal representative) of a will holds that position automatically solely based on the fact that they are named in the will. A will is a nomination of a personal representative, not the binding designation of one. Only a court can appoint a personal representative. The personal representative will still need to petition the probate court to be appointed before they can take control of the estate and distribute assets.
Misconception 4: Revocable trusts provide creditor protection
Another common misconception is that revocable trusts provide creditor protection for the grantor (the person establishing a trust). In Massachusetts and most other states, revocable trusts only protect the individuals named as beneficiaries of the trust after it becomes irrevocable (i.e., upon the death of the grantor) from their creditors. For example, if a child is a beneficiary of their parent’s trust and they are sued or get divorced, the property in their parent’s trust cannot be reachable by that creditor or divorcing spouse. The same protection does not extend to the person who set up the revocable trust because by nature they are still in that person’s control.
Misconception 5: Revocable trusts are expensive and cumbersome
A final misconception is that setting up a revocable trust is costly and complicated. While some firms charge suspiciously high fees, revocable trusts can be relatively inexpensive to set up on top of a basic estate plan and they do not require ongoing fees (unlike LLCs or other corporate entities) for. Similarly, because they are disregarded entities for income tax purposes, they require no reporting, no separate tax return, and no separate tax identification number until the grantor dies. Therefore, during life, revocable trusts are affordable and simple and, when set up properly, provide significant advantages.