📜 Revocable Living Trust
Myth: “A revocable trust protects me from lawsuits and estate taxes.”
Gap: Revocable = full control. That means no asset protection and full estate inclusion.
Case: U.S. v. Estate of German, 7 Cl. Ct. 641
Code: IRC §2036 & §2038: retained control = estate inclusion + no creditor shield.

✍️ Wills
Myth: “If I have a will, I avoid probate.”
Gap: A will still directs assets through probate unless replaced by non-probate tools (e.g. trusts, TODs).
Case: In re Estate of Fick, 678 S.E.2d 46
Law: Uniform Probate Code §2-101: wills go through court unless bypassed with planning.

⚰️ Estate Tax Inclusion
Myth: “I gave my assets away - they’re out of my estate.”
Gap: If you retain control or benefit, the IRS pulls it back into your estate.
Case: Estate of Strangi v. Commissioner, 417 F.3d 468
Code: IRC §§2036–2042: control = inclusion, even with advanced structures.

🧾 Gift Tax Confusion
Myth: “I don’t need to file anything if I stay under the annual limit $19,000.”
Gap: Many gifts (especially into trusts) aren’t “complete” - and require Form 709, even if under the annual exclusion.
Case: Estate of Sanford v. Comm’r, 308 U.S. 39
Code: IRC §2503(b), §2511: gifting rules are strict; mistakes = inclusion or penalties.

🛡️ Trusts & Asset Protection
Myth: “All trusts shield me from creditors and lawsuits.”
Gap: Revocable trusts offer zero protection. And offshore trusts don’t work if you keep control.
Case: FTC v. Affordable Media (Anderson case), 179 F.3d 1228
Law: Domestic revocable trusts = fully exposed. Offshore “firewalls” collapse when control is retained.

❤️ No Estate Plan = No Problem
Myth: “My spouse will get everything automatically.”
Gap: Without a full estate plan, assets may default to intestacy laws — leading to probate delays, taxes, or conflicts with children or co-owners.
Case: Estate of Mellinger, T.C. Memo 1999-300
Law: Uniform Probate Code §2-102: spouse’s share depends on heirs, title, and state law.

🏢 Business Succession Is Not An Issue

Myth: “My business automatically transfers to my family when I die.”
Case: Connelly v. U.S. (2023, 8th Cir.): IRS included life insurance in buy-sell agreement as part of estate; triggered valuation and tax issues.
Code: IRC §2031 & §6166: business interests are included in estate, may be subject to estate tax, probate, and valuation disputes.
Gap: No buy-sell agreement, unclear ownership, or co-owner conflict = probate freeze + estate tax on paper value, not actual liquidity.

🧾 Life Insurance Policies Are Tax-Free

Myth: “If my life insurance is in a trust, it’s completely out of my estate.”
Case: Estate of Gerson v. Commissioner, T.C. Memo 1987-567: retained control (changing beneficiaries, paying premiums) brought policy back into estate.
Code: IRC §2042: any incident of ownership = full inclusion of death benefit in taxable estate.
Gap: DIY ILITs often fail when Form 709 isn’t filed, or the grantor retains control or pays premiums directly (instead of gifting).

🪙 Cryptocurrency Is Not Taxed And Is Private

Myth: “Crypto is anonymous and can’t be taxed or traced.”
Case: IRS v. Coinbase (2017): court compelled Coinbase to turn over user data to the IRS.
Code: IRS Notice 2014-21 + IRC §6038D: crypto is property, subject to capital gains, and must be reported.
Gap: Crypto is included in probate, estate tax, inheritance tax, and is traceable with blockchain tools. If keys are lost, assets are unrecoverable - and still taxable.