I DON'T HAVE AN ESTATE, WHY SHOULD I HAVE AN ESTATE PLAN?
Estate plans are not just for wealthy people. The truth is, everyone has an “estate.” An estate simply refers to your assets, including your home, car, retirement accounts, life insurance, bank accounts, investments, etc. It is important to develop a plan to designate how you would like these assets handled when you are gone.
WHAT HAPPENS IF I DO NOTHING?
If you have no estate plan in place, the state of Michigan will make all decisions for you through the Probate Act. You will lose the power to make those important decisions yourself.
During the probate process, the court will determine who is an “heir”, who is a person who can inherit your assets under the Probate Act. Also, If you have minor children, they cannot directly inherit your assets. Instead, the court will assign a guardian of the minor child's estate (conservator) who must “hold” the funds for the minor child in a blocked account – meaning the guardian cannot use the funds without the court's allowance – until the child turns 18 years old. Once the child turns 18, all the funds will be handed over directly to the child.
The court will also appoint a guardian of the person (guardian) who will care for your child on a daily basis, making the child's medical, educational and everyday decisions. If you don't have a guardian nomination in place, a judge will determine who will be a fit guardian for your child and, often times, multiple family members will petition the court to get the guardianship of the child. The court may not always choose the person who you would want to serve as guardian of your child to raise your child in the same manner as you would.
WHAT'S SO BAD ABOUT PROBATE?
There are number of challenges with probate. First of all, it's costly. And, since all the decisions are in the court's hands, it can take a long time for things to be figured out – in Michigan, typically six months or more. Your personal information is no longer private which means anyone is able to see information about your family, including your young children. Your assets are put on public display, also. Plus, all decisions regarding your family and assets are left up to the court, not you. A judge will make the decision on how to distribute your assets and when. A judge will also make decisions on the well-being of your children, including who will care for them and who will be in charge of their finances. With a properly drafted estate plan, the decisions are all in your hands and you can determine how much your child will get and when, not the court.
WHAT ARE THE BENEFITS OF A TRUST?
There are many benefits of a trust one of which is that it helps you avoid probate. This avoidance can potentially can save your estate and your loved ones both time and money. A trust can also minimize or eliminate estate (death) taxes, if applicable. And, it allows you to distribute your assets to your beneficiaries according to your wishes, not the decisions of the court.
WHAT'S THE DIFFERENCE BETWEEN A REVOCABLE TRUST, FAMILY TRUST, AND LIVING TRUST?
Essentially, they all mean the same thing. They refer to a type of a trust that's created during your lifetime and contains terms that can be changed until your death. Once you die, the trust become irrevocable and cannot be changed. If such a trust is created by a married couple, some of its terms could become irrevocable upon the death of the first spouse.
HOW CAN A TRUST HELP MY FAMILY?
One of the most important things a trust can do for your family is help avoid others (the probate court) making decisions for you and assure your assets are distributed exactly the way you choose – whether that's to your immediate family, extended family, friends, charity, etc. Additionally, it can specify how and when those funds are to be distributed. For example, if decided by a court, your assets will be given to your minor children when they turn age 18, regardless of your wishes or if your children are financially ready. With a trust, you can determine at what age your children can receive their funds and even specify ways you would like them used – education, travel, purchase of a home, investment in a business, payment for wedding, etc.
WHAT DOES IT MEAN TO “FUND” A TRUST?
The trust itself is merely a shell into which you can place your assets. To take full advantage of having a trust, once it is created, you must ensure that your assets are either owned by you as trustee of your trust (real estate, investment funds, bank accounts, etc.) or name the trust as a primary or contingent beneficiary (life insurance, retirement funds, etc.). This means that you should transfer all your assets, like the title of your home, into the name of the trust or name the trust as the beneficiary of your various assets, like your life insurance, retirement funds, etc. as soon as possible.
WHY DO I NEED A WILL IF I ALREADY HAVE A TRUST?
The type of will often drafted in conjunction with a trust is called a “pour over will.” This type of a will ensures that if you forget to transfer your assets into the trust during your lifetime, they will be “poured over” into your trust at your death. That way, your trust can remain the controlling document by which all your assets will pass and if probate becomes necessary, the court will not consider that you died without a will. However, this should not be an alternative to properly funding your trust.
WHAT DOCUMENTS DO I NEED TO ASSURE MY MINOR CHILDREN ARE CARED FOR WHEN I'M GONE?
When you have minor children, you can provide for their care by nominating someone to act as their guardian. You can also nominate someone to act as the conservator of their money. Often times, clients will designate the same person to act as the guardian and conservator for their children. You can nominate a guardian through your will. A revocable living trust specifies how your assets are managed and distributed to your children.
DO I NEED TO CHANGE MY TRUST IF I HAVE ANOTHER BABY?
It really depends on how your trust was written. Every law practice handles this situation differently. Since we work with many growing families, we make sure to include wording that will account for future children, whether naturally born or adopted. That way, even if you don't amend your estate plan after having another child, any additions to your family will be provided for and your assets can be split evenly between all your children, if so desired.
CAN I NAME MY BEST FRIEND, INSTEAD OF A RELATIVE, AS A GUARDIAN OF MY CHILDREN?
Absolutely. But keep in mind two things: that whenever you choose non-relatives to be guardians of your children, it is essential that you have your wishes specifically memorialized in your estate plan. If your wishes aren't documented in your will or trust and the court has to make the decision, they may likely side with a relative, instead of your best friend. Secondly, you want to choose someone to be the guardian of your children who would raise them as you would have.
I'M LEAVING ON A SHORT-TERM TRIP. WHAT CAN I DO TO ASSURE THAT THE ADULT I LEAVE MY MINOR CHILDREN WITH CAN ACT ON THEIR BEHALF IN CASE OF AN EMERGENCY?
You should designate a temporary guardian for your child on a short-term basis. This document, known as a Michigan Power of Attorney for Minor Child is provided for under Michigan law. At a minimum, it should specify the start and end date during the time you will leave your minor children with the designated adult. Your documented wishes will allow the short-term guardian to make medical, school-related and other important decisions for your child while you are out of town. Keep in mind that the Michigan Power of Attorney For Minor Child is only good for six months. At the end of the six months, it can be renewed, in writing.
CAN I DO THIS ALL MYSELF?
Technically, yes. But there are so many pitfalls to doing it on your own that it's generally not worth it. Typically, websites and software programs that tout estate-planning capabilities offer only the most basic, generic documents and no guidance. And when you are planning for your family's future, it's essential to get it right by employing the skills of an experienced and knowledgeable estate planning lawyer. Without a lawyer, there's no one you can ask questions and no one asking questions of you to ensure you include all the important needed documents to protect your family in the way you intend.
WHAT THINGS SHOULD I BE THINKING ABOUT?
Here are the two decisions that need to be given the most consideration:
If you have minor children, speak with your significant other about who will care for your children if something was to happen to you both. It's good to have a few alternate people on that list in case the first person or couple is not able to take on these responsibilities.
Also, it's important to determine who you would like to handle your financial assets after you pass (administer your estate). You will need a successor trustee or a personal representative to help collect your assets and either distribute them or keep them in trust according to your wishes.
HOW LONG DOES IT TAKE TO CREATE AN ESTATE PLAN?
Creating an estate plan takes approximately 2-3 weeks, longer in some cases. However, if you have an upcoming trip or a medical procedure, we can work with you to speed up this process. We believe that what is most important is the accuracy of your documents and assuring they reflect each client's specific needs. Because the documents are completely customized to your particular family, it takes time to get things done right.
HOW DOES YOUR FEE STRUCTURE WORK?
We understand that people are often concerned about fees when working with a lawyer, especially if those fees are hourly based. To start, we offer a free initial consultation, at which time we can access your particular situation and give you a quote based on your specific needs. We never begin working on an estate plan unless both parties have agreed to the fee in advance. While you can certainly find cheaper options, we encourage you to make sure you understand what you are getting. We provide a personalized experience for each of our clients and work hard to provide a great value for a reasonable fee.
- REVOCABLE LIVING TRUSTS
- SPECIAL NEEDS TRUSTS
- LIVING WILLS
- ADVANCED CARE DIRECTIVES
- HIPPA RELEASES
- DURABLE POWER OF ATTORNEY
- PATIENT ADVOCATE DESIGNATION
- GUARDIAN NOMINATION FOR MINORS
- WARRANTY DEEDS
- QUIT CLAIM DEEDS
- CHARITABLE GIVING
- PRENUPTIAL AGREEMENTS
- PROBATE/ESTATE ADMINISTRATION
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