All Michigan adults, regardless of their accumulated assets, need an estate plan. You may think of an estate plan as something that distributes your assets after your death, but it does much more than that. A comprehensive estate plan also includes documents that dictate who will make important financial and medical decisions for you if you become unable to make them for yourself. Having such documents in place prevents the need of having the court appoint a conservator or guardian.
If you are a single parent or an adult who has just undergone a major life change like divorce, it is even more important to have an estate plan in place. If you have minor children, you will want to appoint a guardian for them in the event that something happens to you. And, of course, you will want to provide for their financial security in your absence.
If you do not have an estate plan, your assets will pass by the “law of intestate succession.” These laws attempt to approximate what most people would want to happen to their assets if they had an estate plan in place. However, application of intestacy laws can result in an outcome you might not have wanted, and these laws do not appoint a guardian for minor children.
Fortunately, creating an estate plan is probably easier than you think—and most people who finally get around to making an estate plan feel a huge relief once it is complete.
A last will and testament is the basic building block of any estate plan. After your death, your will distributes any assets that you own in your sole name to the people you want to receive them. Unlike joint bank accounts, jointly-owned real estate, or assets in a trust, assets in a will must go through probate. This is a process where the court assists in identifying all of your assets and where all of your relatives will get to weigh in on how those assets will be divided in your absence.
Another advantage is that you can name a personal representative for your estate in your will. After the probate court in your county formally appoints the person that you nominated to that role, they will be in charge of managing your estate business, paying estate debts, and distributing the remaining assets according to your wishes.
You can also name a guardian for your minor children in your will. If the other parent is not available to care for them, then naming a guardian prevents family members from fighting over who should be responsible for the children.
Trusts are a component of many estate plans, with revocable living trusts among the most popular types. With a living trust, you can continue to use and control trust assets just as if they were owned in your name. You can revoke the trust at any time before you die or become legally incapacitated. After your death or legal incapacity, a successor trustee takes over and manages or distributes the assets as directed in the trust document.
There are a number of advantages to having a living trust in your estate plan. Assets in the trust do not go through probate; control of the trust passes directly from you to your chosen successor trustee without court involvement. Trusts can also keep young adult children from receiving their entire inheritance all at once, before they are mature enough to manage it responsibly. You can customize the provisions in your trust to suit your family’s unique circumstances.
Everyone hopes and intends to remain in control of important decisions throughout their lives. Unfortunately, an injury, illness, or accident can render you incapable of managing your own affairs. A durable financial power of attorney allows you to appoint a person (called an “agent”) to handle your financial matters in the event that you become legally incapacitated. You can grant your agent power that is as broad or as narrow as you wish.
An advance medical directive, called a patient advocate designation or medical power of attorney, allows you to appoint someone you trust to make medical decisions on your behalf if you cannot make or communicate those decisions for yourself.
Used together, wills, trusts, and powers of attorney help to protect you and your family and offer you peace of mind now, and in the future. If you don’t have an estate plan, you should make one without delay. If you do have one, you should update it every few years, or whenever you experience a major life change such as marriage, the birth of a child, or divorce.
Attorney Sean Blume has spent most of his career working for families, including families in transition. At Blume Law Group, we are committed to helping clients build the future they want while they also plan for the changes that lie ahead. We help Michigan residents in Macomb, Oakland, Wayne, and St. Clair counties with their estate planning needs. We invite you to contact our office to schedule a free consultation. We look forward to working with you.