Estate Planning Michigan
The Step By Step Guide To Estate Planning In Michigan
Estate Planning In Michigan
Step 1: Set Your Estate Planning Goals
When most individuals think about Estate Planning in Michigan, writing a Last Will and Testament or Living Trust usually comes to mind. However, Michigan Estate Planning is more than just drafting a document and requires careful consideration. The first step is to consider what you would like to accomplish through the Estate Planning process. Having clearly defined goals will help you decide which Estate Planning documents will be best for your unique situation. Based on your goals, you may need supplemental documents so that your Estate Plan provides your family with adequate protection.
But what if you have never done Estate Planning in Michigan before – where do you start and what goals should you have?
Examples of common Estate Planning goals include:
- Pass your money and property to the next generation quickly and efficiently
- Ensure financial support for your family after you’re gone
- Avoid the long, stressful, and expensive probate court process
- Keep your finances and the transfer of your assets private
- Preserve your wealth by avoiding unnecessary legal fees and taxes
- Document your preferences in case of a medical emergency or incapacitation
- Protect your family and your assets in case you become incapacitated
- Maintain control of your finances after you pass away
- Protect the benefits of a special needs loved one, or a beneficiary with an addiction
- Name someone you trust to distribute your assets after you pass away
- Name guardians and set out a financial plan for support of minor children
- If you own a small business, establish how the business will be managed
- Leave assets to a charity
- Request specific funeral arrangements or healthcare preferences
Understanding and referring to your goals throughout the Estate Planning process will help shape your plan and guarantee the outcome is in line with your intentions.
Step 2: Record The Value Of Your Assets and Debts
When Estate Planning in Michigan, documenting assets and debt is key to understanding how much of your residual, or remaining, estate will be distributed to your beneficiaries. An asset is an item of monetary value. Assets include money in bank accounts, properties, investments, vehicles, and other income-generating resources. A debt, on the other hand, is money owed, such as a credit card balance or loan. Mortgages, credit cards, and vehicle payments are all forms of debt to be considered.
After documenting your assets, subtract your total debts from the total value of your assets. (Any assets that you have will be used to clear your debt before being distributed to beneficiaries.) This amount is your residual estate and it can vary throughout your life based on new debts or assets sold. Keep in mind, if you wish to specifically gift any item or asset to a particular beneficiary, you should make this request explicit so the item will not be sold to cover any outstanding debt.
By knowing where you stand financially, you are left with an accurate view of your residual estate. If your estate is not large enough to meet your goals, you can make changes over the near-term to improve your financial situation by selling assets, paying off debts, changing your investment portfolio, or purchasing life insurance.
Michigan Estate Planning
Step 3: Select Your Beneficiaries
Selecting your Beneficiaries is one of the most important steps when Estate Planning in Michigan. Your Beneficiaries are your loved ones that you will leave your assets to. Typically, this is a spouse, children, or grandchildren. In some cases, people even name a charity as a Beneficiary. It’s really important that you put the time and effort into determining who will receive your assets and how much they should receive when doing your Estate Planning in Michigan. This can help prevent infighting within the family after you’re gone. It will also help your Successor Trustee when distributing your assets after your death.
Step 4: Select Your Successor Trustee or Personal Representative
Deciding who will execute your plans after your death is as important as deciding who will receive your estate. Whomever you choose should be trustworthy, responsible, and possess attention to detail. After all, you are relying on this person to settle your debts and distribute your remaining estate to your loved ones according to your wishes.
If you choose a Living Trust when Estate Planning in Michigan, this individual is known as your Successor Trustee. If you choose a Last Will and Testament, this person is known and your Personal Representative.
A Successor Trustee and a Personal Representative have similar roles after you die, but there is a key difference. Because a Last Will and Testament does not avoid the long and expensive Probate Court process, your Personal Representative will be responsible for navigating Probate before they can distribute your assets to your loved ones. This can take months, sometimes even years, especially if your Will gets contested.
On the other hand, a Successor Trustee is able to distribute your assets to your family in a private setting, often within days or weeks of your passing because a Living Trust avoids Probate.
Generally, the Successor Trustee or Personal Representative will:
- Administer your property and assets
- Arrange for debt repayment
- File necessary forms
- Distribute your assets to your loved ones according to your wishes
- Ensure that donations are given to the correct recipients
- Handle the arrangements made in your End-of-Life Plan regarding your funeral
Estate Planning In Michigan
Step 5: Select Your Agent For Financial Affairs
In times of crisis like a serious accident, an unfavorable diagnosis, or incapacitation, the last thing anyone wants to worry about is having access to finances.
If you were to become incapacitated, who will pay your mortgage, monthly bills, or loans? Who will file your taxes? Who will manage your money and ensure that your bank accounts have enough to cover your medical expenses? Who will apply for insurance and benefits on your behalf if you are unable to do so yourself?
Unfortunately, tragic events often happen out of nowhere, which is why it’s good to plan for these scenarios ahead of time when Estate Planning in Michigan. Being prepared with a Financial Power of Attorney, also known as a Durable Power of Attorney, can alleviate some of the burden and prevent your family from having to go to court to get permission to manage your financial affairs.
You will need to name your Agent when creating your Durable Power of Attorney. Your Agent is the person who will have the power to make financial decisions on your behalf while you are alive or if you become incapacitated. This could be the same person as your Successor Trustee or Personal Representative, but it does not have to be.
You may grant your Agent the ability to act in all of your financial affairs or restrict their powers to certain areas. Typically, you can give your agent the power to:
- Sign your checks
- Make deposits
- Pay your bills
- Contract for medical or other professional services
- Sell your property
- Buy insurance for you
- File lawsuits on your behalf
After choosing an Agent, they must confirm they are willing to act on your behalf. Set up regular communication channels with this individual and share your Estate Planning goals with them. The more you interact with your Agent, Successor Trustee, and Personal Representative, the greater understanding they will have of your goals you outlined while doing your Estate Planning in Michigan. This will help them act in your best interest when you cannot.
If you don’t select an Agent, your family will be forced to petition the Probate Court for a Conservatorship for you. So, it’s best to properly appoint one in advance.
Step 6: Select Your Patient Advocate
Although it is difficult to imagine, it is important to have a plan for what your loved ones will do with respect to your medical care if you become incapacitated prior to your death. It is very common for people to become unresponsive prior to passing away. As a result, it is important to reflect on and document any explicit wishes you may have when it comes to your medical care preferences, organ donation, and funeral arrangements when Estate Planning in Michigan.
Some questions to ask yourself:
- What do I want my loved ones to do if I become incapacitated or cannot make decisions for myself?
- Do I want to be resuscitated?
- Do I want palliative care?
- Do I have any specific medical preferences?
- Do I want to donate organs?
- Do I have religious preferences?
If you are unable to communicate, you will want to make sure that someone you trust is making your medical decisions for you. You can give someone the legal authority to do so by creating a Medical Power of Attorney and naming them as your Patient Advocate when Estate Planning in Michigan. Additionally, you will want to make sure that your medical wishes are documented in a Living Will so that there is no confusion as to what medical procedures you would or would not want. Once you have made these decisions, you should also inform your Successor Trustee, Personal Representative, and Agent, if they differ from the person you selected to act as your Patient Advocate.
If you don’t appoint a Patient Advocate in advance, your family may be forced to petition the Probate Court for a Guardianship to make decisions for you. This is less than ideal in an emergency.
Michigan Estate Planning
Step 7: Select Guardians For Children Under 18
If you have children under the age of 18, you will want to make sure that you nominate someone to raise them if both you and your spouse pass away. If you don’t document this when Estate Planning in Michigan, the state will decide who will raise your children. This situation may be less than ideal, especially if you have family members that you wouldn’t trust raising your kids.
Additionally, you should consider putting together a plan to help the guardian cover the cost of raising your children. Once you have determined who you would like to serve as guardian, it’s usually a good idea to speak with them ahead of time to make sure they are willing to handle the responsibility.
Step 8: Gather Important Documents
The next step in the Michigan Estate Planning process is to gather together all documentation and keep it in one place. This way, when needed, important papers can be readily accessed to begin the administration of your Estate Plan.
Examples of these documents include:
- Property deeds and titles
- Bank and insurance
- Beneficiary designations
- Marriage, divorce, and separation documents
- Adoption and birth certificates for children
- Business and investment share certificates
- Other vital records
Putting these documents alongside your Estate Planning documents will help to prove ownership or relationship changes in the event of a dispute. By setting out clear and legally sound Estate Plans with supplementary documentation, you can help to make the process easier and less stressful for your family and loved ones.
Estate Planning In Michigan
Step 9: Document Your Burial Wishes
Your Estate Plan is also your opportunity to document your burial wishes. If you would like to be cremated, you can specify what you would like done with your ashes. If you would like to be buried, you can specify where your remains should be interred. Additionally, if you have any special instructions about your funeral arrangements that you would like to communicate to your family, you can document these as well. This is particularly important if you have religious or personal restrictions you would like to be honored.
Step 10: Create Your Estate Planning Documents
Once you have made the necessary decisions and advised any relevant parties of your choices, the actual Estate Plan can be developed by drafting the documents required.
There are various documents that you may wish to use depending on your situation:
Last Will and Testament or Living Trust – Both documents distribute your assets to the beneficiaries of your choosing. However, a Living Trust allows you to avoid the long, stressful, and expensive probate court process. This allows you to pass your money, property, and assets to your family in the most efficient way possible while keeping your finances private. It can also help you maintain control of your finances after you pass away and reduce estate taxes. Generally, if you have a house or children, it’s best to use a Living Trust when Estate Planning in Michigan.
Durable Power of Attorney – appoints an Agent to make financial decisions on your behalf while you are alive and if you become ill or incapacitated either temporarily or permanently.
Medical Power of Attorney – appoints a Patient Advocate to make medical decisions on your behalf while you are alive and if you become ill or incapacitated either temporarily or permanently.
Living Will specifies your health care wishes especially with regard to end-of-life decisions. Your Living Will often includes details about life support and care preferences in the event of a terminal illness, coma, or vegetative state.
An End-of-Life Plan of appointment of Funeral Representative allows you to communicate your wishes regarding your memorial service, any religious observances, how your remains will be handled, and more.
Your Estate Planning documents are some of the most important you will create in your lifetime. You worked your entire life to accumulate your wealth, and these documents will be responsible for ensuring that your assets are protected and transferred as efficiently as possible to your future generations.
As a result, you will want to make sure your Estate Planning documents are drafted properly and are legally binding. Will, trust, and estate law changes from state to state, so something that is valid in Ohio may not be valid in Michigan. The best way to make sure your Estate Plan is legally binding is to consult with an experienced Estate Planning Attorney in your state who focuses their practice on will, trust, and estate law.
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