In This Article, You Can Discover:
- Why estate planning is crucial in Michigan.
- The limitations of solely having a will.
- The benefits of setting up different types of trusts.
What Is Estate Planning and Why Do We Need It In Michigan?
Estate planning is the practice of securing your legacy. It revolves around ensuring your wishes are honored both during your lifetime and after it.
In Michigan, when one doesn't establish proper estate planning documents, the default system that has been established by the Laws of Michigan is called "intestate succession." Many potential clients are wary of this default system. Some might be skeptical about the court's ability to select an appropriate guardian for their children. Others might not want certain family members, who under default would receive a share, to benefit from their assets.
Additionally, many potential clients aim to spare their families the distress of making critical decisions in times of emergencies, such as when one is incapacitated in the hospital or suffering from severe Alzheimer's. Moreover, some seek to avoid disputes within the family that can arise in probate court. If you can avoid probate court, family infighting becomes less likely.
In sum, without estate planning documents, individuals are subject to the default rules of intestate succession, may be putting more stress on their families at critical times, and may be inviting fights between family members in the future.
Is A Will Sufficient on Its Own?
Not in most circumstances.
A will is an essential tool that allows you to designate a trusted individual to finalize your financial affairs after your passing, such as closing bank accounts and handling final expenses. A will can also facilitate one-time gifts to beneficiaries, but it may not be comprehensive for those with specific needs. For parents with minor children, a will alone may not ensure their long-term provision.
Homeowners should be wary, too, as homes are part of the probate estate and thus can be subjected to the probate court, resulting in additional expenses. Similarly, for individuals with significant debt or those anticipating substantial end-of-life expenses, relying solely on a will might not suffice. In such cases, one should consider integrating tools like a trust or a Ladybird deed.
What Are the Predominant Types of Trust and Their Purposes?
The most prevalent type of trust is the "revocable trust." In this setup, assets placed into the trust can be withdrawn or modified as long as the individual is alive. This flexibility allows for continued control over your own assets before passing, and then compliance with your wishes once you are gone. Alternatively, the "irrevocable trust" is often chosen by those with large estates who wish to avoid IRS gift taxes. Under these two main types of trust, there are many subcategories of trust with special purposes. Since trusts come in various forms, it's advisable to consult with an attorney to explore the right fit.
How Can We Ensure Care for Our Minor Children If Both Parents Are Incapacitated or Pass Away?
To secure the welfare of minor children, parents should appoint guardians. While wills are a common medium for appointing a guardian, there are other methods available. Besides designating a guardian, establishing a trust is advisable to guarantee the child's material needs are met.
What Healthcare Documents Should Be Included in My Estate Plan?
Recommended healthcare documents include a “Living Will”, a “Patient Advocate Designation”, and a “HIPAA Waiver”.
A "Living Will" offers guidelines to healthcare providers on treatment preferences should you be unable to communicate. These documents should detail care instructions in scenarios like severe Alzheimer's or dementia.
A patient advocate designation or a medical power of attorney enables a trusted individual to represent and advocate for your healthcare wishes if incapacitated.
A HIPAA waiver ensures that those you trust can access your medical records when necessary.
Can One Prepare for Potential Incapacity in Michigan? What Documents Are Advised?
Absolutely! Preparation for potential incapacity is possible and recommended.
Letting someone you trust know where basic information like health insurance and identification is a good first step. Upon hospitalization, a trusted friend or family should be able to access essential documents such as power of attorney, a medical power of attorney (or patient advocate designation), a living will, a HIPAA waiver, and any dementia-related directive.