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What is an estate plan?

The topic of estate planning can be an intimidating or overwhelming topic to discuss, but it doesn't need to be! You don't need a vast "estate" to plan either. Every adult should complete some form of estate planning.

Simply put, an "estate plan" is a set of documents that put your wishes and instructions concerning your healthcare, your kids, managing your finances, and how/when you want your assets distributed in the event you become incapacitated or pass away. Having a plan in place outlines your wishes, and it can make dealing with your death or incapacity easier for your loved ones. This process should not be intimidating - it should bring you peace of mind to know that if/when you die or become incapacitated, you and your family are the people directing these assets, not state law.

Good estate plans not only outline your wishes in the event of your death - they also identify trusted agents to act for you in the event of your incapacity and provide those trusted agents with direction on how to care for you while you are living. Two critical documents for every adult to sign are:

  • Durable Power of Attorney. A Durable Power of Attorney appoints an agent to make financial and legal decisions for you during your lifetime. This document can be very broad, or it can be specifically tailored to specific situations. It can also be effective immediately or only effective when you are unable to participate in your own decisions or carry out these decisions (due to physical or mental limitations). It is important to note that the authority under a Durable Power of Attorney is only effective while you remain living - your agent has no authority to act for you once the agent knows you have passed away. This document ensures that someone will have access to your finances and can protect your assets for you during your lifetime.

  • Patient Advocate Designation. A Patient Advocate Designation (sometimes also called a Healthcare Power of Attorney or Living Will) nominates a person to make medical decisions for you during periods of time when you are unable to make or communicate those decisions for yourself. This document is only effective during periods of your incapacity. In a Patient Advocate Designation, you can give your Patient Advocate the authority to make decisions about life-sustaining treatment and care, including the power to "pull the plug" if medical treatment or care is only artificially delaying your inevitable death from a terminal condition, if you choose.

To identify your wishes upon death, most estate plans center around either a Will or a Revocable Living Trust. There are similarities between these two documents, but some important differences too.

  • Will. A Will is a document that (a) identifies who is in charge of administering your estate (called a Personal Representative in Michigan), (b) who should receive assets from your estate, and (c) appoints a Guardian and Conservator for any minor children at the time of your death. It is very important to note that a Will alone (without a trust) requires Probate Court oversight. The Probate process can add additional time and cost to administering your assets, and it is a public process.

  • Revocable Living Trust. A Revocable Living Trust is a tool that allows you to title assets "in trust" for the benefit of the beneficiaries of the Trust, and to outline your wishes about how and when those assets are distributed to those beneficiaries. A Trust appoints a Trustee to carry out the terms and conditions outlined in the Trust. Trusts are private documents, meaning that, in most instances, only the beneficiaries of the Trust and the Trustee have knowledge about the terms of the Trust. Most often, Trusts are easier to administer than Wills, and are also more flexible than Wills. For example, if you wish to leave assets to minors but delay the distribution to those minors until they reach a certain age, a trust may be the best way to do so. A trust can also protect beneficiaries with special needs or bad habits from "losing their inheritance" to the government or those bad habits. Finally, a trust can also provide the flexibility and privacy needed by business owners to pass ownership interests in those businesses.

Other tools to consider as part of your estate plan include:

  • HIPAA Authorization. A HIPAA Authorization should always be signed whenever a Patient Advocate is appointed, so that your medical providers have authority to provide medical information to your Patient Advocate. This ensures that your Patient Advocate has the medical information necessary to make the best decisions for your care.

  • Funeral Representative Designation. In Michigan, a Funeral Representative is a person that has the authority to make and carry out your funeral and burial arrangements. Designating a Funeral Representative can save bickering among family members, avoid delays and ensure that your wishes are carried out.

  • Deeds for Real Estate. Various forms of real estate ownership are available to pass real estate to persons upon your death or during your lifetime. Each different form has different implications, however, so it is important to understand the different forms before acting.

  • Beneficiary Designations / Transfer on Death Instructions. Designating beneficiaries on financial accounts, or directing that those accounts should transfer to specific people or organizations upon your death are important and effective tools to utilize (and they're usually free!). Good estate planning makes sure that these designations coordinate with your other documents to carry out the overall estate plan.

Estate planning can also help address protecting assets for beneficiaries who may have special needs, or who may be incapable of receiving or managing assets, for any reason.

If you are ready to get started with an estate plan, or you have an existing estate plan that needs updating, contact us today to schedule a consultation. We are here to help make sure that your wishes are carried out and your assets are protected for the people/organizations you care about!


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