Making Sure That Your Loved Ones are Supported After You're Gone
Estate planning is simply the preparation of legal documents to help designate trusted individuals to help if you are unable to make decisions or manage day-to-day activities. Typically, this is due to a disability, incapacity, accidents, and death (or possibly missing on a tropical island after a three-hour tour). A thorough planning process requires gathering relevant information and records, itemizing your assets (and debts), and creating legally binding documents. Proper planning will help ensure that your family may avoid the probate process and keep family matters private. Every situation is unique and we offer customized plans to assist you. Below please find helpful suggestions to start your plan.
Gathering Contact Information and Records.
Important Documents
Real Estate Deeds
Birth Certificates & Marriage Certificate
Social Security Cards & Current Statement
Copies of Driver's Licenses
Titles to Vehicles
Inventory of Digital Devices, Accounts and Passwords
Life Insurance Policy Information
Statements for each asset & debt
A copy of all other important cards and documents typically located in a wallet such as credit cards, health insurance cards, car insurance, etc.
Contact Information
Close Family Members
Financial Planner
Accountant
Insurance Company/Agent
2. Create a Last Will & Testament
This document designates a personal representative (previously known as executor) to assist with your estate if it becomes necessary to resolve matters in probate court. You may want to utilize a pour-over clause to help transfer assets into a Trust after your death. Further, a will may be required to determine guardianship of a minor child. Please note that a person in possession of an original signed will is legally required to submit this document to the applicable probate court upon the death of the testator (the person that created the will), see MCL 700.2516. A will provides a set of instructions that must be approved by the probate court.
It helps to select the right person as your personal representative along with a back-up person because there are many duties to perform on your behalf such as:
Collecting and securing assets
Managing property
Preparing an inventory list that must be filed with the court
Paying debts
Determining creditors
Attending court hearings
Filing taxes
Settling claims
Selling assets
Distributing property and funds to beneficiaries
3. Create a Patient Advocate Designation
A Patient Advocate Designation provides authority for a trusted friend or family member to make medical decisions on behalf of another person due to incapacity, injury, or mental disability. It is also known as a Durable Power of Attorney for Health Care or an Advanced Directive. It is helpful to select a person that will respect your wishes and make difficult decisions even if different from personal opinions or the opinion of family members. This document authorizes your designated Patient Advocate to make decisions regarding your health care if you are not able to make those decisions for yourself.
Requirements and Recommendations for Choosing a Patient Advocate:
A family member or friend (must be over 18 years old)
Understands your preferences and willing to make difficult decisions
Resides close to you (or lives in the same state)
Able to question medical decisions with doctors, nurses, and social workers
Advocates for best treatment options, medications, and tests
4. Determine your Durable Power of Attorney for Financials and day-to-day requirements
A Durable Power of Attorney transfers legal authority to another individual to act on your behalf to help manage financials and other daily responsibilities. This may include limited duties such as a real estate transaction or an extensive list of broad powers. A power of attorney terminates upon death and is not filed with the court -which means it is not public record. You may revoke a power of attorney at any time (while of sound mind). This designation is used to avoid probate court in the event of incapacity. This means a trusted person may act immediately on your behalf in the event of an emergency. This person is known as your "attorney-in-fact" or "agent" to help manage your finances and sign your name on your behalf. The person that creates the power of attorney is known as the Principal. This document should be stored in a safe location until this authority becomes necessary to help prevent misuse of the powers listed in this legal document. An agent must sign an acceptance form to act as an attorney-in-fact.
5. Establish a Revocable Living Trust
A revocable trust is a legal agreement to privately manage and transfer assets to beneficiaries during lifetime and after death. The person that creates the trust agreement is known as a Settlor, Initial Trustee, and Grantor (legal terms that all mean the same thing). A Trust is very beneficial for more complex estate planning goals, minor children or grandchild, and other benefits such as asset protection from various creditors. A trust is privately managed compared to a will that must be submitted to probate court for judicial approval to resolve an estate. After the initial trustee's incapacity or death, a successor trustee would take over to manage the trust assets. It may be helpful to select the same person for your power of attorney and successor trustee. For those with minor children, a revocable trust would typically include provisions for the health, education, and support of a child. Parents may select various ages for an adult child to receive direct distributions. Without a Trust, a minor child would typically receive inheritance funds at the age of eighteen. It is important to remember that a successor trustee may continue for many years based on the timing of distributions to each beneficiary. A Trust may be revocable (may be changed) while you are alive but becomes irrevocable (cannot be modified) upon death. The goal is to avoid owning any property solely in your name at the time of death to help eliminate the need for probate administration. Assets are transferred into the Trust by changing the title or beneficiary status that is known as "funding" the Trust. The Revocable Trust allows you to remain in control of your assets during your lifetime. After your death, the Trust provides instructions on managing your affairs by the successor trustee. Like Wills, Trusts give instructions on how to distribute property but have the added benefit of limited to no probate court involvement.
For business succession planning, business owners or self-employed individuals should consider creating a trust for the business with a successor trustee that is knowledgeable about the business operations. An operating agreement is another important business planning tool.
6. Secure digital assets and accounts
It is essential to address digital assets with estate planning – mainly because many people do not realize the extent of their digital assets and how difficult it is for other family members to access the information. The critical question is: if something happened to you, would your loved ones have the credentials and authority to access your accounts? First, determine the best method to maintain an updated list or database of assets, account information, passwords, security questions, and other credentials. Next, make sure this information is accessible to your designated personal representatives, power of attorney, or beneficiaries when the time comes. Some prefer paper copies or an electronic password manager, regardless, make sure you have a back-up copy located in a safe location.
7. Plan for your final arrangements
Spending some time to decide on your final wishes will be invaluable for your family members and friends. The mourning process is already overwhelming, and trying to figure out what a loved one would have wanted only adds to this stress (especially if family members cannot agree so planning will help eliminate potential conflict).
Helpful items to consider:
Burial or cremation? If cremation, wishes for ashes? If burial, which cemetery (above or below ground)?
Which funeral home to use?
If there is a particular person that you would like to perform the service?
Has your funeral or cemetery plot been prepaid?
A basic outline of your obituary
Where and when you were born
Names of immediate family members (Spouse, Children, Grandchildren, Father, Mother, Siblings)
Your professional career
Hobbies you enjoy
Accomplishments or other information you would like have mentioned
8. Discuss this information with your loved ones or a trusted attorney
Many people have not discussed final wishes with their families for various reasons. Although it may be an uncomfortable topic to discuss, it may be easier to have a written plan to review with a family member or to create a written plan with a trusted estate planning attorney that is experienced with final wishes. Planning ahead makes everyone feel more comfortable and it may be a relief to know there is a plan in place that honors your requests.
9. Keep your information current
It is very helpful to review an estate plan annually to determine if any changes are required and to ensure that it includes all new and relevant information. Make sure to communicate changes in your planning with your loved ones. Here is a list of life events that may impact an estate plan:
Becoming a parent or grandparent
Purchased real estate in Michigan
A foreseeable need to move to a nursing home
Minor children are now adults
Cottage law planning for a vacation home
Change of marital status
Family relationship changes
Pet trust planning
Checking off your bucket list (i.e., swimming with the sharks or skydiving)
Asset protection (no matter how big or small)
Designating the ages and conditions for family members to inherit funds (i.e., must earn a degree)
Business succession planning
Death or incapacity of a family member
10. maintaining records and estate planning documents
Ensure that your originals are in a safe location and that you have a back-up plan for important documents.
Most estate planning attorneys should be able to retain your documents until needed, revoked or amended. We will maintain a copy of your estate planning documents as part of the estate planning process.
Keep your estate planning documents in a fireproof safe in your home and make sure the necessary people know how to access the documents.
Consider the options to provide a copy of your legal documents with a trusted loved one. Your successor trustee or personal representative would qualify for this job. It is important to note there is a risk when another person is given legal authority to access your accounts. Health care providers will also retain a copy of your Patient Advocate Designation as part of your medical file.
Innovative Law Services will help you evaluate the best legal options for estate planning with an initial consultation at no charge. Each family's situation is unique, and we will help customize the necessary documents to fit your specific needs. Please contact us below to schedule a meeting to learn more about Wills, Trusts, Powers of Attorney, Patient Advocate Designation, and other estate planning options.
Common Misconceptions About Estate Planning:
Estate Planning is Only for the Wealthy - Almost everyone has an estate such as cars, real estate or a leased home with a security deposit, and other personal property. No matter how modest you think it may be, you should still have a plan in place for your estate. Typically, even modest estates benefit from proper estate planning techniques because families need all the help they can get when there are limited funds. With time-saving processes and various planning tools, we offer affordable rates to help all kinds of family situations.
Only a Will is Required - A will is meant to provide instructions to the probate court after you are gone. However, if the goal is to avoid probate court then additional planning techniques are required.
Estate Planning is Only for Retired People. - Although older people may tend to think about estate planning more often, all kinds of families need to have a plan in place especially if there are minor children. Families with pets should have a plan as well. Planning helps in times when we need it most such as illness, accidents, incapacity, and simply peace of mind.
“By failing to prepare, you are preparing to fail.”