What is estate planning?

Estate planning is a continual process of analysis regarding your financial, medical, tax, and business affairs. The process involves your family, friends, business partners, professional advisors, and charitable organizations of your choice. Consideration of your assets and the various forms of ownership and title that those assets may take is necessary while planning.

Through proper estate planning, you can determine:

• How your assets will be managed for your benefit if you become unable to manage them yourself during your lifetime or after your death.
• How healthcare decisions will be made during your lifetime should you become unable to care for yourself.
• When and under what circumstances to distribute your assets during your lifetime.
• To whom and when your assets will be distributed after your death.
• Who should be responsible for taking care of your minor children if you should become unable to care for them?

What is a will?

A will is a document of instructions and wishes as to how your assets are to be distributed after your death. A personal representative should be named in your will to carry out your specific instructions and wishes. A properly drafted will should also appoint a guardian to care for any minor children left behind at your death. After your death, the personal representative should file the will with the county probate court to begin the administration of your probate estate.

What is probate?

Probate is the process by which your will is determined to be your final statement concerning your assets. Probate also confirms the appointment of the person or institution named as personal representative to administer the estate. Probate is the process of gathering the assets of your estate, paying debts, and distributing assets to the named beneficiaries of the will. The personal representative is responsible for following the orderly method for administering the estate. The personal representative is responsible for accounting to the beneficiaries of the estate throughout the process until completion.

What is a living trust?

A living trust is a property arrangement made during a person’s lifetime entrusting certain assets to a named person or institution known as a “trustee.” The trustee or successor trustee(s) will hold and distribute the assets in accordance with the provisions of the written trust instrument for the benefit of the beneficiaries. A person may be named both as trustee and beneficiary of the same trust.

A living trust can established to be revocable or irrevocable. A revocable living trust allows for amendments or revocation during the lifetime of the creator or “grantor.” Either type of trust can be established for the purposes of property management in the event of physical or mental incapacity of the grantor, and distribution of the property to the named beneficiaries after the death of the grantor.

Living trusts are not just for the wealthy! The individual circumstances and goals of each particular client will determine whether or not a trust is the proper estate planning choice.

What is a durable power of attorney?

A durable power of attorney is a lifetime document that gives one or more persons the power to act on your behalf. The power may be limited to a particular activity or transaction or general in nature, allowing one or more persons to act on your behalf in a variety of situations. The power of attorney may take effect immediately or only upon the occurrence of a future event, such as a determination by physicians that you are unable to act on your own behalf.

The person named in a Power of Attorney to act on your behalf is commonly referred to as your “attorney in fact” or “agent.” The agent can take any action on your behalf which is permitted in the document. Typically, your agent will be requested to present the document prior to invoking the power.

If you become unable to manage your personal or business affairs, it may be necessary for the probate court to appoint one or more people to act on your behalf. People appointed through the probate court are referred to as guardians/conservators.

What is a Health Care Power of Attorney?

In Michigan, individuals can make a patient advocate designation which is often referred to as a health care power of attorney. A health care power of attorney allows you to appoint a “patient advocate” to make or communicate decisions regarding medical care if you are incapacitated and unable to effectively communicate for yourself. We recommend that the instructions in your health care power of attorney are as specific as possible so that your medical providers and families clearly understand how your care should be handled.

How often should I review or revise my estate plan?

The precise answer to that question depends upon the facts and circumstances unique to each estate, but we generally advise clients to review their estate planning documents approximately every three years. Events such as the birth of a child, the incapacity or death of a spouse, divorce, changed intentions, or the receipt of a substantial inheritance should prompt one to review a plan more often.  Additionally, in the case of taxable estates, changes in tax laws should prompt more frequent reviews.