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1662 East Centre Avenue
Portage, MI 49002
Ph: 269.324.7344
Fx: 269.324.2767

4625 Beckley Road
Building 400, Suite 4003
Battle Creek, MI 49015
Ph: 269.968.1101
Fx: 269.968.9505


Estate Planning

Estate planning is a process by which you and your attorney develop a plan for your personal and financial affairs upon your death or incapacity. In order to successfully achieve your objectives, your plan may consist of several complex documents or a just few simplified documents. It depends on whether there is a need to plan for estate taxes, avoiding probate, providing for minor children, providing for your children's educational expenses, providing for a child with special needs, etc. Everyone is different and every plan must be drafted to achieve your individual needs. The following are brief overviews of the most common estate planning documents.

Trust:

Trusts are commonly used to distribute assets upon death. There are many advantages to using a trust and not any real disadvantages. At one time, trusts were too expensive for persons with smaller estates. This is no longer true. With the aid of computers, the attorney now spends less time drafting the trust which in turn saves the client money. The most common type of trust used is the revocable grantor trust, or "living trust", as it is frequently referred to as. Advantages of living trusts include:

Probate avoidance: With a fully funded trust, there is no need to go through the probate court to administer the estate. This can save thousands of dollars in court costs and legal fees. A Will on the other hand must go through the probate court to be administered. Privacy is also an issue; a Will becomes a public record when filed with the court. A trust always remains private.

Delayed distribution of assets: You can delay the distribution of assets to beneficiaries after your death. For instance, you may give your child a 1/3 of their share at age 25, a 1/3 share at age 30, and the remainder at age 35. This may be a great benefit as giving an 18 year old a lump sum of money may not be the wisest decision. You can also state that the child can use the funds for college, health reasons, necessary support, etc., when needed.

Parents with minor children: In the event of death of the parents, a trust allows you to appoint the same person(s) as guardian and trustee. This will allow the person(s) raising your children to use the funds as is necessary for the benefit of your children. This reduces the financial strain that may be put on the new family. This is also an excellent planning tool for young parents just starting out who have not accumulated a lot of savings. You can purchase a term-life insurance policy for a very small cost and use it to fund the trust in the event of death.

Incapacity: Any asset held by the trust can be managed by the successor trustee in the event of your incapacity. This will preclude the need for a court proceeding to appoint a conservator.

Special Needs Trust: A Special Needs Trust is an excellent tool when you have a loved one with special needs who is, or may be, receiving public benefits (i.e. SSI or Medicaid). These types of public benefits place a limit on the amount of assets the individual can have. If you leave money or assets to an individual with special needs it may cause them to exceed the amount of assets they are allowed to have and disqualify them from public assistance.
A Special Needs Trust is designed to hold the funds for the individual. The funds are used to improve the quality of life without disqualifying them from public assistance.

Will:

A Will is a legal document that controls the distribution of your assets upon your death. You choose who is to receive your assets and who is not. It also provides you with the opportunity to appoint a guardian for minor children. This is very important as it gives you the right to choose who will raise your children instead of the court appointing someone. You also choose who is to be the personal representative (executor) of your estate.

A common misconception about a Will is that you do not have to go through probate if you have a Will. This is incorrect; a Will MUST be probated. Think of it this way: A Will is a ticket to probate. Probating an estate can be costly and time consuming, but a Will is still a necessary and beneficial document. If you die without a will (or trust), the State of Michigan decides who gets your assets.

Powers of Attorney:

Powers of attorney are documents that EVERYONE should have. If you are 18 or older, Powers of Attorney can be extremely beneficial if you ever have an accident or health issues. If you recall the Terri Schiavo case, where there was a legal battle over her end-of-life decision, you will know the significance of a Durable Power of Attorney for Health Care. If Ms. Schiavo had a Durable Power of Attorney for Health Care, her wishes would have been followed and there would never have been a legal battle. A Durable Power of Attorney gives you the opportunity to choose who will care for you, make medical treatment decisions for you, and manage your business and legal affairs in the event you become incapacitated. Without these documents, a court proceeding will be necessary to appoint a guardian and/or a conservator upon your incapacity. The judge must then make the decision as to who will be appointed to make the decisions regarding your care and handle your affairs. The person appointed may not be someone you would have wanted.

There are two types of powers of attorney:

  1. Durable Power of Attorney: This allows someone to make legal and financial
    decisions for you such as banking, applying for benefits, selling real estate, etc. The power can be effective immediately or upon disability.
  2. Durable Power of Attorney for Health Care: This allows someone to make
    medical treatment decisions for you when you are unable to make them
    yourself. You will also make a statement regarding the use of life support in
    the event you become terminally ill or are in a persistent vegetative state.

As you can see, estate planning can be quite advantageous if done properly. It allows you to choose what happens to your assets, who will manage your affairs, and who will make medical treatment decisions for you. It's a plan; it's your plan.

You may call this office to set up a free consultation to discuss setting up an estate plan for you.

This information is only a brief overview and is not intended to be legal advice.


 

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