+(231) 714-4501Estate Planning FAQs
Who needs an estate plan?
Everyone who is 18 and older! Certain individuals have more pronounced needs for proper estate planning. These include individuals who:
- are likely to die in the near future
- may need long-term care.
- have ever received Medicaid benefits.
- have preferences regarding distribution of their assets
- are parents with minor children
- part of a blended family
- wish to leave assets to persons with disabilities
- own real property, particulary if in multiple states
- have a family dynamic that might result in conflict
- own businesses
- want to protect their wealth from creditors and predators
What is estate planning?
Estate planning involves preparing for two fundamental aspects of life: important decisions about care and management of possessions. Estate planning helps in those areas if you become incapacitated and when you pass away. Proper estate planning can help avoid conflict, prevent unnecessary court involvement, and make everything easier on your loved-ones.
Working with an attorney will formalize your wishes in legally-binding documents, including wills, trusts, powers of attorney, beneficiary designations, and patient advocate designations.
What is a financial durable power of attorney?
A Durable Financial Power of Attorney is a written agreement where an individual, known as the principle, grants another person, referred to as their "agent" or "attorney-in-fact," the authority to exercise financial rights specified in the document.
Benefits:
- Can avoid the necessity of having a court-appointed conservator.
- A "Durable" power of attorney remains valid during incapacity but ceases upon death.
- The principal can opt for the power of attorney to take effect immediately or upon their incapacity or a designated date (referred to as a Springing Power of Attorney).
What is a Patient Advocate Designation?
A Patient Advocate Designation is a written instrument that empowers an individual to appoint another person or persons as their "patient advocate." The patient advocate is entrusted with making health care decisions on behalf of the principal when the principal can no longer do so.
Benefits:
- Enables the principal to designate a trusted individual to make health care decisions in the event of their incapacity.
- Can be revoked even if you lack the capacity to execute a new one.
- Provides the opportunity to express preferences regarding organ or tissue donation for transplantation or research purposes, or to decline such donations.
What is a will?
A will is a legal document that outlines an individual's preferences regarding the distribution of their property upon death, specifying who receives what asset.
A "Pour Over Will" is a will that designates the individual's Trust as the recipient of all assets. The purpose of this type of will is to ensure any assets that accidentlally end up in a person's probate estate are transferred to that person's trust.
Benefits:
- A will is a foundational element of anyone's estate plan.
- A will can be changed so long as you have legal capacity.
- A will ensures that probate assets go to who you want them to go to.
- You can nominate a guardian and conservator for your minor children.
Limitations:
- Probating a will involves the government, specifically the court system.
- Probate is a public process, so anyone can access information about your probate estate.
- Notices of the proceedings will be given to multiple people, which may lead to legal challenges to your plan, including dissatisfied family members.
- Legal expenses are typically higher for a probate administration than a trust administration.
- A will only controls assets after you pass away.
- Probate estates are subject to Medicaid estate recovery.
What is probate?
Probate involves validating that the will represents the final testament of the deceased individual. The process includes asset collection, settling taxes and debts, and distributing remaining assets to designated beneficiaries.
Benefit:
- Cost savings during one's lifetime by avoiding the need for a trust.
Downside:
- Time: Probate proceedings can often be lengthy.
- Expense: While initial savings may be realized during the grantor's lifetime, the overall expense of probate typically surpasses the cost of establishing a living trust.
- Public Records: Probate proceedings are public, compromising the estate's privacy.
What is a personal representative?
The Personal Representative is responsible for gathering and safeguarding the deceased's assets, settling estate taxes, debts, and expenses, and executing the appropriate distribution of any remaining assets.
What is a Revocable Living Trust?
A Revocable Living Trust (RLT) is a legal arrangement wherein the creator of the trust, known as the grantor, retains the right to modify the trust.
Benefits:
- Control over assets placed in the trust either during the grantor's lifetime or upon their, death.
- Provides for the management of property during periods of incapacity.
- Trusts are typically private because court involvment is not typically part of the administration of the trust.
- Legal expenses are typically lower because of proper planning to avoid conflict and because you avoid the probate process.
How do I fund my trust?
Funding a Trust: The steps of funding a trust are done when you create the trust and then in the future as you gain additional assets. We cannot stress enough about the importance of funding your trust. A partially funded (or unfunded) trusts is not able to avoid probate, and your assets might not end up where you intended them to end up.
As part of the funding process, you will either change the ownership of assets to your trust or cause them to enter your trust upon your death. Assets include real estate, businesses, investment accounts, personal property, vehicles, and retirement accounts.
What is a trustee?
A trustee is the person or entity who oversees a trust. Most commonly, the person who creates the trust is the initial trustee; however, that is not always the case. The trustee is legally obligated to administer the trust's assets in the best interests of the beneficiaries. Common trustee duties include:
- Managing and investing money
- Selling assets
- Distributing assets to beneficiaries
- Providing accountings to beneficiaries
A trustee should be honest and organized. It's often beneficial to appoint a local trustee for efficient day-to-day administration, although institutional trustees such as banks or investment brokers may also be suitable. Most clients select a trusted family member to perform this role.
What is a beneficiary?
A beneficiary is an individual or entity legally entitled to receive assets from a trust or a will.
What is the estate tax?
Michigan Estate Tax: There is currently no estate tax imposed by the state of Michigan
Federal Death Tax: In 2024, as an individual, if your gross estate is valued under $13.1 million, then you will not owe any estate taxes. If you are married, then that amount is doubled.
What is Medicaid?
In the context of elder law, we are most often referring to Medicaid that helps provide long-term-care for seniors. In Michigan there are three basic-types of Medicaid assistance for long-term care:
- PACE
- MI Choice Waiver
- Nursing Home
What are the requirements for qualifying for Medicaid?
There are three basic categories of requirements:
- Medical - You have to have a high enough level of medical needs.
- Your "countable" assets need to be below a threshold, which varies depending on a variety of factors.
- For the PACE and MI Choice Waiver program, your individual income needs to be below a certain amount.