Estate planning is one of the most useful and important steps you can take to prepare for the future — but it is also one of the most commonly misunderstood.
Put simply, having an estate plan in place is a way to keep control of your most important assets, and have a say in the matters that will directly impact the people you care about even when you are unable to speak on your own behalf. There are a variety of tools that can be used as part of an estate plan, including wills, trusts, and powers of attorney. Which instruments to use will depend on the specifics of your circumstances.
Interested in learning more about estate planning and the probate process here in Michigan? Separating fact from fiction is an important way to get started. Let’s get to the bottom of seven all-too-common estate planning myths:
MYTH #1: “Only wealthy people need to think about estate planning.”
Estate planning is not just for the wealthy; it is for anyone who wants to be able to stay in control, no matter what the future has in store.
Regardless of how many assets you have acquired up to this point in your life, estate planning is an important step that gives you a say in how your property will be reallocated when you’re gone. Importantly, you can also use estate planning mechanisms, such as your will, to care for your loved ones when you cannot be there to provide for them yourself. Nominating a guardian for your minor children is an important piece of the typical estate plan, as is nominating a conservator to handle the financial affairs of your inacpacitated loved ones. You can also use a trust to assure distribution of your assets in a manner appropriate for your circumstances, and maximize the assets available to your beneficiaries.
At a minimum, like it or not, we should also all have a plan for incapacity. While it’s never fun to think about what would happen if you were to sustain a major injury or succumb to illness, it is necessary to ensure your affairs are handled in the way you would want — and to keep your family out of the arduous and complicated process of living probate. In recent months, the coronavirus pandemic has served as a vital reminder of the importance of incapacity planning.
MYTH #2: “Estate planning isn’t something I have to think about until I’m much older.”
According to a recent poll cited by CNBC, about 62% of Americans say that they do not have a will. Taking it one step further, a report from Caring.com suggests that less than one-third of all Americans (32%) have any estate planning documents in place.
While many people believe that they only need to start thinking about estate planning later in life, the reality is that putting it off for too long could be disastrous for yourself and your loved ones.
Estate planning is a relevant and important concern if you have any property you want to distribute, or any loved ones you want to provide for when you’re gone. This makes it a critical consideration, no matter what stage of life’s journey you may currently be on. Whether you are recently married or divorced, a first-time homeowner or a retiree getting ready to downsize, there are estate planning tools and mechanisms that can make life easier for yourself and the people you care about. Importantly, you can also update and refine your estate plan over time, to ensure that it always aligns with your goals and expectations as your circumstances change.
In short? The only things that go away with time are snowflakes, youth, and opportunities. You have an opportunity to plan for you and your loved ones now. Why would you let that pass?
MYTH #3: “If I’m married, my spouse will inherit everything and get to bypass probate.”
Although your spouse is entitled to assets from your estate, if you have not put a plan in place, your spouse will likely be subject to the probate court and its control.
Without an estate plan, you leave things up to chance. If you do not make decisions about the allocation of your property and assets when you have the chance, you will end up leaving things to Michigan’s laws of intestate succession. These strict and complicated laws determine what happens to a decedent’s estate when they do not have a will. Ultimately, leaving things up to intestate succession could result in your assets being distributed in a manner that you would not want. While your spouse is entitled to some assets, other people in your life may also be able to claim a share of your intestate estate — such as an estranged child, or a parent you’ve broken off contact with.
Having an estate plan in place can help assure that your partner gets the assets and control you want them to have. If nothing else, estate planning is a straightforward way to offer guidance and protection to your spouse, making a difficult and uncertain time far easier to navigate.
MYTH #4: “Having a will is enough to bypass probate.”
Having a will does not mean that your estate will avoid probate.
However, if you have assets in your name and want to control the distribution of those assets when you pass, a will can accomplish that goal. Having a will helps facilitate the probate process, and, when executed properly, can help to avoid or minimize the potential for contests.
- Nominating someone you trust to serve as personal representative, and handle your affairs in the probate court.
- Nominating a conservator to handle the financial affairs of your minor or incapacitated adult children or loved ones.
- Nominating a guardian to handle the care, custody, and control of your minor children to assure they grow up the way you intended.
- Establishing a long-term distribution scheme for loved ones who are not as financially savvy as you would like, usually working in conjunction with other estate planning tools such as a trust.
MYTH #5: “I have a power of attorney in place. My agent can distribute my assets when I pass.”
A power of attorney is an important tool, which may be used in conjunction with a will or trust. However, it is limited in its scope — particularly once you’ve passed away.
Broadly speaking, a power of attorney is a written instrument that gives legal authority to a third party (known as the “agent” or “attorney in fact”) to act on the behalf of someone else (known as the “principal”). In estate planning, power of attorney (POA) is a tool that can be used to ensure that someone you trust manages your financial and health care decisions when you no longer can.
For estate planning purposes, it is imperative that the power of attorney used can be classified as a “durable” power of attorney. A durable POA contains specific language that ensures your agent can act even if you become incapacitated, while keeping the power in your hands for as long you can make decisions for yourself. However, when the principal on the power of attorney passes away, the agent’s power is dissolved.
Fortunately, there are other mechanisms that can be used to ensure that your wishes will be carried out after you’re gone — such as nominating a personal representative in your will, naming a successor trustee to oversee the management and administration of your trust, or nominating a conservator to manage the financial affairs of your minor children.
MYTH #6: “If I die without a will, all my assets will go to the government.”
Under Michigan’s laws of intestate succession, the contents of an intestate estate only escheat to the government in very limited circumstances — namely, if you are not survived by any legal heirs.
However, it is true that if you do not create a plan to determine how your properties and assets will be handled in the event of your passing, then the state will make many important decisions for you. This takes away your control. Having an up-to-date and thorough estate plan helps ensure that the people and properties you care about will be handled in the manner that you decide. Meanwhile, having a plan in place can help streamline and simplify things for your loved ones. The probate court is not a comfortable setting for handling an estate. Failing to create a plan can make this time even more long and arduous for your loved ones, who are already dealing with the emotions and stress of losing someone dear.
MYTH #7: “Setting up a trust means giving up control of my assets.”
Does creating a trust mean giving up control? Not if you don’t want it to. There are many different types of trusts that can be used here in Michigan, depending on your unique goals.
Generally speaking, with one of the most common and popular types of trusts, you will be able to maintain control of your assets for as long as possible.
In an inter-vivos or revocable living trust, the trustee controls the assets. One of the practicalities of creating such a trust is that you can typically assign yourself as the trustee. This way, you remain in complete control of your trust assets. In the event that you can no longer perform your duties, the responsibilities would legally be granted to the successor trustee you’ve named.
Get Real Answers from Michigan’s Probate and Estate Planning Attorneys
When it is time to take care of your estate planning needs, get the answers, insight, and guidance you and your beneficiaries deserve. Whether you are trying to avoid probate with a trust, want to make sure your assets are protected and transferred according to your wishes, or want to plan for incapacity with powers of attorney, our attorneys can help you custom tailor a solution to suit your needs.
At the Law Office of Dean E. Patrick, PLLC, we put our legal experience and skills together with our commitment to excellence in representing your rights. You can depend on our law firm’s ability to listen to you and our talent for creative strategies as we help you navigate estate planning and probate, including (but not limited to) general probate litigation, will and trust contests, beneficiary disputes, guardianships, and conservatorships.
Our goal is to provide you with only the best professional legal services available in Michigan. Work with us and you have our sincere promise to carefully plan and manage each and every step of your legal matter from start to finish.
Have any questions? Ready to get started? Our staff is available 24/7 to help you with your legal matters. Contact Dean E. Patrick at his Southfield office at (833) 469-4897, or click here to arrange your initial consultation.
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