Whatever stage of life’s journey you may currently be facing, estate planning is one of the most important ways to prepare for whatever the future may hold. An estate plan can empower you to keep control of your most important assets, and have a say in the matters that will directly impact you and the people you care about.
However, it’s important to remember that crafting your estate plan is not a one-time, “set-it-and-forget-it” proposition. You should regularly review and consider updating your estate planning documents — particularly in the face of a major life event, such as a marriage or divorce.
For Michigan families, divorce can be a particularly challenging situation, with many moving parts to address. In the shuffle, it is important to take some time to review your estate plan and execute new documents as needed — so that you can maintain control over the assets and decisions that matter most to you.
What Goes Into Estate Planning?
Over the course of a lifetime, we all acquire assets. When we pass on, those assets remain and they will be reallocated. The question is: will you have a say in the matter?
Estate planning is the process that gives you a say. If you become incapacitated, and even when you’re gone, estate planning keeps you in control.
Thoughtful and comprehensive estate planning can help make a difficult transition much easier for your loved ones. It can help ensure the swift distribution of your assets in a manner appropriate for your circumstances, minimize the potential for conflicts among your family members, and minimize or even eliminate the financial and time costs involved with probate.
There are a variety of estate planning tools that you can put in place to help ensure that you keep control even when you are unable to speak on your own behalf. The specific instruments that you may use will depend on the specifics of your circumstances. Some of the most important estate planning mechanisms to keep in mind include:
- Wills: A will is a valuable estate planning tool that allows you to plan for the distribution of your estate and nominate someone you trust to handle your affairs in the probate court as your personal representative. If you do not take advantage of your ability to determine how your properties and assets will be handled in the event of your passing, the state will make these decisions for you.
- Trusts: A trust is a written agreement created by a settlor or grantor that names an individual (known as the trustee) who is responsible for managing property as directed by the trust agreement. From an estate planning perspective, trusts can be used to direct the distribution of your property, help protect your estate from certain taxes and fees, and minimize the potential for lengthy probate issues.
- Powers of Attorney: A power of attorney is a writing that gives legal authority to a third party (known as the agent) to act on the behalf of someone else (the principal). In estate planning, these tools are used to ensure someone you trust manages your financial and health care decisions when you can no longer do so on your own. For estate planning purposes, it is imperative that the power of attorney used can be classified as a “durable” power of attorney. In short, this classification allows your agent to act even if you become incapacitated.
- Beneficiary Designations: Retirement accounts, life insurance policies, bank accounts, annuities, pension plans, investment accounts, and securities can be set up with a designated beneficiary, known as a “pay on death” or “transfer on death” beneficiary. When executed properly, this designation allows for the assets in an account or proceeds of a policy to transfer directly to the named beneficiaries upon the death of the account owner or policy holder, outside of probate.
Updating Your Estate Plan After a Divorce
Divorce will necessarily involve extricating your lifestyle and finances from those of your former spouse. This might include dividing up assets, as well as determining a plan for child custody and calculating child support and alimony payments.
Many people get started with estate planning after they get married, and set up their plan with the assumption that many of their valuable assets — and much of the decision-making power and responsibility — will go to their spouse. While Michigan’s probate law does build in some protections regarding the revocation of probate and nonprobate transfers after a divorce, it is still important to be proactive and take steps to ensure that your wishes will be carried out — and that your estate plan clearly and accurately reflects your most up-to-date goals.Taking time to clear up confusion or uncertainty now could make a significant difference during estate administration in the future.
During and after your divorce, it is important to consult with a knowledgeable local estate planning and probate attorney to discuss the best course of action based on your circumstances. Some important steps to take from an estate planning perspective include:
Revoking your current will and creating a new one
The Michigan statutory will notice puts it bluntly:
“You may make and sign a new will at any time. If you marry or divorce after you sign this will, you should make and sign a new will.”
The most effective way to amend your will is to work with an experienced estate planning attorney to revoke your current will and create an entirely new document that better reflects your current circumstances.
Reviewing and updating your trust documents.
The period after a divorce is an important time to review your trust documents.
If you have a revocable living trust, one common formality is that you will generally name yourself as the primary trustee, with a successor trustee named who will manage the trust when you pass away or become incapacitated. If your spouse is your successor trustee, it is important to name a new one.
You may also want to use this time to review and update the beneficiaries of your revocable trusts, if any of your personal relationships have changed as a result of your divorce. This might also be an opportune time to set up a new trust that better reflects your goals — for instance, establishing a trust for the protection of your minor children’s funds which an ex-spouse cannot access.
A knowledgeable trust and estates attorney can help you understand all your options and take the appropriate action for your situation.
Reviewing and updating your powers of attorney.
With a durable financial power of attorney, you can provide someone that you trust with the right to handle your financial affairs if you become incapacitated. A durable power of attorney for health care gives your chosen agent or advocate the ability to handle your health care decisions if you become incapacitated..
With each type of power of attorney, you do not give up control of your affairs while you still have the capability to manage them — but can sleep better knowing you have a plan in place in case you do not.
If you currently have documents in place that give your ex-spouse authority over your decision-making, an attorney can help you revoke your existing powers of attorney and create new documents. This is particularly important if you do not already have a successor agent named.
An attorney can help you weigh all of your options as you think about who to name as your new agent or advocate, while also helping you take care to ensure that your chosen agent will receive only the powers that you want them to have.
Updating your beneficiary designations
One of the most effective ways to set up a nonprobate transfer is to designate a beneficiary on certain assets, including life insurance policies, retirement accounts, bank accounts, and brokerage accounts. When you divorce or your personal circumstances change, it is important to work with the institution to update your beneficiary designations. Broadly speaking, if your former spouse is still named beneficiary on an account they will stand to inherit unless you take action to replace them. Do not assume that the financial institution will make changes for you, and be ready to act swiftly.
Start the Conversation with Metro Detroit’s Probate and Estate Planning Attorneys
Interested in learning more about estate planning and probate in Michigan? Ready to start preparing for the future, and make sure that you always have a say in what happens to your most important assets — and the people who matter most?
For all these important matters and more, it’s wise to have an intelligent and experienced lawyer at your side, fighting for your rights and the well-being of your loved ones. That’s where our attorney Dean E. Patrick comes in.
You can depend on our law firm’s ability to listen to you and our talent for creative strategies as we help you prepare your estate plan and navigate complicated probate matters.
Whenever you’re ready to get started, Mr. Patrick is here to listen and learn more about your circumstances, and start finding a solution to your desired outcome – with the expertise, empathy, intellect, and professionalism your situation requires at every step of the way.
Have any more questions regarding any estate planning or administration matters you may have? Ready to get started? Contact Dean E. Patrick at his Southfield office at (833) 469-4897 or click here to arrange your initial consultation. Our staff is available 24/7 to answer any questions and help you with your legal matters.
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