Frequently Asked Questions
Do I need an estate plan?
If your answer to any of these questions is “yes,” you need to take the time to plan for your future and that of your family:
- Do you want to determine who will represent your interests after you’re gone?
- Do you want to decide for yourself how your assets will be distributed?
- Do you want to determine who will look after your minor children?
- Do you want to minimize or eliminate the time and expense of probate administration for your heirs?
- Do you want to minimize or eliminate estate taxes for your heirs?
- Do you want to help prevent conflicts among family members?
- Are you or your spouse a resident alien?
- Do you have a blended family, with children (minor or adult) from a previous marriage?
- Do you want a portion of your assets to go to a charity or educational institution?
Why do people put off setting up an estate plan?
Most people would rather put off the topic of estate planning for another day…or another year. They say things like:
“I don’t want to spend the money right now.”
“It’s just easier not to think about it.”
“It’ll take care of itself.”
“It won’t be my problem.”
“I’ll live forever.”
“I know I need to do it; I’ll get around to it soon.”
“I don’t know how to start or who to talk to.”
It’s easy to put it off, but better to get it handled. The consultation is free and with no obligation. Get the advice you need and the help you deserve.
What happens when I don’t plan ahead?
When you don’t plan ahead by having a comprehensive estate plan:
- The Court appoints a guardian for you if you are incapacitated.
- Doctors and the Court make medical decisions for you if you are incapacitated.
- The Court appoints your personal representative upon your death.
- The Court appoints guardians for your minor children.
- Michigan law directs distribution of your estate to your “heirs at law”:
- Grandchildren, etc.
- If you have no spouse, your children receive your estate.
- If you have no spouse or children, your parents receive your estate.
- If you have no spouse, children or parents, your siblings, nieces and nephews receive your estate.
- If you have no spouse, children, parents, siblings, nieces or nephews (or descendents), your grandparents (or descendents) receive your estate.
- If you have no spouse, children, parents, siblings, nieces, nephews, grandparents, aunts, uncles or first cousins. . .
- The State of Michigan receives your estate.
What should a comprehensive estate plan include?
A comprehensive estate plan should include:
- Letter of Instruction—to provide detailed instructions as to what final arrangements you desire, as well as other important information, such as the names of key advisors and financial service providers.
- Will—to name your family members, nominate guardians for minor children, and to direct any remaining probate assets (ideally, there won’t be any) to the trust for distribution under its terms.
- Funeral Representative Designation—to nominate someone to have final authority over making funeral arrangements.
- Revocable Living Trust—to hold assets for distribution upon your death and to specify what those distributions will entail.
- General Power of Attorney—to allow your agent, generally trusted family or friend, to conduct business on your behalf while you are alive.
- Medical Power of Attorney—to allow your patient advocate to make decisions regarding your medical care if you are unable to participate in those decisions.
- Medical Records Release Power of Attorney—to your patient access to gain access to your medical records to assist them in making decisions regarding your medical care if you are unable to participate in those decisions.
- Advance Medical Directive—to allow you to specify what level of medical care you will receive.
How does Probate Court work?
The Probate Court oversees the distribution of a person’s assets when he or she dies with a will or without a will (called “intestate”). Once someone (a spouse, child, sibling or parent, for example) files an application to open a probate estate, the Court appoints a Personal Representative to collect assets, pay bills, and distribute the remaining property or money to those named in the will or, if there is no will, to that person’s “heirs at law.”
The probate administration process takes at least four months and can take much longer, depending upon the complexity of the estate and how well the heirs are getting along. The costs generally start at between $3000 and $4000 and can go up from there, again depending upon the estate and the people involved.
The Probate Court also oversees the appointment of guardians and conservators for minor children and incapacitated adults.
How do trusts work?
A trust is a legal mechanism, not unlike a corporation or other legal entity, that can be used to hold property for later distribution to individuals and organizations. Unlike a will, which is a set of instructions on how to distribute assets, a trust is, in a sense, a “completed gift.” It names individuals or organizations as beneficiaries to receive trust assets.
Also unlike a will, a trust need not be administered or overseen by the Probate Court. It is a private document and generally results in a private distribution of assets.
Do I really need a trust instead of just a will?
Gone are the days when only wealthy parents or grandparents set up “trust funds” for their children or grandchildren. Today, estates of even modest complexity generally should be placed into a trust for distribution. This generally includes deposit accounts, brokerage accounts, stocks, bonds and real estate.
This is especially true if there are minor children or an incapacitated adult. Whatever your situation, though, it’s important to meet with an experienced estate planning attorney who can help you determine the most effective and efficient way to transfer your property.
Why is a trust better than a will?
While not every estate fares better with a trust than with a will, it is often the case that a revocable living trust is a much better way to transfer assets than a will. Here’s why.
A will is a set of instructions that the Personal Representative (appointed by the Probate Court) uses to distribute assets to those named in the will to receive the estate (once all the bills have been paid, of course). The will is entered into probate; it’s part of the public record. The Court requires that notice of the death and of the probate process be published. The Court also requires that an inventory fee be paid to the court based on the value of the estate’s assets.
A trust, on the other hand, is a mechanism to transfer assets without going through the probate process. Unlike a will, a trust agreement is private. Publication of notice is not required (although there are situations when it’s still a good idea). There are no inventory fees due to the Court. Most important, though, is that a trust agreement is much more flexible, allowing you to defer distributions to beneficiaries, as well as to place certain conditions on those distributions.
Why do I need to “fund” my trust?
You fund your trust for the same reason you deposit money into your bank account: so the trust holds your property. A trust without assets assigned to it is nothing more than a piece of paper. Assigning assets to your trust takes those assets out of your estate, generally putting them beyond the reach of the Probate Court.
It’s important to understand that putting assets into a revocable living trust, a common estate planning tool, does not, by itself, protect those assets from creditors or from Medicaid “spend-down” requirements. These sorts of protections require more elaborate and carefully timed approaches to avoid being disqualified for Medicaid coverage, as well as to avoid running afoul of the Court for concealing assets.
Should I place my tax-deferred retirement accounts into the trust?
Generally, it’s best to use beneficiary designations for IRAs and other tax-deferred accounts. This can allow survivors to keep at least some of those assets as tax-deferred for a longer time than if those accounts are distributed with other trust assets. However, it’s a good idea for the trust to be named as a contingent beneficiary after the other beneficiaries, to keep those accounts from being part of your estate and, therefore, subject to probate.
Should I put my home into the trust?
Generally, it’s a good idea to deed your home and other real estate into your revocable living trust. This is especially the case if you are not married. This way, your assets pass to your beneficiaries outside of the probate process, saving your beneficiaries substantial expense, including filing fees, notice fees, inventory fees and legal fees.
How should I handle my interest in a closely-held business?
It is vital that you coordinate your estate plan with any business succession plan, which often means assigning your business interest to your revocable living trust. However, be aware that Federal law may require that your trust include special language, depending upon the type of business entity.
Will my estate be subject to Federal estate tax?
Estates valued at or below $12.92 million face no Federal estate tax. For married couples, an estate tax sheltering plan can be crafted to shelter up to $25.84 million from estate tax. The amount above these exclusion levels is subject to a Federal estate tax of up to 40%.
Remember that your estate includes real property, life insurance proceeds from policies owned by you or your trust, and the value of tax-deferred retirement savings, such as IRAs, 401(k) accounts and 403(b) accounts.
How can I minimize the amount of estate tax my beneficiaries will have to pay?
When an estate exceeds the estate tax exclusion amount, a special trust mechanism can be established to shelter those assets from estate tax. Called a disclaimer trust, this approach helps you reduce the amount of estate tax that will be due upon trust distribution.
It’s important to understand that proper trust drafting can be complex and is essential. The difference between doing this properly and not can be hundreds of thousands of dollars in tax liability that could have been avoided.
How do I nominate a guardian and conservator for my minor child?
A good place to nominate a guardian and conservator for minor children is in your will. Your will is a legal document that has been signed and witnessed–it should be notarized as well. It has full legal force and effect.
Guardians and Conservators are appointed by the Probate Court. The Court generally looks favorably upon guardianship and conservatorship nominations. Judges, while always reserving the right (and having the duty) to act in the “best interests of the child,” usually give great deference to the express wishes of parents.
Can I nominate a guardian and conservator for myself?
Yes, you can. This is generally done as part of a Durable Power of Attorney (DPOA). In addition to delegating specified powers to another person (called the Agent), a well drafted DPOA also nominates someone (usually, the Agent) to serve as your guardian and conservator should you become incapacitated.
Guardians and Conservators are appointed by the Probate Court. The Court generally looks favorably upon guardianship and conservatorship nominations. Judges, while always reserving the right (and having the duty) to act in the “best interests of the protected person,” usually give great deference to an individual’s stated wishes.
Why do I need a medical power of attorney?
A Durable Medical Power of Attorney (MPOA) is an essential part of any serious, comprehensive estate plan. It provides a framework to allow someone else (called the Patient Advocate) to guide and manage your medical care if you are unable to participate in making those decisions.
The best medical POAs also provide guidance to your Patient Advocate as to the level of medical care you wish to receive in the form of an Advance Medical Directive (sometimes referred to as a “living will”). Providing an advance medical directive can help your Patient Advocate know what you want, making decisions a little easier at a time when they’re already difficult enough.
Should I have powers of attorney drafted for my college-bound kids?
Absolutely! Even though your kids are away at college, they may still need you to transact business on their behalf. A durable power of attorney for your children is almost a necessity.
Even more important is to obtain a medical power of attorney for your children, including the power to authorize release of medical records. Colleges and universities are bound by very strict regulations governing the release of medical information, even to parents. The only way to ensure that you can obtain medical records in an emergency is to have the proper durable powers of attorney drafted, executed and ready to use.
Can’t I just do this myself, or maybe buy software or go online?
By all means, you certainly can, just as you can repair your own car, replace your own roof, or even set your own broken arm. You may not save time, but you’ll probably save money, at least in the short run. The trouble is that if there’s a problem, it might not surface until it’s too late. That’s when the value of having a professional becomes clear.
The cost of an estate plan that is not done correctly can be huge when compared to the cost of working with an experienced attorney to make sure the job is done properly the first time.
How often should I review my estate plan with my attorney?
How often you should have your estate plan reviewed depends largely on where you are in life:
- In your 30s and 40s, every three to five years.
- In your 50s and 60s, every two to three years.
- In your 70s and above, every one to two years.
There are also life events that, when the occur, make it a good idea to contact your attorney to schedule an estate plan check-up:
- Divorce (yours or a beneficiary of yours).
- Death of a spouse.
- A substantial change in the size of your estate (for example, if you receive a large inheritance or win the lottery).
- A move to another state.
- Death of any personal representative, trustee, agent, patient advocate, guardian, conservator or beneficiary you have named in your legal documents.
- Birth of adoption.
- Serious illness of a family member.
- Changes in any business interests you may have.
- Change in your health.
- Change in your eligibility for life insurance.
- Acquisition of property located in another state.
- Changes in tax, property, probate, or trust law (if applicable to your estate).
- A change in your plans with respect to any of your personal representatives, successor trustees, agents, patient advocates, guardians, conservators or beneficiaries.
- Any new financial responsibilities.
How much is this going to cost?
Fees for estate planning are all over the map. There are attorneys who charge very low prices–and you’ll get what you pay for, but not necessarily what you really need. There are high-line law firms that charge very healthy fees for every meeting and every change–you won’t know the final cost until the project is finished.
Without sitting down and discussing your specific situation and needs, it’s difficult, if not impossible, to quote a fair and reasonable price for a proper estate plan, no matter what you’ve heard from other attorneys. However, know this:
My fee to meet with you, listen to you, determine your needs, and draft your comprehensive estate plan is fixed, period. You’ll know how much you’re spending before you commit to spending anything. This includes any and all meetings it takes to develop, review and finalize your estate plan.
While we need to pay our bills like everyone else, I strive to earn your business by providing the best possible value to my clients.
Providing quality service for a fair price is paramount. I will never give “low-ball” price to get your business, then raise the price later. It’s just wrong.
Finally, I will never ask you to “just trust me.” Instead, I’ll do what it takes to be worthy of your trust. The rest is up to you.