Michigan Law Update

The last few months have brought us some significant changes in Michigan law that deals with estate planning. Our next two blogs will address those changes and the impact that they are likely to have on existing and future estate plans.

DESIGNATED FUNERAL REPRESENTATIVE

     Clients who have specific wishes for funeral arrangements, but worry that family members may disagree with them and go against their wishes, whether for religious or personal reasons, now have a specific statute that gives them the right to designate a "Funeral Representative" to make decisions about postmortem funeral arrangements and the handling, cremation, disposition or disinterment of the person's body. 

     The new law allows the client to appoint a "designated federal representative", who then has priority over spouses, family members and others with respect to making arrangements for the client's remains. The funeral representative designation can be included in another estate planning document, including a will or patient advocate designation, but it must be executed before two witnesses and/or be notarized. The representative accepts the appointment by signing an acceptance or by acting as the funeral representative. 

     One important caveat is that the funeral representative is personally liable for the costs of final arrangements, so it is important that the person who has made the declaration insures payment for the costs of the disposition through a trust, insurance, a prepaid funeral contract or some other means.

ELIMINATION OF DOWER RIGHTS IN MICHIGAN

     Recently signed legislation eliminates a wife's "Dower" right. Prior to the legislation, Michigan law assigned a married woman a one third ownership right in any property owned by her husband during the marriage. The effect of this law was that the husband could not attempt to sell property purchased during marriage without obtaining his wife's signature on any legal documents.  The Dower rights were claimed after the husband died, and the widow was entitled to a portion of the property even if it had been transferred to another party without her consent, for the rest of her life. She could not, however, pass those Dower rights on to anyone else and the right was extinguished when the wife died.

     The new legislation abolishes Michigan Dower, and transfers of real estate in Michigan will no longer be subject to a potential Dower claim. The husband will no longer be required to obtain his wife's signature in order to extinguish her Dower rights when transferring property to another.

In addition to these two changes the state of Michigan has also now provided statutory authority for the creation of a Domestic Asset protection Trust (DAPT). A DAPT allows an individual to create and fund an irrevocable trust, which, subject to certain legal requirements, allows the rantor to shield their assets from the claims of a creditor. Our next blog will discuss this new development in greater details.

Alan and Matt

Making Decisions about Funeral Arrangements

Well so much for scheduling posts to go up every Tuesday, I guess my technical expertise are not as sharp as I thought.

Estate planning focuses on the legal and financial aspects of the distribution of the person's assets following their death. While our clients appreciate the peace of mind they get from this planning there are other issues related to death and dying which are equally important to consider, many of which are more personal and may have a greater impact on your loved ones. Today's blog addresses one of these very personal matters, issues surrounding making funeral arrangements.

Following the death of a loved one, an issue that often causes the most complications is the funeral arrangements. Many questions surround this matter, including what would the deceased want, who is responsible for paying for services, and who has the authority to make decisions? Each of these areas can be fraught with intra-family stress and strife, but as with many other issues addressed in this blog, planning can limit or eliminate many of those problems.

For many individuals, funeral planning begins long before they have any reason to believe death is imminent. This planning takes multiple forms, from a simple note stating their wishes to a detailed letter of instruction including their desire for burial or cremation, the selection of a church for services and hymns to be played, and even charitable organizations to which contributions can be made to honor the decedent in lieu of sending flowers. It is also becoming more common for individuals who want to preplan their funerals to work with a Funeral Director to plan and completely pay for their services in advance. The benefits of preplanning the funeral, as articulated by our clients, include ensuring that their wishes are honored, avoiding excessive spending on funeral services, and knowing that with the planning completed their family members will have more time to focus on the grieving process. While many benefits to preplanning your funeral exist, not everyone is comfortable doing so. Nonetheless, it is important to know who will be responsible for these decisions when the time comes to make them.

Recently the Michigan Legislature updated the law that governs who has authority to make funeral decisions to allow individuals to name a designated Funeral Representative. This individual, who may be named as part of a Will, Power of Attorney, or a separate writing signed in the presence either two witnesses or a notary, has legal priority to make decisions regarding final arrangements. Prior to this change, and in the absence of a designated Funeral Representative, surviving spouses have priority, followed by children, grandchildren, parents, grandparents, and finally siblings. This extended statutory plan of priority creates many conflicts, as various family members argue about funeral arrangements, each believing they know best for their loved ones. With the change in the law, an individual can appoint the person responsible for making decisions and inform that person of their wishes in advance. Regardless of who makes decisions, a frequent concern regarding funeral arrangements is the cost of those services and the responsibility for paying that cost.

The average cost of a traditional funeral in the United States is between $7,000 and $10,000, which is a substantial expense for anyone to bear unexpectedly. Some individuals choose to limit the effect of this cost on their loved ones through preplanning and prepaying for their funeral as we discussed above, others carry small life insurance policies to cover the expense, but many people do nothing at all. In these circumstances, loved ones must figure out how to pay for these costs in a short time. Under Michigan probate law, the costs of funeral and burial take priority over all other claims, except the costs and expenses of administering a decedent's estate. This means that whoever pays for these expenses is entitled to reimbursement for their costs before almost all other creditors. This priority however does little to clarify who will be responsible for these expenses. One potential solution to this uncertainty is executing a living trust. As we have discussed before, following the death of the trust Grantor, the successor Trustee can immediately take over the administration of the trust and in that capacity make distributions from the trust to pay for funeral expenses. In the absence of this planning however a relative or other individual must incur the substantial costs and await repayment during the probate process.

While problems and choices follow us even in death, it is possible to limit the problems that arise following your death by engaging in planning while you are alive. While this planning may initially be difficult to consider, the benefits to your loved ones in a very difficult time make that difficulty seem minute.

Alan and Matt