It has been a long time since we last posted anything new here, but after seeing a number of different articles in the news media and other publications we felt that it was time for us to come back and revisit some important issues in estate planning and to discuss some of the changes to the area that have transpired over the past two years. We look forward to hearing from our readers if there are particular questions you or your clients have had about estate planning, because as always one of our major goals is to make the process of estate planning approachable and understandable.
We'll start off with a subject that both of us constantly attempt to help people understand, the question of "Who needs an estate plan?".
Estate planning is not just for older, wealthier individuals. Estate planning covers a number of areas that can be of great benefit to a person of any age. While often estate planning is associated with planning for one's eventual death and the transfer of property to loved ones, estate planning is much more than that.
A person of any age, whether or not owning significant assets, can benefit by writing a Will. Estimates vary, but surveys regularly indicate that less than 50% of adults have a Will and even fewer have documents protecting them in the event of a disability.
A Will is a basic estate planning document that can provide specific instructions about how your property is to be distributed. But if you have minor children, a Will is important because it will designate your choice for Guardians to take care of the physical well-being of your children in the event of a premature death. The Will also name a Personal Representative (sometimes called an Executor) to administer your estate for the benefit of the beneficiaries you have named. While it will not eliminate the probate process under state law, a Will at least allows you to designate your beneficiaries rather than allowing a complicated state statute to determine how your assets are distributed. For example, the Michigan intestacy statute provides for six different potential distributions to a surviving spouse and an additional four potential distributions to other beneficiaries, all dependent on who survives the decedent. Based on the complexity of these rules, it is easy to see that failure to specifically designate those beneficiaries who are to receive your assets can result in unintended and undesirable results. For some people, especially younger adults, it may be even more important to consider documents protecting you in the event of disability rather than death.
A Patient Advocate Designation (PAD) is a document that allows you to specify the person or persons you want to make medical decisions on your behalf in the event you become disabled and unable to make your own medical decisions because of illness or accident. If a PAD has not been executed and a person becomes incapacitated through illness or accident, someone must file a petition with the local Probate Court to have a person appointed to make medical decisions. This process is time-consuming costly and public.
A Durable Power Of Attorney (PoA) is a document that allows you to specify the person or persons you want to make legal decisions on your behalf in the event you become disabled and unable to make your own legal decisions because of illness or accident. If a PoA has not been executed and a person becomes incapacitated through illness or accident, someone must also file a petition with the local Probate Court to have a person appointed to make legal decisions. Again, the process is time-consuming costly and public.
You may also want to consider a Living Will which, although nonbinding, is an expression of your intent that you do not want to be kept alive by extreme measures if doctors indicate that such measures will only prolong the dying process rather than lead to a recovery. This document and allow those designated to more quickly make medical decisions you would want if you could make them.
While these documents are applicable for all adults, parents with children who have reached age 18 and perhaps going off to college or another state for job opportunities may want to have these children execute a PAD or PoA, because otherwise medical personnel will likely not allow parents to make decisions on behalf of their adult children.
While there are other estate planning documents that are beneficial as an estate gets more complex, the documents discussed here are the basics which are important for all people. To ensure that you have planning that is appropriate for your needs please consult with an experienced estate planning attorney.
Alan and Matt
