______________________ |
Estate Planning Estate planning is a process by which you and your attorney develop a plan for your personal and financial affairs upon your death or incapacity. In order to successfully achieve your objectives, your plan may consist of several complex documents or a just few simplified documents. It depends on whether there is a need to plan for estate taxes, avoiding probate, providing for minor children, providing for your children’s educational expenses, providing for a child with special needs, etc. Everyone is different and every plan must be drafted to achieve your individual needs. The following are brief overviews of the most common estate planning documents. Trust: Trusts are commonly used to distribute assets upon death. There are many advantages to using a trust and not any real disadvantages. At one time, trusts were too expensive for persons with smaller estates. This is no longer true. With the aid of computers, the attorney now spends less time drafting the trust which in turn saves the client money. The most common type of trust used is the revocable grantor trust, or “living trust”, as it is frequently referred to as. Advantages of living trusts include: Probate avoidance: With a fully funded trust, there is no need to go through the probate court to administer the estate. This can save thousands of dollars in court costs and legal fees. A Will on the other hand must go through the probate court to be administered. Privacy is also an issue; a Will becomes a public record when filed with the court. A trust always remains private. Delayed distribution of assets: You can delay the distribution of assets to beneficiaries. For instance, you may give your child a 1/3 of their share at age 25, a 1/3 share at age 30, and the remainder at age 35. This may be a great benefit; giving an 18-year old a lump sum of money may not be the wisest decision. You can also state that the child can use the funds for college, health reasons, necessary support, etc., when needed. Parents with minor children: In the event of death of the parents, a trust allows you to appoint the same person(s) as guardian and trustee. This will allow the person(s) raising your children to use the funds as is necessary for the benefit of your children. This reduces the financial strain that may be put on the new family. This is also an excellent planning tool for young parents just starting out who have not accumulated a lot of savings. You can purchase a term-life insurance policy for a very small cost and use it to fund the trust in the event of death. Incapacity: Any asset held by the trust can be managed by the successor trustee in the event of your incapacity. This will preclude the need for a court proceeding to appoint a conservator. Will: A Will is a legal document that controls the distribution of your assets upon your death. You choose who is to receive your assets and who is not. It also provides you with the opportunity to appoint a guardian for minor children. This is very important as it gives you the right to choose who will raise your children instead of the court appointing someone. You also choose who is to be the personal representative (executor) of your estate. A common misconception about a Will is that you do not have to go through probate if you have a Will. This is incorrect; a Will MUST be probated. Think of it this way: A Will is a ticket to probate. Probating an estate can be costly and time consuming, but a Will is still a necessary and beneficial document. If you die without a will (or trust), the State of Michigan decides who gets your assets. Powers of Attorney: Powers of attorney are documents that everyone 18 years of age or older should have. It gives you the opportunity to choose who will care for you, make medical treatment decisions for you, and manage your business and legal affairs in the event you become incapacitated. Without these documents, a court proceeding will be necessary to appoint a guardian and/or a conservator upon your incapacity. The judge must then make the decision as to who will be appointed to make the decisions regarding your care and handle your affairs. The person appointed may not be someone you would have wanted. There are two types of powers of attorney: Durable Power of Attorney: This allows someone to make legal and financial Durable Power of Attorney for Health Care: This allows someone to make As you can see, estate planning can be quite advantageous if done properly. It allows you to choose what happens to your assets, who will manage your affairs, and who will make medical treatment decisions for you. It’s a plan; it’s your plan. Your estate plan should be reviewed by an attorney every 3–5 years. This is to make sure your estate plan will still accomplish what you originally intended; or perhaps you have new ideas for your plan and how you want it administered; or you want to appoint new persons to handle your affairs. Contact Walling & Foster, P.C. to speak with an understanding and qualified attorney for a free consultation. |
|
Home | About Us | Our Attorneys | Contact Us ©2008–2012 Walling & Foster, P.C. | Site design by Creative Group |
|