A good estate plan provides for both what happens after your death and during a period of incapacity or disability. You do not need to be wealthy to have an estate plan. In fact, just about everyone could benefit from an estate plan. Some of the questions you may ask yourself are:
- Who will manage my finances and make my medical decisions if I am unable to do so?
- Who should receive my estate and how much should they get? Should they be given the assets outright or will they require someone to manage the assets for them?
- Who will administer my estate to carry out my wishes and maximize the inheritance to my loved ones?
To adequately protect you and your family in the event of disability or death, it is important to have a well thought out and comprehensive plan. There are four documents in a basic estate plan.
- Last Will and Testament. A Will passes property in your own name alone that does not have a beneficiary designation, is not jointly held with another or is not held in trust. If you have assets in your name alone, there will be probate administration of your estate. A Will is also where you name guardians for minor children.
- Revocable Living Trust. Trusts are established for many reasons and by persons of all income levels. With a self-trusteed trust, you place assets in a trust managed by you for your own benefit. In addition, you name a successor trustee to take over if you become incapacitated to manage the trust assets for your continued benefit. Upon your death, your successor trustee distributes the trust assets to the persons you name in the trust in a private manner outside of the probate court. Thus, you save the time and expense of probate administration of your estate. Assets may continue in trust after your death to provide for the care and support of your children until they are financially and emotionally mature enough to manage their own inheritances. Revocable trusts can be amended by you at any time or revoked if you do not wish to have the trust anymore.
- Durable Power of Attorney. A Power of Attorney is a legally binding document by which you authorize another person to act on your behalf to manage your finances. It avoids the necessity of someone having to go to the probate court to be appointed your Conservator if you become incapacitated, who may or may not be the person that you would choose.
- Patient Advocate Designation. Also known as a medical power of attorney, the Patient Advocate Designation is a Michigan document which allows you to appoint a patient advocate to make medical decisions for you, including termination of life support, if you are unable to make these decisions for yourself. Without it, your loved ones may be forced at the time of a medical crisis to petition the probate court for the appointment of a guardian for you.
Article written by Karen L. Stewart, Attorney and Counselor. For more information, please see my website, www.customestateplans.com.