Kenneth Gold, Author at Gold & Associates, P.C.

Durable and Springing Power of Attorney

Contemplating a debilitating illness or injury is unpleasant, but by planning ahead, you can take some of the burden off your loved ones should tragedy strike. By creating a power of attorney before you need it, you make sure your wishes are known should you become disabled.

A power of attorney is a legal document through which you choose a representative to manage your medical care and financial dealings in the event of your temporary or permanent disability. The individual who acts on your behalf is known as your “attorney in fact” or “agent.”

What Is Durable Power of Attorney?

If you suffer mental incapacitation at some point in your life, you can benefit from having a “durable” power of attorney in place for handling your medical and financial decisions. A durable power of attorney becomes effective as soon as you sign it, and it continues indefinitely if you become unable to handle your own affairs due to incapacitation. A nondurable power of attorney, on the other hand, ends automatically if the individual who put the power of attorney in place becomes incapacitated.

A legally executed durable power of attorney enables your designated representative — who should be someone you trust — to handle all of your important affairs, such as overseeing your investments, paying bills or making medical decisions for you if you cannot do so on your own.

If you become incapacitated without a valid power of attorney document in place, your family members may have a difficult time getting authority to manage your affairs — and securing authority may require going to court to obtain a guardianship and or conservatorship. To provide for oversight of all your personal affairs, you should have two documents in place: a medical power of attorney and a financial power of attorney.

A medical power of attorney, sometimes referred to as a durable power of attorney for health care, or patient advocate agreement, names a trusted surrogate who makes your medical decisions should you lose the ability to do so.

With a financial power of attorney, your designated representative has authority to oversee your financial matters. In some cases, a financial power of attorney can be used for a short time or for only one transaction, such as finalizing a real estate deal. A durable financial power of attorney, though, allows an individual you name to handle your financial affairs indefinitely in the event of your incapacitation.

Michigan Requirements for Durable Powers of Attorney

In Michigan, both financial and medical durable powers of attorney are recognized under state law. In both cases, the designated representative — referred to as an advocate for medical purposes and an agent for financial purposes — can participate in actions on behalf of the creator of the power of attorney.

Financial powers of attorney typically are durable unless the document explicitly states an end date. Medical powers of attorney go into effect when the creator of the document becomes incapacitated.

An individual wishing to create a legal power of attorney document in Michigan must be at least 18 years old and must be mentally competent. A qualified estate planning attorney can assist you with preparing the documents to ensure that you meet all state requirements.

What Is Springing Power of Attorney?

A springing power of attorney — as opposed to a durable power of attorney — takes effect only when the creator of the document becomes incompetent. Either a court or a doctor can declare that individuals are no longer able to manage their own finances. A representative named in a springing power of attorney has no legal right to manage the document creator’s finances until that individual is officially deemed mentally incapacitated.

Create Separate Documents

To keep your affairs as simple as possible and to meet state law requirements, separate documents for financial and medical powers of attorney are best. While it is possible to combine the two, separation into two documents provides several advantages. For instance, your medical records may include personal information that you want to keep private from financial professionals, and medical professionals treating you do not need to know the details of your finances.

If you decide to create two separate powers of attorney, however, you may want the same individual representing you for both areas. If you want different representatives for medical and financial matters, make sure that the two individuals can work together effectively. For a consultation with an experienced estate planning attorney, please contact Gold & Associates, P.C.

Intestacy – Deceased Without a Will in Michigan

The rules outlined in Michigan law direct the distribution of property in the event that a deceased person did not leave a will, and they apply to any property that was not under joint ownership or did not have a designated beneficiary.

When an individual dies without a will in Michigan, assets go to the closest family member(s) under the state’s intestacy laws. The laws spell out:

If there is no will, who inherits assets.
The order of inheritance rights.
The probate process with no will.
Who is in charge of the process.

Spouses Come First

If you are married at the time of your death and do not have living parents, children or grandchildren, your spouse receives your whole estate under Michigan law. If you have children or grandchildren, your spouse still receives the first $150,000 of your assets. In addition, your spouse receives half of the rest of your estate, and your spouse receives three-quarters of the remaining estate if you have a parent who is living. If you have children for whom your spouse is not a parent, your spouse receives the first $100,000 plus half of your estate.

If you have a surviving spouse, your children receive half of your estate after the first $150,000. If you don’t have a surviving spouse, your entire estate is divided equally among your children.

In some cases, some or all of your estate may pass to your grandchildren, siblings or parents. If you do not have a surviving spouse or children but do have grandchildren, the grandchildren would split the share of your estate that your children would have received. If you are not married and don’t have children at the time of your death, your estate goes to your parents or is equally split among your siblings.

How Michigan Law Defines Your Descendants

Under Michigan intestate law, your children receive part of your assets upon your death. The share that each child receives depends on the number of children you have, and the law also defines the individuals that are legally considered to be your children. State law includes the following stipulations regarding children:

If you’re married, children born to your wife during the course of the marriage are considered to be your children.
If you had children with someone to whom you were not married, and paternity is established under Michigan state law, your children receive their share of your estate.
Any legally adopted children are your children under the law.
Foster children and stepchildren that you have not legally adopted, along with children you have placed for adoption and who were adopted by another family, do not receive a share of your estate.
Any biological child of yours who was born after your death receives a share of your estate.
Your grandchildren receive a portion of your estate if their parents pass away before you.

Not all Assets Pass Through Intestacy

If you leave no will after death, your assets that would have been disbursed by a will instead go through the state’s intestacy process. Typically, only assets that you alone own are included.

However, a number of assets are not included in a will and are not subject to succession under intestate laws. Instead, the assets pass to your named beneficiary or to the assets’ joint holder, regardless of whether a will exists.

Assets that typically are not affected by intestacy include:

Proceeds from life insurance policies with a designated beneficiary.
Proceeds from retirement accounts, including IRAs and 401(k)s with a designated beneficiary.
Bank accounts that are payable upon your death.
Property you own jointly.
Property that has been transferred into a living trust.
Securities in an account that is transferrable upon your death.

The Role of Probate

When an individual dies with or without a will, the state probate courts in Michigan administer the estate. Any assets held without a beneficiary, joint owner or in trust will pass through probate. A will directs who will get the assets and who is in charge of the administration. Without a will, the laws of the State of Michigan control.

If you do not have any living family members and die without a will, it’s possible that the state will get your property. Such scenarios are rare, because the intestate succession process attempts to locate any relatives and get assets to them. If you have living grandparents, cousins, nieces or nephews, it is unlikely that your assets will end up in state coffers.

Do you have a legally valid will? If not, you’re potentially leaving the distribution of your assets to the state upon your death. To ensure that your wishes are honored, work with a qualified estate planning attorney to create a comprehensive will. Contact Gold & Associates, P.C., to schedule a free consultation.

Revocable Living Trust

If you’re hoping to create a flexible estate plan for every stage of life, you may find that a revocable living trust meets your needs. These popular estate planning tools cover the three phases of life — your lifetime, your possible disability due to injury or illness, and your death.

What Is a Revocable Living Trust?

A revocable living trust — also known simply as a living trust — is a written legal document. The trust document names the trustee who will manage the property if you are incapacitated or you pass away. It also spells out who receives the property when the initiator of the trust passes away.

The purpose of a living trust is to hold assets belonging to an individual. If you create a living trust, you’re known as the trustmaker, settlor or grantor. You normally also serve as the trustee, who controls and manages the included assets.

Your living trust is “revocable” because you can alter it if your needs or life circumstances should change. The trust is referred to as “living” because you create it during your lifetime. If you function as the trustee, a successor trustee will take over managing the trust in the event of your incapacity or death.

Revocable Trusts Pros and Cons

Revocable living trusts offer some significant advantages, but they’re not for everyone. What are the primary pros and cons?

Pro: Your heirs may receive assets sooner. For many individuals, revocable living trusts are a means of avoiding probate — the lengthy, and often costly, process of legally settling your estate after you die. With a revocable living trust, your property can be passed on to your beneficiaries without going through the probate process. You can also decide when they receive the assets.
Con: You’ll still need a will. Even if you create a revocable living trust, you’ll still need a will. In addition to providing guidance on the dispensation of your estate for assets that are not in your trust, a properly written will is vital for designating guardians for your minor children, which a revocable living trust does not do. Often a “pourover” will is used which will place the assets into your trust.
Con: Property must be titled correctly. After creating your revocable living trust, you’ll need to transfer property you want covered into the trust. Property to which you hold title — such as real estate — must have a new title issued in the trust’s name. Work with an experienced attorney to ensure that the title change meets all regulations and does not land the property in probate.
Pro: Your heirs may have more privacy. Revocable living trusts are not in the public record, since they don’t go through probate. Your trust beneficiaries immediately receive a copy of the trust upon your death. If you’ve cut any beneficiaries out of the trust, the possibility exists that the information could become public if the trust is contested after your death. However, short of a court battle, living trusts typically are more private than wills because they generally are not available to the public.

Work With an Estate Planning Attorney for Your Living Trust

After reviewing revocable trusts pros and cons, does a living trust sound like a possible solution for your estate planning needs? To consult with an estate planning attorney about your specific situation, please contact Gold & Associates, P.C.

Trust Planning and Setup

By setting up a trust as part of your estate plan, you help ensure that your loved ones have the financial resources they need after your death. You can use a trust to hold assets including cash, investments and property, which are distributed to beneficiaries according to your wishes.

A trust also can help you reduce your estate taxes. And since trusts typically are not subject to probate, your heirs may be able to access the assets held in the trust more quickly than with a will alone. Trusts can provide a number of additional advantages, including:

A higher level of protection of assets from lawsuits and creditors.
The ability to specify when and how your assets are disbursed following your death.
The ability to designate a successor trustee to manage the trust after your death or in the event of your incapacity.

Revocable and Irrevocable Trusts

Various types of trusts exist, with most falling into the categories of either revocable or irrevocable. A revocable trust, also referred to as a living trust, is a flexible estate planning tool that helps you avoid the probate process even as you keep control of your assets. You can dissolve a revocable trust whenever you wish; however, revocable trusts usually are irrevocable after your death.

Once you establish an irrevocable trust, you will not have the ability to alter it. Assets in the trust typically are moved out of your estate. You lose control of the assets, and you do not have the option to change terms of the trust or dissolve it.

If your main objective is reducing the portion of your assets subject to estate taxes, an irrevocable trust does so by essentially moving the assets out of your estate. Because the assets are no longer part of your estate, you also are not liable for taxes on income generated from the assets. In some cases, irrevocable trusts can protect assets from legal judgments. But in most cases, revocable trusts can also protect most, if not all, assets from estate taxes for most individuals and married couples.

Living Trusts as Estate Planning Tools

A living trust is established during your lifetime rather than upon your death. Different forms of living trusts exist and can serve as tools for lowering estate taxes, avoiding probate or establishing a means for long-term management of property.

Revocable living trusts have grown in popularity in recent years, especially among individuals approaching retirement age. A living trust may be a beneficial estate planning tool for you, depending on your individual circumstances. Your attorney can assist you in determining whether this type of trust should play a role in your overall estate planning.

Differences in Wills and Trusts

Trusts serve as tools for avoiding probate and controlling your assets after your death. In addition, a trust can help keep at least some of your personal financial affairs out of the public record, and it can provide a high degree of flexibility.

However, a trust also can be more complex to establish than a simple will. In addition, to reap the full benefits of a trust, you’ll need to complete the process of funding and changing titles for assets the trust owns. Trusts also typically allow for a higher level of control over the disbursement of assets, and they can help you achieve specific goals like paying for college or contributing to charities.

For some retired individuals, a will may suffice for estate planning needs. Wills are simpler to set up and manage, and — unlike trusts — they’re easy to dissolve if circumstances change. Wills also typically cost less to create than do trusts.

How to Set up a Trust

To establish a trust in Michigan, work with an experienced estate planning attorney to create the trust document. Your attorney will take into account a number of factors — including your age, marital status and the size of your estate — in structuring the trust appropriately for your needs.

The trust document will specify the beneficiaries of the property held in the trust, and they will name you as the designated trustee as well as name a successor upon your death or incapacity. Once the paperwork is complete, you’ll transfer property into the trust.

The trustee will be responsible for administering the trust based on the terms of the trust, for the benefit of the beneficiaries you’ve named. If you need to amend or alter the trust at any point in the future, your attorney can assist you with completing the proper paperwork.

Creating an estate plan is a complex and important endeavor that can affect your loved ones for many years to come. To ensure that you make the right choices, work with a qualified estate planning attorney. Contact Gold & Associates, P.C., for a free consultation.

How to Contest a Will or Trust

The death of a loved one is a difficult time for those left behind. The situation can become even more painful if you feel that you have reason to contest your family member’s will or trust. Working with an experienced estate attorney is the first step in achieving closure and moving on with your life.

Contesting a Will or Trust

To contest a will or trust, you must be a beneficiary, or you must be in a position that you would have inherited some portion of the estate had a will not existed. In Michigan, courts typically consider spouses, children, parents, grandchildren and sometimes siblings as interested persons who may have standing to contest if there is a question regarding the validity of the will or trust.

Grounds for Contesting

Along with establishing legal standing, you must show evidence of impropriety in order to contest a will or trust. Grounds for contesting may include:

Inadequate mental capacity of the deceased person at the time the will or trust was created. The court takes into account the individual’s state of mind only at the time the will or trust was signed and not at the time of the individual’s death.
Inappropriate influence, such as the deceased person having been pressured into signing by someone who would benefit from the will or trust. Threats and withholding needed medications are examples of inappropriate influence.
Fraudulent activity, such as the individual who signed the will or trust not having realized what was being signed.
The existence of a more-recent version of the will.
Inadequate witnessing or signature of the will. If you contest based on a will having signatures that were forged, courts can require that witnesses appear to verify their signatures. You also can contest on the grounds that the document did not have the required number of witnesses.

Unclear Language

In some cases, the language in a will or trust may be confusing or unclear. If you dispute the meaning of language in a will or trust, you can work with your attorney to petition the probate court asking for an interpretation of the document’s true intent.

If the court determines that the language is unclear or ambiguous, the estate may be distributed based on the court’s interpretation of the meaning.

No-Contest Clauses

Many wills and trusts include clauses stating that beneficiaries who contest the document can be penalized, including giving up rights to property that would have been inherited. Such “no-contest” clauses are intended to discourage family members who may feel slighted by what they’ve received in the will or trust.

State law determines whether no-contest clauses are enforced. In Michigan, the clauses are not honored if probable cause exists to begin the process of contesting a will or trust.

Work with an Experienced Attorney to Contest a Will or Trust

If you have legal standing for contesting a will or trust and you have adequate grounds, you can begin the process by working with an experienced attorney. Your attorney will:

Advise you on time limitations and other requirements for filing your action with the probate court.
Assist you with the necessary forms that will need to be filed.
Help you gather evidence supporting your claim, including different versions of the will or trust in dispute, information about the deceased person’s mental state at the time of signing, and any documentation supporting an allegation that a document was forged.

After you file your claim, the probate court will investigate. During the investigation, the approval of the will or trust is put on hold until the court makes a decision. A representative of the estate may be required to present evidence supporting the contested document. After reviewing the evidence, a probate judge will rule on whether the will or trust is valid.

Regardless of the reasons you wish to contest a loved one’s will or trust, a skilled attorney can assist you with reviewing your legal case and beginning the process. To speak with an experienced will and trust attorney, please contact Gold & Associates, P.C.

What is a Power of Attorney?

A power of attorney is a legal authorization that allows someone else to act in your place in matters related to finances, personal affairs and health care. If you ever become mentally unsound and unable to handle your own affairs, a durable power of attorney can stay in effect indefinitely.

With a valid power of attorney declaration in place, a trusted individual of your choosing — designated as your “agent” or “attorney-in-fact” — can legally oversee important matters in your life such as managing investments, paying bills, signing checks, making deposits, obtaining insurance, contracting for professional services, and making decisions about your health care if you cannot do so. The authority you grant to your agent can be as broad or narrow as you wish.

A power of attorney should be in writing, and you should sign it so your agent has proof of authority to act on your behalf. Power of attorney often is executed as a formal legal document that can be recorded with the local register of deeds in case your agent needs to use the authority regarding a real estate transaction.

Types of Power of Attorney

You can choose among several different types of power of attorney to meet your specific needs.

With a special power of attorney, you can grant specific powers to your designated agent. You may choose a special power of attorney if you’re unable to handle some of your affairs due to medical reasons or other commitments. Powers granted can include selling personal property, managing or selling real estate, overseeing business transactions and collecting debts.
A financial power of attorney allows your agent to oversee your financial affairs on your behalf. You can use a financial power of attorney for single transactions like closing a real estate agreement, or you can sign a durable financial power of attorney that allows your agent to manage all your financial affairs if you become unable.
A healthcare power of attorney allows your designated agent to make medical decisions for you if you become mentally incompetent or cannot make decisions for yourself.

Selecting the Right Person

You should have significant trust in the person you select for power of attorney authority. Whether the individual is an attorney, organization, business associate, loved one or friend, you’ll be trusting your power of attorney designee to act in your best interests and honor your wishes.

Your power of attorney agent should keep detailed records of any actions taken on your behalf and update you periodically so you stay informed. If you cannot review updates, you should ask your agent to provide the information to a third party such as a family member or a trusted attorney.

An agent acting under a power of attorney has legal liability for decisions made in the event of intentional misconduct. However, power of attorney documents typically protect agents who make a mistake with no ill intent. Agents with power of attorney usually are not paid.

Granting Power of Attorney in Michigan

Michigan law requires that power of attorney agreements be in writing and signed on a voluntary basis. The signer must be mentally competent at the time of signing.

If you wish to give someone else the authority to act on your behalf, you’ll need to sign a power of attorney form that specifies the authority you grant to your agent. Your estate planning attorney can advise you on the proper forms.

For a power of attorney declaration to be considered valid, you must be in a mentally competent state at the time of signing. If you are concerned that your mental capacity might be called into question, you may need to have your doctor sign a statement attesting to your competency. Your attorney can assist you in compiling appropriate documentation.

Work with an Experienced Estate Planning Attorney

Choosing the right person as your power of attorney agent is one of the most important decisions you’ll make in life, and it’s critical to meet all legal requirements to ensure that your wishes are honored. To speak with an experienced estate planning attorney in the Plymouth area, please contact Gold & Associates, P.C.

What is a Living Trust?

A living trust is a legal document that allows you to explain exactly how you want your assets handled, appoint heirs and to name a trustee, who will fulfill the role of an executor upon your death. The living element of a living trust allows you to do all this while you are still living. The big benefit of a living trust is the fact that it allows your estate to bypass probate upon your death, because the trust passes on to your successor and allows them to then execute your wishes for your estate. A living trust also allows you to appoint someone to oversee your affairs, such as your financial assets, your legal affairs and your health care needs, if you become incapacitated while still alive. This is the biggest difference between a will and a living trust. A will only becomes effective when you die, while a living trust is active while you remain alive.

What is The Difference Between a Living Trust And A Regular Trust?

We have talked about the difference between a will and a living trust, but we haven’t yet covered how a living trust differs from a regular trust. Before answering that, it’s a good idea to define a regular trust. A regular trust or testamentary trust is a trust that only goes into effect after a person’s death. The trust creator will name beneficiaries who will then be allowed access to assets and the like after the individual’s death. Conversely, with a living trust, which is of course set up during a person’s lifetime, the person who sets up the trust is usually both the trustee (or the person who runs the trust) and the beneficiary (or the person who benefits from the trust property or assets). Of course, once the person who creates a living trust dies, it then transfers to the successor trustee to manage or distribute the assets to the beneficiaries.

Types of Living Trusts

There are two main types of living trusts. These are referred to as revocable and irrevocable living trusts. Read below to learn more:

Revocable Living Trust

This type of living trust allows a person to transfer their assets into the ownership of a trust. They still retain all control of their assets, because they are named the trustee of their revocable living trust. At any point in time, a person who creates a revocable living trust can change or “revoke” their living trust, thus its name. The assets within the trust will pass directly to the beneficiaries listed upon that person’s death, without having to go through the process of probate.

Irrevocable Living Trust

The other type of living trust, irrevocable is, as you may have guessed from the name, permanent. It allows a person to give away their assets during their lifetime. These assets, once given, are no longer in the trust creator’s control. This means the assets are no longer considered part of the trust creator’s estate. The benefit of this is the fact that because the assets are no longer part of the estate, they are not subject to estate taxes. Irrevocable trusts are rare, because it usually is only beneficial if a person has so much money, they could not hope to spend it all in one lifetime and they want to ensure their beneficiaries are not taxed at a high rate.

Other Reasons a Person Might Consider a Living Trust

Aside from easing the tax burden on beneficiaries, the following are some additional reasons a person might consider creating a living trust:

Minor Children/Beneficiaries

When children are young, creating a living trust is a way to safeguard their inheritance from them, allowed it to managed for them, by an appointed person, until they are old enough to responsibly handle the assets. It also allows the creator to set certain criteria for the inheritance, ensuring any assets given to a child are used responsibly.

Allows Property Management Before Death

As we mentioned above, one can set up a living trust so that their affairs are handled even if they are still living. Therefore, they won’t have to worry about bills being paid or being taken care of in their old age if they have a living trust. This is a huge benefit of a living trust with so many people living longer in today’s society.

Avoids a Contested Will

In general, wills are contested much more often than a living trust. Therefore, to ensure wishes are followed without contention, having a living trust is a good idea.

Keeps The Process Private

The probate process is public, so a will that is probated cannot be that private. By contrast, a living trust, since it avoids the probate process, remains more private.

To learn even more about a living trust and how it can benefit you, contact us today.

What is a Trust?

Ensuring that the ones you care for most are taken care of is an important goal for many people – particularly those with substantial assets. You want to pass on your possessions in a way that protects those possessions and makes certain that they wind up in the hands of those you specify. While wills are one tool to accomplish such a goal, using a will requires going through probate, which can be an unnecessary burden on your loved ones.

Understanding Trusts

What Is A Trust?

A trust is a document that instructs your friends and family on what you want to happen to your possessions. Like a will, a trust gives instructions about your possessions and describes the party who will be responsible for the distribution of those possessions. The key distinction between a trust and a will is that in addition to the above functions, the trust is carefully designed to avoid probate and also to possibly minimize the taxation that may be levied against your possessions. Considering how substantial probate costs and taxes can be, the financial benefits of a trust make it the preferred choice for those who want to protect what they worked so hard to earn.

The individual who establishes the trust is referred to as a settlor, grantor, trustor or creator. The creation of a trust requires assigning the duties of overseeing the trust to a specific party, who is known as the trustee.

Revocable And Irrevocable Trusts

A revocable trust is often referred to as a living trust. It is a trust that can help transfer your possessions without going through probate. You can keep control over your assets – even naming yourself as the trustee – which means that you can alter your plans at a later time if you choose to do so. If you do pass away, in most cases the revocable trust will change to an irrevocable trust. Keeping control of your assets may be necessary in some circumstances, however, it is important to remember that a revocable trust will not usually shield your assets from creditors.

Unlike a revocable trust, with an irrevocable trust you lose control of your assets after the trust is created. Even with the loss of control, an irrevocable trust is often desirable because you can protect your assets from creditors and estate taxes. Probate is also avoided using an irrevocable trust. An irrevocable trust can often protect assets from legal judgments as well.

With either a revocable or an irrevocable trust, you also gain the benefit of privacy. While probate is public record, a trust bypasses probate and therefore keeps your estate planning decisions private. You also have the ability to protect your assets from the creditors of your heirs, and provide stability for heirs who are not skilled at managing finances or are disabled.

Helping You Choose A Trust

The laws regarding trusts, wills and estate taxation vary by state, which is why it is important to speak with an estate planning attorney before you finalize your decision on a trust. Our law firm has worked with numerous estate planning clients in the creation of trusts. In fact it is the largest part of our practice and we have an in-depth understanding of what is required to create effective trusts throughout the State of Michigan.

We can help you in the creation of a variety of trust types including:

Marital Trusts
Bypass Trusts
Testamentary Trusts
Charitable Trusts
Irrevocable Life Insurance Trusts (ILIT)
Generation-Skipping Trusts

At Gold & Associates, P.C., we offer informed, knowledgeable estate planning services that will ensure your interests are protected. We offer a free initial consultation where you can discuss your circumstances and clarify your objectives. Please contact our firm today . We are standing by to help you understand your options and choose the estate planning tools that will help you protect your legacy and your loved ones.

Do I Need A Will?

Americans often take a hands-off approach to estate planning. Many people resist the idea of death and planning for when it happens. The results of this reluctance are clear: 51 percent of Americans aged 55 to 64 do not have a will. Look at younger brackets, like 45 to 54, and this percentage increases to 62 percent.

A will is simply good planning. It makes the distribution of your assets after death easier on your loved ones and it assures that your wishes are respected. Wills also contain provisions that assure the future of any dependents. No matter your marital, income, or parental status, you need a will and this is why.

The Reasons For Wills

Wills describe what happens to your income and assets after death. This collection of property is your “estate.” Since dead people cannot own property, it is distributed through a probate process.

Your will also makes other stipulations that affect other people. If you have minor children, the will names a guardian to assure their needs are met. Children who inherit property also require a conservator since minors are not allowed to own property under law. Anything they inherit is kept under the control of the conservator until the children reach the age of majority.

In general, wills address several issues including:

Specific gifts of property or money to individuals, charities, or trusts;
Naming a guardian or conservator for minor children;
Naming a personal representative to carry out the wishes in your will; and
Creating or adding trusts to aid in the distribution of assets.

If you do not have a will, the probate court determines these issues—not you. That is why if you have specific expectations after death, you need to have a will.

The Effects of Intestacy (Dying Without a Will)

People who die without a will have their property distributed by the court according to Michigan intestate statutes. The scheme presented in the laws depends on who survives you. For example, if your children are still around but your spouse predeceased you, your children would inherit everything. Likewise, if you are married with no children and no surviving parents, your spouse receives all your property.

Other pay-outs under the intestate statutes include:

Spouse and children from current and previous relationships survive you: Spouse receives first $150,000 as adjusted from your estate plus half the balance remaining after that amount. Children receive the rest.
Spouse, and only children from previous relationships survive you: Spouse receives first $100,000 as adjusted from your estate plus half the balance. Children receive the rest.
Spouse and parents survive you (no children): Spouse receives first $150,000 as adjusted from your estate plus three-quarters of the balance. Parents receive the rest.
Parents survive you but no spouse or children: Parents inherit it all.
Siblings survive you but no parents, spouse, or children: Siblings inherit it all.

In order to effect these rules, your estate is taken to probate court, just as with a will. However, instead of a quick process, intestate estates generally take more time and effort and are more costly. The court will need to take the time to appoint a personal representative, locate your survivors, take an inventory of your property, and then distribute as per the intestate statutes. Even if the intestate scheme lines up well with your overall wishes, this will be a time consuming process. While an estate probated with a will could take as little as five months to conclude, an estate without a will often requires more time to conclude. The more complex estates with disputes or non-liquid assets or that are also large enough for the federal estate tax would take even more time.

Also, if you have minor children, the court would decide on their guardian. If your spouse survives you, he or she is the obvious choice—omitting certain circumstances. The court could also appoint a conservator to manage your child’s inheritance until he or she reaches the age of majority. Many people prefer to have a choice in these individuals and would rather not leave that up to an intestate proceeding.

Spouses and Reciprocal Wills

Spouses normally draft wills at the same time. Called ‘reciprocal wills’, each document transfers property to the other spouse when one predeceases the other. Unlike the intestate statutes, the spouse receives all the property in order to have the means to care for minor children and other interests. There is normally no share granted to the children in that scenario.

Reciprocal wills also cover the contingency if spouses die simultaneously. While this is uncommon, there is always a chance of this in a car accident or other tragic event. It should be planned for just in case. In these instances, the reciprocal wills designate guardians and a personal representative so there is a consistent estate plan for all the property and the future of any minor children.

For that reason, even if assets are concentrated with one spouse, having reciprocal wills is the best strategy. It assures all bases are covered in the worst of circumstances.

To start your estate planning and secure a will, contact Gold & Associates P.C. at (734) 335-7100. Your consultation will be free and your peace of mind will be priceless.