Why a Basic Estate Plan is Necessary — At Any Age
By: Matthew J. Abraham, Esq., Michigan Estate Planning Attorney
“At what point do I need to create an estate plan?”
“When should I at least setup the basic documents that will help my family make important decisions in the face of an unexpected life-changing event?”
“What estate planning documents do I really need to create?”
“Where do I even start?”
We as individuals and families face so many estate-planning questions that it can be prohibitive to taking any action at all. Very often these important questions simply go unanswered or even ignored altogether with no estate-planning action being taken by individuals and families to protect themselves and their loved ones. And yet, taking action is exactly what needs to be done before it becomes too late. Having experienced estate-planning counsel and advice from an attorney specializing in your state’s probate law is important to begin addressing these issues and determining the best course of action for you and your family.
When to create an estate plan is a common question that many individuals and families need to answer. There are many reasons to create a basic estate plan early on. Estate plans should be created in conjunction with an attorney, tax advisor and possibly a financial planner, so that the right estate plan is created based upon you and your family’s specific needs and wishes. A solid estate plan dictates things like how certain assets should be held or owned and which assets should be given to whom and even when and how they should be given. Assets can include everything from bank accounts to real estate to your favorite piece of jewelry.
Without a specific estate plan in place, an individual’s resident state law will determine how, when, and to whom your assets will be disbursed. This process must typically occur only after numerous required filings with your local probate court and, as a result, has the likely potential to become an incredibly inefficient (and potentially expensive) process of passing assets and possessions to family members following strict court-ordered rules and at times mandated by the court.
A complete estate plan should include more than just what happens to assets or wealth after death. A complete estate plan must also handle financial and medical decisions during your lifetime. It is important to designate someone you trust with the authority to access your financial or medical records and with the ability to make medical decisions on your behalf in the event that you are unable to make such decisions. Most of us would rather make this decision while you can instead of leaving such a decision to be made by the local probate court. Under such circumstances, it is likely that the appointed agent would not have been your first choice.
Choosing exactly what your estate plan includes must also be answered and has significant lasting consequences. Below are the essential components for a basic estate plan that all adults should have in place:
1. Will. A will expressly states your wishes for how, to whom, and sometimes when you want your assets to pass. If you have minor children, this is also where you will name guardians for them. If a will is the only document you create, the local probate court may still need to be involved, but on a limited or informal basis.
2. Power of Attorney (POA) for Property & Financial Matters. A POA designates someone to make decisions regarding your financial & property affairs if you are unable to do so yourself. The designee can be authorized to handle your banking and sign important documents, such as checks, contracts, income tax returns, automobile titles, and other similar documents. Typically, this power is either granted immediately upon execution or later in the event you are subsequently deemed incapacitated by one or more doctors. You have the ability to choose which at the time you sign it.
3. Healthcare Power of Attorney. A POA for healthcare designates a person of your choosing as a patient advocate with the power to make medical decisions on your behalf if you are deemed unable to do so for yourself. It should also grant the person access to HIPAA-protected medical records. This POA can also integrate a Living Will or Medical Directive. This states your wishes regarding life support. Without this document, hospitals are required to administer life support to prolong life even if you are in a comatose or permanently vegetative state.
4. Miscellaneous Beneficiary Designations. If you own a life insurance policy, retirement accounts like IRAs or 401Ks, it is important to make sure you name your beneficiaries and their allocation of share percentage properly. These types of assets pass directly to your beneficiary designation(s) and are not included in a probate estate determined by your will.
Depending upon the types and amounts of the assets you have, a more sophisticated estate planning portfolio may become necessary. You may need to use a trust to plan for certain situations. Reasons creating a need for a trust may include:
· Minors. Conveying assets to your trust for the benefit of your minor children may be best. You have the ability to designate a trustee and specify what, when, and why your child(ren) receive the assets, such as at a certain age or to pay for college or medical needs.
· Special Needs Trust. Specifically provide for the financial support of a special needs child throughout his or her lifetime.
· Second Marriage. Provide income or a life estate in the primary home to your surviving spouse while protecting the assets for the benefit of children from a prior marriage.
“If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”
Abraham | Law: Experienced and Exceptional Estate Planning Representation
You’ve invested a lifetime in building your business. Estate planning is essential to preserve your hard earned business, assets, and your legacy. Having an experienced Michigan Estate Planning Attorney to protect your interests is important. Matthew Abraham of Abraham | Law will assist you through the intricate process of thoroughly preparing a complete estate plan tailored to meet your specific needs and wishes. With the myriad of estate planning tools available to you, you need an estate planning law firm that will guide you in the best direction for your family.
For assistance with all of your estate planning needs, call Abraham | Law today at (810) 750-0440 to schedule your free consultation.