Estate Planning In Michigan

Archive for the ‘Michigan Probate’ Category

Michigan Probate; Problems

Currently our office is probating the estate for a personal representative who is outside the state of Michigan.  The client has already expressed her dismay at the probate system before we even began the process.  Our office tries to make the administration and probate process as easy as possible on our clients.  But we cannot change the fact that it is time consuming, stressful, and puts both our firm and clients at the mercy of the Michigan courts.

There is a better way, and it is through using a living trust based estate plan to avoid the whole probate process.  The personal representative in this situation would have had a much easier, quicker and less stressful experiance if the deceased had opted for a trust based plan instead of a will based estate plan.  Remember, a will does not avoid the probate process, but instead is a ticket to the probate process.

Want to Avoid Probate? A Will is Not The Answer!

As my office prepares to probate another Michigan estate of a client’s relative (who had used another attorney to prepare the documents), I am again reminded of a huge myth that many people still believe.  They believe that a will avoids the probate process.

A WILL DOES NOT AVIOD PROBATE; A WILL IS YOUR TICKET TO THE PROBATE SYSTEM.

A properly funded revocable living trust avoids probate.  Operation of law due to the status of title avoids probate.  A will does not avoid probate.  It can make the probate process go smoother, but still, you have to go through the probate process.

Why is Michigan Probate Viewed as Something to be Avoided?

The word “probate” is derived from the Latin phrase “to prove.” The legal definition of probate means a court process by which a certain instrument is proved to be your Will. Typically when people use the word “probate” they are talking about the whole estate administration procedure. The transfer of assets of the deceased to his or her heirs. Technically, “probate” only refers to the process of administering assets through the court system.

The first reason Michigan Probate is viewed as an evil is the emotional connotations attached to death and the legal proceedings. People have difficulty dealing with the emotions in the process.

Anorther reason is that almost every family has a story about a disastrous result which occurred when someone passed and their assets had to be probated. Deep dark secrets can come to light in the public proceeding. Remember, Michigan probate is a public court proceeding.

There is also a financial reason why Michigan probate is viewed as something to be avoided. It can be expensive. Not only through legal fees, but also court costs and taxes if proper measures are not taken ahead of time.

Remember a will does not avoid the probate system and does not ensure that your estate will be administered smoothly. There can be public, nasty, will contests in probate court.

Taking all these reasons into account, it is no wonder that many clients choose to use a revocable living trust to avoid the probate system in Michigan.

How to Wrap Up a Trust in Michigan

Our firm assists clients as trustees in administering Michigan Trusts. Some tips for wraping up a trust include the following

1. Carefully and accurately read the terms of the trust agreement, as well as the powers and limitations of the trustee’s power.
2. File final tax returns.
3. Determine the shares for the beneficiaries and heirs after any expenses.
4. Prepare any conveyances or liquidate the assets.
5. Distribute assets and obtain receipts from the beneficiaries and releases and indemnifications when appropriate.
6. Prepare the final report and provide it to any interested persons.
7. Get court approval of the final report when it’s appropriate.

If you have any questions or want more information, contact me at (248)-865-4700.

Does a Will in Michigan Avoid Michigan Probate?

No. This is one of the largest misunderstandings clients have who are interested in estate planning in Michigan. Let me say it again so it is clear, a will does NOT avoid the Michigan probate system. I have discussed some of the ways to avoid probate, often the best way is through a properly drafted and funded revocable living trust, but a will does not. Think of your will as your ticket to the Michigan Probate system in all of it’s glory. Sure, the court systems follows your wishes with a properly admitted will, but it does not avoid the process.

Funding Your Living Trust

At our firm, estate planning is more than just preparing documents. Estate planning is about providing expertise and counseling from the beginning of our client engagement through the funding of the trust, if a trust based estate plan is used.

Price of Estate Planning in Michigan Part I

As a Michigan estate planning lawyer, occasionally I will meet with a potential client in need of estate planning who is very sensitive to price. Prior to meeting with them and finding out their goals and the complexity of what they want to accomplish, I have no idea what the price of a comprehensive estate plan will be. Estate planning for me and my firm is not a “one-sized fits all” proposition. Each family, individual and business is different so each estate plan is also different.

Everyone says they just want a simple will, or simple plan, but they don’t understand the hidden traps, or complexities that need to be overcome to meet their goals.

What are you paying for by preparing an estate plan, especially when you use a lawyer who’s main focus is estate planning? Is it the documents? No, because you can download or by forms off the internet for less then $50. Better yet, and this was new to me, use someone else’s trust document and just change the names.

What you are paying for is a) the expertise b) the counseling c) the documents d) peace of mind that your planning has been done right. That peace of mind that it’s been done right is elusive and difficult to show value of.

The best way to demonstrate it is to look at examples where it has not been done right. I will take a real world. Just recently there was an error in a family’s estate plan that cost a special needs child nearly $800,000. The way the documents read is that this special needs child had a trust that was only funded with $34, when most likely the trust was supposed to be funded with $800,000 of the deceased’s estate. That is an expensive mistake for a family. That one example of the price you can put on peace of mind, not only for you but also your loved ones. That is who this planning is for. I feel comfortable saying that to set up an estate plan ahead of time would have been much cheaper then the $800,000 cost to this decedent.

What is a General Durable Power of Attorney in Michigan?

A general durable power of attorney is a key estate planning document in Michigan. The general durable power of attorney is a document that is used to plan for your financial, property, banking and legal affairs. This document in Michigan, allows your agent to act on your behalf and sign your name to financial and legal documents.

Planning ahead by drafting a general durable power of attorney along with your other estate planning documents will prevent the time consuming, expensive and possibly publicly embarrassing process of having a court appointed guardian or conservator handle your affairs if you become incapacitated. This process in Michigan can also be called, “living probate.”

The general durable power of attorney is a key estate planning document in Michigan and you should have your estate planning attorney draft one for you and also your loved ones, if you have not yet.

Trust vs. Will

Common questions my clients have are why are revocable living trust so popular, why do most people choose a revocable livng trust instead of a will for their estate planning needs?

There are a few reasons why the living trust is a powerful and flexible alternative to just a will based estate plan.

First, in Michigan, a living trust avoids the Michigan probate system. A will is probated through the probate court while a trust will avoid probate all together. The trust distributes your assets directly to your chosen beneficiaries.

Next, a will can be inconvenient for your heirs to administer. With a will, your heirs and loved ones, burned with your passing must hire a lawyer to probate your estate since a will does not avoid probate.

Another reason is the administrative cost of a will. A probate in Michigan can be an expensive process eating up three to five percent of any assets. These costs goto attorneys, judges, and other administrative fees.

Additionally, the process can be time consuming. Michigan probate can take six months to years to administer your assets.

Another advantage of a living trust is that your distribution will be confidential. Michigan probate is a public affair, while the administration of a trust is private and confidential.

If you have any questions, contact my office at (248) 865-4700

Estate Planning Myths

Estate Planning is a very complicated area of the law in Michigan where myths abound and they can be harmful to you and your loved ones. Below is a list of common myths about estate planning.

If I have a good Will in Michigan, Michigan probate will not be required, and my assets can be transferred immediately to the beneficiaries of the Will. In fact, having a Will mandates a probate in most circumstances and the assets may not be transferred to the heirs for months or years.

Probate in Michigan is a court proceeding to transfer title from the decedent’s name to the living beneficiaries. Probate occurs in the state of your legal residence as well as any state where you own real property. The length of time to complete a Probate varies from state to state, but can take six to eighteen months, on average. Probate is frustrating to the heirs and is public record.

I don’t need a will if I have a small estate. Many people also believe that if there is no Will, all the decedent’s assets will be distributed to the surviving spouse.

If you don’t create a valid Will, the state of Michigan has a statute that will dictate where your assets go and who will administer your estate. Michigan law may not distribute your assets to the people you want to have them.

A Will covers all my assets. in Michigan, wills do not cover assets held as joint tenants with right of survivorship, retirement plans, annuities, life insurance, financial account with payable on death or transfer on death designations.

I can do my own estate plan. Estate planning is more than just creating documents. It is understanding the big picture and how the legal documents will work in concert with the assets and Michigan laws at the time they are needed.

I don’t need an estate plan because I hold all my assets jointly with another. In fact, this is one of the worst ways to plan you estate. The asset may be exposed to estate and gift taxes; it does not avoid probate, just delays it until the last owner’s death; it may cause estate, gift and capital gains taxes; it is subject to the creditors of all owners; and it will result in the transfer of the property to the joint owner when one owner dies, even if that was not intended taxes.

You can’t afford to rely on myths when it comes to your estate. Find out the facts, plan carefully and execute a plan to provide you with peace of mind and security for your loved ones.