Estate Planning & Trusts
Frequently Asked Questions
A proper estate plans takes into account all of an individual or families assets including, but not limited to, bank accounts, real property, personal property, life insurance, retirement, educational accounts as well as all debts and liabilities. A person’s estate plan will utilize documents such as wills, letters of instruction, revocable trusts, irrevocable trusts, health care derivatives, funeral instructions etc., to ensure that your final wishes are carried out while avoiding many of the pitfalls that a protracted probate process can entail.
Just like using the internet to diagnosis an illness or health condition, the use of preprinted trust and estate forms and documents must be utilized with great caution. A licensed trust and estate attorney is trained and experienced in the area of creating a custom estate plan that can minimize or eliminate many of the headaches and troubles that can arise from an improperly or poorly crafted plan. The attorneys at Kelly & Kelly P.C. have over 30 years of experience in crafting an estate plan that will minimize tax consequences and maximize the ease at which an individual’s final wishes are carried out. You would not trust your health to a diagnosis found on websites like WebMD alone, so why would you risk assuming your family’s financial future is secure based on forms not specifically drafted with your wishes in mind?
In order for a will to be valid it must be signed in the presence of witnesses and certain formalities must be followed. The attorneys at Kelly & Kelly have extensive experience in drafting and executing wills to ensure that your wishes are carried out.
In Michigan, you can probate a document or writing that was not executed in exact compliance with Michigan law but only if the proponent of the will establishes “by clear and convincing evidence” that the deceased intended it to be a will. A formal court proceeding is necessary to obtain a judge’s order that the document or writing is a valid will. Intent that a document constitutes your fathers will can be established by other evidence (lawyers call this extrinsic evidence) that may not be contained on the document itself.
Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. Even a simple will has advantages over proceeding without a will. You should always review your goals with a trusted advisor like the attorneys at Kelly & Kelly P.C. to ensure the best strategy for you.
The answer here is limitless. Wills can be utilized not only to distribute assets as you desire, but can also be used to establish guardianships for minor children, establish trusts for future generations, provide for distributions for charities, or even provide for specific funeral and burial instructions in conformity with personal or religious traditions.
Your non-jointly held probatable assets will not simply pass to any individual without a probate estate being opened in court and a judge ordering your property transferred in compliance with the law. If you die intestate (without a will), Michigan law, or the law of the state you are domiciled in at the time of your death, will determine who receives your property by default. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A proper estate plan allows you to alter the state’s default plan to suit your personal preferences. It also permits you to exercise control over a myriad of personal decisions that broad and general state default provisions cannot address, and further can assist you in avoiding or minimizing the often expensive and tedious process that probate court can entail.
Anytime there is a major change in either a person’s financial situation (such as buying a new home or vacation home or starting a new retirement plan) or family situation (such as the birth of a child or grandchild) is a great time to revisit your current estate plan. A will alone may not be sufficient to accomplish the goals you have for family. On average, a person should update their estate plan every five (5) to seven (7) years.
No, a will can be supplemented by what is called a codicil. This acts as an addendum to the will, supplying additional instructions to be read in conjunction with your existing will. Great care must be given when drafting a codicil. Any terms of the codicil that contradict the existing will, will be the controlling terms followed by the court and your personal representative.
It is important to share with your family your wishes, this way they know what you would have wanted when you are no longer around to supply instructions. Even if you do not share every detail of your estate plan, the location, or name of the law firm who assisted you in drafting your plan should be shared with close relatives so that they may begin carrying out our wishes. If you have a copy of a loved ones will or other estate plan documents, you should contact the attorneys at Kelly & Kelly immediately so that we may guide you through the next steps.
Most likely, yes. Assets that are not already jointly held or held in name of a trust will likely need to go through a probate process in order to be transferred to any heirs or beneficiaries. Non-probate assets, such as life insurance or payable on death accounts (POD), will transfer by operation of law to the designated beneficiaries. All other assets will need to be probated.
Many people prefer to be private about their affairs. Often the location of important documents like a will are hidden. There is a balance that must be struck between safeguarding the will to ensure that a family member does not tamper with it or protecting them from peeking at its contents and hiding it so well that no one can find it. If you can recall the name of the family attorney who may have prepared such documents for a loved one, you should contact them immediately. If no will can be found, the case may proceed intestate, meaning the state rules for distribution will control.
When an original will cannot be found upon the death of a loved one, and the loved one that passed was in possession of the original, there exists a rebuttable presumption under the law that it was destroyed with the intent to revoke it. This presumption can be overcome with appropriate evidence of the loved one’s intent was not to revoke his or her will, and that the copy should be allowed to be probated to carry forth that persons wish.
There is more than one way to revoke a prior will. Simply destroying the original will can suffice to revoke it, however, if copies of the will are still out in the world and no new will is drafted, a relative or beneficiary may try and probate that copy of the will by claiming the original was merely lost and not destroyed. Aside from destroying the original and each copy, a newly drafted will has the effect of revoking all prior wills, if drafted correctly and containing the proper language.
Your estate plan does not govern the disposition of your property that is controlled by beneficiary designations or by proper titling and so passes outside your probate estate. These non-probate assets include property titled in joint names with rights of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits. These assets pass automatically at death to another person, and a will is not applicable to them unless they are payable to an estate by the terms of the beneficiary designations for them. A probate estate consists only of the assets subject to a will, or to a state’s intestacy laws if no will exist or is found, and over which the probate court (in some jurisdictions referred to as surrogate’s or orphan’s court) may have authority. This is why reviewing beneficiary designations, in addition to preparing a will, is a critical part of the estate planning process. It is important to note that whether property is part of your probate estate has nothing to do with whether property is part of your taxable estate for estate tax purposes.
This question may have multiple answers, depending on how property is titled. Jointly held property with right of survivorship will pass to the other joint owner by operation of law upon a person’s death. Property that is held as tenants in common will not pass automatically, and the portion of the property titled in the name of a deceased individual, absent a proper estate plan, will have to go through the probate process before it can pass to another individual.
An enhanced life estate, also known as a Ladybird Deed (sometimes written Lady Bird Deed) in one option. A Ladybird Deed allows you to keep a life estate in the property and grants a remainder to the person or persons of your choosing. Michigan probate courts have held that once the grantor is deceased, the property vests as a transfer on death in the individual or individuals named as your remainderman or remaindermen. Your estate has no interest in the property and the property is out of the reach of creditors of the estate. The property would be considered a non-probate asset.
One option is to establish a durable power of attorney for health care, also known as a health care proxy or a patient advocate designation. This is a written document in which you specify what type of medical care you want in the future, or who you want to make decisions for you, should you lose the ability to make decisions for yourself.
A fact of life is that tragedy does not come when expected. A health care proxy or advanced directive allows you to designate a trusted individual to make the decisions you would want made if you were able to make them for yourself. It is always better to be prepared, and a health care proxy can lift the burden from family and friends when deciding who is best equipped to make vital calls in regard to your health and well-being.
In Michigan, the law defines an incapacitated individual as “an individual who is impaired by reason of mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, or other cause, not including minority, to the extent of lacking sufficient understanding or capacity to make or communicate informed decisions.”
If a person meets the qualifications of incapacity, any interested party can apply for a guardianship on their behalf. This is done through the probate court and will help to grant a trusted friend of family member the authority to manage the person’s finances and major health and well-being decisions.
One option may be to seek to be appointed as a conservator for your father. The standard for appointment of a conservator to manage the individual’s assets is whether the individual “is unable to manage property and business affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance,” and has property that would otherwise be wasted or dissipated or that is needed for the individual’s support, care, and welfare. As a conservator, your job is to legally protect your father and his assets.
If you believe a loved one is being taken advantage of by someone who has been designated as a guardian or conservator you can petition the probate court in guardianship to have a new representative appointed.
A properly drafted health care directive will outline exactly what powers and limitations an individual acting on your behalf can have. It is important to plan for as many outcomes and situations as possible and make your designation clear as to what someone has the power to do, and what they have the power not to do.
No. A durable power of attorney, though it survives the incapacitation of an individual, terminates upon the death of an individual. Proper estate planning is necessary to ensure that your wishes are carried out after your death.
Any individual of sound mind who is at least 18 years old, and who is capable of understanding that you are giving them power to make certain decisions for you should you become unable to make them. It should be someone you trust and who will act in your best interest when you are unable to do so for yourself.
Yes, but you must express in a clear and convincing manner the patient advocate is authorized to make such decisions, and you must acknowledge these decisions could or would allow your death.
There are many options including but not limited to withholding treatment, withholding food or water through the use of tubes, or withholding any extraordinary efforts to revive you. You could also express a desire not to be placed in a nursing home and a desire to die at home. A properly drafted document should spell out all of your desired wishes.
Your health care derivative can name alternate individuals who can step in the event your designated patient advocate is unable or unwilling to do so. It is always a good idea to designate alternative individuals for just this reason.
Yes, a power of attorney can be revoked either through creation and destruction of a new power of attorney, or through simple destruction and revocation of the original. You can always change, alter, or destroy you power of attorney or designation of patient advocate, assuming you are of sound mind to do so.
Any spoken wish to have a specific life-extending treatment provided must be honored by a patient advocate, even if the wish contradicts your written instructions. Remember, regardless of your physical or mental condition, you can revoke or cancel a durable power of attorney by indicating in any way the document does not reflect your current wishes.
Yes. Your patient advocate needs to execute an acceptance of your designation. They can do so when you designate them or any time after. A patient advocate can also revoke their acceptance at any time, in which case your alternate would have the right to accept as the new advocate.
Any interested person who believes that your advocate is not acting in your best interest and in conformity with your wishes can petition the probate court and try and intervene. The court will hold a hearing to determine if the actions taken are in your best interest and has the power to stop the advocate from making decision that violate your best interest.
A simple will gives outright gifts and has no complex provisions creating future interests or establishing trusts. Although a will is an integral part of almost every estate plan, it alone may not adequately meet your needs. Trusts are usually used to save taxes, to avoid the probate of the assets after death, to provide assistance in managing assets while delaying outright distribution, to provide for multiple or successive beneficiaries, or to achieve some combination of all of these. Depending on your needs and wishes, a trust/will combination may be the best course of action.
Trusts are not only useful for probate and estate planning purposes but are extremely useful in tax avoidance and asset protection. One reason for using an irrevocable trust may be to protect certain assets from possible creditors. Due to the fact that the grantor loses all interest in the property transferred, that property cannot be reached by creditors of the grantor.
Yes, a revocable trust becomes irrevocable upon the death of the grantor or trust maker.
Asset protection can be provided to the beneficiaries of a revocable trust. The assets must remain in the trust to provide ongoing asset protection to a beneficiary. In other words, once assets transfer to a beneficiary, those assets are no longer protected. Trusts for the lifetime of the beneficiaries provide prolonged asset protection for the trust assets.
The trustee of the trust is responsible for the maintenance of the assets. The trustee must use reasonable efforts to prevent the assets from decreasing or “wasting”. This does not mean the trustee must ensure the house titled in the name of the trust increases in value or that the stocks continue to grow if those things are outside his or her reasonable control.
Yes. Very often this is how trusts are drafted, with a successor trustee named in the event the trustee is incapable of administering the duties of the trust.
A trustee can be anyone, including a corporate entity. Many law firms or banks and financial organizations operate as trustees for clients who wish to designate them as trustees of their trust. Generally, corporate trustees such as these will charge a fee for such service. Any trusted individual can be named as a trustee and they must follow the directions given within the trust, with limited exceptions.
There are limited instances where a trustee can ignore the terms of a trust and distribute to a beneficiary. Where failing to distribute would frustrated the ultimate purpose of the trust, the trustee may be authorized to distribute to a beneficiary to ensure that the ultimate goal the creator was hoping to achieve is not frustrated by an unforeseen change in circumstance.
Yes. A trust can provide a beneficiary with the right to dictate when distributions should be made. However, the more power the beneficiary has with respect to compelling trust distributions, the less asset protection the trust provides. A creditor of a beneficiary can sometimes exercise any rights a beneficiary may have. Thus, if a beneficiary has the right to demand a distribution fr