Do I Need a Will?
A Will serves as a written disposition of your assets after you finish this life. If you have one or more minor children, you can also nominate a Guardian or Co-Guardians to raise your child(ren), and a Conservator or Co-Conservators to manage their finances if you pass on before they become adults.
Do I need more than a Will?
Your Will may provide that all property you own at death is to be distributed to your surviving spouse and then equally to your children. That sounds clear enough. But how is that result going to be achieved?
Let’s assume that you have no estate tax liability, that you ultimately desire your children to share equally in your estate, and that you have a Will with instructions that your children are to do just that. You must also consider the present “ownership status” of the assets which you own. This includes your home and any other real property. Is it in joint ownership with anyone? How about your bank or credit union accounts and other investments? Who are the beneficiaries of your life insurance policies? If any of those assets are jointly, but not evenly held, or if the children are not all listed as beneficiaries on the life insurance policies, there is a good chance that your estate may not be evenly distributed between them.
In this common situation the Will may accomplish very little. The intention is ultimately to equalize the estate between all of the children, but the way in which title to the assets is held creates an unequal distribution of the estate. Plus, if one child pays the funeral expenses and final income taxes, how are they to force the other children to contribute? This situation sometimes causes a dispute among siblings.
What is the Solution?
You can have your assets owned by, and all beneficiaries listed in, your Living Trust. This way, your home, investments, and life insurance would all be held by your living trust upon your death. The living trust will avoid probate, just as joint ownership might, or naming a beneficiary would. But more importantly your objective of equal distribution will be met. In the Trust document you appoint a successor trustee to pay your final expenses and any income tax owed before distributions are made to your children. Remember that a living trust must be set up and funded prior to your death.
If you have questions on the effectiveness of your will, or to see how a living trust may benefit you, please contact us to discuss your situation.
What is a Living Trust?
Living Trusts have become one of the most popular estate planning tools. There are many types of Trusts. A “Trust” is a separate entity which is set up, and its existence is evidenced by a written trust document. A “Living Trust” is so named because it is created while you are alive; as opposed to a “Testamentary” or “Continuing” Trust which arises and continues after death. A “Revocable” Living Trust is one which you can amend or revoke in part or in whole throughout your life.
Generally speaking an after-death trust will arise by virtue of specific language in a Will. The assets to fund this type of trust must usually go through the probate process. Therefore, in some cases this type of trust may need to be court-supervised.
A Living Trust, on the other hand, is a trust made while the person(s) establishing the trust is/are still alive. Living Trusts thus provide a means to avoid probate court supervision. A Trust is recognized as a separate legal entity. Thus, distributions can be made by a Trustee without any involvement from the courts. Unless requested, the courts maintain no control over the Trust’s assets, and the assets are not tied up in a lengthy and often costly probate process. The Trustee simply distributes assets to the named beneficiaries as directed in the trust document. But that can happen only if those assets have actually been placed into the Trust. Carefully drafted Living Trusts protect your assets, with no need to worry about losing control of them.
Everyone’s situation is different. Feel free to contact us if you need further information.
Do I need a Power of Attorney?
Guardians and conservators can be appointed through the probate court to manage the affairs of minors or disabled adults. That process is statutory; it requires court appointment and supervision; and thus often results in delay, expense, and a public procedure that can be embarrassing both for the protected person and for his or her family.
The durable power of attorney offers an alternative to judicial Guardianship and Conservatorship. A person can anticipate the possibility of incompetence or other disability and provide an efficient, private, out-of-court mechanism for dealing with his or her affairs. Advance planning, however, is crucial. Once disability has occurred, it is too late for the person to sign a durable power. Most people probably do not anticipate disability, nor do they realize that they can make arrangements to have their affairs handled during disability.
The agent’s authority can either take effect immediately after the written durable power is signed, or it can take effect only upon the disability of the principal. If the principal is aged or infirm, immediate authority is usually advantageous. However, if the principal is signing a durable power only to plan for a potential disability, he or she may be reluctant to authorize another to act presently, wanting to retain full control over his or her affairs. If the power is effective immediately, the agent could act and bind the principal without the principal’s knowledge or consent. That potential danger exists no matter how apparently trustworthy the agent may be. Therefore, you may prefer to sign a durable power that is effective only on disability.
Although there are risks associated with a power that is effective immediately, there are also advantages. A primary advantage is that an immediately effective durable power eliminates the need to produce evidence that disability has occurred in order for the agent to convince third parties that he or she may act. This step can take time and may be inconvenient as well. Because of this triggering mechanism, the power of attorney with delayed effectiveness is known as a “springing power”.
In Michigan a “durable” power of attorney is an instrument by which a principal designates another as the principal’s attorney-in-fact in writing and the writing contains words such as “this power of attorney is not affected by the principal’s subsequent disability or incapacity”, or similar words showing the principal’s intent that the authority conferred is good despite the principal’s subsequent disability or incapacity and, unless the power states a termination time, notwithstanding the lapse of time since the execution of the instrument. On the other hand, it is also possible to prepare a power of attorney that is limited in time, even to the extent of limiting the agent’s authority to conduct a single act on a specific day.
Please feel free to contact us if you need further information on how a power of attorney may best work for you.
Do I Need a Living Will?
Should you have a living will specifying the type of care you would or would not want if you couldn’t speak for yourself?
A living will is an advance directive, which is as much for the living as for the dying. Without specific instructions, family members may have to decide whether you would want to be kept alive artificially, what level of disability you’d be willing to live with, and how to let you die if you had no hope of recovery.
If family members aren’t available, doctors are generally empowered to discontinue medical care which they deem futile. But when family members are present, they often want to keep terminal patients connected to life support, hoping for a miracle.
Studies indicate that most people would not want life-sustaining care if they were in an irreversible coma. However, some patients wish to be kept alive at all costs, and some religious views mandate this. Often, people think that advance directives are just about ending life. But you can also use them to request any foreseeable treatment intervention.
Advance directives are available in different formats. A living will that sets out what kind of life-support care you would want in various situations, such as “if I become terminally ill or injured” or “if I am in a permanently unconscious or in a vegetative state.” However, they can’t anticipate every situation, so a durable power of attorney for health care or a “patient advocate designation” allows you to appoint someone to make health-care decisions for you.
The Patient Self-Determination Act of 1991 mandates that all Medicare or Medicaid funded health-care facilities ask patients if they have advance directives and make them available if the patient does not. But that question often comes up during the admission process when serious analysis and discussion is difficult.
Advance directives do not need to be filed. In Michigan they go into effect immediately as soon as they are signed and witnessed. However, it is important to give your patient advocates and doctors copies or at least instructions on how to access them. Electronic registries that will store advance directives online will soon be available for those who wish to utilize them.
The best time to begin considering advance directives is long before a health-care crisis looms. Including a trusted physician in your discussions may be useful for help in answering medical questions.
Feel free to contact us if you need further information on “living wills/health care directives/ durable powers of attorney for health care/patient advocate designations”.