Estate planning is essential for anyone with assets, regardless of their age or their assets. An estate plan allows you to have peace of mind by putting your affairs in order in the event of your death, or if you suffer unforeseen injuries or illnesses that lead to mental or physical incapacitation.
An estate plan can be simple or complex for those with considerable wealth. Regardless of the value of your estate, it’s important to work with an experienced estate planning attorney to ensure you have the necessary documents to protect your legacy and your family’s future.
Understand the two basic types of estate plans
Depending upon your family’s financial situation, here are the primary strategies and the documents you need.
Will-based Estate Planning Documents
If you do not require a revocable living trust, a foundational plan includes these five items:
- Last will and testament
- Living will
- Financial power of attorney
- Advance health care directive
- Funeral directive
Trust-based Documents
If you need a more sophisticated and private estate plan, it’s crucial to have these eight documents:
- Revocable living trust
- Pour-over will
- Financial power of attorney
- Living will
- Advance health care directive
- Funeral directive
- Assignment of personal property to trust
- Deed of real properties to trust
Defining these crucial estate planning documents
While your attorney will fully inform you about these elements, here is a brief description of each:
- Revocable living trust: This document contains detailed instructions to cover three crucial periods of your life. These include how your assets will be managed while you are alive and well, what happens if you become too ill or injured to manage your affairs and what happens after you die.
- Last will and testament: For will-based planning, this is a detailed list of how your property should be distributed after your death. It also designates a guardian for minor children.
- Pour-over will: For trust-based planning, this document contains minimal instructions and is meant to serve only as a safety net to include assets that were not transferred to your trust before death.
- Living will: This vital document provides instructions for your doctor and other caregivers on whether you want life-saving measures taken if you have a terminal disease or suffer life-threatening injuries.
- Advance health care directive: Also known as the medical power of attorney, this document designates the person you want to make medical decisions on your behalf should you be unable to do so yourself.
- Financial power of attorney: Just as an advance health care directive allows someone to make medical decisions for you, this document allows the person of your choosing to make financial decisions.
- Funeral directive: This document allows you to designate a person as your funeral representative. This person has the power to choose funeral arrangements and the handling, disposition or disinterment of your body. Simply including information about your funeral wishes is generally not sufficient under Michigan law.
- Assignment of personal property: This document allows you to assign in a blanket fashion all of your personal property to your trust.
- Deed: This allows you to deed all of your real property to your trust. The type of deed used depends on the situation: quit claim, warranty and/or lady bird. You also have a transfer affidavit that is prepared with each deed and filed with the municipality where the property is located.
Protect your family and your legacy
Too many people fail to take steps to protect their property and their family’s future by creating an estate plan. Others believe the process simply means drafting a will to transfer money or property. However, creating a successful plan allows you to control your assets while you are still healthy, as well as after you die, and it keeps your family from experiencing unnecessary costs and anxiety.
