Estate Planning Attorney
Our philosophy on all matters is to start at the end. What is the definition of success for your life? Success can be as simple or complex as you like, but defining your successful life is one of the most important decisions you can make, and we encourage you to consider this deeply.
After you have made this determination, our job as an estate planning law firm is to help ensure you are on the right track and prepare you for obstacles you may encounter along the way. Generally, an estate is property or assets owned by a person or a trust, and estate planning is strategizing and executing a plan for your personal and financial affairs.
Three of the most significant obstacles to your success are: (1) becoming unable to handle your affairs due to an accident, illness, or unexpected event, (2) lawsuits and creditor claims, and (3) passing away. Several tools are available for addressing these issues, including:
- Family Limited Liability Company (LLC)
- Durable Power of Attorney
- Advance Health Care Directive
- Patient Advocate Designation (aka Health Care Power of Attorney)
- Living Will
- HIPAA Authorization
- Do-Not-Resuscitate (DNR) Order
- Nonopioid Directive
- Final Disposition Instructions
A Will, or Last Will and Testament, is a document expressing how someone wishes for their property to be distributed after their death. If you are a parent with children under 18, a Will is typically where you would nominate a Guardian (person responsible for your minor child’s daily care and well-being) and a Conservator (person responsible for managing your minor child’s finances and property).
A Will is probably the most common estate planning document. However, many people think they avoid probate court with a Will – which is not true. In fact, probate is a procedure where a deceased person’s (aka decedent) Will is admitted to the court for estate administration purposes. Additionally, it is important to remember that a Will only becomes effective at death – it does not affect your assets or affairs while you are alive.
Michigan has a statutory Will located at MCL 700.2519. This fill-in-the-blank form creates a valid Will if you print it word for word and complete it correctly. However, the statutory Will has limitations. The statutory Will only allows 2 cash gifts, and it is designed to leave everything to your surviving spouse. If you did not have a surviving spouse, everything would go evenly to your “descendants,” meaning children you conceived or adopted (not stepchildren), grandchildren, and their descendants.
Many prefer either a more specific Will or a “Pourover Will.” Unlike a statutory Will, a Pourover Will is designed to leave (pour) everything to your Trust.
A Trust is another common estate planning tool for holding property and managing your assets. In a nutshell, a Trust is an agreement where someone (known as the Settlor or Grantor) transfers legal title to property to a Trustee, who must protect or use property for the benefit of a Beneficiary according to the terms of the Trust. In Michigan, Trusts are primarily governed by the Michigan Trust Code.
Trusts are flexible tools that you can use to accomplish many different goals. Some of the most common goals include:
- Control Over Your Assets: A Trust can be used to manage your assets if you become unable to handle your affairs due to an accident, illness, or unexpected event or if you pass away. Additionally, a Trust can provide structured distributions over time or upon specific goals or events. A Trust accomplishes this by holding title to your assets, such as real estate, bank accounts, business interests, personal property, and more, then a Trustee that you appoint manages the assets according to the terms of the Trust that you created.
- Privacy. Unlike a Will, a Trust does not need to be probated to be effective. A Will must be filed with the probate court and declared valid before somebody can transfer assets. Anyone can access and obtain copies of probate court documents, including a Will. Generally, a Trust is not filed in probate court and is not a public document, which provides greater privacy for you, your family, and your assets.
- Minimize Probate. Assets properly transferred to a Trust avoid probate. These assets are instead managed and distributed according to the terms of the Trust and without court approval. Generally, avoiding probate court reduces disputes, provides more privacy, and saves you and your family time and money.
Although there are many specific Trusts and classifications, the two broad categories are (1) Revocable Trusts and (2) Irrevocable Trusts.
- Revocable Inter Vivos Trust / Revocable Living Trust: When someone simply references a “Trust,” they most commonly refer to a Revocable Living Trust. A “Revocable” Trust means you can change or cancel the Trust at any time before your death or incapacity. Unlike a Will, which requires someone to pass away, an “Inter Vivos” or “Living” Trust means it becomes effective while you are alive. Typically, the person that creates the Trust (the Settlor) also serves as the Trustee until they become incapacitated or pass away. The Revocable Living Trust provides you with the greatest flexibility and control over your assets.
- Irrevocable Trust: As the name suggests, an Irrevocable Trust is irrevocable, meaning you typically cannot change it after you create it. Irrevocable Trusts are generally used for advanced asset protection, special needs, and tax planning. Irrevocable Trusts are much less flexible than Revocable Trusts because the Settlor irrevocably transfers title to the property. Thus, you must be ready and willing to part with these assets.
Family Limited Liability Company (LLC)
You likely have heard about an LLC for starting your business, but an LLC can also be valuable for estate planning purposes. LLCs are very flexible entities that provide liability protection to its members. The Family LLC is a frequently overlooked estate planning tool that can own real estate, investments, intellectual property, and nearly any other property type. Additionally, almost anyone can be an LLC member, including your family or a Trust. Like a Revocable Living Trust, you can easily amend a Family LLC Operating Agreement as desired. A Michigan LLC can potentially last forever, providing value to you and multiple generations.
Durable Power of Attorney
A Durable Power of Attorney is a critical document for managing your affairs and any assets that have not been transferred to a Trust. “Durable” means that the Power of Attorney can still be effective even after you become disabled or incapacitated. See MCL 700.5501. A Durable Power of Attorney is most commonly used to manage your assets if you become incapacitated due to an accident, illness, disability, or unexpected event (known as a Springing Durable Power of Attorney). However, you can have a Durable Power of Attorney that is immediately effective while you are available and competent. Depending on your goals and preferences, your Durable Power of Attorney can grant your agent (aka Attorney-In-Fact) either broad or limited powers.
Advance Health Care Directive
One of your most valuable rights is the right to make your own decisions. You have the right to refuse or consent to medical treatment based on your values. Although difficult for most people to think about, there is a real possibility that you could become unable to make medical decisions for yourself. This nightmare scenario can happen to anyone at any age. An Advance Directive is a document or set of documents where you can specify what medical treatment you want and who can make medical decisions for you. An Advance Directive can include a:
- Patient Advocate Designation
- Living Will
- Declaration of Anatomical Gift
In many cases, these documents will avoid the need to start a guardianship proceeding in probate court regarding your medical care.
Patient Advocate Designation (aka Health Care Power of Attorney / Durable Power of Attorney for Health Care)
In Michigan, an Advanced Health Care Directive includes a Patient Advocate Designation, which applies if you are a patient in a hospital or medical facility and unable to participate in medical or mental health treatment decisions. See MCL 700.5506. A Patient Advocate is someone you give powers concerning your care, custody, and medical or mental health treatment decisions. You can also provide the Patient Advocate the authority to make an anatomical gift of all or part of your body.
A Living Will is a written document expressing your desires regarding medical treatment. A Living Will should not be confused with a traditional Will (Last Will and Testament). A Living Will applies while you are alive but unable to make your own medical decisions. In contrast, a traditional Will expresses your desires on how your assets should be distributed after you pass away. Michigan is one of the few states that does not expressly provide for a Living Will by statute.
Nonetheless, the Michigan Supreme Court has strongly encouraged everyone to create a written directive providing concrete evidence of a patient’s decisions. In re Martin, 450 Mich 204, 228 (1995). A Living Will can be included within your Patient Advocate Designation, which has the added benefit of providing written instructions for the Patient Advocate you are comfortable with making these tough decisions.
If you choose to create a Patient Advocate Designation, it is wise to consider a HIPAA Authorization. A Patient Advocate only has the authority to make medical decisions for you when you are unable to make them yourself. Once the Patient Advocate has this authority, they can receive your HIPAA-protected health records. However, there may be situations where you would like the Patient Advocate to have immediate access to your medical records, even if you are still competent. It is also possible that the Patient Advocate may need your medical records to show that you cannot make medical decisions. Creating a HIPAA Authorization plans for these scenarios by giving your Patient Advocate the authority to receive protected medical information.
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