Our experienced Trusts & Estates attorneys are here to guide you or your loved ones in the estate planning process, asset protection trusts, marital agreements, estate administration and special needs matters.
THE IMPORTANCE OF ESTATE PLANNING
As much as any area of the law, clients come to the estate planning process with misunderstandings, confusion and often fear. Concepts like “avoiding probate” and the “death tax” have entered into the public consciousness, but their significance is often exaggerated.
In brief, estate planning is a process used to assist you in developing and implementing a plan for your financial, medical, and personal affairs. Estate planning is particularly crucial for the elderly and for individuals with disabilities because the need to provide for long-term care and other services introduces additional, often competing, considerations. However, LawCounsel, P.L.C. is not going to scare you with more intimidating concepts. Rather, our goal is to help you understand and make good decisions.
The estate plan is the creative response of our attorneys to the issues raised by you. Most, if not all, clients will want their estate properly distributed to their beneficiaries without unnecessary delay or expense. Your estate planning objectives may, in fact then include minimizing taxes and avoiding lengthy probate proceedings. But you may also have legitimate reasons to maintain some control over distributions. For example, you may worry that a beneficiary will recklessly dissipate an inheritance, or that assets that might be left to a disabled child or an elderly loved one will be used up to pay for benefits that the government would otherwise provide.
WHAT DOCUMENTS MAKE UP AN ESTATE PLAN?
A basic estate plan includes elements of joint ownership, beneficiary designations, and a last will and testament. A revocable living trust has multiple uses and may also be part of a more complex estate plan. In all instances, you should consider a durable power of attorney and a patient advocate designation. The elements discussed below should be selected according to your unique circumstances and objectives.
Last Will and Testament
Virtually every estate plan will include a last will and testament (or will). A will is a letter of direction to a probate court. It tells the court how to administer and distribute your assets after death. It also nominates a personal representative (i.e., executor) who is responsible for paying your debts and taxes prior to distributing your assets. The only assets governed by the terms of the will are those that you own in your name alone at death. If you have minor children or are the guardian for a legally incapacitated individual, you should nominate another person to take over as guardian in the will. A nomination in your will or other writing receives preference even over a guardian appointed by the court.
The type of will used with a trust is commonly called a pour over will. If certain assets owned by the you are not transferred to trust during your lifetime, the pour over will directs that the remainder of the probate estate be transferred to the successor trustee of the your trust. Although probate is not avoided for all of your assets, privacy and discretion for most of the assets is still achieved.
Revocable Living Trust
A revocable living trust serves many purposes. Because assets are titled in trust name, not your individual name, trust avoids probate court at death, provides for continuity in the administration of assets, and provides for control in terms of distribution.
A revocable living trust is more than just a will substitute. A revocable living trust can include complex tax avoidance strategies. When fully funded with the client’s assets, it can also substitute for a conservatorship in the event of incapacity. A revocable living trust can also provide for minor children or disabled adults, without court intervention or the termination of government benefits.
Durable Power of Attorney
You may designate an agent to make a broad range of legal and financial decisions for you. Properly drafted durable powers of attorney are not affected by your subsequent disability or incapacity. Thus, you can plan for future incapacity by choosing, while competent, the person who will handle your finances. This often avoids the need for a court-appointed guardian or conservator, saving both time and expense for our older clients.
Patient Advocate Designation
In addition to a durable power of attorney for financial affairs, every client who can do so should make a medical power of attorney. This document is also known as a patient advocate designation. It appoints someone to make health care decisions for you when you are unable to do so (the patient advocate). The identity of the patient advocate and a clear expression of your wishes concerning medical and mental health treatment are important parts of our information-gathering process. The patient advocate must be familiar with your wishes and preference regarding health and mental health care, capable of communicating with family members and health care providers, and able to make difficult decisions regarding end-of-life treatment such as termination of life support.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) generally restricts disclosure of a patient’s health care information to anyone but the patient. This would include family members and others. Because a patient advocate designation only takes effect on incapacity, vital information is often restricted from patient advocates, friends, or family members while the client has capacity. To address this problem, we typically prepare a separate limited power of attorney authorizing an agent (or agents) to receive medical information and waiving the liability of any physician, hospital, or health care provider.
MICHIGAN ASSET PROTECTION TRUSTS
You are now able to limit the ability of creditors to reach assets by creating domestic asset protection trusts (“DAPTs”) that are governed by Michigan law. This means that not only do individuals who reside in the State of Michigan have the ability to create these trusts, the assets subject to such protection, such as businesses or real estate, may now also be situated in Michigan. It is no longer required to seek such asset protection planning offshore or in other states such as Delaware or Alaska.
DAPTs are not appropriate estate planning mechanisms for everyone. In fact, the option to create a DAPT should only be presented to a very specific class of clients. Although a DAPT may be a beneficial tool to add to your arsenal, the following considerations should be weighed before implementing one into your estate plan: (1) whether you have a sufficient amount of accumulated wealth that you are willing to part with; (2) whether you (or your business) are regularly exposed to creditors’ claims; and (3) whether your assets are vulnerable to specific creditor claims (e.g., child support obligations).
Typically, the purpose of a prenuptial or postnuptial agreement is to vary or relinquish the rights and interests upon death or divorce that your spouse would otherwise acquire in your property and estate by reason of marriage. You can protect the inheritance rights of children from previous relationships and retain control of property brought into the marriage. You may wish to enter into a prenuptial agreement, for example, if you have substantial financial means and wish to earmark money for children from a previous marriage or set aside funds for other future needs, such as possible nursing home expenses. You might also wish to use a postnuptial agreement to preserve your interest in a family-owned business.
ESTATE ADMINISTRATION IN MICHIGAN
So, lucky you, you have been picked to be in charge of an estate or trust. Now you need to know how to keep this assignment from consuming, or even ruining, your life. Is the joint account part of the estate? Can you charge? Unfortunately, all of this matters. Best advice you can get is to work with a lawyer who knows the rules regarding inventories, accountings, claims and creditors, knows how to pull information together, meet deadlines, and keep the process from spiraling out of control and taking over your life. LawCounsel, P.L.C. is here to help and do everything within its power to keep you out of hot water.
Whenever a person dies, his or her estate needs to be collected and managed. Estate administration involves gathering the assets of the estate, paying the decedent’s debts, and distributing the remaining assets. We regularly provide representation in audits with the IRS and other tax collection agencies. Without a basic understanding of the estate administration process, the whole experience can be pretty overwhelming.
LawCounsel, P.L.C. offers a number of resources on estate administration for fiduciaries. We can provide you with assistance on how to administer an estate, the treatment of debts after death, the duties of trustees and personal representatives, and much more. We administer trusts of all kinds and provide assistance with forms, deeds, accountings and other administrative tasks.
SPECIAL NEEDS TRUSTS
A special needs trust (SNT) is most commonly used when your loved one has an intellectual, developmental, physical disability and is either already receiving means-tested government benefits or is expected to receive such benefits in the future. In most instances, the benefits programs of concern are Medicaid, Supplemental Security Income (SSI), Community Mental Health Services, and Home and Community-Based Services Waiver. The primary purpose of an SNT is to allow resources to be held in trust and used for the benefit of the beneficiary with disabilities while at the same time not allowing the existence of these resources to interfere with that beneficiary’s eligibility for means-tested government benefits. An SNT is also an excellent vehicle for providing protections, financial management, and advocacy for people with disabilities, who are often vulnerable.
The Value of Special Needs Trusts
SNTs come in a variety of flavors. Understanding and using SNTs involves advanced legal concepts. A drafter needs not only to understand trust agreements and have skills in estate planning but also to possess knowledge on the administration of such trusts.
In addition, the drafter needs a complete understanding of multiple public benefits programs (both means-tested and non-mean-tested programs). At LawCounsel, P.L.C., our attorneys possess a highly developed understanding of trust agreement drafting, means-tested government benefit programs, and sophisticated tax concepts.
LawCounsel, P.L.C. is here to help you and your family understand estate planning, asset protection, marital agreements, estate administration, and special needs matters. Our firm utilizes cloud-based legal solutions to make legal services more efficient and a better client experience. Our Michigan law firm welcomes you to contact us and learn how we can help meet your Trusts & Estates needs.
WE LOOK FORWARD TO HEARING FROM YOU
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