Estate Planning Should Be Part of Your New Year's Resolution
As you plan to eat healthier, exercise more, or lose weight, remember that estate planning should be part of your New Year’s Resolution. Estate planning is an essential part of preparing for the future, but far too many people procrastinate this vital task.
What’s an estate plan?
Most people have an estate. An estate is made up of everything a person owns, including their home, other real estate, automobiles, checking and savings accounts, retirement accounts, life insurance, investments, and personal property. No matter the size, from the substantial to the humble, all of us have an estate, and we can’t take it with us when we pass away.
Most people want to make sure their possessions are given to the people or charities of their choosing when they die. It is important to provide instructions stating who is to receive something, what they are to receive, and when they are to receive it. Taking care of these tasks limits the potential for legal battles or family turmoil. An estate planner will help prevent critical mistakes and help as laws, plans, and circumstances change.
An estate plan may include:
- Will. A will provides instructions to the probate court with respect to distributing assets to your family, friends, and other beneficiaries. Your personal representative (executor) will pay final expenses and taxes before distributing the remaining assets. Your will is also the way to designate your choice of a guardian to raise your minor children.
- Trust. A trust sets money aside for a specific purpose and identifies both the trustee who will manage your assets and your beneficiaries who will receive them at a specified time. A trustee may be any person or an institution (like a bank or other corporate trustee). It is the trustee’s job to manage the funds or property in the trust according to the wishes of the grantor of the trust (the person who establishes the trust). The beneficiaries are the individuals or charities who the grantor wishes to receive distributions as stipulated in the trust agreement. Ordinarily, a properly prepared and funded trust ensures that an individual’s estate plan wishes will be efficiently carried out without the involvement of the local probate court.
- General Durable Power of Attorney for financial business decisions. A power of attorney is a legal document in which you name another person to act on your behalf. You can give this agent broad or limited capabilities. Select this person carefully because he or she will have the ability to spend, invest, or distribute your assets during your lifetime. A power of attorney can be made to be effective immediately or upon your incapacity and continues to be effective after an individual is incapacitated.
- Durable Power of Attorney for Health Care (living will). The person you designate as your patient advocate has authority to make health care decisions on your behalf (including carrying out your wishes with respect to end-of-life preferences) if you are unable to do so yourself. This document is necessary to avoid court intervention or family conflicts if you should become unable to make your own healthcare decisions.
- A DNR (Do Not Resuscitate) order. This form, signed by an individual and signed-off by the person’s doctor after consultation, instructs healthcare providers to not attempt to resuscitate the individual if their heart stops or if they stop breathing.
- A Designation of Funeral Representative. A document which authorizes the appointed person to make arrangements with respect to funeral, burial, cremation, or disposition of one’s body upon death, as provided in the Michigan Funeral Representative Act.
- Access and Management of Digital Assets. A document which authorizes the appointed individual to access, manage, copy, distribute, deactivate, and delete an individual’s digital assets. Digital assets include online accounts, email, travel reward programs, mobile phone information, electronically stored photographs, eBay accounts, Facebook, LinkedIn, and other social media accounts, and commercial websites as provided in the Michigan Fiduciary Access to Digital Assets Act. Having access to this digital information can be critically important with respect to managing finances, paying bills, accessing bank and other investment and retirement accounts, and communicating with individuals after a family member’s death.
- A list of assets. The list serves as a guide for managing your affairs if you are incapacitated.
- A list of digital assets. The list facilitates access to digital assets and information through a compilation of account numbers, passwords, and contact information.
- Life insurance. Either a term, an umbrella, or a whole life policy can benefit a surviving loved one without the tax issues a cash gift might have.
- Retirement assets, IRAs, and 401(k) and 403(b) plans. Investments that provide retirement income or assets to specified individuals upon certain event.
- An estate plan tax review. Meet with your attorney and accountant to discuss the tax consequences of your estate plan.
The estate planning and probate attorneys at O’Reilly Rancilio in Sterling Heights offer comprehensive planning and administrative services to individuals and families. Estate planning should be part of your New Year’s Resolution, so be sure to contact one of our attorneys today for help with your estate planning and probate needs.