What is Estate Planning and What Should be in an Estate Plan?

Estate planning is a process in which clients work with attorneys, insurance advisors, accountants, financial planners, and other professionals to help develop a plan for their assets and how they are owned and managed. Estate planners are familiar with their client’s assets and how they are owned, their family structure, and their goals and concerns.

What is estate planning?

Estate planning is an important series of tasks that will ultimately help ease some of the burden on the family at the time of the testator’s death. The transfer of property at death, tax planning, and several other matters are addressed with an estate plan.

What is an estate?

Most people, regardless of their income and assets, 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.

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 clients update their estate plans as laws, plans, and circumstances change.

What’s included in an estate plan?

Will

A will provides instructions to the probate court concerning distributing assets to family, friends, and other beneficiaries. An individual’s personal representative (executor) will pay final expenses and taxes before distributing the remaining assets. A will is also the way to designate the guardians of minor children.

Trust

A trust identifies assets and names the trustee who manages assets and the beneficiaries who will receive them at a specific 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 the grantor wishes to receive distributions as stipulated in the trust agreement. A properly prepared and funded trust ensures that an individual’s estate plan wishes will be carried out without the involvement of the probate court.

Power of Attorney

A power of attorney is a legal document designating another person to act on your behalf. Select this person carefully because he or she will have the ability to spend, invest, or distribute assets before death. A power of attorney can be made to be effective immediately or upon an individual’s incapacity.

On the other hand, with a durable power of attorney for healthcare documents, a person is designated as an individual’s patient advocate and has the authority to make healthcare decisions on the individual's behalf if he or she is unable to do so.

Funeral Representative

A designated funeral representative is a document that authorizes the appointed person to make arrangements concerning funeral, burial, cremation, or disposition of one’s body upon death, as provided in the Michigan Funeral Representative Act.

DNR order

A Do Not Resuscitate (DNR) order instructs healthcare providers to not attempt to resuscitate the individual if his or her heart stops or if they stop breathing.

Access to Management of Digital Assets

An Access to Management of Digital Assets document authorizes an appointed individual to access, manage, copy, distribute, deactivate, and delete an individual’s digital assets. Digital assets include online accounts, email, cell phone information, electronically stored photographs, social media accounts, commercial websites, and other digital assets as provided in the Michigan Fiduciary Access to Digital Assets Act.

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 may have.

Investments that provide retirement income or specific needs

Retirement Assets, IRAs, 401(k) and 403(b) plans, and other investments that provide retirement income or assets to specified individuals upon a certain event should be included in estate plans.

List of Assets

A list of assets serves as a guide for managing an individual’s affairs if he or she is incapacitated. Store this list and the documents above in a secure place that is known to those who need access to it.

Help is available

The estate planning and probate attorneys offer comprehensive planning and administration services to individuals and families. To speak to an attorney, call 586-726-1000 or visit our website.

Categories: Estate Planning