AN ESTATE PLANNING CHECKLIST OF THINGS YOU SHOULD KNOW

If you are like many Americans, we all have a “To Do List.” Sometimes, that list gets longer and longer with no end in sight. Oftentimes, it is easy to put off estate planning to get to those other things that are on your To Do List. People often procrastinate when it comes to estate planning because they feel that the whole estate planning process is daunting. 

It is the goal of our office to make the estate planning process as easy as possible for our clients. So, we put together another list for you. It is not a “To Do List” but, it is a list of things that you should know if you are considering implementing an estate plan for you and your family. We have prepared an Estate Planning Checklist by identifying common questions, concerns, and issues that arise during the process.

What is an Estate Plan?

The definition of an estate plan is different for everyone. The type of plan selected is often dependent upon the nature of the assets. In general, it is a plan that is put in place to make the administration of your estate an easier process. Your next question might be “What documents should be included in my estate plan?” The type of plan implemented is dependent upon the complexity of our estate. Our office prepares comprehensive estate plans for any size estate. A full estate plan will address both what happens if you become incapacitated and what happens if you pass away. Some of the core documents that are included in our estate plans are Trusts (and supporting documents), Wills, Financial Power of Attorney, and a Patient Advocate. Other documents included in your estate plan will be dependent upon your current situation and the type of plan you select.

What is the Estate Planning Process?

Now that you know what an estate plan is, one of your first questions to an attorney might be “What is the actual process?” In our office we utilize a five-step process. Call our estate planning attorney and the first step is for you as the client to complete a worksheet. We use this worksheet to get a better understanding of your own unique situation. The worksheet also helps you to think of important issues that come up in the estate planning process. Some of these issues include deciding who you would like to have handle your financial affairs and healthcare if you were not able to do so.

                The next step in the process would be a Family Estate Planning Session. The purpose of this meeting is to help you to understand the benefits of putting a plan in place. We also use the information that you provide on the completed worksheet to explain your options to you and to make recommendations to you based on your individual situation.

If you decide to go forward, the next step would be to design your plan. You choose the best options for your situation and your budget. Pricing depends on the options that you select. Consequently, we are unable to provide you with the cost of a plan until we have discussed, and you have selected your options. We would then prepare a unique plan that is specific to your situation. Once the documents were complete, we would schedule a signing meeting.

What are some special issues and concerns that arise during estate planning?

You may be asking “What are some other important issues that should be addressed in my estate plan?” Our office does not recommend utilizing an on-line plan. Essentially, DIY plans do not address all issues that may pertain to an individual situation. Our office recommends consulting an attorney who is experienced in estate planning that is able to issue spot and appropriately address the issue in your estate planning documents. Some common issues that are often missed when using a DIY plan are discussed below. Please note that this is not an all-inclusive list and you should consult with an attorney to discuss your specific needs.

If you have minor children, you will want to make sure that you designate who you would want to care for your children and how you would want that person to care for them. You also want to address what would happen to them in the event of an emergency and you (the parents) were unavailable. Other factors to consider are how and when you would want your children to receive their inheritance. 

Maybe, you have a child with special needs that receives benefits. Without proper planning for a special needs child your child could be inadvertently disqualified from receiving their benefits due to an inheritance from your estate. A plan should be implemented to insure that any potential inheritance would not disrupt your child’s benefits.

If you have pets, then you will want to make sure that your documents include provisions for their care. You want to make sure that you identify who you would want to care for your pets. You would also want to make sure that you detail the financial support that you would want to make available to the new caretaker that you have named.

Many people in Michigan go hunting and consequently own guns. Have you thought about what would happen to your firearms in the event of your death? If you fall into this category, then you would want to make sure that you have proper planning in place to address what would happen to your firearms. Failure to do so may result in someone that you care about inadvertently committing the serious crime of unlawful possession of a firearm upon your death.

Maybe, you are a business owner. If so, it would be important to implement a business succession plan in addition to planning for your personal affairs. This may include simply addressing what would happen to the business in your personal estate planning documents if you were an individual owner of a business. More complex planning would likely be required if you shared ownership with other individuals.

Why do I need an Estate Plan?

One of the common questions I hear is “Why do I need an estate plan?” Depending on the type of plan that you choose, you can avoid probate. Probate is an often expensive, long, time-consuming, and public process.

The cost of implementing an estate plan often is far less than the cost of going through the probate process. In probate, there are administrative costs that include court fees and attorney fees if an attorney is hired. Without proper planning, your estate might incur unnecessary taxes. A well-written estate plan will help you to avoid probate. Thus, more money is kept in your estate to go to your heirs. 

If you do not put a plan in place, then the State of Michigan has a plan for your estate. This is called “intestacy” which may result in an unintended recipient receiving your assets upon your death. By putting an estate plan in place, you increase the likelihood of keeping more money in your estate, you control who gets your estate and how it is distributed. It is also helpful to put a plan in place to make things easier on your family while grieving your loss.

The probate process can be long because you may be at the mercy of the judge’s docket. A busy docket can lead to increased timeframes of administering a probate estate. By implementing a plan that avoids probate, you can speed up the process of administering an estate. This helps to get money to your family more quickly.

Filings in probate court are a matter of public record. Anyone can go to the court, pull a file, and see what is in an estate. They can also see who is getting what from the estate. By putting a plan in place that avoids probate everything can be kept private.

How to use this Estate Planning Check List

This Estate Planning Checklist is intended to help you make your first meeting with an attorney to be more productive. Understanding the estate planning process can help make you feel more comfortable in implementing your estate plan. You should select estate planning options that are consistent with your goals and are within your budget. Everyone’s situation is different. There is not a one-size fits all estate plan. Your estate plan should address the specific concerns and issues relating to your personal situation. You should implement an estate plan if you want to avoid probate, make things as easy as possible for your family, and be in control of who would manage your health and financial affairs if you were unable to do so due to incapacity or death.

Estate planning benefits provide your family with peace of mind and security for the future.  Below are some key benefits including:

#1 Avoid Probate

Probate court is the court that will administer the estate of a person that passes away without having a plan in place.  This is called dying intestate.  When someone dies with a will it is called testate.  Probate Administration is the resolution of a persons estate that has passed away intestate or with a will.  It is a deadline driven process that can be expensive, long and public.

No one can tell you the exact amount that a probate case will cost.  However common expenses include legal fees, court fees, appraisals, publication fees and other fees that may be case specific.  Estimates are that the cost of administering an estate through probate court are 3-8% of the value of your probatable assets.  This is money that is taken out of your estate that could have passed to your family.

Probate can take a significant amount of time.  In Michigan, the minimum time for a probate case is 5 months.  However, some cases can take years to resolve.  The amount of time a case takes to go through probate depends on issues raised, the court’s docket and whether or not there are any disputes among beneficiaries.  Given the COVID-19 crises, most courts have closed.  Thus, they are not handling cases.  There will be a backlog of cases that were already filed before COVID-19 thus likely pushing the resolution of newer cases out even further.

Probate makes the financial affairs of a person that has passed away very public. Information that becomes public record includes the nature of the person’s assets and debts.  It also becomes public information as to who gets the assets.

Probate has many negative aspects to it.  It can be expensive, long and public.  It is possible to avoid probate with proper planning. Our estate planning attorney can help you to put a plan in place that can help your estate to avoid probate.

#2 Peace of Mind

The loss of a loved one can cause a significant amount of stress and anxiety for a loved one.  It often times leads to family conflict. The last thing that they should have to deal with is the additional stress of  having to go to court to resolve your estate. By implementing an estate plan and using estate planning services you will have the peace of mind that you are helping your family to avoid the probate process and significantly reducing any potential added stress in their time of grief.

Do you have an Estate Planning Question?

We’d be happy to answer your estate planning question.  Please Contact Us and we can discuss your estate planning needs.  You can also refer to our estate planning checklist for more steps on effective estate planning.

As 2020 draws to a close, the time is ripe for reflection on what has occurred over this past year. The historical magnitude of the Coronavirus Pandemic has dominated the world consciousness and may have even struck close to home. Even when numbers are more under control and the curve is flattened, there is the reality that this pandemic is not over. If you have not caught the novel coronavirus, you are not yet out of the woods. No one knows how this disease will affect them and whether they will contract it. You could be lucky and have few to no symptoms and recover quickly, as many people have experienced. However, you could be one of the unlucky ones who do not survive. It’s that case that strikes fear in our hearts and minds…the thought that we may not survive if we catch this virus.

If you do catch the virus and end up in the hospital without the ability to speak for yourself and make your wishes known, then what happens? If you do not survive, who will take responsibility for your minor children? What happens to your finances and assets? How will you pay for funeral expenses? How will your children pay for college?

Have you made your New Year’s Resolutions yet? Here are eight relatively simple steps you should consider doing as soon as possible to protect your family and your assets in the event the ultimate disaster strikes:

1. Have you drafted a will? More than half of American adults make the mistake of not having a will. Most people think they will not need one because they are relatively young and healthy. Even if you do not have a multi-million dollar estate, someone will have to handle all of your financial affairs should something happen, and it will be much easier if there is a document explaining what should be done. This is especially important if you have any minor children. You should also name a trusted person as the executor of your estate.

2. Speak to an attorney about trusts. You may want to create a trust. This is always a good idea if you fall into one or more of the following categories: a) you have minor children and don’t want to leave your real estate properties directly to them; b) you have adult children and are not confident they will responsibly manage their inheritance;  or c) you want to protect your assets from ending up with a creditor or in the hands of a former spouse. By creating a living trust, your estate may avoid all the expenses and hassles associated with going through the probate process. It will be money well spent.

3. Assign a power of attorney to someone you trust. This relatively simple document authorizes someone of your choice to handle matters if you are unable to act on your own behalf. There are two types: financial power of attorney, which lets someone of your choice take care of your financial matters such as writing checks to pay your expenses; and medical power of attorney, which allows someone of your choice makes decisions about your health care when you are unable to do so. Without this form, your loved ones will likely have to go to court to handle simple matters if you were incapacitated, such as being on a ventilator in a medically induced coma (Covid-19 treatment). This is really important. You will have to decide whether you want a standard durable power of attorney or a “springing” power of attorney that requires a doctor declare you incompetent or incapable of making your own decisions before it becomes active. You should update this document about every three to five years even if it is correct since officials are sometimes reluctant about accepting an older form.

4. Create an advance directive. This document sets forth your preferences, such as whether you want a feeding tube or if you need to be placed on a respirator. It can be written to incorporate other related requests such as explaining under what circumstances you would want to be allowed to die.

5. Do you have enough life insurance? If you have any children that are dependent on you financially, you will need enough life insurance to cover lost income after the date of death.

6. Regularly update your beneficiaries. You may not realize it, but the listed beneficiaries on your 401(k), insurance policies, retirement accounts and investments will supersede your will. Review your designations about every two years or upon life events, such as a marriage, divorce or the birth of a child. Speak with an attorney to make sure you have properly named your beneficiaries.  It’s not uncommon of for people to have seriously outdated beneficiaries, i.e., when you enrolled in your first 401(k) at the grand old age of18, did you name your significant other at the time as the beneficiary? You really need to change that and fast.

7. Get your paperwork organized. Do you have your tax returns, insurance policies, brokerage and 401(k) statements, and mortgage paperwork in one place? If you don’t, you can be sure that your loved ones won’t have a clue where to find them when they need them, sending them into an estate-settlement nightmare. Do everyone a favor and put everything together in one place and then tell your spouse and/or closest family member where that is. In addition to the documents mentioned above, also include: your Social Security and health insurance/Medicare cards, plus the contact information for your doctor, lawyer and accountant.

8. Keep everything in the right place. Settling the estate is easier with the original will in hand. Just be sure to share access with your closest trusted family member, so he or she will be able to find the document when necessary.

These simple steps could save you and your family a lot of trouble and confusion in the event that the worst happens. It is the best insurance that your family will have an easier time caring for your needs and settling your estate if/when it comes to that. Attorney Colleen Hubbs of Hubbs Law Group is uniquely capable of addressing these tasks and more for your family. Contact our office to set up your appointment to make securing your family’s future your New Year’s Resolution.

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