FAQs

Q: WHY DO I NEED AN ESTATE PLAN?

Regardless of age, income or net worth, every adult individual should have an estate plan.  An estate plan is a series of documents designed to address the following issues:

  • Who will manage your affairs if you are unable to act?  If you become incapacitated or otherwise unable to make medical and/or financial decisions, an estate plan can ensure the person(s) you trust has the legal authority necessary to handle your affairs.

  • Who will receive your assets in the event of your death? In the event of your death, a properly drafted estate plan can minimize the potential costs and taxes associated with transferring your assets to your chosen individuals.

  • Who will take care of your children?  A properly drafted estate plan can allow you to designate a guardian for a minor or disabled child and avoid placement in a foster care system.  Court involvement is typically required until the child attains the age of 18.

Q: HOW CAN I AVOID PROBATE COURT?  

A properly drafted estate plan can avoid probate court during your lifetime if you are unable to manage your affairs and can avoid the need for probate court involvement to transfer your assets to your beneficiaries upon your death.

Q: WHAT HAPPENS IF I DON’T HAVE AN ESTATE PLAN?  

If you don’t have a plan and become incapacitated or die, state law and the court will control who is in charge of your affairs and how your assets are divided upon your death.  In the absence of a properly drafted estate plan, probate court involvement is typically required in the event of your death or incapacity and the process can be lengthy and expensive as discussed below.  The result may not be what you want and your assets may be exposed to unforeseen creditors, including the State of Michigan.

Q: WHAT IS A LADYBIRD DEED?

A ladybird deed is a nickname for an enhanced life estate deed.  This type of deed provides that the real estate remains in your name for life and you have the power to sell it.  If you still own it when you die, your interest automatically transfers to your designated recipient on death.  This avoids probate and can also protect your primary residence in the event that you need nursing home care.  Because a ladybird deed avoids probate, it also avoids the Estate Recovery program under current Michigan law.  

Q: CAN I DO IT MYSELF? 

Nowadays, you can find anything on the internet, including sample powers of attorney, deeds and wills.  Estate planning is not a “do it yourself” project for most people.  There are numerous aspects of estate planning that most people do not understand including tax consequences and creditor’s rights.  Without understanding how the law the works, you may leave your beneficiaries with a hefty, unnecessary tax bill and/or expose your assets to creditors that could have been avoided.  Spending money on a properly drafted plan can save tens of thousands of dollars or more by avoiding creditors and reducing or eliminating taxes and probate costs.

Q: WHAT ARE THE BENEFITS OF A LIVING TRUST VS. A SIMPLE WILL? 

Many people believe that if their estate is “simple,” they only need a simple will.  It does not matter how simple an estate is, a will is not valid until the court admits it to probate, so all wills must go through probate court in order to transfer probate assets to the intended heir(s).  As a result, in addition to the probate costs, a will is typically easier to contest than a trust that does not go through probate.  

Additionally, through the Estate Recovery Act passed in 2007, the State of Michigan has the right to be reimbursed from probate assets if you receive Medicaid benefits to pay for long term care costs, such as nursing home expenses.  As discussed above, this only applies to assets passing through probate upon death which includes those passing by will.

A properly drafted Living Trust can eliminate these issues and provide a cost-effective method for managing assets during your lifetime and transferring your assets to your beneficiaries upon your death.  A Living Trust can also protect your beneficiaries if they have any kind of known or unanticipated problem (divorce, disability, bankruptcy, poor financial decisions, substance abuse, incarceration, student loans, credit card debt, tax problems, underage beneficiaries/minors, etc.) and can protect against Estate Recovery by the State of Michigan under the current law.