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Frequently Asked Questions About Estate Planning

Although most individuals can benefit greatly from creating an estate plan, many people do not understand the reasoning and benefits of having a will, trust or a complete estate plan.

Below are simple answers to some of the most commonly asked questions from our clients — designed to help you understand your situation before you contact us for more specific information.

Click on any of the questions below to learn more about estate planning:

What is a will?

This legally binding document appoints a trustee to handle a deceased person’s estate, directs asset distribution and appoints a guardian for minor children. Most wills will go through probate and since they are public record, when filed begin a long process that can sometimes cost up to 8% of the estate’s value.

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Why would I need a Revocable Living Trust?

This legal option can do all of the appointments that a will can do, but it also provides quick distribution of assets to beneficiaries, or asset protection for them (i.e., in the case of a child who may not handle money effectively, the trust will pay their bills and disburse money periodically). A trust remains private and never becomes a public record — and there are no probate costs associated with the distribution of the assets. The Trust provides asset protection for the surviving spouse who may choose to remarry and can protect for dependents with special needs.

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How does a living trust work?

When a trust is created for you it is not effective until you change the title of your assets to the name of the trust. Once the assets are transferred, you can serve as trustee and pay bills and spend money as you normally do. When you die, these assets do not have to be probated and the successor trustee takes over, distributing your assets according to your wishes. Your estate does not go through probate court (which is a public record) and therefore your affairs remain private. Remember, only assets that are in the name of the trust will be distributed according to the trust terms. You retain the right to revoke the trust and to appoint or remove trustees.

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What are some other benefits of a living trust?

Michigan law provides a spouse the legal right to make a claim against their spouse’s estate. A living trust can override this right, which can be helpful in regards to second marriages when the deceased spouse wants to protect assets for children from a prior marriage.

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What does Power of Attorney Mean?

This legal document gives your attorney (or another individual) the right to handle your financial affairs in case you become unable to make decisions Without this document, no one can represent your interests unless until the court appoints someone.

In addition to a general Power of Attorney, we prepare Medical Powers of Attorney with HIPAA authorizations. Without these documents, if you are disabled no one has the authority to make medical decisions for you, including your spouse and children. The Health Insurance Portability and Accountability Act (HIPAA) was amended in 2003 to make all medical records private. Doctors, nurses and all medical personnel are forbidden by law to discuss any medical information about you without these HIPAA authorizations.

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How can I avoid probate?

All clients wish to avoid probate, but many are unsure why. If a client executes a will and then dies, the will needs to be probated. In addition to the costs of probate, the will and distribution of assets is a public record. That means on the day your children and loved ones receive assets, their names and addresses and amounts of distribution becomes a public record. A Revocable Living Trust avoids that. A trust can also provide protection for children who may have drug or alcohol problems, bad spending habits or troubled marriages.

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For more information about the estate planning and probate attorneys at Elder Brinkman Law or to schedule a free initial consultation regarding your estate plan, contact our office today or call us directly at 313.582.5800.