When people come to our office for planning, the first question they always have is “What is the difference between a Will and a Trust? And what do I need?” We strive to make the complex simple and guide our clients to find the answer that best meets their individual needs. That being said, there are a few documents that every estate plan should have and should have reviewed on a regular basis.
What are these essential documents?
Will. A Will is an instruction sheet to a Probate Court Judge. When most people do their planning they want to avoid probate. However, in all technicality that is what a Will is for, to tell the Judge what they should do if a family ends-up in court. Without a Will, a person would die "intestate." In that case, state law divides and distributes the estate to surviving family members based on their relationship to the deceased. No consideration is given under state law to how "close" such family members were to the decedent (or if they fought constantly).
Contrary to popular belief, a Will does not keep you out of probate court. And, it has absolutely no legal authority until the maker of the Will dies … and the Will is given to the proper probate court within the time limit prescribed by state law. Accordingly, your Will has no authority to appoint financial or health care decision-makers (agents) for you if incapacitated by an illness or injury (more on that later).
Medical Power of Attorney. Michigan allows for either a Health Care Advanced Directive or a Medical Power of Attorney to be in place but not both. A health care directive, often known by other names such as an "advance directive," is a document you sign now to specify the type and extent of medical and personal care you would want later were you unable to make and communicate your own decisions. This document works well for specific institutions but is very limited in what it can do. It also does not technically appoint anyone to act on your behalf. It does list who you would like the Physician to consult with. A Medical Power of Attorney is a similar but much more powerful document. It works in almost any setting, can deal with psychiatric powers, and allows you to appoint a person to actually make medical decisions on your behalf.
Everyone age 18 and older needs to have this fundamental legal document signed, a copy on file with their physician, and a copy given to each of their appointed agents. At Sarah’s Law Firm, we will supply you with a wallet card that allows access to your Medical Power of Attorney 24 hours a day 7 days a week so you can always find it when you need it (and so can your family). Click HERE to find out more (https://www.legaldirectives.com/)
Financial Power of Attorney. This is a legal document giving another person — sometimes called "the attorney-in-fact" or "agent" — the legal authority to make decisions on financial matters and other issues on your behalf. The exact scope of the power given is spelled out in the document itself. These powers end at death. Permission to Access Personal Medical Information. This document should be right on top of or specifically incorporated within your Medical Power of Attorney. It is your authorization for named persons to view your medical records and discuss your care with medical providers. Without this document or specific authorization, there is the possibility your doctor may decide not to speak to your designated "point persons" — the persons you want to make those tough decisions about your care if you are in an unresponsive state.
Trusts. These come in all sorts of shapes and sizes. Generally speaking, a trust is like a bucket. When you are alive it is your bucket, you fill it with all of your assets (house, car, bank accounts, Life Insurance etc). While you are alive, you can do whatever you want to with your bucket – it’s YOUR bucket after all! When you pass or become incapacitated, the person you appointed as a Trustee will read the instructions on the side of the bucket and control the spicket to make sure things flow where you want them to flow. Depending on your circumstances, there could be advantages to establishing a trust. The most common advantage is avoiding probate. This can help streamline administration of your estate should you become incapacitated and upon your death, keeping your plans private in the process. Trusts can help protect your children from losing their inheritance due to divorce, lawsuits, squandering, or creditors.
What type of plan is right for you?
It depends on a great many factors. We would be happy to help guide you through the planning process and help you create a simple plan that meets your needs. Request a consultation with Sarah’s Law Firm today.