- Estate Planning Do's and Don'ts
- June 8, 2012 | Author: Shannon L. Wirth
- Law Firm: Clos, Russell & Wirth, P.C. - Westland Office
Most people realize that having an estate plan to dispose of their assets or to provide for their family if they should die is extremely important. However, an alarmingly high number of Americans do not have a Last Will and Testament ("Will") or any other estate planning device to accomplish this important work. Many people feel they do not need to plan for the manner in which they want their estate distributed because they have a small or modest estate, while others believe that if all of their property is jointly owned, they do not need a Will. Not surprisingly, studies have also found that most people do not like talking about this subject and simply put off dealing with these issues. While thinking about your own mortality is difficult, failure to have a Will or estate plan prepared, or failure to update an existing Will, can have an impact most people do not intend.
One of the most important purposes of having a Will and estate plan is to set forth how your assets should be distributed upon your death. When a person dies without having a Will, their assets pass according to the laws of intestacy. The laws of intestacy substitute the judgment of lawmakers for the judgment of the deceased. Unfortunately, the laws may not conform to your wishes and may not be in the best interests of the people closest to you. For example, failure to have a Will, under existing Michigan law, would result in a disinheritance of step-children or a partner to whom you are not married. In addition, if no blood relatives can be determined or located, the State may receive all of your assets.
In addition to providing for the disposition of your assets, a Will also designates a Guardian and/or a Conservator to care for your minor children in the event of your untimely death. A Will also allows you to appoint a person or persons to act as your Personal Representative (or executor), who is responsible for administering your estate and ensuring that your estate is distributed in accordance with your wishes. Creating a Will permits you to clearly set forth your wishes and also decreases the likelihood of conflicts, bitterness and disputes among those closest to you.
Even if you already have a Will or other estate plan, it is important to review and update these documents periodically. This is particularly important if circumstances in your life change. For example, your Will should be reviewed (and possibly changed) following events such as: marriage or remarriage; moving in with a partner; the birth of children or grandchildren; divorce or separation, retirement or the death of a loved one. Failure to update an existing Will can be as problematic as having no Will at all.
For example, recently while at the Wayne County Probate Court, I witnessed a hearing regarding a woman who had prepared a Will back in the 1970's leaving all of her assets to her husband. Her husband however, had passed away in the 1980's and she never revised her Will. Unfortunately, this woman left no living heirs and as a result of her failure to update her Will following the death of her husband, the State of Michigan will receive approximately One Million Dollars that this woman had accumulated over her lifetime. It is highly unlikely that it was her intent that her hard earned money would go to the State of Michigan. This result could have been avoided if she would have reviewed and updated her Will following the death of her husband.
Additionally, in some circumstances, it is preferable to also have a Living Trust. A Living Trust allows you to avoid probate court, to control the distribution of assets after your death, defer distribution of assets until certain beneficiaries reach certain ages, and/or provide continuing support for a child or loved one. In certain circumstances, creating a Living Trust may have tax benefits that cannot be achieved with a Will alone.