With evidence suggesting that most of us still haven’t gotten around to starting our estate planning, it’s easy to lose sight of the fact that many of those who want to create an estate plan are simply intimidated by the process. There are few things more difficult than contemplating your own demise. When you add complicated legal processes to the mix, it’s easy to see why so many people would rather have a tooth extraction than worry about creating an estate plan. With that said, that reluctance can often be better addressed with some simple advice. So, if you’re still unsure about where to start with your own estate plan, here are six tips for inheritance planning in Michigan.
One: Take Stock of Your Estate
If you’re having a hard time wrapping your head around the idea that you need an estate plan, then maybe it’s time to take stock of your wealth. The fact is that very few of us ever stop and take a look at where we are in life – at least in terms of material wealth. If you had to make a guess as to how much your estate is actually worth, would you know where to begin? Most people have no realistic idea about how much their collective belongings and property are really worth.
This assessment can benefit you in multiple ways. First, it never hurts to have a better understanding of your financial situation. You’d be surprised at the number of people who never seem to know just how much they have. More than that, though, this analysis can provide you with crucial information that you will need when you begin your estate planning process. After all, if you don’t know what you have then you don’t know what you’ll have available to pass on to others when you’re gone.
Two: Start with the Basic Will
It can be tempting to think that you need to go out and do everything at once – and that can be intimidating in and of itself. Many people feel more comfortable starting with the basics. Where estate planning is concerned, that means getting a Last Will and Testament created. This is an important thing to do in any event, since all of us should have a will. In fact, even if you later decide to add things like trusts to your estate plan, you should still have a pour-over will, since it’s almost impossible to have everything that you own covered by your trust when you die.
Three: Get an Incapacity Plan
Once you have your will in place, you should consider the possibility of incapacitation. We all face the threat of one day suffering an injury or illness that leaves us unable to manage our own affairs. If that happened to you, who would make your important financial decisions or deliver health care instructions to your doctors? If you just assume that your closest family members would have that power, think again.
Unless you have a plan in place, it will fall to a probate court to decide who serves as your guardian. Your only participation in that process will involve footing the bill for any expenses, since the cost of that guardianship will be paid by your estate. To prevent that from happening, you need to have a financial power of attorney to appoint an agent to represent your interests during incapacitation, and an advance directive to name a health care proxy to deal with your medical decisions.
Four: Think “Trust”
Trusts can be great estate planning tools. They help you avoid probate, secure the distribution of assets when you die, and can achieve many different planning goals. You should consider a trust if you have:
- Minor children who need to have their inheritances managed
- Special needs heirs whose benefits might be impacted by a direct gift
- Wasteful heirs whose inheritance needs to be protected
- Charitable goals that extend beyond your life
- A need to manage estate tax liability (you’ll need an irrevocable trust for this)
- Pets who need to be cared for when you die
- Other special circumstances that cannot be addressed properly with just a will.
Your estate planning attorney can help you to identify whether a trust is right for your specific circumstances, and can assist you in creating one that will accomplish your unique objectives.
Five: Maximize Liquidity
It’s tempting to just put your home, vehicles, art collections, and similar assets in your trust, and assume that you’ve done all that you can for your heirs. However, if you die with debts – and we all do these days – then your heirs may be forced to sell assets to pay those debts. That can be problematic, since it may force them to sell a business or piece of property at a time when the market is less than favorable to sellers. To help them avoid that, always try to maximize the liquidity of the estate so that they have easy access to any cash they may need for debt repayment or tax obligations.
Six: Don’t Fly Solo
Another temptation that’s common these days involves the trend in do-it-yourself estate planning. Yes, there are many websites and promotional campaigns designed to convince you that you can create your own estate planning tools without help from an attorney – and they’re right up to a point. Technically, you can create a will, trust, or any other estate planning tool without anyone’s help. The question is whether the documents you create will accomplish your goals. To have that assurance, you need the assistance of an experienced estate planning attorney.
At Biddinger & Estelle, PC, we know how difficult getting started with your estate planning can be. Often, uncertainty about the process can make it seem even more intimidating than it really is. We can help to simplify the process by working with you to assess your unique circumstances, identify your needs, and develop solutions that can address your most pressing challenges. If you’d like to learn more about how you can benefit from inheritance planning in Michigan, then contact us at our website or call us today at (989) 872-5601.