If you are like most Michiganders, you have done no estate planning. It is reported that over 50% of the residents of the state of Michigan have no powers of attorney to care for them and their stuff during their mental disability or will to take care of their stuff after they are gone.
What you may not realize is that even if you have done no planning, you do have a plan. The folks in Lansing wrote it for you. Upon your mental disability, the probate court will appoint a conservator to handle your finances and other property and a guardian to make decisions regarding you, your health care and living arrangements. Similarly upon your death, your state legislators have determined who will get what share. Wouldn’t you rather have yourself or someone you choose making those decisions?
One reason that you may not have done any planning is because you cannot decide what you want to do, who you want to do what or who you want to get what. Another reason may be that you do not want to face your own mortality. I have heard other excuses/reasons why some couples have put off doing an estate plan is that the spouses may not be able to agree about who gets what, or who is going to be guardian of the kids. Another excuse that I hear a lot is “I’m too busy.”
Well, you probably are busy. However, what I have observed over the years is that even if you are busy, you always seem to find time to do things that are important to you. You generally will make the time. For example, when you want a night out and you have younger kids at home, you probably need a babysitter. You most likely planned the evening out and wrote out a list of instructions for the babysitter.
Or what about your last vacation? It didn’t just plan itself. As I write this, I and my wife Emily are on a boat crossing the Ionian sea in the Mediterranean on our way from Athens, Greece to Naples, Italy in celebration of our 35th wedding anniversary. This is our first cruise. We took over a year preparing for the trip. We spent a lot of time planning the trip, picking the cruise, choosing the stateroom and shore excursions, watching videos, reviewing booklets, getting TSA pre-checks, registering visa waivers, arranging airline tickets, etc.
Just think of how much time that you spent planning for when you were be gone on your last vacation for a week or two or even when you were only going to be gone just one night. Shouldn’t you spend at least as much time planning for when you are going to be gone forever, either physically or mentally?
I believe that everyone over the age of 18 who is not legally incapacitated, no matter how large or small his or her estate, should have at least a will-based plan, which consists of financial and health care powers of attorney and a will. Most people with any assets would also benefit from a trust.
So what are some of the reasons that you would want to set up an estate plan ? Well, here are just a few:
- Maintain control of your assets while you are alive and well. I haven’t met anyone yet who did not want to be in control of their assets if they could.
- Provide for you and your loved ones upon your mental disability. You can leave instructions to make sure that you and those for whom you are responsible are cared for.
- Choose who will manage your assets upon your mental disability. Your bills will be paid, investments monitored and properties maintained.
- Choose who will make your personal and health care decisions upon your mental disability. This will minimize or prevent inaction due to disagreement among loved ones.
- Plan for your long-term health care, including decisions regarding life support and nursing home care. In what circumstances do you want the plug pulled?
- Avoid guardianships and conservatorships, the living probate through the use of financial and health care powers of attorney and a fully-funded revocable living trust.
- Assure that your wishes and directions are carried out. You can include detailed instructions in your estate planning documents
- Choose who will manage your assets upon your death. You designate the personal representative of your estate in your will and your successor trustee of your revocable living trust.
- Teach fiscal responsibility to your children and grandchildren who may not be capable or experienced in managing assets. This will prevent 18 year olds from going to the University of Corvette.
- Protect your children from a prior marriage. Prevent your children’s inheritance form going to their step-parent’s family.
- Provide for the needs of your surviving spouse with a spousal lifetime trust.
- Provide for the education and other special needs of your children and grandchildren. This can give them a jump-start on their way to becoming self-sufficient.
- Protect assets you leave to your beneficiaries from lawsuits, divorcing spouses, new spouses, bankruptcy and other claims with beneficiary lifetime trusts. Do you want Thor or Bambi, your surviving spouse’s new spouse, to have a claim on your marital assets?
- Keep matters private among the family. With a fully-funded revocable living trust, the only persons who need to be notified or provided any information are beneficiaries and contingent beneficiaries.
- Avoid death probate with a fully-funded revocable living trust.
- Prevent or discourage challenges to your plan with provisions penalizing beneficiaries who attempt to challenge what you have provided.
- Reward or encourage your beneficiaries who make intelligent life decisions, and prevent depletion of your estate by those who do not make wise decisions.
- Recognize the differing needs and abilities of your children. Fair is not necessarily equal.
- Provide for your pets. You can designate a pet caregiver and set aside funds for your pets needs for the rest of their lives.
- Provide for your favorite charities who will no longer be getting your annual donation after you are gone.
As you can see, there are whole lot of reasons you may want to do some estate planning. As you can also see, estate planning is more than death planning. Estate planning is keeping you in control of your property while you are alive and well; planning for you and your loved ones if you become mentally disabled; and when you are gone, giving what you have to whom you want when you want the way you, all at the lowest predictable overall cost to you and those you love.
By Matthew M. Wallace, CPA, JD
Published edited November 7, 2016 in The Times Herald newspaper, Port Huron, Michigan as: Why would I want to do estate planning?