Answers
What is Estate Planning?
We define Estate Planning as follows: I want to control my property while alive and well; plan for me and my loved ones if I become mentally disabled; and when I’m gone, I want to: give what I have to whom I want, when I want and the way I want; and if I can, I want to save taxes, fees, costs, all at the lowest predictable overall cost to me and those I love.
What is Durable Financial Power of Attorney?
A Durable Financial Power of Attorney is a document by which you appoint someone to make financial decisions for you to be effective upon signing or upon an event such as your disability. A Durable Financial Power of Attorney may give your agent full, broad, general powers to act on your behalf or limited powers such as to sell a parcel of real estate or transfer property to a trust. Without a Durable Financial Power of Attorney, a conservator may have to be appointed and supervised by the probate court to make financial decisions on your behalf. The authority granted in a Durable Financial Power of Attorney terminates upon your death.
What is Durable Power of Attorney for Healthcare?
A Durable Power of Attorney for Healthcare (or Designation of Patient Advocate) is a document by which you appoint a patient advocate to make medical and mental health care decisions for you if you cannot. A Durable Power of Attorney for Health Care should include among other provisions:
- a proper appointment of a patient advocate with at least two back-ups;
- mental health care powers should be explicitly included;
- anatomical gift / organ donation powers should be given to your patient advocate to carry out any anatomical gift or organ donation wishes you may have;
- Health Insurance Portability and Accountability Act (HIPAA) powers should be granted to allow your patient advocate to access your protected health information and allow your patient advocate to release of that information to health care providers, insurance companies and others; and
- living will provisions to allow your patient advocate to withhold or withdraw life support at end of life in the event that your body is being kept alive artificially.
Without a Durable Power of Attorney for Healthcare, a guardian may have to be appointed and supervised by the probate court to make medical decisions on your behalf. The authority granted in a Durable Power of Attorney for Health Care terminates upon your death.
What is a Living Will?
A Living Will, also called Advanced Directive or Advanced Medical Directive is a document that includes medical directives giving specific instructions regarding the use of artificial or life sustaining treatments at end of life. There is a range of choices that you can make for your Living Will provisions. On one end of the spectrum, you may direct that all means be used to keep you alive, “Keep me alive no matter what”. On the other end of the spectrum you may implement a Do-Not-Resuscitate (DNR) directing that no artificial means be used to keep you alive, “Do nothing no matter what.” Many people choose some variation in between that direct that artificial means be withheld or withdrawn in certain circumstances such as if you are in a persistent vegetative state or irreversible coma, you are terminally ill and artificial means only prolong the dying process, or in circumstances where the burdens of treatment outweigh the expected benefits. The artificial means or life sustaining therapies that are often requested to be withheld or withdrawn in these circumstances are feeding and hydration tubes, cardiopulmonary resuscitation, mechanical breathing and dialysis.
Without specific instructions, certain medical decisions regarding withholding or withdrawing artificial or life sustaining treatments cannot be made by your patient advocate and a guardian may have to be appointed and supervised by the probate court to request such decisions on your behalf. In Michigan, Living Will provisions are usually included in your durable power of attorney for health care.
How can I be assured my medical directives are followed?
Once you have taken the time to complete your durable power of attorney for health care, living will, anatomical gift or other health care directive, you need to make sure they will be there when you need them. Research shows that these documents are not available at the hospital three out of four times when needed. We offer a service that helps make sure your documents will be there to work for you called DocuBank®. With DocuBank, copies of your durable power of attorney for health care, living will, anatomical gift or other health care directives along with your personal information, allergies, medical conditions, emergency contacts information and prescriptions if you elect, are kept on a secure server. When needed, all of this information can be accessed 24/7/365 anywhere in the world with your DocuBank emergency card so long as there is a computer internet connection or a phone and a fax.
What is a Revocable Living Trust?
A Revocable Living Trust is a document with instructions to manage and distribute your property both during your lifetime and after your death. You as trustmaker create and control the trust. You as trustee, while you’re alive and well, manage the trust property. You as beneficiary receive trust property when and how you determine. Then when you are no longer able to manage your property or affairs, the people you have chosen as your successor trustees manage your trust property on your behalf.
When are Irrevocable Trusts used?
Irrevocable Trusts are generally only used in special circumstances and usually only in conjunction with a fully funded revocable living trust based plan. Irrevocable Trusts such as qualified personal residence trusts, irrevocable life insurance trusts, charitable trusts, intentionally defective grantor trusts and demand right gift trusts can be utilized to transfer property out of your taxable estate and to maximize the assets conveyed to your beneficiaries.
What is Trust Funding?
Trust Funding is completely and correctly:
- titling your assets in the name of your trust or in individual names;
- designating your trust and individuals as asset beneficiaries; and
- adding your trust as an insured party on your homeowners and other insurance policies.
- A trust is a financial vehicle to hold your assets. It’s kind of like your new car sitting in your driveway. It sure looks great, but it will not go anywhere unless you fill it with fuel. Your assets are the fuel for your trust.
What is a Family Limited Partnership or Family Limited Liability Company?
Family Limited Partnerships and Family Limited Liability Companies are entities used to own and manage family assets and to provide a mechanism to transfer ownership of the assets and control of those assets to your descendants over time. They can also be utilized to transfer property out of your taxable estate and to maximize the assets conveyed to your beneficiaries.
What is a Will?
A Will is a document with your instructions to distribute your assets after your death and a nomination of the person(s) to do it. That person is called a personal representative (formerly executor). Your Will is generally only applicable to property owned solely by you and titled in your sole name (no joint owners) and without any beneficiary designations such as payable on death. A Will must be probated and does not have any authority to transfer assets in and of itself; that authority comes from the probate court through the court appointment of your nominated personal representative. Any jointly owned property and any property with a beneficiary or payable/transfer on death designation generally bypasses your Will.
What is Medicaid?
Medicaid is a state and federally funded and state run medical expense assistance program for those with limited income or resources. For seniors, Medicaid is primarily for long-term care in Medicaid qualifying nursing homes, and in certain circumstances, long-term care outside of a nursing home.
What is Medicare?
Medicare is federal catastrophic major medical insurance program principally for seniors and disabled individuals, covering certain medical expenses for hospitalization, rehabilitation services, hospice, durable medical equipment, lab tests, surgery, prescriptions, preventative care; it does not pay for long-term custodial care.
What is Probate at Death?
Probate is the legal process for distributing assets that are in your sole name without any beneficiary designations after your death through the court process. In probate, a personal representative (formerly executor) is appointed by the probate court. The personal representative is someone you nominate in your will if you have one, or in accordance with state law if you do not have a will. Your personal representative is charged with preserving and protecting the assets of your estate, pay all creditors and estate expenses and then distribute the remainder in accordance with your instructions you leave in your will, if you have one, and in accordance with state law if you don’t have a will. We call probate after death, the lawsuit your family files against itself to protect your creditors, since they get paid first.
What are Guardianships and Conservatorships?
Guardianships and Conservatorships are part of the “living probate.” If you become mentally incapacitated and have not done proper estate planning, then a guardian and/or a conservator may need to be appointed and supervised by the probate court to manage your affairs and make decisions on your behalf. A Guardian is someone appointed and supervised by the probate court to make personal decisions for you such as where you live and what type of medical treatments are made. A Conservator is someone appointed and supervised by the probate court to manage your finances and property and make such decisions as when and how to sell your property. The probate court then makes the decisions about what the Guardian and Conservator can do.
How much may I give in Non-Taxable Gifts each year?
As of 2016, you may generally make lifetime gifts of $14,000 per recipient per year ($28,000 with spousal gift splitting) without any gift or estate tax consequences. These gifts would generally not be included in your taxable estate.
When would I be subject to Estate Taxes?
The estate tax “exemption amount” is the limit on the value of an estate before it is subject to estates taxes. In 2012, federal law set the estate tax exemption amount to $5 million and indexed that amount to inflation. For illustration purposes, we’ll use $5 million as the “exemption amount.” When you die, you can transfer up to $5 million to your loved ones without incurring any estate taxes. If you are married, you and your spouse each have an exemption amount, which means the two of you could transfer up to $10 million to your loved ones and escape the estate tax. If your estate is more than $5 million, when you die the amount that is over $5 million will be subject to a 40% estate tax. So, if you had a $6 million estate, your estate would pay $400,000 in estate taxes.