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Oakland County MI Estate Planning Law Blog

Choose the right trusts for your estate plan

One of the functions of your estate plan is to help provide for your loved ones as much as possible after your death. There are several elements to an estate plan that can do this. Two primary ones include your will and any trusts. When the estate plan goes through probate, the will is part of the record. Trusts move assets to the beneficiary without having to go through the probate court.

If you choose to incorporate trusts into your estate plan, you must remember that there are different types. Setting up the appropriate trusts for the situation is important. In order to do this, you have to think about your intentions and the beneficiary's circumstances. This can help to narrow down the types of trust that might work for the situation.

What is long-term planning?

Most individuals are generally familiar with what estate planning entails. It involves a person sitting down with an attorney to draft a will, power of attorney, health care directive or other legal documents. These guide your loved ones, doctors and financial institutions regarding your final wishes. A concept that you may not yet be familiar with is that of long-term care planning. It's a process through which you can decide how you want to be cared for as you age.

Medical care costs are particularly high for seniors as they often require more frequent doctor's or hospital visits as they age. These health care expenses can be financially devastating if you don't plan for them early on. If you add rehabilitation, a nursing home placement or at-home care to the mix, then things become even more financially crippling.

Your executor probably doesn't know everything about you

After taking the time to create an estate plan, you feel that you have everything in order. It gives you and your loved ones the peace of mind that, if something happens to you, your plan will guide them through the probate and estate administration process.

However, even if the person you chose to serve as your executor knows you well, he or she probably doesn't know everything about you or know where you keep everything. You could take one more step in order to make his or her job easier when the time comes.

Ensure estate is handled properly in Michigan

When a loved one from Michigan passes away, their family members have to deal with their final arrangements. An individual with has an estate plan in place will likely have named a personal representative. This person is responsible for making sure the decedent's estate is probated properly. They have several duties that they must complete throughout the process.

We understand that it can be a challenge to figure everything out while you're still dealing with your loss. Having an attorney probating the estate can ensure that everything is handled properly.

Know what type of power of attorney to set up

When you're thinking of your estate plan, you have to consider setting up a power of attorney for your health care and one for your finances. This might seem like a fairly easy task, but it is one that will require you to make some decisions. One of these is the type of power of attorney you want to set.

Two of the more common types of powers of attorney used for these cases are the durable and the springing. These are very different because of the time when they go into effect.

Include these points in your will

A will is the backbone of the estate plan that lets your loved ones know your wishes when you pass away. There are some specific points that you should include in your will. Remember, you also have other estate planning tools, including trusts, to help you care for your beneficiaries and heirs.

One of the primary purposes of the will is to name the executor. You should name a primary person, but don't forget to include an alternative in case the primary person isn't able to handle the duties. The individuals you name should be at least 18 years old. Many people opt to name a spouse or adult child, but make sure this isn't going to be too much pressure on them because they will be dealing with losing you while they have to handle these duties.

Set a plan for your finances if you're incapacitated

There are many things that you have to think about when you set up your estate plan. Many people know that they need to set a plan for their assets and possibly their health care. They might not think about what's going to happen with their financial matters if they're unable to handle those.

You can set up a durable power of attorney for your finances. This document will only empower the person to handle your money matters if you're incapacitated. Knowing that you have this in place might give you peace of mind. It can also allow your family members to focus on other things if you're in bad health.

The work is just beginning after you execute your trust

After spending a great deal of time determining whether you need a trust, figuring out what kind of trust you need and creating the document itself, you may think that, once you execute it, you are done. You can put it away and not have to worry about it again.

Unfortunately, if you do that, you will have wasted all that time, money and effort. In order for a trust to work for you and your beneficiaries as intended, you need to "fund" it. This post explores what that means.

Trusts: Revocable and irrevocable vary considerably

Many people opt to use trusts as part of their estate plan. When you do this, you have to determine what type of trusts you are going to establish. There are many to choose from, but each one will be classified as either a revocable or irrevocable trust. Understanding the difference between these two designations can help you make the decisions you feel are best.

A revocable trust is one that you can change when you want to. You can switch to a different beneficiary or cancel the trust completely if you decide to. Some people appreciate the flexibility that this gives them since they can tweak the trust until they have it exactly how it needs to be. The downside to this is that there are some protections that this type of trust doesn't provide that might be valuable for you.

Understand the lookback period for long-term care planning

Many people don't think about the possible need for long-term care until it's too late. This type of care is costly, and most people won't be able to pay out of pocket for it. Instead, they'll need to have some measure of financial assistance for the costs that come with this type of care. Some individuals hope they'll be able to qualify for Medicaid, but ensuring this can happen may require some special planning.

In order to effectively plan for the possibility of needing to qualify for Medicaid in Michigan, you need five years. This is because the program has a five-year lookback period when determining eligibility. This means that anything you've sold or given away of value can be counted against you during the determination of your benefits.

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