Oakland County MI Estate Planning Law Blog

Heirs often assume that their inheritance is protected from creditors, taxes, divorce and undue influence, if there was an incapacity. But, there may be little support for this assumption unless inheritance trusts were properly planned. Several components should be considered.

The person who receives the inheritance, the client, is named as the trustee and may designate the successor trustee, if they resign, die or suffer incapacity. Any successor trustees must comply with reasonable limitations, such as limiting successors to their spouse, children or a trust company to assure that a person outside of their family cannot overtake the trust.

A bad Michigan estate plan can have consequences long after a person dies. There are common errors that afflict estate planning.

Failure to name a contingent beneficiary on insurance policies and retirement accounts or updating this information is a typical error. Not naming a contingent beneficiary can leave an estate open to probate and creditors. For an IRA, this failure can eliminate a tax break to the person who inherit the account to draw out distributions over their life expectancy.

Without proper planning, dealing with estate matters and handling parent's business and personal matters can become a modern-day Cain versus Abel family dispute. Before executing a power of attorney, family members should understand its powers, its place in estate planning and how sibling powers can be assigned and shared.

A general power of attorney covers an agent's management of financial, business or personal affairs. This power is often exercised when a parent cannot govern their affairs because of ill health or other reasons. A health care power of attorney grants a sibling power to make health care decisions, usually under these conditions.

A recent study revealed what each state's residents have the most concern about when it comes to finances. In Michigan, the most Googled financial term was "income tax." However, perhaps Michigan residents should take a cue from New Yorkers and feel more concerned about estate planning, which was that state's most searched term. 

One aspect of your estate plan you need to carefully consider is who should be the trustee of your estate. This is an individual who has a legal responsibility to administer property within a trust to the proper parties. You need to carefully consider who should have this responsibility, but in the event you want to change the trustee for whatever reason, it is possible to do so.