Drafting an estate plan is more than just preparing for what will occur when you die. Michigan residents should understand that it is a life-planning tool that could prove to be very effective if you suffer in an unexpected accident. While it is clear that documents in an estate plan have a purpose at the time of your death, but what if you survive a horrific event? What documents will designate powers to individuals if you are in a coma or incapacitated?
Why is it important to draft a will and other estate planning documents? A will is the most common estate-planning document, and it serves a very important purpose. This legal document expresses your wishes, designating who you want to represent you after your death. This person is called an executor and provides guidance on how and to whom your property and assets are disbursed to if a beneficiary is not designated.
On the other hand, a durable power of attorney, which is another estate planning document that is paramount to have, invokes a power to a named person to manage your finances on your behalf if you were to become incapacitated. Without this document and designation, financial institutions and other similar establishments will not speak with someone trying to assist you with your financial affairs.
A final key point to remember when drafting an estate plan is beneficiary designation. Accounts such as life insurance, retirement plan, bank accounts and financial accounts all have beneficiary designations or are held in joint tenancy, causing it to go to someone directly at the time of your death. It is important to properly designate these accounts and consider the impact it could have on income tax. Additionally, it is imperative that you ensure that these designations are consistent with your intent and what is asserted overall in your estate plan.
The estate planning process can be complex and it is often much more than just drafting a will. Because of that, individuals should take the time to consider what their current and future wishes are, ensuring that they are properly memorialized in an estate plan.
Source: Bizjournals.com, "Proper estate planning is as much about life as death," Denise Bendele, March 1, 2017