Many of our Michigan readers know that having a will is just one piece of a larger, comprehensive estate plan. Previous posts here have also detailed how important other estate planning documents can be, such as trusts and powers of attorney. However, those other documents - while still very important for many people - should not cast a shadow on the fact that a will is going to be the bedrock document in most instances, regardless of the amount of assets that need to be distributed or the number of relatives that need to be included in the plan.
When many Michigan residents think about estate planning, they usually know at least the starting point: a will. Even though some reports continue to show that about half of the people who should have a will don't have a will, those people who don't have a will probably still know what a will is supposed to be designed to do. They know that this document is used to designate property distribution for a person's assets, including personal property, after death, and that for people with minor children guardians are named to care for those children in the event that the other parent is also deceased. Some people will say that a will is a way to provide a person with "peace of mind." But some of our Michigan readers may be overlooking who else will be helped by a solid, complete and comprehensive estate plan: relatives.
Estate planning can be tricky business. When an individual has a lot of money or other assets to leave, drafting the proper documents, following proper procedures, and working with people you can trust are essential. A mistake in any of these areas can lead to unintended, tragic consequences that may leave family members without family property. One way to avoid problems such as a will contest or probate litigation is to update estate planning yearly. There are several reasons why this may be in the planner's best interest.
Most of our Michigan readers know the basic goals of a will. First, the will is intended to designate property distribution among relatives, friends and charities, so that a person's assets will be passed on to those individuals or organizations specifically designate by the estate planner. These assets could include personal property, business assets, real estate or cash. Sitting down and crafting an approach during the estate planning process can give the planner the comprehensive approach - and comprehensive answer - that they want to provide some piece of mind.
"Where do I begin?" This is a question that many people have when they start to think about drafting a comprehensive estate plan. Even the term, "estate plan," can lead some people to scratch their heads and go back-and-forth over whether they really even need to have a plan, and if it is worth the work involved. But getting started with an estate plan doesn't have to be overwhelming or daunting. A recent article pointed out that several simple goals are what an effective estate plan is all about.
Some of our Michigan readers are probably interested in avoiding probate litigation as a primary goal of estate planning. There are many ways to avoid litigation, whether the issue is a will contest based on the validity of a will, or arguments among relatives about the distribution of assets. Some wills even include specific clauses that could penalize anyone who challenges the will. However, another good way to avoid litigation may not seem so obvious at first: make sure everyone gets at least something.
Some of our Michigan readers may have trouble thinking of this figure: $5.25 million. When it comes to estate planning, however, this is actually a very important figure. $5.25 million is the limit of the federal estate tax exemption. What does that mean? It means that if the total value of an estate is below that threshold it will not be subject to taxation at the federal level. For many people, this will never be a concern because there is no way they would ever earn that sort of money, short of winning the lottery. Unfortunately, this type of thinking also sometimes leads people to think that they do not even need a will, let alone a comprehensive estate plan. In reality, however, this is far from the truth.
One of the primary goals of estate planning is to designate property distribution upon death. But, what is the best way to plan for this? When a person is trying to get more information about an estate plan, anyone helping them draft their will and all of the other appropriate documents will need just as much, if not more, information from the planner about their intentions, assets and relatives. Is there a good way to compile this information and then go through the tough choices involved in divvying up personal property? A recent article set out one option, called the "Four P's": People, Property, Plans and Planners.