Individuals often think that if they make a Will, it means they have an estate plan — but that actually is a common misconception. While your Will is part of an estate plan, it is only part of a complete estate plan.
In the discussion that follows, I explain the difference between a Will and an estate plan, as well as why it is essential for most people to have both. I include explanations of many of the legal terms used in estate planning.
The term “Will” is an abbreviated form for the name of a legal document called a Last Will and Testament. The person who creates the Will is the Testator or Testatrix. A Will sets out your wishes regarding distribution of property after your death. It also includes important other provisions.
If a person dies without a Will, he or she dies intestate. In that situation, Michigan laws of intestate succession determine distribution of the estate, rather than the decedent making those decisions.
You may be familiar with two famous singers who died intestate and did not have a Will (or an estate plan) — Prince and Aretha Franklin. If you read the news stories about their estates, you already know about the problems and confusion that result when someone dies without these essential legal documents in place.
Different terms apply to inherited property, depending on how it is received. The individuals who receive your property in your Will or trust are beneficiaries. If you die intestate, the people who receive your property under state law are your heirs.
In addition to specifying the beneficiaries to receive your property and assets, a Will has other important provisions that express your wishes about what occurs after your death. Those provisions address:
The person you name in your Will to administer your estate is the personal representative, also referred to as the executor of your estate. If you do not have a Will, the court appoints a personal representative to handle your estate.
In the absence of a Will, the court may appoint a personal representative who is someone that you would not want to manage and distribute your estate. The same possibility occurs regarding the guardian and conservator for your minor children, if you do not name a guardian and conservator in a Will.
If you do not express your wishes in a Will, family disagreements and disputes can arise over property division, management of the estate, your final arrangements, and care of minor children. One critical reason to make a Will is to avoid these types of disruptions in your family, which can ruin lifelong relationships forever.
An estate plan is a set of legal documents that protects you, your family, and your assets and provides for efficient, orderly distribution of your property after death. Estate planning is the process through which you and your attorney determine your needs and goals and create the essential documents for your plan. If you do not have an estate plan, Michigan law makes all those determinations for you — and what the law provides may not be the same as your own wishes.
An estate plan is more comprehensive than your Will. While your Will addresses what happens after your death, some of the additional documents in your estate plan actually protect you during your lifetime. Those documents include:
If you do not have these documents in place and become incapacitated, your family will have to ask the court to appoint a guardian to manage your personal and medical needs and a conservator to manage your finances. The court may give that authority to individuals that you would not want to make decisions for you.
Some estate plans also include a trust, which is a legal arrangement under which the named trustee manages and distributes property to beneficiaries of the trust. To create a trust, your estate planning attorney includes a trust instrument as part of your estate plan.
Trusts serve many different purposes. A trust in an estate plan accomplishes goals important to the person creating the trust, who is the grantor of the trust. Examples of commonly used types of trusts include:
A significant advantage of many types of trusts is that they avoid probate (the formal legal process for settling estates) and maintain the financial privacy of the estate. Your estate planning attorney will discuss the possibility of using a trust as part of your estate plan when your goals might be served by creating a trust.
When you make a Will and create an estate plan, it is essential to talk with an experienced estate planning lawyer. Using an online service or form for a Will or any other legal document creates a substantial risk that your document may not be valid or may not accomplish your goals at all. Unfortunately, if that happens, it may not be discovered until it is too late to fix the problems.
If you take the time to create an estate plan, you should make sure that it is fully effective and does exactly what you intend. Numerous Michigan laws apply to Wills and other documents in an estate plan. Trusts and trustees are subject to state laws as well. Consulting with a knowledgeable estate planning attorney is the only way to ensure that your Will and your entire estate plan comply with the requirements of Michigan law and accomplish your goals.
Estate planning is a necessity that many people overlook. While planning for the future is easy to put off, it is essential for your and your family’s well-being. It also brings you the peace of mind that you have taken care of your family. When you enlist the help of an experienced attorney, the task is greatly simplified. Your lawyer will help you navigate seamlessly through the whole process and ensure that all the essential details are fully addressed.
In my practice at Ager Law Office, I help individuals and families with all aspects of estate planning. From my Ann Arbor office, I serve clients throughout Washtenaw County. To talk with me about a new estate plan or about updating your existing plan, call (734) 649-0784, send an email to email@example.com, or use the online contact form.