Wills are essentially documents that, when standing alone, provide for the distribution scheme of a decedents, name the personal representatives, and nominate guardians for minor children. Another way to think of a will is a letter to the judge. It does not provide for probate avoidance nor are will useful to protect privacy. Wills are essential for all estate plans.
When an estate plan has a revocable living trust for its primary distribution scheme, the will becomes a safety net. That is to say, if any assets are accumulated and do not transfer through titling, beneficiary status, or placing into trust, the will acts as a safety net to make sure that all assets are put into the trust. This process is referred to as “pouring” into the trust. This type of will is commonly referred to as a “pour-over” will.
In pure form, trusts exists when a person (the Settlor) transfer a property interest to another person (the Trustee) for the benefit of others (the beneficiaries). Common types are the Revocable Living Trusts and Testamentary Trusts.
A Revocable Living Trust is designed to allow the Settlor to manage their assets as their own while they are living and competent. The first Trustee is typically the Settlor. When the Settlor passes or becomes incompetent, the first named Successor Trustee steps up as the Trustee. Successor Trustees generally cannot revoke and have very limited ability to amend the trust.
It is not uncommon for both the husband and wife to have their own Revocable Living Trust. This allows the estate planner significant flexibility in helping the Settlors with their tax planning and avoiding probate. When a husband and wife use Revocable Living Trusts, it is commonly referred to as a Marital-Bypass Trust and sometimes an A-B Trust.
A Testamentary Trust is a trust that is not funded until the death of the Settlor. The provisions of the Trust are contained in a Will and, upon the demise of the Settlor, the Personal Representative (Executor) will then fund the Trust. The initial Trustee of a Testamentary Trust is, for obvious reasons, never the Settlor. A major drawback to Testamentary Trusts are that they are created within probate and therefore you do not avoid the delay, hassle, and lack of privacy that accompanies probate proceedings.. – A Revocable Living Trust is just as it sounds. It is created while the Settlor is living and may be revoked or amended during the Settlor’s lifetime. Typically, when the Settlor passes away or becomes incompetent, a Revocable Living Trust becomes irrevocable.
Our Firm has developed the exclusive Palooza Trust™ and Postmortempalooza™ for our clients to take advantage of Michigan’s honorary special purpose trust laws in our clients’ end of life planning. The Palooza Trust™ and Postmortempalooza™ may be a component of any well-rounded estate or trust plan. The primary purpose of these trusts is to allow the Settlor to create and plan his or her party or memorial celebration exactly as the Settlor desires. To ensure that the Settlor’s wishes are carried out, the Palooza Trust™ and Postmortempalooza™ provides for the appointment of a Trustee to execute the Settlor’s envisioned end-of-life party or celebration independent of any normal funeral service. The Palooza Trust™ and Postmortempalooza™ also provides for the party or celebration’s funding.
A gun trust is a trust that allows people to buy, hold, and use firearms and other items which are restricted by the National Firearms Act. The transfer, possession, and sale of such items, including silencers, is a federal crime if not done properly. State and federal laws must be followed where the items are stored as well as where the beneficiary lives. To learn more about Gun Trusts, click here to visit our page of Frequently Asked Questions page.
It is advised that every individual should have a personal, financial Power of Attorney that names a trusted person (the Attorney-in-Fact) to assist you in paying your bills and handling your personal business needs in the event you become temporarily or permanently incapacitated.
A proper Power of Attorney can help avoid the need for a formal conservatorship. While it is obvious that a Power of Attorney is neither as authoritative or formal as a conservatorship, it is significantly less expensive and in most cases is sufficient when a family has done proper planning. Therefore, having a proper Power of Attorney in place may allow a family where a person becomes incapacitated the hassle and expense of a formal court hearing to determine capacity for an appointment of a conservator.
A Power of Attorney may be effective immediately or may spring into action in the future when the person becomes incapacitated. Once in place, it allows the Attorney-in-Fact to pay bills, sign contracts, negotiate with vendors, etc.
A Patient Advocate Designation is also referred to as a medical Power of Attorney. In Michigan, however, in order to enforce advance directives, you must appoint an individual that will make those decisions for you (the Patient Advocate). The important thing is that with a Power of Attorney or the Patient Advocate Designation, you are deciding in advance who you want to be in the position of helping you make decisions in the time of need. Obviously, when you are no longer able to make your own decisions, it is not the best time to require you to select someone to make those decisions for you. The Patient Advocate would typically be the family spokesperson that, designated by the Patient, would interact and make decisions on behalf of the Patient including end of life directives.
Contact Shinners & Cook to schedule a consultation with one of our experienced estate planning attorneys, today.