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Estate Planning | Living Trust | Living Will/Advance Directive Trust

Estate Planning (Wills, DPOA's)

At Bodwin & Associates, P.C., PC we are experienced in assisting individuals with their end-of-life planning, to make sure that their own individual wishes are carried out and not what someone else thinks should be done. Nothing is more personal that one’s own death, and we believe that people have a right to make their own decisions, to die with dignity, and to have their wishes respected. This includes who inherits your property when you die, and who makes your medical decisions if you are no longer able to do so. Proper planning can prevent a great deal of uncertainty, conflict, expense, and emotional distress. That’s where we can help. We are honored to be able to provide this service.

Estate plans necessarily vary according to each individual's particular situation. That it why it is important to talk with a knowledgeable attorney, rather than resort to do-it-yourself kits from the bookstore or the internet. You should also be wary of people, including attorneys, who use a “cookie-cutter” approach or who try to sell you a trust when you don’t need one.

A typical estate plan would begin with a will, a durable power of attorney for health care including an advance directive (living will) and a durable power of attorney for managing one’s affairs in lieu of a conservatorship.

We can also offer advice on avoiding costly legal processes and tax liability in the event of disability or death. Among the most common legal pitfalls are living probate, death probate, estate taxes and death taxes. These financially and emotionally draining legal processes and costs can be avoided by creating a comprehensive wealth management plan.

Estate planning is a complex undertaking and to do it properly requires a patient, knowledgeable attorney with a complete knowledge of your individual situation and your personal wishes. Nothing is sadder than to see people burdened with a mountain of legal documents that they don’t understand and that don’t serve them well. An estate plan should provide comfort and order, not create unintended problems. We take the time to do it right. If we believe you require more complex estate planning, we will refer you to attorneys who specialize in that.

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Living Trust/Revocable Grantor Trust
What is a Living Trust?
More correctly called a revocable grantor trust in Michigan, the living trust is an estate planning device that has become increasingly popular in recent years. It is created for the purpose of holding ownership to an individual's assets during his/her lifetime and distributing those assets at the time of death. Usually the individual is also the trustee of the living trust and can control the assets even though they belong to the trust. The intent of the trust is to eliminate the need for probate of the individual's estate at his death and to ensure privacy.

Who sells Living Trusts?
Attorneys may recommend the living trust as an estate planning device for some clients where it is appropriate for their particular needs. However, living trusts are also being sold through mass marketing by several companies to senior citizens in one of the fastest growing consumer blitzes in the nation. These companies are selling living trusts to senior citizens by the use of misleading claims and representations.

What are some of the claims made and what are the true facts about those claims?

Probate costs are high, 10% of the estate.

This is not true. Probate costs are very small and never 10% of an estate in Michigan.

Attorney fees are high for probate services.
This is also not true. The requirements of Michigan's Estates Protected Individuals Code (EPIC) take only limited attorney hours. Attorney fees increase in the event of tax issues or issues of the valuation of assets, but these can also arise if a living trust is used.

Safe deposit boxes and bank accounts are impounded in probate.
Neither safe deposit boxes nor bank accounts are impounded. When the personal representative is appointed, he/she has access to safe deposit boxes and bank accounts.

Assets are distributed in probate only after a lengthy waiting period of 1-3 years.
Generally, the waiting period for distribution of assets in a probate estate is about 6 months after death. To insure that assets can be distributed without fear of a creditor's claim, the probate code provides for a published notice to unknown creditors of the decedent and actual notice to known creditors. Creditors have 4 months after publication to present their claims or they are forever barred. Actual notice is required for known creditors, but the time limits for them to bring a claim are shorter. Here again, there are similar notice requirements for a living trust.

Assets must be liquidated in probate.
Generally not. Assets are only liquidated in order to pay taxes or creditors, but this is also done under a living trust if necessary.

Probate litigation is expensive.
There is no need to expect litigation under either a will or a trust; however, both the will or trust can be challenged by an unhappy heir and similar tax and valuation issues can arise under either a will or a trust.

Federal and state taxes are high in probate.
This is a half truth because estate planning can be done under both a will or a trust. If assets at death are under $1,500,000, there will be no federal estate taxes and no Michigan inheritance taxes.

Complex probate proceedings require special court approval to take actions.
This is also untrue. In Michigan, the procedure known as unsupervised probate is used in over 95% of estates. This procedure does not require formal court approval for most actions.

Will contests are possible in probate.
There is no reason to expect a will contest. However, any person interested can challenge a will based on certain legal grounds, but any interested person can also challenge a living trust on the same grounds.

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Living Wills/Advance Directives (Lessons Learned From Teri Shiavo)
Since the Teri Schiavo case became headline news, people all over the country have become much more aware of the need to have a living will, advance medical directive, or whatever you may call it. And lawyers, whether they practice estate planning or not, have been besieged by questions of people wanting to know what they think about the case.

At Bodwin & Associates, P.C., we believe there are two lessons that we must learn from Teri Schiavo:

Lesson #1:
A living will, advance medical directive or whatever you may call it, can and must be designed to express an individual's wishes, whatever they are. Most people think that they only need a living will if they want to pull the proverbial plug. Not true. Clients are frequently surprised to learn that they can have a living will that directs that they be kept alive as well. The tragedy in Teri Schiavo's case is not that a woman may have died against her will; nor is it that she may have been kept alive against her will. The tragedy is that we did not truly know her "will". A living will should include the answers to such questions as: Do you want to be kept alive by all means necessary? Do you consider nutrition or hydration a heroic measure? What about pain medication? If you are pregnant, whose life should take priority, yours or the babies?

Lesson #2:
In addition to creating a living will to let people know your wishes, you must name an agent to make medical decisions when you cannot make them for yourself. It does no good to let people know what you want to have done if you do not give someone the authority to make those decisions on your behalf. If Teri Schiavo had designated her husband as her patient advocate, her parents would have had a much weaker argument. Designating a patient advocate indicates that you trust someone to make decisions for you and directs the medical professionals to deal with that person. Clients often ask if they can name their children jointly. We advise that they can, and warn that they should not. You should name the person most likely to carry out your wishes. You should also consult with an attorney about the various authorities you can confer upon your agent. Should your agent be able to stop medical treatment? Should your agent be able to authorize (or not) medical tests? If the facility you are in is not honoring your wishes, should your agent be able to transfer you? Most important, should your agent have access to your medical records? This has become a bigger issue with the passage of HIPAA (the Health Insurance Portability and Accountability Act). HIPAA was designed to protect our privacy but has resulted in handcuffing our medical professionals to our medical charts. Without proper authorization, even your designated patient advocate will have difficulty accessing all of your medical information. This is a new concern that many attorneys have yet to recognize and incorporate into their documents.

No one should be kept alive, or left to die, against his or her wishes. The only way to prevent this from happening is to make those wishes known, and to empower a trusted person to make those decisions for you when you are unable to do so.

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