LAW OFFICES OF
AARON D. COX
PROFESSIONAL LIMITED LIABILITY COMPANY
23940 EUREKA RD. SUITE 107
TAYLOR, MICHIGAN 48180
www.aaroncoxlaw.comTELEPHONE (734) 287-3664 FAX (734) 287-1277
Top 10 Frequently Asked Questions About Estate Planning
1. Can't I use a Will but keep my estate out of court?
Answer: No. Using a simple Will alone ensures that your estate will be involved in the probate process. A Will is literally an instruction to the Probate Court requesting that the court assure that the decedent's taxes and expenses are paid and then the remainder of the estate is handled in the manner that the decedent described in the Will.
2. I don't have a very large estate, so it seems to me that having a Trust is overkill and would be more expensive. Why can't I simply use a simple Will?
Answer: Generally speaking when all is said and done your estate will have incurred more expenses by using a “simple” Will rather than using a revocable living trust with a pour-over Will. There are fees to pay in Probate Court for the filing process as well as an “Inventory fee”. On the non-monetary side, going through probate will mean that your heirs will be forced to adhere to the time table set by the probate court. Finally, a simple Will will not avoid “living probate”.
3. Can I avoid “living probate” by having a simple Will and a durable power of attorney document?
Answer: Having a simple Will and a Durable Power of Attorney does not guarantee that you would be able to avoid “living probate”. Many institutions do not honor a Durable Power of Attorney document which is not of recent date. So, a conservatorship may still be necessary to pursue in the Probate Court. The evidence that a Durable Power of Attorney document was executed may be submitted in court, however the court may still appoint someone else as the person's conservator.
4. I hold everything joint with my spouse; therefore, I thought I would simply put my children's names on all real estate that we own so we can avoid probate that way. Is there any problem with this?
Answer: This type of “estate planning” often results in a family feud. It must be carefully analyzed. The use of joint tenancy between husband and wife will avoid the time and cost of probate at the first death but probate at the second death will be required. The addition of children as owners introduces a lack of control by the parents over the disposition of that joint property because all joint owners must agree. You may have inadvertently included dower rights of in-laws and creditors of the children may then be able to attack and attempt to apportion property to satisfy the children's debts.
5.Why does a trust avoid probate?
Answer: The key in avoiding probate with a revocable living trust is the retitling of assets. Assets titled in the name of the trust avoid probate. At the time of the person's death, if the asset is owned by the trust and is not in the decedent's name alone, the Probate
Court has no control over that asset. Therefore the Successor Trustee of the trust is now able to handle the asset as the trust document instructs. Note that after a trust has been established, it is still necessary to transfer the ownership of the assets held in the person's name over to the trust during the person's lifetime or it too, will not avoid probate.
6. Wouldn't using a trust during my lifetime restrict me in what I can do with my own property?
Answer: No. A revocable living trust is a document created while you are living, but does not prevent you from continuing to use your property as you wish during your lifetime.
7. I do not believe that our family needs the use of a trust since we have small children and our estate is well under the applicable exclusion amount for state taxes. Is this correct?
Answer: Even though your estate may be considered modest in terms of the likelihood of needing to pay federal estate taxes, you should consider what would occur if both parents died prematurely. Would you want your children to be able to receive their entire inheritance at age 18? If you leave assets to your minor children and both parents die before the child reaches 18, the court will set up a conservatorship with those dollars for that child. However, when the child reaches the age of 18 the child will then receive the entire lump sum inheritance.
8. Aren't Patient Advocate Designation documents simply for people over sixty (60) years of age?
Answer: No. Beginning at age 18 Michigan law enables you to name a surrogate known as a “patient advocate” to make medical care decisions for you in the event you become incapable of communicating such decisions for yourself. Your patient advocate can make any decision you can make within the limitations you set forth in the document.
9. If I use a trust, don't I still need to set up an executor of my estate?
Answer: If you use a revocable living trust, you will be naming Successor Trustees. A Successor Trustee will, upon your death, serve the same function as what you may be familiar with as the function of an “Executor” of an estate. A significant difference is that the Successor Trustee will not have to undergo any court proceeding to accomplish your goals.
10. If I am going to use a trust, why do I have to use a will at all?
Answer: There are still very good reasons for having what is called a “pour over” Will. First, if you have a minor child the Last Will and Testament is the document in which to nominate a guardian and/or conservator for any minor child. There will need to be a court proceeding in order to appoint a guardian or conservator and so it is appropriate that the Will be used to make those nominations.
The Will is referred to as a “pour over” Will because the Will instructs that after any taxes and expenses are paid, the remainder of any assets would “pour over” into the trust and then be handled according to the instructions in the trust. In other words, the Will “catches” any assets that were held in your name alone at your death and “pour them over” into the trust to be handled as you have directed in that document.
Please consult an attorney before making any legal decisions related to your estate plan. For more information or to set up a consultation, please contact my office at the information listed above.
Aaron D. Cox, Esq.
