Category Archives: Wills

How Important is a Will, Really?

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How Important is a Will, really? The simple answer to that question is . . . wait for it . . . “It depends.” Most people own assets of some kind when they die. The assets might include real estate (home, land, timeshare, etc.), financial accounts (bank, investment, and retirement accounts), life insurance, savings bonds, autos, boats, toys, and personal effects or “stuff” (clothes, furniture, jewelry, tools, etc.). The assets will all transfer to someone after the owner dies. The question, then, is who gets which assets and how do they get them?

Some of the assets may transfer to surviving joint owner(s) and some may transfer to named beneficiaries. Those transfers will happen automatically with the appropriate paperwork. Some assets, however, may not have a surviving joint owner or beneficiary. The assets in this category will not transfer automatically and must go through the probate process to determine who receives them. This is where a Will comes into play.

What happens with a Will?

A Will (or Last Will and Testament) is a personal instruction manual for probate. It expresses the intentions and desires of the Will maker. Its primary function is to direct who gets what assets passing through probate. It is important to understand that a Will only applies to the assets passing through probate. It does not control any assets passing by joint ownership or by beneficiary designation. For example, if a Will directs all life insurance be given to a charity, but the life insurance form has a cousin named as beneficiary – the cousin gets the insurance proceeds.

A Will also appoints a trusted person to be the Personal Representative (PR). The PR manages the probate process, which includes collecting assets, handling the deceased person’s debts and taxes, and distributing the probate assets to the people or charities named in the Will.

A Will may be used to disinherit individuals who would naturally inherit from the deceased person, such as a child, parent, or sibling. Alternatively, it may include individuals or charities who would not naturally inherit from the deceased person. A Will may also protect vulnerable heirs, such as minor or disabled children, by naming guardians and conservators for the children.

What happens without a Will?

If there is no Will, there is no personal instruction manual. Michigan law, not the deceased person, determines who will receive the probate assets and the persons eligible to be PR. There will be no distribution to favorite charities, no excluding undesirable next-of-kind, nor will unrelated individuals be included. Also, the default laws sometimes trigger family feuds because the process and results are not as well defined as with a Will.

For example, assume a person has no spouse but has five surviving children. Without a Will, those children all have equal priority to be PR of the probate estate. The children might disagree over who should be in charge. A Will, however, would designate which child the parent wanted to be PR of the probate estate. That clarity provided in a Will might defuse the situation and prevent an argument altogether.

Do you need a Will?

So, do you need a will? Again, it depends. If none of the assets you leave behind go through probate, then a Will is not needed. Similarly, if you want your probate assets to go to your spouse and children, or parents (if you do not have a spouse or children), or siblings (if none of the others) and you do not care who is in charge of the probate estate, then it will not be necessary to have a Will. On the other hand, a Will is crucial if:

  • you want certain assets to go to certain people;
  • you want to include a charity;
  • you want to treat your children unequally;
  • you care who is in charge of the probate process; or
  • you want to protect a vulnerable loved one.

An example may help put all this in perspective. Imagine a woman named Sally. Sally is unmarried and has no children. Her parents are deceased, but she does have several living siblings who are estranged from her and to whom she does not want to leave anything. Instead, Sally has a partner with whom she has cohabited with for 20 years and to whom she desires to leave most of her assets upon her death. Sally would also like to support a charity with some of her assets. Now imagine Sally passes away owning a house, two cars, several bank accounts, and a brokerage account. Each asset is in her name alone and there are no named beneficiaries.

In this scenario, all of Sally’s assets will pass through probate. If Sally dies without a Will, everything she owned at her death will distribute to her siblings equally. Why? This is because Sally’s siblings are her nearest blood relatives. In the absence of a Will the default probate laws distribute her probated assets to her nearest blood relatives; therefore, her partner and charity will receive nothing. Moreover, her partner will not be involved in the probate process at all, only her siblings.

If Sally dies with a Will, however, she will be able to change that undesirable result. With a Will, Sally may designate her partner to be the PR of her estate. She will give an amount of money, or percentage of her estate, to a charity and the rest to her partner. Sally will accomplish her goals and will exclude her siblings from managing her estate and from receiving any of her assets.

In conclusion, there are many reasons to have a Last Will and Testament. It is the essential legal document by which you decide how your probate estate is handled and to whom your assets are distributed. Without a Will, your estate may pass to individuals not of your choosing.

If you would like to explore whether you need a Will, or if you would like to learn about how to avoid probate altogether, call CMDA to schedule an appointment with one of our estate planning attorneys. As a bonus, if you mention this article when you call, you will be eligible for a free consultation.

Norman E. “Gene” Richards is a partner in the Livonia office of Cummings, McClorey, Davis & Acho, PLC where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

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Elder Law Vlog

In this video, Attorney Gene Richards speaks about a free resource you can use to put a will or medical power of attorney in place without the use of an attorney in an emergency situation. In an emergency, it is better to have something in writing than nothing. It’s always best to work with an attorney for your legal documents, and you should not copy documents from the Internet or try to draft them yourself. In a pinch, however, Mr. Richard’s recommends a Michigan resource that includes a statutory Will, medical POA and for organ donation. These documents, which have been vetted by attorneys and approved by the state legislature, can be found be clicking here.

Coping in Crisis: Estate Planning Challenges and Solutions

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Estate planning documents (wills, trusts, powers of attorney, etc.) are essential in a crisis.  In the present pandemic, our families, friends and customers are dealing with frustrating isolation, sudden debilitating illness, and untimely death.  Each situation presents unique challenges that is best resolved with a specially designed legal document.  Attorney Norman (Gene) Richards has compiled a Gene Coping in Crisis Estate Planning Solutions chart that lists some challenges and identifies the legal documents that meet each challenge. We hope you find the chart informative and helpful.

Please remember that Mr. Richards and the Elder Law and Estate planning team at CMDA:

1. Leverage technology to assist safely and to provide services faster

2. Offer creative solutions in this time of crisis

3. Are working… Are available… Can help

Norman (Gene) Richards helps clients safely navigate life’s transitions through the skillful, practical, and compassionate application of comprehensive elder law and estate planning services. He guides clients in planning for their future care needs, including maximizing financial resources to pay for the cost of long-term care. He takes the time to understand his clients’ needs and goals and designs practical, customized solutions for them. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

 

Estate Planning for Retirement Years

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Retirement is a highly-anticipated reward for years of hard work and child rearing. The “golden years” are viewed as a special season to pursue hobbies and enjoy life. Interestingly, while many people seek advice from a financial advisor to make sure they have enough money to retire, often they do not obtain a professionally prepared estate plan. Instead of working with an attorney, they will do one of the following:

  • rely on outdated wills, trusts, and powers of attorney drafted many years earlier,
  • use estate plan forms downloaded from the Internet, or
  • not worry about estate planning at all.

All of these approaches are a disaster waiting to happen. There is simply no substitute for an estate plan prepared by an attorney because the legal issues facing older adults are far too complex.

The Advantages of an Elder Law Attorney

Since retirement typically happens later in life, aging and health concerns become more of a priority.　A person who relies on the three approaches above will face several disadvantages:

  • Old estate plan documents typically focus on the children and not the retirement years.”
  • Canned” estate plan forms and those purchased from estate planning services are not tailored to the person’s unique circumstance and are not adequately state specific.
  • Long-term care planning strategies are not authorized or adequately addressed.

On the other hand, an elder law attorney will provide experience and specialized training required to plan for and cope with the unique legal issues that accompany aging.　Elder law attorneys prepare documents that are:

  • tailored to a client’s personal circumstances,
  • current and state specific, and
  • designed to maximize eligibility for public benefits such as Medicare, Medicaid, Veterans benefits, and Social Security.

Estate Plans Focused on Retirement

At first glance, every estate plan seems to use the same few documents: wills, trusts, financial powers of attorney, and medical powers of attorney. It is important to realize that a document labeled as a “will” or “power of attorney” is not necessarily appropriate for the situation.　A power of attorney prepared for a 75 year old should be very different from one prepared for a 40 year old. The financial and health needs of an older person are much different than those of a younger person, and their legal documents need to address those differences. Below are some examples of how estate plan documents for senior adults are tailored specifically for that season of life.

Financial Powers of Attorney. This document authorizes someone to make financial decisions on your behalf. For retirees, this is the single most important document for managing long-term care needs. Carefully crafted powers should be included to deal with retirement accounts, beneficiary changes, transfers of assets, creation of legal documents, and extraordinary powers for long-term care planning.

Medical Powers of Attorney/Patient Advocate Designation. This document authorizes someone to make medical decisions on your behalf. Each state has very specific rules about what decision the health care proxy is permitted to make. It should be drafted for the state of residence. Careful thought should be given to the powers to refuse or withdraw life support, deal with mental health treatment, and who should have the power to make those decisions.

Wills. A last Will and Testament is a well-known document goes into effect after death and disposes of assets passing through probate court. Many people mistakenly believe all of their assets will be controlled by their will. The truth is that a will does not touch some of a person’s largest assets, like IRA’s, annuities, and life insurance. Moreover, wills are not useful during periods of incapacity.

Trusts. Trusts are much more beneficial than wills when it comes to dealing with aging issues and long-term care needs. A trust has several advantages over a will as it:

  • is useful during periods of incapacity,
  • is adaptable to a variety of strategies for Medicaid and VA eligibility,
  • maximizes assets for a healthy spouse under special conditions,
  • benefits disabled children, and
  • avoids probate court process if properly structured.

Summary

The importance of up-to-date estate plan documents that are personalized to the present season of life cannot be overstated. These documents allow trusted family members and advisors to take over management of assets during a period of incapacity. They facilitate access to public assistance programs when needed to help pay for long-term care costs. They minimize the need to involve a probate court judge for the appointment of a Guardian when a person is incapable of making care decisions or the appointment of a Conservator if the individual is not able to manage their finances.

Every person of retirement age should have an elder law attorney on their team of advisors.　Senior adults who consult with an elder law attorney will have assurance that their legal documents have been carefully tailored to their unique situation. They will have peace of mind that they have planned for the financial and legal challenges unique to the retirement years.

Gene Richards_8x10@300Norman E. Richards (Gene) is a partner in the Livonia office of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

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