Contact our Estate Planning attorneys:
Michael A. Hettinger
Kerry D. Hettinger
Kalamazoo: 324-2000 Battle Creek: 968-5000
Three Rivers: 273-7800 Sturgis: 659-6161
Coldwater: (517)278-6800 Dowagiac: 782-2500
Fax: 344-3601 Statewide: 800-294-5055
THE ESTATE PLANNING PROCESS
An estate plan is an arrangement for the use, conservation, and transfer of one's wealth. The process by which an estate plan is created is called estate planning. This process involves much more than merely preparing the estate owner's will. A well thought-out estate plan concerns itself with the creation of an estate where none would otherwise exist, the increase of an existing estate to meet the needs of the owner and his or her family, and the preservation and protection of the estate from unnecessary taxes and expenses.
A good estate plan should provide for the best utilization of assets during the owner's lifetime. With this in mind, the estate plan should anticipate and, after the owner's objectives are ascertained, provide for such lifetime needs as funds for children's education, income for retirement, replacement of income in the event of disability, and management of the estate in the event of incapacity.
A good estate plan should provide for the disposition of assets on death in such a way that the estate being passed on is maximized and is left in accordance with the wishes of the decedent and the needs of the family. In carrying out this goal of estate planning, the planner should realize that the task cannot be accomplished unless he or she first ascertains, in a very careful manner, the estate owner's objectives. Only after this is done, can the estate planner suggest and tailor for the owner an estate plan which accomplishes the objectives of the estate owner while accomplishing the overall objectives of estate planning.
Tax-saving methods can frequently be employed to achieve many estate planning objectives. By minimizing taxes, the estate owner will have not only a larger estate to enjoy during his or her own lifetime, but also a larger one to satisfy the needs of the family after the owner's death.
Probate avoidance is one objective of estate planning which is easily achieved with the proper planning. The Probate Court is the the failure to plan court. When a person fails to plan for the management of his or her affairs, the probate judge steps in and determines what should be done with the persons children and assets. Probate avoidance refers to two separate and distinct issues. First, a good estate plan will minimize the amount of estate assets which must be spent in the distribution of the estate. When assets pass through the hands of a probate court prior to distribution, the expenses of administration increase.
The second, and all too often overlooked, issue regarding probate avoidance arises when money or other assets pass to a minor. The law in Michigan does not allow a minor to directly receive and manage assets received by him or her due to the death of a parent or parents. The two primary options for the management of a minor's money after the death of his or her parent or parents are through a conservatorship or a trusteeship.
In a conservatorship, the probate court appoints a person to receive, invest, and disburse a minor's assets. The probate judge determines how the money is to be invested. The money can only be spent for the minor if the probate judge consents. On the minor's eighteenth birthday, the conservatorship terminates and, if mentally competent, the assets are given directly to the minor. This occurs irrespective of the minor's ability to manage his or her own finances.
In a trusteeship, the trustee appointed by the person establishing the trust (the grantor) receives, invests, and utilizes the minor's assets in accordance with the wishes of the grantor. The trustee owes an obligation to the minor (the beneficiary) to administer the trust according to the grantor's wishes. The trustee does not need permission from an unrelated person, such as a probate judge, to spend money for the benefit of the minor. The trustee disburses the trust assets to the beneficiary at a time predetermined by the grantor, usually when the beneficiary has reached an age by which he or she is more able to manage his or her financial affairs.