Michigan Estate Planning Blog

Just the Facts on Estate Planning

 

While you do need an estate planning attorney to prepare an estate plan properly, you don’t need to go to law school to understand basic facts about estate planning. As reported in a recent article from the Pauls Valley Democrat, “Some real facts about estate planning,” getting the right information on estate planning basics can alleviate unnecessary anxiety and help resolve concerns.

You can use a trust to avoid taxes. Well, not always. Creating a trust alone doesn’t save taxes. It depends upon the type of taxes being discussed—income taxes, federal estate taxes, state estate taxes, or inheritance taxes—and the type of trust being created.

The person who establishes the trust, known as the grantor, pays income tax on a revocable living trust. If the trust is an irrevocable trust, income held in the trust will be taxed at rates near the highest individual tax rate.

Trusts do offer possible estate tax savings, depending upon the type of trust and how it’s structured. However, estate taxes aren’t even a concern for most people, since an individual must own more than $13.9 million of assets at the time of their death before any federal estate tax applies. Whether or not this historically high exemption level remains after December 31, 2025, is still unknown and you should speak with your estate planning attorney to be sure you are prepared if your estate is near the $7 million level just to be sure.

The heir pays estate taxes. Not always. Beneficiaries don’t pay the estate tax. The estate pays federal and state estate taxes. Federal estate taxes apply only to the estates of people with large amounts of wealth, who have likely done the proper estate planning to avoid paying estate taxes in the first place.

If you live in one of the few states with an inheritance tax, then you’ll pay inheritance tax based on the laws of your state.

If inherited assets include a large amount of appreciation, there won’t be any capital gains taxes paid because the recipient receives the assets at their fair market value at the date of death. For example, let’s say your mother dies owning $100,000 of land, which she bought in 1958 for $10,000. If she sold the land, she’d pay capital gains tax on $90,000. However, her heir’s basis is $100,000, and they could sell the land for $100,000 and pay no taxes.

The best way to avoid worrying about estate planning is to schedule a consultation with an experienced estate planning attorney and discuss your unique situation. They’ll be able to create a plan to minimize your taxes, discuss whether a trust would be appropriate for you and your heirs, and give you the peace of mind that comes with knowing you’ve taken care of yourself and the next generation.

Reference: Pauls Valley Democrat (April 11, 2025) “Some real facts about estate planning”

Here’s Why Everyone Should Have a Will

 

There isn’t an estate planning attorney alive who doesn’t have horror stories of what happens to families when a loved one doesn’t have a will. The person without a will leaves behind a mess for loved ones to take care of, including the risk of minor children being placed in foster care. This should be enough to motivate you to call an estate planning attorney, says a recent article from Investopedia, “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Having an estate plan in place does not have to be complicated. However, not having one is. Family conflict is more likely to occur, probate can drag on for months or years and take a big bite out of your estate’s value. If you don’t have an estate plan with medical directives, you might be kept alive by artificial means, even if you’ve told everyone in the family you don’t want this to happen.

Every state has its own laws about how assets are distributed when there is no will. For the most part, they follow bloodlines. Estranged relatives could end up owning everything, or one child could end up with an unwanted responsibility. Having a will lets you be intentional about distributing your assets.

Even close families fight over inheritance when there’s no will. Without documenting your intentions in a will, family members can end up in court, sometimes fracturing families permanently. This is probably not the legacy you’d want to leave behind.

Probate is a legal process where the court validates a will, appoints an executor and allows the executor to administer the estate. If there is no will, the court will appoint an administrator, who is likely to be a stranger. They’ll track down assets, pay debts and distribute what’s left after their fees are paid.

While the court-appointed administrator is handling the estate, heirs will need to wait for any inheritance and the fees, and the months may stretch on far longer than if there were a will and an executor named.

Estate planning is also a means to preserve wealth and pass it on to the next generation. For families who are just getting started, receiving an inheritance of any size could make the difference between owning a home or continuing to rent without the opportunity to build equity for their own descendants.

If you think of creating an estate plan and a will as a gift to your children and your grandchildren, it may be more comfortable than thinking of it as a reminder of your mortality. An estate planning attorney in your community will have the legal knowledge and understanding of how families work. You can leave a legacy of caring, planning for the future and take care of those you love with an estate plan.

Reference: Investopedia (April 11, 2025) “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Should You Put Your Home in a Trust?

 

If you own a home, you know your name on the title proves ownership. If you decide you’d like to transfer ownership, the name on the title changes. According to an article from ABC 45 News, “How, and why, to set up a trust for your house,” you can transfer ownership of your home to a real estate trust.

One of many reasons to put your home into a trust is to make it easier for your executor and heirs if your estate plan includes passing the home to your children. Transferring your home to a real estate trust involves certain legal and tax benefits. Here’s a look at why this might be something to discuss with your estate planning attorney.

First, what is a real estate trust? A real estate trust is a trust designed to own real estate property, which is transferred into the trust by retitling the deed. Once this is done, like any other trust, the asset—the real estate property—is managed by the trustee for the benefit of the grantor and beneficiaries.

In most cases, the home's original owner names themselves as the trustee to maintain control of the property, although someone else can be named as a trustee. An adult child is often named as the trustee if the original owner is ready to take this step.

Trusts have many applications for estate planning as well as tax planning and asset protection. Depending on the type of trust your estate planning attorney determines is best, a trust can be established to protect the home from creditors as well as passing directly to heirs without needing to go through probate court.

If you need a revocable or living trust, the grantor (the person who creates the trust) can make changes or even close the trust at any time. This is appealing to some people because they want to be able to be in charge. When the grantor dies, the property is distributed to beneficiaries according to the directions in the trust.

If you put your home in an irrevocable trust, the asset is protected against lawsuits and creditors. The same protection doesn’t extend to a revocable trust, however. The irrevocable trust may be eligible for a stepped-up basis on the grantor's death, reducing estate taxes and capital gains taxes when the property is sold, if all required conditions are met.

Trusts are a popular means of circumventing the need to go through probate court, which can cost thousands and take months or years to complete.

Senior homeowners should consult with an estate planning attorney to learn how placing their home in a trust will impact their overall estate plan and Medicaid eligibility. If there is no estate plan currently in place, this is something to address as soon as possible. We don’t know what the future holds, but we do know that having an estate plan provides peace of mind for all concerned.

Reference: ABC 45 News (March 14, 2025) “How, and why, to set up a trust for your house”

What Should Be Included in Your Estate Plan?

 

Estate planning attorneys often have clients who are more than 100 years old. However, those clients have usually made all their estate planning decisions while they were far younger, like in their 70s or 80s! A recent article, “Guidelines for estate planning, from a Golden Valley attorney,” from Sun Post, explains what your estate plan should include and why.

People should have their estate plans in place long before they turn 100, to provide peace of mind for themselves and for their heirs and executors, who will need to take over their affairs in case of incapacity or when they ultimately die.

Everyone should have a healthcare directive, sometimes called a Power of Attorney for Healthcare or Healthcare Proxy. This allows another person to have access to medical information and acts to express your wishes if you can’t communicate your wishes because of illness or an injury.

One person should be appointed to follow your healthcare and end-of-life instructions. Making your wishes clear in a legally binding document ensures that your loved ones know what you want and will help them make decisions for your care during a healthcare crisis.

You’ll also want a financial power of attorney in place so someone else can manage your financial life. Some people opt to make their bank accounts payable to a trust or retitle the bank as a “Transfer on Death” (TOD) account. This lets someone gain access to your finances. Let’s say you needed to be hospitalized for an extended period—having these documents in place will allow bills to be paid, your home maintained and avoid penalties for late or non-payment.

Many people today have trusts to prevent the estate from going through probate. When a will goes through probate, it becomes part of the public record. Probate takes time and can be costly. While probate in some jurisdictions isn’t as bad as in others, it can delay settling your estate by months or years.

Everyone who is over 18 needs to have a will. A will describes how your assets are to be distributed. If you have family heirlooms, for instance, your will can clarify who you want to receive a necklace or piece of art. The will instructs your executor, so they know exactly what you want to happen.

Your will is also used to nominate a guardian for minor children. Parents should always have a will, so they can name the person they want to raise their children in case both parents die.

Not having an estate plan leads to all kinds of problems for families. For one thing, the distribution of assets, and who should be the guardian for children and executor of your estate, are all decided according to the state’s laws. You may not have wanted your first cousin to raise your children. However, the court will make the decision for you. It’s better to have a will.

If you already have a will but haven’t updated it in more than three years, it’s time to dust it off and have it reviewed by an experienced estate planning attorney. Changes in your life and tax laws could mean that your will isn’t going to work the way it once did.

A final note: ask your estate planning attorney about how to store your estate planning documents. If your documents are stored at a safe deposit box, they will be sealed upon death and won’t be accessed until a court order has been obtained. This can delay settling the estate and create complications for loved ones.

Reference: Sun Post (March 20, 2025) “Guidelines for estate planning, from a Golden Valley attorney”

How Estate Planning Can Transfer Ownership of the Family Home

 

Starting and finishing an estate plan will not only provide peace of mind but also save your heirs from the stress and expense of going through the probate process. This is especially true if your plan is to bequeath the family home to loved ones, says a recent article from Cleveland Jewish News, “Estate planning simplifies inheriting a home.”

If no estate planning is done, the amount of time and paperwork to pass the home to a family member can become overwhelming. Planned correctly, the transition is far more efficient and less costly.

There are a few different ways that this can be accomplished. An estate planning attorney will know the best way for your unique situation. For instance, if you own the home with a spouse, typically Jointly With Rights of Survivorship (JWROS), each owner has an undivided interest in the house. The surviving spouse will follow the rules in their jurisdiction. This usually requires filing a document with the county recorder’s office with an affidavit of survivor and death certificate, and the interest of the decedent will pass to the surviving tenant.

If two or more people own the home together but not JWROS, when one of the owners dies, their interest in the house will need to go through probate. This can get sticky, especially if their heirs have a different plan for their share of the house than the other person or persons who own the home. This is a common estate planning disaster, often leading to litigation.

Another way to protect the inheritance of a home is to have a Transfer-on-Death (TOD) designation affidavit. The owner can sign the document, and the house ownership will be transferred upon their death without going through probate. If you have a straightforward estate plan, ask your estate planning attorney if this option is permitted in your jurisdiction.

If you have a more complicated estate, significant wealth, minor children, or adult children with disabilities, it’s time to discuss trusts with your estate planning attorney.

If a trust is used, the deed for the home must be retitled so the trust owns the home. Upon the death of the original owner, the home is dealt with in accordance with the provisions of the trust.

These are just a few ways home ownership can be transferred to another person and remain outside of probate. Estate planning is a highly personal process, where many factors need to be taken into consideration before the best solution can be determined.

To find the best solution for your own situation, meet with an experienced estate planning attorney in your community. They’ll be able to prepare an estate plan to achieve your wishes for the future, protect your family and give you the peace of mind of knowing you’ve taken care of those you love.

Reference: Cleveland Jewish News (March 25, 2025) “Estate planning simplifies inheriting a home”

 

The Coming ‘Great Wealth Transfer’ and Estate Planning

 

As a huge number of baby boomers turn 65 from now through 2027, most people should be thinking about managing their money amid the so-called “great wealth transfer,” when as much as $72 trillion is expected to move from one generation to the next. A recent article from MarketWatch, “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow,” offers some tips.

Every adult should have a last will and testament and a financial power of attorney, so someone can manage their financial affairs if they become incapacitated. You’ll also need a healthcare proxy to name a person who can make medical decisions on your behalf.

Update beneficiary designations on 401(k)s, investment accounts and any financial accounts naming a beneficiary. Whatever is on those documents supersedes trusts and wills. These should be reviewed every few years or after any major life events like marriage, divorce, the birth of new children or grandchildren, or the death of a beneficiary.

Secure your important documents and make sure your executor, trustee and a trusted family member know where they are. The executor should also have contact information for your estate planning attorney, CPA and financial advisor.

Review your overall estate plan every three to five years. If your estate plan was created when your children were minors and now they’re adults, it’s time to revisit your estate plan.

A will alone might work for a simple estate. However, if you have complicated finances or significant wealth, you should talk with your estate planning attorney about a Revocable Living Trust. Putting assets into trusts allows assets to pass to beneficiaries without going through probate, which is often expensive and time-consuming. Once the trust is established, you’ll need to fund it by retitling assets, so they are taken out of your estate and owned by the trust.

Wills, trusts and estate planning documents should be reviewed and updated on three occasions: every three to five years if your life doesn’t change much, every time there is a major event in your life, commonly called a “trigger” event and whenever there is a large change to tax laws.

The estate planning community is now preparing for the possible end of the Tax Cuts and Jobs Act of 2017, which raised the federal estate and gift tax exemptions to historically high levels. Unless the rule is extended, on January 1, 2026, these limits will return to previous amounts, with estates around $7 million subject to federal estate taxes. If your wealth is near the $7 million mark and you haven’t met with your estate planning attorney to prepare for this potential change, now is the time to make an appointment.

Once your estate plan is up to date, it’s a good idea to have conversations with family members, the people you’ve named as executors, power of attorneys and beneficiaries. If you have a plan but haven’t shared it with children or heirs, it could lead to family fights, even leading to litigation.

Your estate planning attorney will help create an estate plan to meet your needs and protect your loved ones. It’s a task to tackle sooner, rather than later.

Reference: MarketWatch (April 3, 2025) “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow”

Create a Succession Plan to Keep Family and Business Together

 

Murdoch created a succession plan. However, he made some critical errors, landing him and his children in a public court battle and dooming family relationships. The planning issues resulted from a lack of clarity, power struggles over his media empire and family disputes, says a recent article from MSN, “Learn From Rupert Murdoch’s Errors—Create a Succession Plan Today to Protect Your Company’s Legacy.”

The trouble started when Murdoch appointed his son Lachlan as his primary heir. The other three children objected and sued their father. Murdoch wasn’t even dead, and the succession battle had begun. The company’s reputation and stability felt an impact, to say nothing of the family relationships.

A structured succession plan could have prevented this and much of what followed. With a succession plan, businesses of any size will have a road map for the future and avoid significant internal conflicts.

A recent survey from a major accounting firm in 2021 showed that only 30% of family-owned businesses have created and communicated a robust succession plan. If you own a business and don’t have a succession plan, everything you’ve worked for over the years could fall apart. Here are four lessons from the Murdoch debacle to consider.

Don’t wait to create a succession plan. Some estate planning attorneys say business owners should start preparing their plan about ten years before they expect to retire. The process of documenting the entire business, from how inventory is managed, transportation conducted, sales relationships and all the processes needed to create a proper plan takes time. Developing leadership and preparing for the human resources aspect of a transaction is equally time and labor-intensive.

Be completely open and honest with family members, key employees and other stakeholders. You’ll want everyone to know what to expect, understand what drove certain decisions and be on board with your vision for the future. Transparency does more than manage expectations, it reduces the potential for conflicts. If there are going to be problems with your succession plan, doing it in a timely manner, years in advance, will give you and your company time to address them.

Be able to separate your personal and professional lives. If your plan is to sell or gift your business to family members, there will be many benefits, including gift tax exemptions and income-splitting. However, there will also be challenges.

Plan for the unexpected. Business owners know things never go exactly as planned. Be ready to pivot with a succession plan, including multiple courses in case of change.

A good succession plan identifies key roles for those stepping into leadership positions. Those roles need to be defined clearly and communicated. Honestly assess the skills of the family members you intend to put into positions. Listen to trusted advisors who may have a less emotional response to decisions about family members.

Build a strong team of advisors. Your team will include an estate planning attorney, CPA, financial advisor and possibly a forensic CPA to evaluate the company’s value, processes and assets. If your retirement finances are linked to the transfer or sale of your business, there will be estate planning strategies to embrace to be sure there’s a happy ending for all concerned.

Reference: MSN (March 28, 2025) “Learn From Rupert Murdoch’s Errors—Create a Succession Plan Today to Protect Your Company’s Legacy”

How Young Is Too Young to Have a Will?

 

Being young and healthy is unfortunately no protection against an early death, which is why all adults aged 18 and up and especially parents need to have an estate plan, including a will, says a recent article, “You’re Young and Barely Making Ends Meet. Why You May Need a Will,” from Barron’s.

Only about 22% of young adults aged 29—44 and nearly 15% of adult Gen-Zs, aged 19—28, have estate plans. This poses risks for their spouses, if they are married, and their children, if they are parents.

A last will and testament is used to distribute your assets upon death. This is the best-known aspect of estate planning. Still, it’s only one of several documents, including a living will, also known as an advance directive, which designates who may make medical decisions on your behalf in the event of incapacity. While someone in their 20s or 30s may not have children, they may still enjoy activities like rock climbing, bungee jumping and engaging in physically demanding pursuits. People in their 20s and 30s are statistically more likely to be injured in car accidents, skiing, or while travelling.

This doesn’t mean anyone should limit their activities. However, it does mean young adults need to have estate plans in place to express their wishes in case of incapacity or death and protect themselves and their loved ones. Once these documents are prepared and executed, parents or the individual named in the living will are allowed to communicate with doctors, access medical records and be involved in a young adult’s care. Otherwise, decisions may be made by doctors and not family members.

Young adults with small children need a will to name a guardian who will be responsible for raising their children in the event both parents die unexpectedly. If there is no will, or if the will doesn’t include a guardian, a court will decide who will raise the children.

Every adult should also have a power of attorney. This gives a person of your choice the legal ability to manage your finances, including paying bills. A power of attorney can be customized to permit your agent—the person named in the POA—to perform specific actions but not others. For instance, you may want the person to be able to access accounts and pay bills, but not to sell your Pokémon card collection.

Another important aspect of an estate plan is to verify the beneficiaries named on various types of accounts. Any assets with a named beneficiary, such as an IRA, investment account, or insurance policy, will not need to go through probate and can be transferred directly to the beneficiary. However, if the IRA you opened at your first job named your last girlfriend as the beneficiary and you’ve since broken up, make sure to change the name on the account. The beneficiary designation overrides the will, so it won’t matter if you left all your assets to your fiancé; your former partner will still inherit the account.

Estate planning attorneys assist individuals at all ages and stages of life with their estate planning needs. The estate plan you need in your 20s and 30s differs from the one you need in your 60s. However, at any age, an estate plan is essential for being a responsible adult.

Reference: Barron’s (March 15, 2025) “You’re Young and Barely Making Ends Meet. Why You May Need a Will”

Should You Have a Revocable Trust?

 

There are many good reasons to include a revocable trust as part of your estate plan, according to a recent article from Columbus Monthly, “Planning Ahead: When to Consider a Revocable Trust.” You might think trusts are only for the wealthy. However, that’s not true. An experienced estate planning attorney can easily establish a trust to protect assets and direct their distribution. Distribution can occur while you’re living or after you’ve passed away.

Trusts also distribute assets to beneficiaries outside of probate, which avoids the delays and costs associated with probate and, even better, keeps your private business confidential between you and your beneficiaries. When a will is probated, many courts require an inventory of assets. The will becomes part of the public record, and anyone—including ex-spouses, local realtors, thieves and angry relatives—can read your will and learn about your bequests.

A tip from the professionals: ensure an estate planning professional establishes your trust. Every state’s laws are different and what your brother-in-law in Idaho did might not work in Virginia. You should also ensure that the trust is properly funded. If you don’t fund the trust, it won’t work as you intended.

Revocable trusts are used to pass assets after you’ve died. The language of the trust is tailored to your specific wishes. For instance, you may want your children to inherit a certain amount of money every year or only when they have reached goals, such as completing college.

Trusts can be created to fund education, serve as a deposit for a home, or initiate distributions upon reaching a specific age. This is especially beneficial for parents of young adults, who understand that giving a twenty-five-year-old their entire inheritance all at once may not be as beneficial as making partial distributions over a twenty-year period.

One example of a well-structured trust is a woman who owns land that has been in her family since 1947. There are two houses on the property. The land has been placed in a trust to manage the property, and the trust language stipulates that multiple generations can continue to reside there until there are no family members who wish to live on the property. At that point, the trust allows the trustee to sell the property and distribute the proceeds to the living beneficiaries.

Trusts are also useful when a person becomes incapacitated and needs someone else to access the assets owned by the trust to manage the person’s financial affairs. A home, bank account, or all a person’s assets can be placed in a trust, and then the trustee can manage the person's affairs without needing to go to court and file for guardianship.

Whether or not you need a trust should be discussed with an experienced estate planning attorney. It has applications for protecting heirs in the event of a second marriage, incapacity and controlling assets. Your attorney will determine the type of trust that best suits your unique situation.

Reference: Columbus Monthly (March 10, 2025) “Planning Ahead: When to Consider a Revocable Trust”

How to Create an Estate Plan That Works

 

An estate plan tells your loved ones and the courts how you want to divide your property, as well as protecting heirs from the expenses and stress created when there is no estate plan. According to a recent article from AOL, “Estate planning checklist: 7 key steps to making a successful plan,” an estate plan also saves your family from months, even years, of dealing with courts and government bureaucracies in settling your estate.

How to start? Follow these steps.

Make a complete inventory of your assets, both tangible and intangible. This means real estate, cars, financial accounts, digital assets, life insurance, retirement accounts, pension accounts and personal property. Save your heirs from a scavenger hunt and protect assets from being lost.

Decide who you want to care for your family. If you have children who are underage, name a guardian in your will. The guardian often serves as the conservator, managing the children's financial assets. Check on your life insurance policies, which provide funds for your family after you’ve passed.

Ask potential executors if they are willing to do the work. The executor carries out directions in your will. It can be a big responsibility. They’ll need to gather and manage assets, notify heirs, Social Security, Medicare, pay estate taxes, secure and possibly sell your home, and more.

Have an experienced estate planning attorney set up at least three key elements: a will, power of attorney and advance healthcare directive.

The Will names a guardian and an executor and gives directions for distributing assets. The biggest estate planning mistake people make is not having a will. When this happens, the court assigns someone to manage your estate, and your family will have to live with whatever the court-appointed person decides.

A Power of Attorney allows someone to care for your business affairs if incapacitated. A Medical Power of Attorney, or Healthcare Proxy, will enable you to name someone to be involved with your healthcare, speak with your doctors and health insurance company and help make decisions for you. These documents should be customized to convey your wishes as to how much or how little you want these people to be able to do.

An advanced healthcare directive is used to state your wishes if you are incapacitated about what kind of treatment you do or don’t want to receive if you are at the end of your life. For instance, if you don’t want to be resuscitated or if you don’t want CPR to be performed, this information goes into the AHD. This document can be challenging to consider. However, it is a blessing to spare your family from having to guess your wishes during a time of crisis.

Discuss the use of a trust with an estate planning attorney. Trusts are not just for wealthy people. Some trusts take assets from your taxable estate and distribute them directly to beneficiaries outside of probate. Many kinds of trusts serve different purposes, so your estate planning attorney will help you understand which is best for your purposes.

Determine who to leave your assets to and how to structure your estate. If you have young children and you don’t establish the correct trusts, they may inherit everything when they turn 18 or 21. This is rarely a good idea.

Tax planning is a part of estate planning. While you may not face federal taxes, your state may have its estate tax, and some states still have inheritance taxes. Rates and exemptions are different in every state.

The incapacity planning part of an estate plan is for you. However, the rest is for your family, to take care of them and show them how much you care about them and their futures.

Reference: AOL (Feb. 4, 2025) “Estate planning checklist: 7 key steps to making a successful plan”