The components that constitute a basic estate plan are, first, a last will and testament. The last will and testament is written to designate somebody who will handle the final affairs of the client once they pass away and also to tell the surviving family and the probate court who is going to get their assets and how they are going to be distributed after death.
The second important document is the durable power of attorney. In the durable power of attorney, the client is will nominate somebody who is going to handle the client’s financial affairs for them if they become incapacitated and, sometimes, even if they are not incapacitated. The client may need someone else to handle the affairs because, for example, they are sick, they are in an accident or maybe if they are just out of town. Sometimes this document can be needed, too, for a client that travels a lot. A durable power of attorney can be made effective as soon as the client signs it so that the person they appoint (called “the Agent”) can step in whenever they need to. However, the durable power of attorney could be made effective only when the client becomes disabled so that clients feel more comfortable in having that kind of power in someone else only when it has to be. When that power becomes effective depends on the client’s family circumstances, comfort level and who they want to appoint.
The last component of the basic estate plan is the patient advocate designation which is a document in which a client will designate a person (called the “patient advocate”) who will make medical decisions for them when they can’t make their own medical decisions. Those decisions typically include the right to withhold, or to withdraw, medical treatment that could allow the client to die and sign a “Do Not Resuscitate” or DNR order. This document can also include directions for organ donation, if desired.
Michigan has a new statute in place called the Funeral Representative Designation. I talk to clients about this also, but not every person needs it. In that designation, the client names someone who is going to be responsible for handling the client’s funeral arrangements after they die. Most people really don’t need that kind of designation, because they have close family members, like a spouse or child, that the funeral director is going to look to in order to make those decisions. For clients that don’t have close family members or don’t have a spouse or children or just want to nominate somebody else other than family members, then this is another relatively new option in Michigan for the basic estate plan.
The basic estate plan typically does not include more complex documents, like trusts, for example. But trusts are fast becoming a standard fixture of many estate plans.
Of course, the attorney is a vital member who will be involved in an estate plan, because he has the responsibility and duty to consult with and advise the client about how to accomplish the client’s goal in the most effective manner, and then to draft the documents and make sure that they are properly executed and recorded, if needed.
The clients, of course, are important because they must let the attorney know what their desires are, in terms of how and when their estate is going to pass to their family (or others) and who is going to control that after their death.
The tax advisor, the insurance advisor and the financial advisor for the client are also good professionals to be involved in the estate planning process. There might be some assets that are especially affected in the case of death, or some assets that may be passed on better through a trust or through a will or through beneficiary designations. The financial advisor might have some input into how to best deal with assets such as IRAs, 401ks or 403bs and how to pass those on after death to enjoy the best tax advantages.
Finally, the clients should talk to the fiduciaries they want to name in their estate plan documents to make sure that they are willing to serve in the capacities for which they are nominated. They should talk to the people that are going to be trustees of their trust when they die, or their personal representatives for the wills. When they do durable powers of attorney, they are going to want to appoint alternate agents if the spouse can’t do it. And, for medical decisions, alternate patient advocates should be consulted if the spouse can’t do it. All of those people don’t necessarily have to come in and talk to the attorney, but they should be consulted by the clients to make sure they are willing to serve in those capacities before they come in and start making their estate plan.
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