What is an Estate Plan?

• An estate plan is a series of documents that provide instructions regarding how you want your health, your children, and your property to be handled should you become incapacitated or die. Having an estate plan can give you and your family peace of mind, and can make a difficult situation less fraught for your loved ones.

• Estate plans are organized with either a Will or a Revocable Living Trust as the central document. In short, a Will must go through a public legal process called probate before your assets can be distributed. Assets distributed via a Living Trust avoid probate, but Living Trusts take more time to set up than a Will.

• Estate Plans typically include the following documents. (Other documents are available to meet more specialized needs.)

  • Will — A Will is a document that states who should receive your assets when you pass and who should act as the Guardian of your minor children and the Conservator of their inheritance until they reach age 18. Assets distributed by Will must go through a public probate process. If you also have a Living Trust, your will becomes a Pourover Will, which “pours over” any assets left out of your Trust during your life into the Trust when you pass.

  • Living Trust — You can think of a Living Trust as an invisible box containing your assets that you control during your life. It is “revocable” because you can revoke it for any reason during your lifetime. When you pass, a Trustee designated by you will distribute your assets pursuant to the instructions you put in your Trust Agreement. This distribution can happen without the delay and added cost of probate, and the process is completely private. Living Trusts are also highly customizable. For example, if you have minor children or grandchildren, you can control when and under what conditions asset distributions are made to them. A Pourover Will accompanying a Living Trust “pours over” any assets previously left out of the Trust into the Trust when you die.

  • Power of Attorney for Finance — A Power of Attorney gives a person you designate as your agent the ability to handle your financial affairs during your life. You can make your power of attorney effective immediately or effective upon your incapacity.

  • Designation of Patient Advocate — Also known as a “healthcare power of attorney,” the Designation of Patient Advocate is a document that names the person you trust to make decisions about your medical care should you become unable to speak for yourself. This document is especially important for unmarried partners, parents of college-aged children, and others whose trusting relationship may not be recognized by medical professionals.

  • Living Will — A Living Will, also commonly known as an Advance Directive, details your wishes for medical care or the withdrawal of such care in the face of an incurable incapacitated condition.

  • HIPAA Authorization — A HIPAA Authorization allows you to direct your healthcare providers to share your confidential medical information with a specific person or people. This document is especially important for unmarried partners, parents of college-aged children, and anyone who would like their loved ones to be able to be informed about their medical condition in real time.

  • Final Disposition of Remains — This document allows you to specify how you want your remains to be handled upon your death and to designate the person who will be responsible for your funeral. In it, you can specify whether you would like to make anatomical gifts to those waiting for organ donation, and/or to research or scientific study. Like other aspects of estate planning, making known your wishes for the final disposition of your remains gives your loved ones a tangible opportunity to honor you and reduces the burden of stressful decision-making.

• Child Protection Plan — At Treetown Law, we don’t mess around when it comes to the care and protection of minor children. This is why we created a special set of planning documents for parents/guardians of young children.

  • Emergency Guardian Power of Attorney — If neither you nor your child’s other parent or legal guardian is able to take care of your child, first responders will need to take custody of your child to ensure their safety. A Power of Attorney for Minor Children allows you to designate another adult living nearby to step in, in lieu of foster care, as the temporary guardian of your child, until you can resume care or a court can appoint the permanent guardian named in your Will.

  • Patient Advocate for Minor Children — This document allows you to designate a trusted adult to make medical decisions for your child if you are unable to do so. 

  • Emergency Wallet Cards — The Child Protection Plan includes a subscription to Docubank’s Minors Matter wallet card service, providing instant cloud access to the Emergency Guardianship and Patient Advocate documents, as well as information regarding your child’s health conditions, allergies, emergency contacts, and primary care physician.

• 18+ Guidance Plan — Your big kids might be stretching their wings, but they still need you. When your child turns 18, they are legally an adult and you will no longer have access to their medical, financial, or educational information without permission. The 18+ Guidance Plan includes any or all of the following:

  • Power of Attorney for Finances

  • Designation of Patient Advocate

  • HIPAA Authorization

  • Educational Records Release

  • Emergency Wallet Cards specifically tailored for college students and young adults

Who Needs an Estate Plan?

TL;DR: Everyone.

Regardless of the size of your “estate,” everyone over the age of 18 should make a plan. Children under the age of 18 should be included in the estate plan of their parent(s) or legal guardians.

Estate planning is essential if you fall into any of these categories:

You are 18+. When you turn 18, you are legally an adult, so your parents will no longer have access to your medical, financial, and educational information without permission. In addition, even if your net worth is in the red, you likely still have “digital assets” and accounts that will need to be taken care of in the event of your incapacity or death. An estate plan allows you to grant your parent(s) or other trusted adults permission to help you out when you need it most.

You have minor children. An estate plan allows parents to (1) designate a guardian and (2) choose who will manage your child’s assets, how they are to be managed, and when they may be distributed to your child. You know your children better than anyone, so you are in the best position to create a plan that will carry them into adulthood.

You have children with your LGBTQIA+ spouse/partner. It is especially vital for LGBTQIA+ families to have estate planning documents, including formal adoptions of non-biological children, guardianship designations to protect against challenges to non-biological parent guardianship, and patient advocate designations and HIPAA authorizations that ensure healthcare providers honor family relationships.

You are not married but have assets or children with your partner. If a partner in an unmarried couple dies without an estate plan, their assets will not automatically pass to their partner and co-parent. Instead, assets will pass directly to that partner’s legal children, or if they do not have children, to their next of kin (living parents, then siblings). In addition, unmarried couples need estate plans to ensure that each partner is able to take care of the medical and financial affairs of the other, should the need arise.

You have a blended family. For blended families, estate planning can be especially helpful for harmony between siblings, step- and half-siblings, and a new spouse. Careful planning can ensure that both the child of a prior marriage and current spouse/children of a current marriage are fairly and equitably treated.

You are getting a divorce or are newly divorced. If you are getting a divorce, it is critical to revise your estate plan (or put one in place) to ensure that your spouse does not inherit your assets while your divorce is pending. If you are newly divorced, it is important to ensure that your ex-spouse is removed from any powers of attorney, patient advocate designations, and HIPAA authorizations for you, and that your assets will go to the correct beneficiaries. If you have minor children, you may want to ensure that your ex-spouse does not manage any assets you may leave to your children.

You are single. If you are single, it is important that you designate trusted people—whether family members, friends, or professionals—to make financial and medical decisions for you, should you be unable to make them yourself.

You are a homeowner and/or own other real estate. If you own real estate, your estate will have to pass through probate. Probate is time-consuming, public, and can be costly. If you own real estate in more than one state, your estate will have to go through probate in more than one state, likely increasing cost, delay, and logistical burdens for your loved ones. Placing real estate into a living trust will allow your property to be distributed or liquidated in the most expeditious and cost-effective way.

You own a business. If you are an owner of a small business, sound succession planning can make a world of difference for the partners, clients, and family members who depend on you.

You are caring for a loved one with special needs. If you are caring for a loved one with special needs, it is critical that you have a specialized estate plan in place. Without the right plan, you may unintentionally pass assets to your loved one in a way that disqualifies them from their need-based government benefits.

You own pets or other animals. If you have pets, livestock, horses, or other animals, you can provide for their care and support in your estate plan.

You want to support a favorite non-profit or cause with your estate. Your estate plan is also a means for you to continue to support causes you believe in. Careful planning for charitable giving can allow you to maximize tax benefits to both your estate and the organization receiving your gift.

What Happens If I Don’t Have an Estate Plan?

Your Children

• If you don’t designate a permanent legal guardian of your minor children, a judge who has never met your children before will make the decision for you (and them), without your input.

• Without an estate plan, the assets you leave behind (including life insurance and settlement funds in the event of your wrongful death) will be managed by a conservator appointed by a judge until your children turn 18. At 18, the law expects your children to be able to manage their own inheritance wisely and without supervision.

Your Property

• If you do not have an estate plan, Michigan law will determine who inherits your property by “shares.” In general, the law favors close family members over more distant relatives and friends. If you have specific assets, heirlooms, or any other items of valuable property, they will need to be liquidated or divided up by agreement among those who stand to inherit from you. Unfortunately, disharmony often results from disputes over property among grieving loved ones.