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The holiday season is a perfect time to draw up your estate plan

The holiday is an opportunity to spend more time with family and loved ones. Those warm thoughts may inspire the giving of gifts. Our estate planning law firm also hopes that the spirit of the season will motivate individuals to protect their loved ones with an estate plan.

If you’ve never created an estate plan, there are documents that are common to most situations: a will, a revocable trust, an advanced health care directive, and a financial power of attorney. Let’s take a closer look at each of these.

Trusts are important tools for avoiding the costs and time delays of probate, and there are many different kinds to serve different objectives. However, specific asset transfers generally must fund the principal of a trust, and any overlooked assets will be excluded from the trust. For that reason, a will remains the primary document used to transfer assets.

A will can be thought of as the master document, describing and organizing other components of an individual’s estate plan. For example, if an estate includes one or more trusts, the will typically identifies and describes them. A will can also include a pour-over provision, directing that any assets not included in the trust principal or governed by contractual beneficiary designations should be transferred into the trust principal upon an individual’s passing.

An estate plan can also be used to plan for unexpected health emergencies. If an individual becomes incapacitated, a medical power of attorney can designate an individual to make decisions on the individual’s behalf, and an advanced healthcare directive can specifically describe life-sustaining procedures that an individual may choose to accept or decline. A durable power of attorney designates an individual to make financial decisions on the individual’s behalf during any times of incapacity.

Finally, other asset types may require beneficiary designations, rather than inclusion in a trust. Tax-deferred accounts are one example, where naming beneficiaries, rather than transferring the asset into a trust, will preserve the tax benefits. To learn more about your estate planning options, contact our Michigan law firm.

Source: FedSmith, “Protect Your Family with Important Estate Planning Documents,” Carol Schmidlin, Dec. 20, 2016

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Bebout, Potere, Cox & Bennion, P.C.
821 North Main Street
Rochester, MI 48307

Phone: 248-805-1959
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