What to Know About Michigan Planning Law
When the term “estate planning” comes up, the first thing that comes to mind is a Last Will and Testament. It is the most commonly known document in estate planning. However, estate planning extends beyond just having a Will in place.
Your real estate holdings, financial accounts, personal belongings, and other possessions constitute your estate. It is distributed among your relatives, friends, and other parties when you die, according to the terms of your Will. In the absence of a Will, Michigan’s statutory laws will decide the distribution of your estate.
Testate vs. Intestate
If you die with a Will, it is called dying “testate.” A Will is a legal document that spells out your wishes regarding the distribution of your estate in the event of your death and indicates who you want to be in charge of carrying out your wishes, known as the personal representative. It speaks for you even in your absence and ensures your wishes are respected. A Will is a critical component of any estate plan.
In the legal world, if you die without a Will, it’s called dying “intestate,” in which case Michigan’s statutory laws regarding intestate estates will determine how your estate is distributed. Intestacy laws try to mimic the last wishes of an average person, however, without a Will, your actual wishes remain unknown and thus unfulfilled.
Can You Skip Probate Court?
Probate is the process of transferring title to a deceased person’s property to the individuals or entities entitled to it. Property titled solely in the deceased person’s name is the estate property that is subject to probate. The deceased person’s Will tells the court who is entitled to the deceased person’s estate property and the probate process passes title to those people. So, while a Will is an important document in every estate plan, it does not help to avoid probate. Depending on the size of the estate, locations of the estate property, number of heirs or beneficiaries, and any conflicts, probate can be time-consuming and costly. In addition, since it is a state legal proceeding, what goes on in court is public record, making it difficult to keep sensitive personal financial matters private.
The common legal means used to avoid probate court in Michigan includes the following:
- Joint ownership with rights of survivorship: if you own property jointly with someone else, with the “right of survivorship,” it ensures the surviving owner automatically owns 100% of the property when the first joint owner dies. No probate is necessary in this case.
- Beneficiary designations: assets like life insurance policies and retirement plans have beneficiary designations on file with the company holding the asset. Beneficiaries listed in these beneficiary designations forms will receive the proceeds without being subject to probate.
- Living Trust: This additional estate planning document can work to avoid probate on virtually any asset you own, including bank accounts, real estate, investments, etc. With a Living Trust the goal is to title all of your assets in the name of the Trust, so that, upon your death, all of your assets are owned by the Trust. That way no assets are titled in your individual name, and, therefore, none of your assets are subject to probate.
- Small estate procedures: There are some “small estate” exceptions from having to go through the full probate process for an estate. These exceptions are available for estates valued below a certain amount ($25,000.00 for deaths occurring in 2022).
Putting your affairs in order is essential in ensuring your wishes are respected and fulfilled, even in your absence. One way to do this is to create a Last Will and Testament that details the management and distribution of your estate among the people you care about. Dying “intestate,” without a Will, leaves it to Michigan statutory law to decide how to distribute your estate, which could have unintended consequences. Additionally, as part of the estate planning process, you should explore strategies for avoiding probate, such as a Living Trust.
For questions on estate planning and/or probate law, contact us today or call (616) 458-3994.