Michigan Estate Planning
What you should know
A complete estate plan includes the following:
- A Will, directing what happens to your worldly goods after you die and possibly directing the creation of ongoing trusts for your beneficiaries.
- A Durable Power of Attorney to allow your agent to care for your finances during any period of incapacity while you are still alive;
- A HIPAA release to allow your loved ones to be informed about your physical and medical condition during any period of incapacity;
- An Advance Health Care Directive or Living Will outlining your preferences regarding end-of-life care;
- A Health Care Power of Attorney expanding the authority of your medical decision-maker to include hospice or long-term care and disposition of remains; and
- Potential Additions – Guardianship for minor children, funeral and burial instructions, and charitable giving
Will-Based Planning & the Small Estate
In general, there are two ways to plan: Will-based or Trust-based. A Will-based plan requires fewer adjustments during your lifetime and doesn’t take effect until your death. A will-based plan may be sufficient for individuals or couples with assets less than $100,000, including proceeds from life insurance policies, who have little equity in property, with simple family dynamics.
In Michigan, a “small” estate is subject to the Small Estates Proceeding. To qualify, you must have no real property (a house or land) that is subject to probate (no survivorship titling) and the balance of your estate subject to probate (without beneficiary designations or survivorship titling) must be less than $24,000. If this describes you, a Will-based plan may suit your needs.
Without careful planning and coordination of beneficiary designations and titles, probate is nearly always still necessary in a Will-based plan. Probate is the court-supervised transfer of assets to your heirs and typically costs 2-10% of the total value of your estate. Life insurance is included for purposes of estate taxes and probate administration.
FEDERAL AND STATE ESTATE TAX
Michigan does not impose an estate tax and the federal estate tax doesn’t apply to amounts under $11.58 million per individual. If you would be subject to the federal estate tax, generally, we would not recommend you to be in a Will-based plan.