Estate Planning 101: Why Every Adult in Muskegon Needs a Plan
Andrew Mateskon
Michigan Estate Planning | Trusts | Probate | Business | Real Estate
Estate planning is often viewed as something that only the wealthy or elderly need to worry about. However, the reality is that every adult, regardless of age or financial status, should have an estate plan in place. Whether you’re a young professional just starting your career, a parent building a family, or someone nearing retirement, estate planning is essential for securing your future and protecting your loved ones.
If you’ve been putting off creating one or simply don’t know where to start, this guide will provide a comprehensive breakdown of why estate planning is crucial for everyone in Michigan and how you can begin the process.
What Is Estate Planning?
Estate planning is the process of organizing your personal and financial affairs in the event of your death or incapacitation. It’s about ensuring that your wishes regarding your assets, healthcare, and beneficiaries are honored.
An estate plan typically includes:
Why Do You Need an Estate Plan?
1. Protect Your Loved Ones
Without an estate plan, your loved ones may face a complicated and stressful situation upon your death. For instance, Michigan law dictates how assets will be distributed if you die without a will, a process known as intestate succession. This can result in your estate being divided in ways you wouldn’t want, potentially leading to family disputes.
By having an estate plan, you ensure that your assets go to the people you care about most, and that your estate is administered by the people you trust most to protect your loved ones.
2. Avoid Probate
One of the key reasons to establish an estate plan is to help your family avoid probate—a court-supervised process that can be time-consuming, expensive, and public. In Muskegon, as in the rest of Michigan, probate can take months or even years, delaying your family’s ability to access your assets. If you use an attorney, and you probably should use an attorney, probate is also almost universally more expensive than an estate plan. Your estate will need one or the other to correctly pass to your beneficiaries.?
Creating tools like a revocable living trust can help bypass probate and allow for a more streamlined distribution of your assets. Pay on Death designations, beneficiary designations, and ladybird deeds can also help bypass probate. This keeps the process private and gives your loved ones quicker access to their inheritance.
3. Plan for Incapacitation
Estate planning isn’t just about what happens when you die—it also prepares you for unexpected events during your lifetime. If you become incapacitated due to illness or injury, having a durable power of attorney and a healthcare directive ensures that the people you trust can make decisions on your behalf.
Without these documents, your family may have to petition the court to make decisions for you, which can be a lengthy and emotionally draining process. Estate planning gives you control over who manages your finances and healthcare if you’re unable to do so yourself.
4. Minimize Estate Taxes
Though Michigan doesn’t impose an estate tax, federal estate taxes can still apply if your estate is valued above a certain threshold. For 2024, the federal estate tax exemption is $13.61 million per individual, but if you have a sizable estate, taxes could take a significant portion of what you leave behind. The federal exemption is set to sunset in a few short months on January 1, 2025, reducing the amount to $5 million before inflation adjustment.?
An estate plan can help minimize the impact of these taxes by utilizing various strategies, such as gifting during your lifetime, setting up trusts, or leaving assets to charity. This ensures that more of your estate goes to your loved ones, rather than being eaten up by taxes.
5. Control Over Asset Distribution
Without an estate plan, the state of Michigan decides how your assets are distributed, and their decisions may not align with your wishes. With a properly crafted estate plan, you can dictate how and when your assets are distributed, ensuring that they are passed on according to your specific intentions.
For example, if you have minor children, you may want to set up a trust that controls the timing of distributions to ensure they are not given large sums of money at an early age. You might also wish to provide for other important people in your life, like friends or charities, which the default intestate laws do not accommodate. A trust can even set aside money to care for beloved pets, which cannot be done through intestate succession or a will.
6. Simplify the Process for Your Heirs
Losing a loved one is emotionally difficult, and dealing with legal matters during that time can add unnecessary stress. An estate plan simplifies the process for your heirs by clearly outlining your wishes, minimizing family conflict, and reducing legal fees and time spent in court.
By having a clear and detailed estate plan, you reduce the burden on your loved ones and provide them with a straightforward roadmap to follow during a challenging time.
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Key Components of an Estate Plan
Let's take a closer look at the key components of a comprehensive estate plan. These documents work together to ensure that all aspects of your financial, legal, and medical matters are addressed.
1. Last Will and Testament
Your will outlines how your assets will be distributed upon your death and names an executor who will oversee the process. It can also designate guardians for your minor children, ensuring they are cared for according to your wishes. If you have a trust, a will is still typically needed to capture any assets that are not already titled to the trust and pours those assets over into the trust.
2. Revocable Living Trust
A revocable living trust is a tool that allows you to place assets into a trust while maintaining control over them during your lifetime. Upon your death, the assets are distributed according to the terms of the trust without going through probate.
3. Durable Power of Attorney
A durable power of attorney allows you to designate someone to manage your financial affairs if you become incapacitated. This person can pay bills, manage bank accounts, and handle other financial matters on your behalf.
4. Healthcare Directive/Living Will
A healthcare directive or living will outlines your medical treatment preferences if you’re unable to communicate them yourself. It may also designate a healthcare proxy who can make medical decisions on your behalf.
5. Beneficiary Designations
Certain assets, such as life insurance policies, retirement accounts, and certain bank accounts, pass directly to a named beneficiary outside of your will. It's important to keep these designations up-to-date and consistent with the rest of your estate plan.
6. Letter of Intent
A letter of intent is an informal document that outlines your wishes regarding your funeral, burial, or other final wishes. While not legally binding, it provides guidance to your family and can help ensure your wishes are followed.
Why Muskegon Residents Should Prioritize Estate Planning
Muskegon residents face unique considerations when it comes to estate planning. Whether it's local property laws, business ownership, or the strong sense of community that defines the area, these factors make having a well-constructed estate plan even more important.
1. Local Property Considerations
If you own real estate in Muskegon, such as a family home or vacation property on Lake Michigan, you’ll want to ensure that your estate plan addresses how this property is transferred. Real estate can be a significant part of your estate, and planning for its transition can save your family both time and money.
2. Family-Owned Businesses
Many residents in Muskegon own or operate family businesses. Estate planning ensures a smooth transition of business assets and operations, helping to preserve the legacy you’ve built. Without a plan, your business could face unnecessary complications or even closure.
3. Community and Charitable Giving
If you’re passionate about giving back to Muskegon’s local community or specific charities, an estate plan allows you to continue supporting those causes after your death. Through charitable trusts or bequests, you can leave a lasting impact on the organizations that matter most to you. I am always talking with charities in the area about estates and giving, so if you need a recommendation for a good local charity do not hesitate to talk to me about it.
How to Get Started with Estate Planning
Estate planning doesn’t have to be a daunting task. The first step is to meet with an experienced estate planning attorney who understands Michigan law and can help you navigate the process.
At Mateskon Law, we specialize in helping individuals and families create personalized estate plans that meet their unique needs. We can guide you through every aspect, from drafting your will to setting up trusts and beneficiary designations. An estate planning initial consultation is complementary, and can be a great learning experience. We are also in the community leading workshops and informational gatherings, so look out for more!
Estate planning is something every adult in Muskegon should prioritize. It’s not just for the wealthy or elderly—estate planning is about taking control of your future, protecting your loved ones, and ensuring that your wishes are honored. By creating a comprehensive estate plan, you can avoid probate, minimize taxes, and provide peace of mind for yourself and your family.
If you’re ready to get started on your estate plan, contact Mateskon Law (231) 881-7894 today for a complementary consultation. We’re here to help you secure your future and protect the people who matter most.