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FAQ - Estate Planning

What is a Will?
A Will is a document that directs how your property is distributed after your death. You also decide who manages your estate (your Personal Representative) and who will be guardian of your minor children.

Can I change my Will?
Yes. A Will is not registered or recorded anywhere and can be changed any time before your death, as long as you are mentally competent. A Will does not transfer any enforceable legal right to your heirs as long as you are alive.

Does a Will avoid probate?
No. Your Will does not take effect until after you die and a petition is filed with the probate court. A Trust does not require probate.

How long does probate take?
It depends on how complicated your estate is. It could be as little as six months or it could take years.

Does the State get my property if I die without a Will?
No. There are legal rules, known as intestate succession, which determine who gets your property if you die without a Will. These rules are arbitrary and may not fit your needs. For example, without a Will, you might end up leaving everything to a disabled sister on Medicaid and the nursing home would get all your property.

What is a Trust?
A trust is a legal arrangement where you transfer your property to a Trustee, who manages the property according to the terms of a contract known as a Trust Agreement.

There are many kinds of Trusts, but the most commonly used is the Revocable Grantor Trust, also known as a Living Trust. In this case, the Grantor (you) reserves the right to revoke or amend the Trust at any time. The Grantor usually serves as Trustee.

A trust avoids probate because the Trustee, and not you as an individual, actually owns your property. The trust continues to exist even after you die or become disabled. The Trust Agreement provides for a Successor Trustee, who automatically takes over management of the Trust upon your death or disability. The Successor Trustee, then, either distributes the Trust assets to your beneficiaries, or continues to manage the assets for as long as you direct in the Trust Agreement. This is all done without court supervision and there is no probate. A Trust can also avoid the need to appoint a Guardian or Conservator should you become disabled.

You do not need to be wealthy to have a Trust. however, there can be substantial tax savings if you leave an estate worth more than $1 million.

Which is better, a Will or a Trust?
It really depends on your personal circumstances. Some salespeople claim everyone should have a Trust and tell horror stories about probate. Probate is usually a simple and inexpensive process. Many people are well served by a Will.

I put my children on all my accounts and on the deed to my house. Is this a good idea?
You have to be very careful with joint accounts. Creditors of your children may be able to get at your money through lawsuits, bankruptcy or divorce. Real estate can present some especially difficult problems. Generally you are much better off with a Will or Trust Agreement and a Power of Attorney.

How much will I pay in inheritance taxes?
There is no Federal estate tax on estates of less than $2 million currently and this will rise to $3.5 million in 2009. Unless Congress takes some action, the exemption will go back to $1 million in 2011. There is no tax only in 2010. Larger estates are taxed at a 45% rate. A married couple can double the exemptions with the right kind of Trust.

Michigan currently does not have an inheritance tax.

Do I pay income tax on an inheritance?
Generally no. But, certain items, such as IRA's and interest on savings bonds are treated as "income in respect of a decedent" and are taxed at regular income tax rates.

 


 
 
 
 
 
Dinning & Greve
Located in Roseville, Dinning & Greves, P.L.C., represents clients throughout Michigan, in cities including:
Eastpointe, St. Clair Shores, Warren, Sterling Heights, Clinton, Harrison, Macomb, Shelby and Washington Townships.
Our firm also represents clients in Oakland County, Wayne County, and Macomb County.


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