Estate: Essentially includes everything you own.
This includes life insurance, business interests, personal property,
real estate and retirement plans. The "value" of your estate is
determined by the "fair market value" of the assets.
Probate: The public, court controlled, legal process for changing title to assets for people who have died. Since deceased persons are legally incapable of transferring property, the probate court provides the process for transferring a decedent's property. Owning property in more than one state will require multiple probates.
Will: A legal document that advises the probate court about a decedent's wishes for distribution of their assets. A will is only effective after the person's death.
Will Substitutes: Certain forms of ownership that transfer property automatically on death. The most common will substitutes are beneficiary designations and joint tenancy. Will substitutes can cause unforeseen results and consequences.
Trust: A legal document that provides instructions to a personal trustee on how to manage and distribute the estate. A Living Trust is established during the person's lifetime and is usually revocable and amendable. A properly funded trust avoids probate and can provide instructions for management of the estate in the event of death or incapacity. A Testamentary Trust is established as a part of a will, but like a will, is only effective on death and must also be probated. Special kinds of trusts can be used to provide for disabled children or grandchildren, called a special needs trust. Also, certain irrevocable trusts can help protect assets from nursing home expenses.
When you create a trust, you (Trustmaker) transfer your property into the name of the trust, to be managed by you or someone else that you choose (Trustee) for the benefit of yourself or someone else (Beneficiary). In a Living Trust you are generally the Trustmaker, Trustee and Beneficiary so that you retain total management and control over your assets. However, at the time of your death, if the trust is then the owner of everything in the estate, there is nothing to probate and that process is avoided. Your Successor Trustee simply follows your instructions for further managing and distributing your estate. A revocable Living Trust does not require any special or additional tax filings, and can generally be revoked or amended at any time.
Guardianship: A guardianship is a legal relationship in which the probate court gives a person (the guardian) the power to make personal decisions (i.e. medical decisions) for another (the incapacitated person). If the judge determines that the person does not have the mental capacity to care for his or her own needs, the judge will appoint a guardian. Unless limited by the court, the guardian generally has the same rights, powers and duties over the person that parents have over their minor children.
Conservatorship: A conservatorship is a legal relationship in which the probate court gives a person (the conservator) the power to make financial decisions for another (the protected person). The court proceedings are similar to those of a guardianship except the judge is determining whether the individual has the capacity to manage his or her financial affairs. If the individual is determined not to have the necessary mental capacity, the court will appoint a conservator to make financial decisions for the individual. Once appointed, the conservator must file an accounting each year documenting all of the income and expenses generated on behalf of the protected person.
Probate: The public, court controlled, legal process for changing title to assets for people who have died. Since deceased persons are legally incapable of transferring property, the probate court provides the process for transferring a decedent's property. Owning property in more than one state will require multiple probates.
Will: A legal document that advises the probate court about a decedent's wishes for distribution of their assets. A will is only effective after the person's death.
Will Substitutes: Certain forms of ownership that transfer property automatically on death. The most common will substitutes are beneficiary designations and joint tenancy. Will substitutes can cause unforeseen results and consequences.
Trust: A legal document that provides instructions to a personal trustee on how to manage and distribute the estate. A Living Trust is established during the person's lifetime and is usually revocable and amendable. A properly funded trust avoids probate and can provide instructions for management of the estate in the event of death or incapacity. A Testamentary Trust is established as a part of a will, but like a will, is only effective on death and must also be probated. Special kinds of trusts can be used to provide for disabled children or grandchildren, called a special needs trust. Also, certain irrevocable trusts can help protect assets from nursing home expenses.
When you create a trust, you (Trustmaker) transfer your property into the name of the trust, to be managed by you or someone else that you choose (Trustee) for the benefit of yourself or someone else (Beneficiary). In a Living Trust you are generally the Trustmaker, Trustee and Beneficiary so that you retain total management and control over your assets. However, at the time of your death, if the trust is then the owner of everything in the estate, there is nothing to probate and that process is avoided. Your Successor Trustee simply follows your instructions for further managing and distributing your estate. A revocable Living Trust does not require any special or additional tax filings, and can generally be revoked or amended at any time.
Guardianship: A guardianship is a legal relationship in which the probate court gives a person (the guardian) the power to make personal decisions (i.e. medical decisions) for another (the incapacitated person). If the judge determines that the person does not have the mental capacity to care for his or her own needs, the judge will appoint a guardian. Unless limited by the court, the guardian generally has the same rights, powers and duties over the person that parents have over their minor children.
Conservatorship: A conservatorship is a legal relationship in which the probate court gives a person (the conservator) the power to make financial decisions for another (the protected person). The court proceedings are similar to those of a guardianship except the judge is determining whether the individual has the capacity to manage his or her financial affairs. If the individual is determined not to have the necessary mental capacity, the court will appoint a conservator to make financial decisions for the individual. Once appointed, the conservator must file an accounting each year documenting all of the income and expenses generated on behalf of the protected person.
Brett Howell, the founder of the Elder and Estate Planning Law Firm, specializes in helping Michigan families protect their estates. Contact our office for a confidential consultation to discuss your concerns with Brett - you will be glad (and relieved) you did. Contact Brett by calling the Elder and Estate Planning Law Firm at (810) 953-3846 or visit his website http://www.michiganelderlawyer.com for more information.
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