In Michigan, as in other states, estate planning is one of the most important aspects of general financial preparation. However, most people are under-prepared in this area and are not aware of all the documentation that they need to have a complete estate plan.
Elements of an estate plan
There are several key documents that every person should have as part of their estate planning to cover all of their bases. The first is, of course, a will. The will specifies how the executor should distribute your assets once you pass away. It’s the most important document but not the only one. You also need to specify beneficiaries on financial accounts like a 401(k) account, insurance plan or an annuity. This lets those assets pass directly to a specific person without the probate process. You should also write a letter of intent. This is not legally binding, but it contains your plans for how you want your assets divided as well as any funeral plans.
The next two documents for the estate planning process are the durable power of attorney and the health care power of attorney. These allow for someone to make legal and health decisions for you if you are incapacitated and unable to make them on your own. Lastly, you should get a guardianship agreement if you have underage children. This specifies who takes care of the kids if you pass away and they are not old enough to live on their own yet.
Having all of these documents is an essential part of ensuring that your assets and your plans go as you want them to go. The goal is to avoid any conflicts or legal wrangling.