In recent years, several celebrity estates have been in the news because of such mistakes as creating trusts and failing to fund them or because of not creating an estate plan at all. The very wealthy are as likely to make these and other estate planning errors as anyone else, and these are only two of many typical mistakes. People in Michigan should know about these and other errors so that they can avoid them.
Beneficiary issues
Many people might be familiar with beneficiary designations that they fill out when they open a retirement account or purchase a life insurance company. They may be less aware that they can designate certain other accounts as payable or transferable upon their deaths and that they can avoid probate for those assets. The limitations vary from state to state, but in Michigan, for example, a savings account can be made payable on death.
Minors cannot be beneficiaries, but you can appoint a guardian for your children in your will, and the guardian can manage the child’s inheritance until the child is of legal age. Another option is creating a trust for the child. Finally, you should keep in mind that if your beneficiary designations contradict your will or trust, the beneficiary designations will override those other documents.
Tax issues
You may not realize that if your estate planning leaves your retirement account to anyone other than your spouse, you could be saddling them with certain requirements for withdrawal and tax payments. There might be ways around this, such as buying a life insurance policy or creating a Roth IRA.
The strategies for dealing with these issues can be complex, and this is one reason an attorney can be useful when it comes to creating an estate plan. An attorney may also help in the preparation of other important documents, such as powers of attorney.