You often hear that everyone needs an estate plan, but you don’t often hear exactly what that means. As a result, many people reach the conclusion that they’re not old enough, or not wealthy enough, to bother making an estate plan. But as Danielle explains, while your estate plan may vary depending on your age, assets, and family composition, every adult needs an estate plan—even adults as young as 18.
That’s because any adult could become injured or incapacitated in a way that makes them unable to express their medical wishes or to manage their financial affairs. So, at a minimum, you should have documents that give someone you trust the authority to express and carry out your wishes. Those are medical and financial durable powers of attorney.
A power of attorney gives a person you choose (your “agent”) the legal power to take action on your behalf. With a financial power of attorney, that’s the ability to make financial decisions and transactions for you. With a medical power of attorney, your agent can make decisions about your medical care when you are unable to.
“Durable” means that the power of attorney continues in effect if you are incapacitated, so it’s critically important that any powers of attorney you have be durable; otherwise, they won’t be able to help you when you really need them. So, at a minimum, everyone needs durable powers of attorney, and probably a last will and testament so that they can direct the disposition of any property they have in the event of their death.
Life Changes; So Should Your Estate Plan
Another reason it’s a good idea to think about estate planning in the new year is that our lives change with every passing year. So while you might be able to get by with a simple will and durable powers of attorney when you’re young and single with few assets, that will no longer be enough as you get older, marry, have children, and accumulate some wealth.
For instance, when you marry, you will want to update any durable powers of attorney to make your spouse your agent. As Danielle Mayoras explains, “A lot of people don’t realize that if you’re married, your spouse can’t make your decisions for you.” If you want them to have that power, it’s best to give it to them—legally, in the proper documents, so you don’t have to go through the probate court.
Similarly, if you have young children, you’ll want to update your documents to make sure that you have provided for a guardian for them should anything happen to you and their other parent. And, of course, you will want to provide for them financially if you are no longer around to support them. But leaving young children assets outright is a mistake.
If your children are minors, a conservator will need to be appointed to manage their assets until they reach legal adulthood at 18. At that point, they would be entitled to their entire inheritance. Because few 18 year olds have the financial savvy and maturity to manage a significant inheritance, you may want to look for another option to protect them and their money.
For most parents, that option is a living trust, which allows them to use and enjoy trust assets during their lifetime, and appoint a successor trustee to manage assets for their children in the event of their death. Unlike with a will, a trust can contain assets for as long as the people creating the trust dictate; kids aren’t automatically entitled to their inheritance at 18.
Changes to the Law May Prompt Changes to Your Estate Plan
Even if your life circumstances haven’t changed much in 2024, you may still want to resolve to review your estate plan this year because of upcoming changes in tax law. The Tax Cuts and Jobs Act of 2017 (TCJA )increased the estate tax exemption from $5.49 million per individual in 2017 to about $11.2 million in 2018 (double those amounts for couples). The exemption amount is the amount one can give away during their lifetime or at death without incurring tax.
The exemption amount in 2024 is $13.61 million per person, and it will likely adjust upward for inflation in 2025. But after December 31, 2025, the exemption amount “sunsets” back to the pre-TCJA level, adjusted for inflation. That could leave many more estates vulnerable to estate taxation. If yours is one of them, you should definitely resolve to update your estate planning. Otherwise, assets that could have gone to your family could go to the government instead.
Talk With Our Experienced Troy, Michigan Estate Planning Attorneys
The bottom line is, even if you’ve given up on your other New Years’ resolutions, getting your financial and estate planning in order is always worth doing.
At the law firm of Barron, Rosenberg, Mayoras & Mayoras, P.C., we provide a full range of services relating to estate planning, including durable powers of attorney, wills, trusts, and planning for large estates. We serve clients throughout Michigan and Florida, and our clients have come to count on our credentials, compassion, and commitment when it comes to planning for the future.
Call us today at (248) 494-4577 or use our online form to talk with our experienced estate and probate attorneys.
This article was provided by Don L. Rosenberg, Co-Founder of the Law Firm of Barron, Rosenberg, Mayoras & Mayoras, one of Michigan’s TOP Elder Law & Estate Planning Law Firms. Attorney Rosenberg and his firm are Members of the National ElderCare Matters Alliance and have a Featured Listing on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources to help families plan for and deal with the issues of Aging.
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