Estate Planning For Single People: Why It Matters
Sept. 8, 2020
In Michigan, statutes determine how your assets pass when you die. Without exception, this is how your post-death estate will be distributed unless you have valid estate planning documents that cause deviation from this statutory framework.
In other words, if you do not have the appropriate planning documents, like a will and trust, state laws drafted without any knowledge or consideration for your personal situation, intentions or desires will determine who receives all of your assets upon your death without regard for your actual intent.
As of September 1, 2020, here is how your estate will be distributed pursuant to Michigan Law if you die without having valid estate planning documents:
If you have descendants (children, grandchildren, great-grandchildren), all your assets will pass to your surviving descendants “by representation.” So, your estate will be divided into the same number of equal shares as how many children you had, and the shares will pass either directly to each child that survives you OR to the descendants of a child who did not survive you, also in equal shares to that child’s descendants.
If you do not have descendants, but either or both of your parents survive you by at least 120 hours (5 days), your entire estate will pass in equal shares to your parents or, if either of your parents is dead, all of your assets will be distributed to your surviving parent.
If you do not have descendants, and neither of your parents survive you by 120 hours, your estate will pass in equal shares to the descendants of either of your parents
Examples of Application to Real Life Scenarios:
Example 1 – Divorced person with two children, in a long term relationship with a person they have never married:
Joe divorced 20 years ago and died recently having never remarried. He has two children: a son that was the product of his marriage and a daughter that is the product of an extramarital affair he had (and that ultimately led to his divorce.) Joe’s son died in an auto accident a year before Joe died. He was married with two children when he died. Joe and his daughter had a strained relationship and they had not spoken for at least a decade preceding Joe’s death. In the last fifteen years before he died, Joe was in a committed, happy relationship with Susan. They lived together in Joe’s home and built a life together. Most people thought they were married, but they never made it official.
Joe stated many times that, upon his death, he wanted Susan to receive half of his assets and he wanted the other half to be placed into investments for his son’s two young children to help fund their college education expenses. Because his daughter had not been a part of his life for a long time and their relationship was quite negative, and because she was inheriting money from her maternal grandparents and therefore did not have as much need as his son’s children or Susan did, Joe did not want his daughter to receive any of this assets upon his death. However, even though everyone knew Joe’s desires, Joe did not commemorate any of these wishes in a valid will.
Now that Joe has died, Joe’s son’s two minor children will each receive 25% of Joe’s estate, which will be managed by a conservator until each reaches age 18. When each turns 18, they may do whatever they like with their respective 25% share and will not be required to use it for college, to buy a first home or a business, or for any other future-building use. Meanwhile, Joe’s daughter will receive 50% of Joe’s estate, outright, despite their lack of relationship. Finally, Susan will not receive any portion of Joe’s assets and, because Joe owned the home they lived in and it now must be sold to divide the value between Joe’s grandchildren and his daughter, she must find a new place to live using solely her own resources.
To add insult to injury, during his life Joe told Susan he wanted her to use some of his estate’s money to purchase him a burial plot in the same cemetery where his son is buried, that he wanted a wake with open casket so that family members and lifelong friends could come to pay their respects, and that he wanted a funeral service conducted by the priest in their local parish, where they attended services regularly. However, because Joe never signed a valid funeral representative designation, and he and Susan are not legally married, under Michigan law Joe’s daughter has priority to make all decisions about how Joe’s bodily remains will be handled. She does not want to lose any estate assets to the expenses for the type of funeral and burial Joe wanted, so she has him cremated and gives the ashes to Susan.
Example 2 – Single person who never had children and has 1 surviving parent:
Mary spent her adult life having strong relationships with close friends who she considers her family and by remaining very connected to her community by being involved with a certain charitable non-profit, where she volunteered for more than twenty years. Mary sought and maintained these extra-familial relationships because her relationship with her family, though amicable, was not especially nurturing or supportive of her interests and priorities.
Mary’s father died decades ago, leaving her mother well-provided for financially for the rest of her days. Unfortunately, Mary’s younger brother, Henry, developed serious drinking and gambling problems and has had to turn to their mother for support. Because Mary was so self-sufficient and in good financial shape, and Henry was not, their mother decided her estate planning would give her home, and the bulk of her other estate assets remaining when she dies, to Henry in a Trust run by a trustee who manages the assets for him. The assets in that trust will also be adequate to support Henry for the rest of his life. Mary supported this decision, in large part because she did not want to see her brother on the street if her mother died. However, Mary planned to have her own estate pass to the charity she has volunteered with for years, for them to fund a program named after her. She had informed the executive director of the charity of her plans, and the executive director had agreed that the charity would use the funds as Mary requested.
Mary died unexpectedly last week when she suffered a stroke. Her mother is still alive, but suffers from advanced dementia, lacks capacity, and lives in a senior memory care and skilled nursing facility. Henry lives in their mother’s home and is supported by a budgeted allowance managed by the trustee of their mother’s trust. Mary was planning to have an estate plan drawn up, and even contacted an attorney and received the forms to complete to start the process, but she had not gotten around to working on them yet.
Now that Mary has died, because she never executed valid estate planning documents her entire estate will go to her mother. Once added to her mother’s assets, they will be transferred into the trust that manages all her mother’s money and supports Henry. The charity will not receive anything and Mary’s friends, who Mary had already asked to handle her remains and her memorial service, will not even have the authority to do as Mary asked. Instead, since Mary’s mother lacks capacity to handle these affairs, either Henry or the Trustee of her mother’s trust, an accountant who Mary has never even met, will decide.
Takeaways:
Many people believe the only purpose of estate planning documents is to “avoid probate,” or that “only people with dependent spouses and children need estate plans.” That is not the case. In fact, wills are probated – so having a valid will does not avoid probate at all. What wills and other valid planning documents do is make sure that your intentions for your assets and something as dear and personal as the handling of your funeral services and your remains are commemorated in a way that makes them enforceable. As you can see from the examples above - this may be even more important if you do not have traditional, nuclear family relationships.
Having spent years litigating probate court disputes, I have seen time and again that having valid planning documents in place ultimately provides invaluable order, guidance, and certainty for a person’s loved ones as they mourn. The alternative – an estate that passes via a sterile framework that gives no consideration to what the deceased person actually wanted, and what they sometimes made loved ones promise to do after their death – can be extremely painful and traumatic for those left behind.
What I Can Do For You
Having valid planning documents in place is the responsible, loving, and kind thing to do for your loved ones, and I want to help you get it done. So:
I will provide you with the right documents that will accurately commemorate your intent in an enforceable way, not some overpriced version of what are truly “fill in the blanks” templates that are not nearly so likely to actually “work” when the time comes.
I will charge you a reasonable rate for the solution you need that reflects the fact that my ideal estate planning clients include working class and middle-class people, not just the well-to-do.
Call or e-mail Mattieson Law, now affiliated with Couzens Lansky. My assistant will work with you to get us connected and get your plan moving forward. We can work together to get this done.
Disclaimer: Neither this blog post, nor any of the other blog posts on this page, are intended to serve as legal advice and should not be treated or relied upon as such. They are for informational purposes only, but I hope they help you move forward with reaching out to me, or to another Michigan licensed attorney, to get the help you need to solve problems and reach goals.
- Chiara Mattieson