While most people are uncomfortable thinking about their own mortality or incapacity, failing to plan for these possibilities usually leads to chaos, confusion and excessive costs for the family members and loved ones who are left to handle these situations when they occur. Life and Estate Planning is a proactive and thoughtful way to prevent unnecessary problems, take care of your loved ones, and attain peace of mind for yourself. Life Planning involves implementing the necessary steps to avoid a "Living Probate" such as guardianship, if you become unable to care for yourself or make your own decisions regarding finances or health care. Estate Planning involves putting your house in order to provide for the orderly management and disposition of your assets at the time of your death.

Attorneys who focus on Life and Estate Planning utilize a variety of "tools" to help their clients build effective estate plans that will achieve their goals. The following is an overview of the primary Life and Estate Planning tools. Because each individual's circumstances will vary, it is recommended that you consult with an attorney experienced in Life and Estate Planning to prepare a plan that is right for you and your specific situation.

A Financial Power of Attorney (FPOA) is the legal document that can be used by someone you have chosen, to handle your financial affairs in the event that you are unable or unwilling to manage those assets yourself. The person who owns the asset is called the Principal. The person who stands in for them is called the Agent . The Agent does not own the Principal’s assets. The Agent is only a substitute decision maker who manages the Principal's assets for them. Agents are fiduciaries, which means that they have a duty to act in the best interest of the Principal they are serving. The Agent ’s acts should not be self-serving. In fact, under Michigan law, a person who takes advantage of someone while serving as their fiduciary can be subject to criminal and civil penalties.

To sign an FPOA, a person must be mentally competent. That means the principal must understand what he or she is doing and want to delegate certain decision-making responsibilities to someone else. Importantly, the Agent can handle the principal’s finances if the principal becomes incompetent but only if the power of attorney specifically states that the principal wants the document to remain in effect after his or her incapacity. This crucial clause makes the FPOA durable. Without the clause, an ordinary FPOA becomes useless when the principal becomes mentally incapacitated.

A person also can designate when the durable FPOA goes into effect. It can start when the document is signed or at some other time, say, when the principal becomes incapacitated. This latter type of FPOA is called springing, because it springs into effect in the future. With a springing FPOA, a principal must clearly define how others should determine that the springing event has occurred. All FPOAs end when the principal dies, unless the document specifies an earlier date. The principal also can change or revoke a power of attorney at any time.

An FPOA can be very specific or very general, depending on the principal’s wishes. He or she can authorize just one thing, like selling a car, or include everything that the principal could do him-or herself.

Medical Power of Attorney

A Medical Power of Attorney (MPOA) is the legal document that can be used to appoint someone of your choosing to speak on your behalf regarding your health care, including mental health, in the event that you are unable to speak for yourself. Those health care decisions may involve day-to-day situations or life-threatening events. The person who creates the MPOW is the Principal. The person who speaks on their behalf is the Patient Advocate. The Principal must be given every opportunity to continue to make his or her own health care decisions before it is necessary for the Patient Advocate to take over. The Patient Advocate's power does not begin until the Principal has been determined to be incapacitated by two physicians, or a physician and psychologist who have personally examined the Principal.
Your MPOA addresses many different areas of medical decision making that the Patient Advocate may have to help you with. Keep in mind that the more your Patient Advocate knows about your wishes, the better they will be able to represent you. Your MPOA can always be revoked if you have a change of mind about any of your decisions.

Living Will

The Living Will is the document that can be used to express your desires regarding your end of life treatment. Specifically, you can state whether you would prefer to have artificial means used to prolong your life if you are ever diagnosed as terminal or in an irreversible coma or persistent vegetative state. The person who you have chosen as your Patient Advocate would be responsible for telling your care providers about your preferences. Your Living Will and/or your MPOA may also include instructions regarding organ donation and burial or cremation preferences.

Last Will & Testament

Your Last Will and Testament is the document that states your wishes regarding the distribution of your assets at the time of your death. It is not the appropriate place to address end of life care choices or your funeral preferences. Your Will is only used if your have assets that are in your name alone at the time of your death. If your assets are in a Trust, or jointly owned with another person, your will would not be used to distribute those assets. In addition, if you have named a beneficiary on any of your assets, those assets will pass to the beneficiary without the use of your Will.
The assets left in your name alone are your Probate assets. Generally your Personal Representative will file your will with the Probate Court and this will begin the Probate process. Your creditors will have the opportunity to make claims against your probate assets as will other interested parties who have a valid claim. The Court will issue an Order either approving your Will or stating how your assets are to otherwise be distributed.

Living Trust

Living Trusts are another option for the management of assets during lifetime and distribution at death. In most circumstances, they can be used to avoid Probate (lifetime and death time) because they include plans for management of your affairs and assets in the event of death or incapacity. Trusts are frequently used in conjunctionwith FPOAs and MPOAs. When a Trust is used for Life and Estate Planning, the individual's assets are taken out of their name and retitled to their Trust as the owner. The person who sets up the Trust is the Settlor or Grantor. The person(s) who manage the Trust are the Trustees. The people who the Trust is used for, or given to, are the Beneficiaries. The Trust document, which can be either revocable or irrevocable, contains all of the instructions for the use of the assets during the person's lifetime, and the distribution of the assets at their death. Trusts allow for great flexibility in the distribution and use of the assets and can even allow for treating each beneficiary differently. Trusts can also facilitate the passing of assets such as camps and farms, from generation to generation. In addition, Trusts can also be useful to protect the inheritance of a person who is a minor or disabled. The decision to use a Trust may be driven by the value of the estate or on the circumstances of the Settlors and the beneficiaries.