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Advice & More December 2012

Legal Ease

Myth vs. Reality of Wills, Trusts and Powers of Attorney

By Jonathan J. David

Actually, having a last will and testament has nothing to do with avoiding probate. This is a common misconception. Probate will be required any time you die leaving assets in your name alone, whether you have a last will and testament or not.

Dear Jonathan: I have a few questions that I would like to have answers to. First of all, is it true that if I die without having leaving a last will and testament, that everything I own will be forfeited to the state? Also, if I leave a last will and testament will my assets avoid having to be probated? Further, if I set up a living trust, can I protect my assets from creditors? Finally, can a power of attorney be used for someone after they die?

Jonathan Says: Here are the answers to your questions:

  1. Is it true that if I die without leaving a last will and testament, that everything I own will be forfeited to the state?

    No. If you die without leaving a last will and testament, you will be deemed to have died intestate and the intestacy laws of the state in which you live will control where your assets go. Typically, spouse and children are the first takers. If you are single with no children, then various other family members come into the picture, such as parents, brothers and sisters, aunts, uncles, nieces, nephews, etc., and only if there are no living heirs will the estate be forfeited to the state. Each state has its own laws regarding intestacy, so you should consult an attorney in your locale to determine what happens to your assets in the event you die without leaving a last will and testament in the state where you currently reside.

  2. If I leave a last will and testament will my assets avoid having to be probated?

    No. Actually, having a last will and testament has nothing to do with avoiding probate. This is a common misconception. Probate will be required any time you die leaving assets in your name alone, whether you have a last will and testament or not. Assets that are jointly titled where there are survivorship rights involved, assets titled in the name of a trust, and assets which allow for the naming of a beneficiary (and you have actually named a beneficiary who survives you) will avoid probate at death; all other assets will have to be probated. Having a last will and testament, however, allows you to determine (as opposed to state law) who should receive your assets at the time of your death.

  3. If I set up a living trust, can I protect my assets from creditors?

    No. Having a living trust and retitling your assets to that trust does nothing to protect or shelter those assets from the rights of your creditors. Setting up a trust and retitling your assets to that trust, however, does allow those assets to avoid probate at your death.

  4. Can a power of attorney be used for someone after they die?

    No. First of all, there are different types of power of attorneys. A regular or non-durable power of attorney can only be used during the principal’s lifetime so long as he or she is not disabled. A durable power of attorney can be used during the principal’s lifetime, and is specifically designed so that it can be used in the event the principal becomes disabled. No power of attorney, however, can be used once the principal dies; at the principal’s death the authority of the agent to act on behalf of the principal terminates.

 

Jonathan J. David is a shareholder in the law firm of Foster, Swift, Collins & Smith, PC , 1700 East Beltline, N.E., Grand Rapids, Michigan 49525.

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