Dear Jonathan: My wife and I are retired and have four children, all of whom are married and have young children. We recently updated our estate planning documents and at a recent family gathering I mentioned to each of my children that they should also prepare estate plans to protect themselves and their children, but most of what I said seemed to fall on deaf ears. It seems that none of them feel like their estates are large enough at this stage in their life to engage in estate planning. I really would like to revisit this issue with them, but I don’t feel I can properly articulate the reasons why it is important for them to engage in estate planning. Can you help?

Jonathan Says:  I would be glad to. I have received similar responses when I have counseled younger adults about the importance of estate planning regardless of the size of their estate, whether they are married or single, or have children. The following is a summary of the types of documents everyone should consider having:

1. Durable Power of Attorney for Financial Matters. A durable power of attorney for financial matters is a written power of attorney which allows a person (the “principal”) to name another person as agent to handle anything having to do with the principal’s assets and finances, including, but not limited to, bill paying, buying and selling property, conducting banking and filing tax returns, in the event the principal cannot act as a result of a disability or is just unavailable, i.e., out of town. This type of durable power of attorney can be designed as a springing durable power of attorney which means that it only becomes effective when the principal becomes disabled or it can be designed to be effective immediately even if the principal is not disabled.
   
   
2. Designation of Patient Advocate and Durable Power of Attorney for Health Care. A designation of patient advocate and durable power of attorney for health care is a written power of attorney which allows a person (the “patient”) to name a person as patient advocate to handle the patient’s personal and health care matters if the patient is unable to act. This type of durable power of attorney only becomes effective when the patient can no longer make personal and medical care decisions; until that happens the patient advocate has no authority to act.
   
   
3. Last Will and Testament. A last will and testament is a written instrument which allows a person to direct how that person’s assets will be distributed upon the person’s death. If there is no will, the state where the person lived will determine who is to receive that person’s assets. Having a will avoids ceding control to the state. Also, if a person has minor children, a will permits the naming of guardians and conservators of those children if at that person’s death there is no other living parent or guardian of those children.
   
   One misconception about wills is that having one will avoid probate. Unfortunately, that is not the case because probate will be required any time a person dies with assets titled in the person’s name alone regardless of whether that person left a will.
   
   
4. Revocable Living Trust. A revocable living trust is a written instrument created by a person (the “settlor”) for the purpose of having a person or institution (the “trustee”) manage assets on behalf of the trust beneficiaries. If, while alive, the settlor retitles assets in the name of the trust, then upon the settlor’s death those assets will not need to be probated. This is because probate is only required if there are assets titled in the decedent’s name alone at the time of death.

Further, the settlor can also determine at what age a beneficiary is to receive the beneficiary’s share of the trust assets. This is especially useful in the case of minor children because it allows the settlor to delay the distribution of a child’s inheritance until the child is mature enough to receive that inheritance. Until that happens, the trustee is typically instructed to invest and manage the assets that make up a child’s trust share and make distributions for the child’s health, support and education.

Hopefully, the above summary will help you in your discussions with your children and will motivate them to prepare their own estate plans. Good luck.

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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