At some point in time, each individual must recognize the fact that he or she will eventually die. While this is typically not a favorite topic of conversation for most Michigan residents, it is an inevitable fact that should be addressed and planned for. Proper estate planning can make a tremendous financial difference for the beneficiaries of one's estate.
In many cases, a will is the appropriate tool. A will can specify exactly what each individual is to receive. It can also dictate who is going to be responsible for any children who have yet to reach the age of majority. However, if the estate is relatively large, it is possible that a will could be a costly method for transferring property to beneficiaries. This fact has become apparent as Philip Seymour Hoffman's will has gone through the probate process and resulted in approximately $12 million in estate taxes.
When the estate is large and/or complicated, there are other tools such as trusts that are more effective in reducing estate taxes and meeting the individual's objectives. For example, Hoffman wanted to be certain that his children would not suffer as the result of being "trust fund" kids; therefore, he used a will with specific stipulations. However, a trust fund can have these same stipulations, delay transfer of funds or property until a certain age or criteria is met and protect the estate from some tax obligations.
While the average Michigan resident does not have an estate the size of Hoffman's, it is still important for the individual to look ahead and plan for the future. There are many different estate planning options available. Experienced legal counsel can help determine which one or combination of tools is the most appropriate.
Source: kiplinger.com, "Philip Seymour Hoffman's Estate Planning Mistake", John M. Goralka, July 21, 2017