Grieving your death will be especially difficult on your loved ones, so making plans now for your estate (big or small) is another one of those opportunities to make their lives a little easier. A number of options are available, so you will probably want to research to find the ones which best suit your needs.

If you do have a will, is it a valid will under the law (meaning, will it hold up in probate court)?

In Michigan, you are able to prepare your own will, but if you do not do it correctly, it could be denied by the probate court, and your property would be divided as if you never had one. This means the courts will look to state law to distribute your estate, so only your relatives can inherit. If you don’t have any relatives that meet the legal criteria, all of your property could go to the state. Having a valid will prevents this from happening and ensures your property will go where you want it to go.

Be wary of “will kits,” Internet guidance, or advice from friends. Each state has different requirements, which these other resources may not be able to provide. Once again, if you do not write your will according to your state’s laws, it may be found invalid and your wishes may not be followed. It is best to have an attorney draw up your will, but if you cannot afford one, call the Legal Hotline for Michigan Seniors for suggestions of other options. For example, if your situation is fairly simple and straightforward, you may be able to use a Michigan statutory will which the Hotline can send you.

Once you have a will, you can place it for safekeeping at the county courthouse for a small fee. By doing this, you don’t have to worry about it being damaged or lost. However, this also means you will have to register a new version whenever you want to make a change. You will want to keep your will current, so if any of your beneficiaries die before you do, or if relationships change, it will still be clear to the court how you want your estate distributed. Otherwise, it may be up to the court to determine what you would have wanted, which may not be accurate.

Do you know what personal items you would like to go to specific people? While you may have discussed this with various family members, it is easiest for everyone if you prepare a written list which may either be actually attached to or specifically referenced in your will. The benefit of having a separate list is that you can change it without needing to change your will, but it is best if you handwrite this list and sign and date any modifica¬tions. If you do not actually attach it to the will, be sure to keep this list in a place where the will specifically states it is located.

A Letter of Instruction is an informal docu¬ment, prepared by you, which provides your personal representative and benefici¬aries with more personal information regarding your estate. Examples of what might be specified in your letter include:

• Instructions about the location of important documents
• A list of names of people to be contacted in the event of your death
• Specific burial instructions
• List of money you may owe or that is owed to you

Keep the Letter of Instruction with your will or trust in a safe place.
Another related document becoming increasingly popular is an Ethical Will. This document conveys information, feelings, and values to those you choose to read it and can cover special directions you wish to pass on. What traditions are important to continue in your family? What values did you learn from your parents that you wish to pass on? What do you hope people will remember about you? What are your proudest moments? What is most important in life to you?

Probate refers to the administration of a deceased person’s estate, regardless of whether the person died leaving a will or not. When a person dies leaving assets in his or her own name, these must be transferred to the beneficiaries. The probate process accomplishes this.

A will is not your only option for distributing your estate. There are trusts, jointly held assets, and different types of deeds to pass property without having to go through probate. But in setting up these plans, there can also be drawbacks and risks to you while you are still alive, so you will need to think about your options carefully.

A short list of some of these choices follows. If you are 60 or older, the Legal Hotline for Michigan Seniors is available to explain these and other options.

Payable on Death Accounts

Some financial institutions offer accounts which are paid to a named beneficiary when the owner dies. They may be called payable on death (POD), transfer on death (TOD), trust, or bene¬ficiary accounts. Securi¬ties, such as stocks and bonds, can also be titled in a death beneficiary form. This type of ownership avoids probate but does not have the risks of joint title because your beneficiary has no access to the account or asset until you die. You may need to check with your financial institution to see if this is offered.

Living Trusts

The use of living trusts to avoid probate has grown rapidly in the last few decades. A living trust is created during the lifetime of the grantor (the person who creates the trust). This requires a trustee. The law allows you or someone else you choose to be your trustee. If you are the trustee, you hold the property in trust, and you name a successor trustee to take over after your death.

The trust usually provides income to be paid to you as the grantor during your lifetime from trust property, and you would have the power to withdraw assets from it. You also would typically retain the right to change the terms of the trust or terminate it at any time before you die or become legally incapacitated and thus it is revocable. After creating the trust, you fund it by transferring all of your property into it. This way you can avoid owning any property in your name at your death, allowing your estate to avoid probate and be relatively quickly distributed.

If you were to become disabled before your death, your trustee would be able to take care of you and others according to the terms you establish in your trust docu¬ment. For married couples, your trust may also help avoid or reduce federal estate taxes if you have more than $2 million (for 2008) in assets.

Trust Shortcomings

Not everyone benefits from a trust. Trusts are generally more complex and expensive than wills. The larger the value of your estate, the greater likelihood that a trust might save your beneficiaries some money. But the cost of having the trust prepared has to be paid up front, by you, rather than after your death out of your beneficiaries’ shares, as with probate expenses. It may actually cost less for your property to go through probate.

Caution: If you’re thinking a “trust kit” may be a cheaper way to go, you may be making a huge mistake that could interrupt your life and those of your loved ones. The advice and counsel of an experienced attorney is strongly recommended in preparing a trust and selecting the type of trust that will achieve your goals.

Joint Tenancy/Tenancy by the Entirety

If you are not the sole owner (titled in your name alone) of any property, then there is no property to administer and no need for probate. Property which is owned by two or more individuals as joint tenants with full rights of survivorship passes directly to the surviving joint tenant or tenants upon the death of one. For example, if A and B own a house as joint tenants with full rights of survivorship, then upon the death of A, with B surviving, B is the sole owner of the house. The house need not pass through probate.

Joint-tenancy ownership is available for both real property (e.g., house, land) and personal property (e.g., stocks, bonds, bank accounts). Property owned as husband and wife (tenants by the entirety) provides rights of survivorship, so upon the death of the first spouse, the survivor becomes the sole owner of the property. Thus, when all assets are owned jointly by husband and wife, there will be no need for probate.

Joint-Tenancy Drawbacks

Joint-tenancy ownership is frequently used to avoid probate; however, it has some risks and disadvan¬tages. By making others joint-tenant owners of an asset, you are giving up total control of that asset. For example, if you transfer your sole ownership of your house to a child as a joint-tenant owner, then your child’s approval is necessary for any future sale of the house. Another disadvantage is your property may be accessible by the creditors of your joint tenant, and there may be adverse tax consequences (e.g., reduced capital gains exclusions) when a residence is sold.

Ladybird Deeds

A ladybird deed is a special, enhanced form of a life-estate deed. It allows you as the grantor to transfer real estate to a grantee (another person) after your death, while maintaining a life estate in your property. This means that you would retain the legal right to live in your home, to sell it, or mort¬gage it, for the rest of your life. Then the property would automatically pass on to your grantee when you die without having to go through probate. With a ladybird deed, unlike a joint tenancy, you can change your mind later about transferring the real estate by changing your grantee.