DYING WITHOUT AN ESTATE PLAN: IT'S SCARY STUFF

Death is a topic most of us prefer to avoid, but it’s an inevitable part of life. What’s more frightening than the thought of our own mortality, however, is the possibility of leaving behind a legal and financial mess for our loved ones. Dying without an estate plan is not just a minor oversight—it can lead to devastating consequences for your family and everything you’ve worked hard to build. The lack of a proper estate plan can lead to emotional strain, financial chaos, and unwanted legal battles. Here are several key reasons why it’s scary to die without an estate plan:

Default Rules:  Michigan’s Estate and Protected Individuals’ Code provides a set of rules to transfer your estate if you do not create your own valid estate plan.  People don’t always agree with the default rules.  For instance, under MCL 700.2102, a surviving spouse typically receives only the first $150,000 of the deceased spouse’s estate along with half of the remaining balance, while the other half is divided among any children.  Further, if you are divorced with minor children, although your children will receive your entire estate, your ex-spouse will control it as the children’s guardian and conservator, effectively leaving your entire estate under your ex-spouse’s control.

The Cost of Probate: When someone dies without an estate plan, their assets generally must go through probate—a legal process for validating the estate and distributing assets. Probate can be time-consuming and costly, often taking months or even years to complete. In addition to delays, probate costs can be high. Court fees and other administrative expenses can reduce the overall value of your estate, leaving less for your beneficiaries. With a proper estate plan, such as a living trust, you can minimize or even avoid probate, ensuring a faster and more cost-effective transfer of your assets.

Unintended Tax Consequences: Dying without an estate plan can also have tax implications. Depending on the size of your estate, your beneficiaries could be hit with significant estate or inheritance taxes. An estate plan can help you minimize tax liabilities through strategic gifting, trusts, or other legal structures.

Lack of Control over Medical or End of Life Care: An estate plan is not just about distributing your assets after death; it’s also about making critical decisions while you’re still alive. If you become incapacitated and cannot make decisions about your medical care, without a medical power of attorney, those decisions will be made by someone else—possibly even someone you wouldn’t have chosen.

By creating an estate plan, you can ensure that your medical wishes are respected, whether it’s regarding life support, resuscitation, or other treatments. Failing to do so could leave your family members in the agonizing position of guessing your wishes or disagreeing with one another during an already difficult time.