Sitterley Law, LLC
Estate Planning

TYPES of ESTATE PLANNING

Legal Authority Type Cost
1. Will Probate $200 (Probate average $4,500)
2. Beneficiary Designation Non-Probate Variable
3.Trust Non-Probate $2,000 – $3,500 depending on type

1. WILLS:

Subject to administration by the Probate Court and your appointed executor(s)
Advantages:

    • Nominate guardians for minor children
    • Waive a bond that would otherwise be statutorily required for an executor
    • Make specific bequests and plans for property distribution
    • The Court enforces the process

Disadvantages:

    • Exposed to Creditors, including tax and Medicaid recovery
    • Requires 6-9 months of probate administration
    • Typically requires assistance from attorneys, resulting in legal fees
    • Distributions may not be managed after death

2. BENEFICIARY & JOINT DESIGNATIONS:

Directly on titled assets
Titled assets that can name beneficiaries include:

  • Bank and other financial accounts ⇒ FREE
  • Real estate (Transfer on Death or TOD designation) ⇒ $250 plus recording costs
  • Vehicles (Exempt to surviving spouses up to $65,000) ⇒ $17 at BMV
  • Life Insurance ⇒ FREE
  • Retirement Plans ⇒ FREE

Advantages:

  • Private
  • Often cheaper, faster, easier
  • No one in charge of distributions besides institutions

Disadvantages:

  • Risk of beneficiary predeceasing
  • Cannot manage beyond death
  • Must update with changes in titled assets

3. TRUSTS:

Allows for management of assets and distribution beyond death
Trusts may be used to:

  • Avoid Probate
  • Protect Privacy
  • Care for a surviving spouse while protecting interest for other heirs
    • Young enough that a surviving spouse may remarry
    • Spouse is not biological parent of children
  • Care for minor or disabled children
  • Manage assets for persons who are financially irresponsible
  • Minimize estate taxes for married couples subject to federal estate tax
  • Hold out of state real estate and business interests

Types of Trusts:
Revocable (also called Living and Inter Vivos) Trust

  • May be amended
  • Does NOT protect assets from the costs of long-term care
  • Settlor(s) may also be Trustee(s)
  • Settlor(s) may withdraw assets

Irrevocable (also called Medicaid-Qualified) Trust

  • Cannot be amended except by Court order
  • Can protect assets against the costs of long-term care
    • Long-term plan: Fund and wait five (5) years; or
    • Crisis plan: use in collaboration with an annuity for immediate protection
  • Settlor(s) may NOT be Trustee(s) if Medicaid involved
  • Settlor(s) may not withdraw assets without exposing them to long-term care costs