ESTATE PLANNING IN MICHIGAN: WHAT YOU NEED TO KNOW
Estate planning is an essential part of protecting your financial future and ensuring your personal wishes are honored during your lifetime and after your passing. For Michigan residents, a carefully structured estate plan can help ease the burden on loved ones, minimize legal complications, and preserve assets for future generations.
This article explains the key components of estate planning in Michigan, including trusts, durable power of attorney, beneficiary designations, special needs trusts, wills, and digital legacies.
What Is Estate Planning?
Estate planning is the process of arranging for the management and distribution of your assets during your life and after death. It includes legal documents and financial tools that protect your wealth, direct healthcare decisions in the event of incapacity, and appoint trusted individuals to manage your affairs.
In Michigan, estate planning is governed by the Michigan Estates and Protected Individuals Code (EPIC), which covers wills, trusts, guardianships, and powers of attorney (Michigan Compiled Laws § 700.1101 et seq.)1.
Learn more about our Estate Planning Practice.
Trusts: Flexible Asset Management and Distribution
A trust is a legal arrangement where one party (the trustee) holds and manages assets for the benefit of another (the beneficiary). Trusts can help avoid probate, provide tax benefits, and allow for greater control over how and when assets are distributed.
Common Trusts in Michigan Include:
• Revocable Living Trust: Allows the creator (grantor) to control assets during their lifetime and change or revoke the trust at any time. After death, assets pass directly to beneficiaries without probate.
• Irrevocable Trust: Once established, this trust cannot be altered without court approval. It’s often used for tax planning or protecting assets from creditors.
• Testamentary Trust: Created by a will and activated upon the testator’s death, often to manage assets for minor children or other dependents.
Michigan law permits a variety of trusts under EPIC (MCL § 700.7101 et seq.)2.
Durable Power of Attorney and the UPOAA: Safeguarding Financial and Healthcare Decisions
Durable Power of Attorney and the UPOAA: Safeguarding Financial and Healthcare Decisions
A Durable Power of Attorney (DPOA) authorizes a designated person (agent) to manage your financial or healthcare decisions if you become incapacitated.
Types of DPOAs in Michigan:
• Financial Durable Power of Attorney: Enables your agent to handle financial matters, including paying bills, managing investments, and handling real estate.
• Medical Durable Power of Attorney (also called a Patient Advocate Designation): Appoints a trusted individual to make healthcare decisions on your behalf when you are unable to do so.
Important Update — UPOAA Adoption in Michigan:
In 2023, Michigan adopted the Uniform Power of Attorney Act (UPOAA), codified in MCL § 556.201 et seq.3, which modernizes and standardizes financial power of attorney laws. This act clarifies an agent’s authority, outlines required language for certain powers (like gifting or changing beneficiary designations), and improves protections against abuse.
Key provisions include:
- Presumption of durability unless expressly stated otherwise.
- Statutory form templates that meet Michigan’s legal requirements.
- Clear guidance on the acceptance and rejection of a power of attorney by third parties (like banks and financial institutions).
- Authority for the agent to act immediately unless the document specifies otherwise.
Why This Matters:
Michigan residents should ensure any existing financial powers of attorney comply with the new UPOAA standards. While pre-2023 documents remain valid if properly executed under earlier laws, updating to a UPOAA-complaint document is strongly recommended for clarity and easier acceptance by financial institutions.
Beneficiary Designations: Directing Assets Outside of Probate
Many financial assets
— such as life insurance policies, retirement accounts, and bank accounts
— allow you to name a beneficiary to receive proceeds upon your death. These designations override instructions in a will and typically transfer assets outside of probate, making the process faster and more private
Michigan residents should regularly review and update their beneficiary designations, particularly after significant life events like marriage, divorce, or the birth of a child.
Special Needs Trusts: Protecting Benefits for Vulnerable Loved Ones
A Special Needs Trust (SNT) allows a person with a disability to receive financial support without jeopardizing eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI). Michigan recognizes both first-party and third-party SNTs:
• First-Party SNT: Funded with the beneficiary’s own assets, often from an inheritance or legal settlement.
• Third-Party SNT: Funded by family or friends, typically as part of an estate plan.
These trusts can cover supplemental expenses like therapy, education, travel, and personal care services without affecting essential benefits (MCL § 700.7501 et seq.)4.
Wills: The Cornerstone of Every Estate Plan
A will specifies how your property should be distributed upon your death and appoints a personal representative (executor) to administer your estate. It can also name guardians for minor children.
In Michigan, a valid will must:
- Be in writing.
- Be signed by the testator.
- Be witnessed by at least two individuals.
If a person dies without a will (intestate), Michigan’s intestate succession laws dictate how assets are distributed, which may not align with personal wishes (MCL § 700.2101 et seq.)5.
Digital Legacies: Managing Your Online Presence
Today, estate plans should also address digital assets such as email accounts, social media profiles, online banking, cryptocurrency, and cloud storage. Michigan adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows designated fiduciaries to manage these digital assets after death or incapacitation, provided proper authority is granted in estate planning documents (MCL § 700.1001 et seq.)6.
Leaving instructions for your digital accounts and passwords ensures that important data can be accessed and your online identity managed in accordance with your wishes.
Learn more about Digital Legacies.
Final Thoughts
Estate planning is a proactive, compassionate way to protect your loved ones, preserve your assets, and maintain control over your healthcare and financial decisions. Michigan’s estate laws provide a variety of tools — including trusts, powers of attorney (now modernized by the UPOAA), wills, and digital asset directives — to help you create a comprehensive and effective estate plan.
For personalized guidance and to ensure compliance with Michigan’s latest legal standards. please contact Kemp Klein so that we may assist you in getting the help you need.