If you pass away without an estate plan, the laws of your home state decide how your assets pass to your spouse, children, parents, siblings, and sometimes other relatives. These laws, called laws of intestate succession, try to predict what you would want, but the result may not reflect your true wishes. Many married couples assume their spouse will automatically inherit everything, which is not always the case. Depending on your family, the outcome could look like this:
- If you are married with no children and your parents survive you, your parents may be entitled to a share of your estate.
- If you leave a spouse and children, your spouse’s share depends on whether all of your children are also your spouse’s children.
- If you have children from another relationship, your spouse may receive less.
- If you are unmarried, have no children, and your parents have died, your assets pass to your closest living relatives.
The good news is that you may already have tools in place that override these default rules. For example, retirement accounts and life insurance policies with named beneficiaries pass directly to those beneficiaries, outside of probate. An important part of creating your estate plan is identifying which assets need additional safeguards.
State law controls more than who inherits. Without a plan, you also have no say in who administers your estate. Instead, state law sets the order of priority for people the probate court may appoint. Michigan calls this person a personal representative; other states use the term executor. The personal representative opens probate, gathers your assets, pays your debts and taxes, and distributes what remains as state law directs.
An estate plan matters during your lifetime, too. If an accident, illness, or cognitive decline such as dementia leaves you incapacitated, someone you chose in advance must be ready to make financial and medical decisions for you.
Start with your finances. Without a Durable Financial Power of Attorney, no one automatically gains authority over your money and property. Under Michigan law, a Financial Power of Attorney is durable by default, meaning your agent’s authority continues if you become incapacitated, which is exactly when you need it most. Many people assume a spouse, adult child, or other family member can simply step in, but no one can legally manage assets held in your individual name without written authority. That covers everyday tasks, like paying bills and writing checks, as well as bigger decisions, like managing investments and selling real estate.
Without this document, your family may have to ask the probate court to appoint a conservator. The process can be expensive and, more importantly, slow, while your bills, mortgage, and taxes go unpaid. You also lose control over who serves in this role: the court may choose the person you would have picked, or it may choose someone else.
Medical decisions call for a separate document: a Health Care Power of Attorney, known in Michigan as a Patient Advocate Designation and in Florida as a Health Care Surrogate Designation. Without one, no one may have clear legal authority to make medical decisions for you, and a family member may need to petition the court for guardianship. These proceedings can be expensive, lengthy, and contentious. The court, not you, will choose your decision maker, who may not know the care you want. The result could be treatment that goes against your wishes.
This Estate Planning Awareness Week, take time to create or update your estate plan so the people you choose, not a court or state law, make decisions for you and your family.
