Author: Michael

Critical Importance of Estate Planning for a Michigan Special Needs Child

October 24, 2010 /

I’ve touched on the subject before in a previous post and in my weekly client e-newsletter.  A presentation given to our Grandville, Michigan Rotary group tugged at my heart and renewed within me the passion to help spread the word about the vital importance of proper estate planning to families with children who have special needs.  Some of the great folks behind Benjamin’s Hope spoke to us about the struggles and joys of having a child with special needs (specifically autism in this case) and the vision they have for a unique location where children can reach their full potential.

I’m not going to pretend that I know what it is like to be a parent of a special needs child.  However, I have clients, friends and colleagues who have children with special needs and it has taught me this – they are children first and foremost.  They light up their parents lives and bring joy to those whose lives they touch.  And yes, there are added stresses and struggles.  The great thing about West Michigan is that there are numerous resources available to parents and their special needs children.  And although they may not qualify for them now, due to the parents’ income or other factors, there are also financial resources available through government programs and private programs.

As parents, we love our children more than anything in the world.  So why wouldn’t we want them to receive every benefit available to them?  Yet many parents put their children at risk of not receiving these benefits because they don’t spend the time or money to put a proper estate plan in place (or they don’t know what options are available).  And what if something happened to the parents? It’s a critical consideration for all parents and even moreso for the parents of a special needs child.  Who would care for your child?  Do they know how to care for a child with special needs?  Would a care manager be important?  Have you provided for one and given direction on how he or she should be involved?  Have you provided financial resources through life insurance or investments so your child can enjoy the life you want them to have?  Have you made sure to protect whatever benefits they may be entitled to as they get older or are they at risk because of the planning you’ve done (or lack of planning)?

As an attorney who focuses in estate planning, I make it a point to keep up on the unique planning opportunities available to parents with special needs children.  Please, please, please make sure to put a comprehensive plan in place.  There’s no doubt you care very deeply about your child(ren) – show it by planning for their future.  And make sure whatever attorney you work with has specific training, knowledge and experience planning for children with special needs.  We can help if you call (616) 827-7596 – mention this blog post and we will waive the fee for your Peace of Mind Planning Session ($550 value)!

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

A Week Dedicated to Estate Planning

October 17, 2010 /

Did you know that this week is Estate Planning Awareness week in Michigan and across the nation?  Well, it is.  And you can read the Michigan proclamation by clicking here. Interestingly enough, Governor Granholm left one important estate planning document out of her proclamation…the durable power of attorney.  Don’t forget that one!

Estate Planning is one of the most overlooked areas of personal financial management.  It is estimated that over 120 million Americans do not have up-to-date estate plans to protect their families in the event of sickness, accidents, or untimely death (yikes!).  This costs the working classes and the more affluent wasted dollars and hours of hardship each year that can be greatly minimized with action and advanced planning.

Th reasons for a week dedicated to estate planning awareness are many and varied.  Some of the reasons given in the legislation that put the week in place are:

  • Estate planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of their family, heirs, or charities;
  • Estate planning encourages timely decisions about the method of holding title to certain assets, the designation of beneficiaries, and the possible transfer of assets during life;
  • Many Americans are unaware that a lack of estate planning and “financial illiteracy” may cause their assets to be disposed of to unintended people by default through the complex process of probate;
  • Careful planning can prevent family members or other beneficiaries from being subjected to complex legal and administrative processes requiring significant expenditure of time, and greatly reduce confusion or even animosity among family members or other heirs upon the death of a loved one

And parents with minor children must not forget that estate planning is the way to make sure you’ve legally documented who you want to care for your children if you pass away or are incapacitated, so that they don’t end up in the arms of strangers or Child Protective Services!

If you haven’t put an plan in place for your family (young, older or in between), why not?  I encourage you to show your family how much your care about them by putting a plan in place before it’s too late.  If you don’t, the State of Michigan has a “one size fits all” plan for you.

And if you have put an estate plan in place for your family, when was it last updated?  Your life, the law and what you have are constantly changing . . . your plan needs to change along with it.  What happens if you don’t?  It’s difficult to say until something happens.  However, there is a good chance it will fail to accomplish what you wanted if it isn’t kept updated, and once something happens, it’s too late!

Consider talking with your family, friends and others you care about to share with them the importance of planning and keeping your plan updated.  National Estate Planning Week is a great way to start talking about the subject.  If you, your family or friends have any questions, call us at 616-827-7596 or contact us here.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The Shocking Truth About Michigan Living Wills

October 13, 2010 /

The first shocking truth is this: a Living Will is not a Will at all.  A Will is a document that, when approved by the probate court, determines how and to whom your “stuff” is distributed to when you pass away.  A Living Will is a document that instructs physicians and others to withhold or withdraw life-sustaining treatment when the patient’s death is certain.  It is called a “living” will simply because the declaration is made by a person when he or she is still alive and able to make medical decisions.

The second, and bigger, shocking truth is this: Living Wills have no explicit legal support in Michigan.  That’s right, a Living Will is not a “legal document” in Michigan and is not required to be followed.  Unlike many states, Michigan has no legislation and there are no cases (that I can find) specifically authorizing living wills or requiring that they be followed.  Surprised?  Quite honestly, I was too when I first found out.

So what can you do if you want to express your wishes as to end-of-life decisions?  Michigan does have a Durable Power of Attorney and Patient Advocate Statute that allows you to designate who you want making healthcare decisions if you are unable to participate in your healthcare decisions.  I suggest including living will-like provisions in your patient advocate designation as the surest way to have them recognized.  If you absolutely want a document titled “living will,” then make sure to have a patient advocate designation as well and explicitly incorporate the living will by reference in your patient advocate designation.

Choosing someone to make medical decisions on your behalf when you are unable is one of the most important decisions you can make.  Because of how important this decision is, why wouldn’t you discuss your wishes and options with an attorney who specializes in estate planning?  Take the step of turning your wishes into directives by calling us at 616-827-7596 or contacting us here.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Vital Steps When Inheriting Money in 2010

October 10, 2010 /

There’s been lots of chatter about the “windfall” situation 2010 estates find themselves in this year, with the lapse of the estate tax.

Here’s the problem–this may not be the case. It’s a bit of a technical issue, and one that should be handled in consultation with a tax professional, but this is the long and short of it:

Before this year, heirs valued inherited assets at the fair market value at the time of the decedent’s death. This year, heirs must use the decedent’s basis as their own when computing taxes owed on the sale of these assets.  You can read my previous post that helps explain carryover basis in “every day” terms by clicking here.

The following seven steps can help guide you in this situation:
1. Have assets appraised. In order to determine your estate tax bill and where you want to allocate your $1.3 million carryover basis, you need to know the value of assets in your estate.  That doesn’t mean you are required to have $1.3 million by any means.  Consider that amount as the “coupon” you get to turn in for purposes of carryover basis.

2. Locate purchase records. If you can’t prove the cost of an asset, the IRS will assume a value of zero and you’ll be responsible for capital gains taxes on the entire amount after the adjustment for your “coupon” from #1.

3. Delay selling appreciated assets. It’s possible that inheritors may be able to escape these carryover rules by delaying the sale of the assets until next year.  It’s not guaranteed.  It all depends on what Congress decides to do.

4. Postpone distributions. Although it seems unlikely at this point, Congress could restore the estate tax retroactively. If the assets have already been distributed, paying the estate taxes will be very difficult.  This is one of the toughest decisions in my mind if you have what could be a taxable estate, since we don’t know what Congress will (or will not) do regarding this issue.

5. Extend paperwork deadlines. Just like an income tax return, you may be able to extend the deadline for the carryover basis reporting paperwork to October 15.

6. Apply the basis allowance fairly. Don’t apply it to particular assets that will benefit one beneficiary more than another.

7. Guard against an executor’s added risks. If beneficiaries disagree with the executor (or trustee as the case may be), the executor (or trustee) could do what they ask (if it doesn’t breach a fiduciary duty), but make sure to get the beneficiaries to sign a document releasing the executor from liability.

Here’s the article I found which goes into greater detail for you: http://bit.ly/cQIGmU.

If you have questions,  let me know or contact your CPA.  For purposes of this post I can’t help but make general statements.  It’s important to note, however, that these decisions are very situation specific, so call us at 616-827-7596 or contact us here to get your questions answered.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Selecting a Michigan Healthcare Agent (Patient Advocate)

October 7, 2010 /

As I prepare a post about the importance of designating a Michigan health care agent, I ran across a great post by my friend and colleague Jackie Bedard on How to Select Your Health Care Agent – click here to read it. There really isn’t too much I can add to the post.  It is informative and gives great questions to think about when choosing your Michigan healthcare agent.

There is one main difference in Michigan – terminology.  Here the document that governs who makes healthcare decision for you if you are unable to participate in those decisions is a Michigan patient advocate designation.  The person (or people) you choose to make these decisions is your Michigan patient advocate.

Another point to consider is that a Michigan living will is not a binding legal document.  Surprised?  Many people are!  I’ll go into more depth in a future post.  Contact us if you or someone you know has any questions or needs a caring attorney who will help counsel you through these important decisions.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

An Issue With Typical Michigan Estate Plans in 2010

October 3, 2010 /

The current environment with no estate tax seems to be causing a bunch of unintended consequences (as if that’s a surprise!). Here’s another…

A standard, tax-driven Michigan estate plan for a married couple, put together by many advisers, uses what are called “A-B” trusts. Upon the death of the first spouse, the single trust may split into the decedent’s trust and the survivor’s trust (sometimes called the family trust and the marital trust). The amount in the decedent’s trust is usually equal to the federal estate tax exemption. The remaining assets go to the survivor’s trust for the surviving spouse’s benefit.

The problem with this setup in 2010 is that a deceased spouse may unintentionally give the surviving spouse nowhere near the benefit they intended. . . or even nothing! With no federal estate tax, all assets pass to the decedent’s trust under the typical language, leaving nothing for the survivor’s trust. The decedent’s trust most likely benefits the surviving spouse, but probably has many more restrictions than the survivor’s trust. For example, the surviving spouse may only be an income beneficiary with the remainder going to the children.

Although 2010 is drawing to a close soon, this issue emphasizes the importance of scheduling a review of your current plan or the plan of your family and friends, because even though the estate tax is sure to change, there are so many other aspects of your plan which are affected by this constantly changing legal and economic environment. If there’s ever been a time to work with an attorney that has a membership/maintenance plan it is NOW – that way you don’t get stuck with a bill every time Congress changes the law in a way that may harm your planning.  Don’t be caught by surprise!

And don’t even get me started on the fact that Congress still hasn’t made its mind up on what will happen next year (let alone this year).  We could well see the exemption go down to $1 million dollars.  I know what you’re saying . . . Mike that is a LOT of money.  You’re right, it IS a lot of money.  Think about this though – that amount includes everything you own including the value of life insurance…yes, life insurance.  That puts a lot of people in a position that requires considering tax planning.

If you, your family or your friends need to review your plan or make sure that you have a plan in place in these turbulent times (rather than the State’s plan for you), contact us at 616-827-7596 and mention this post for a special discount.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

How to Make a Michigan Will at No Cost

September 30, 2010 /

I always like to make sure I’m writing about things that are really relevant to the questions everyone has.  Well, I recently had someone find my site by searching Google for “how do I make a will at no cost.”  I figure they wouldn’t have searched for it if they didn’t have the question.

I imagine the first question is, can you create a will at no cost?  Well, sure you can.  There are a couple of ways the come to my mind immediately for creating a no cost Michigan will: a statutory will, and a holographic will.

Michigan has a statutory will that you can find by clicking here.  The gist is that if you fill out and sign a will in exactly the form that is given in MCL 700.2519(2) and otherwise in compliance with the terms of the Michigan statutory will form, it is a valid will.

A holographic will (not to be confused with a hologram which is something entirely different) is a will that, although not valid according the standard for valid wills  stated here in section (1), is still, in fact, valid.  The requirements for a holographic will are found at MCL 700.2502(2).  They are, generally, that the “material portions” of the will must be in the testator’s (the person whose will it is) handwriting, signed by the testator, and dated.

Now, I believe the unsaid question is, is a “no-cost will” right for your family?  The answer will be different for everyone, however experience has taught me that very few families will reach their planning goals and objectives by using one of the no-cost will options.  Why?  Well, think of it this way.  Let’s assume you don’t know much about working on your car.  How well do you think the car would run if you tried to replace a cylinder, a timing belt, or – going big – the engine?  How well do you think you would feel if you tried to perform your own surgery.

See, there is a vast body of knowledge on all of these topics that trained professionals have studied and practiced to be able to perform the task correctly.  And estate planning is no different.  It’s a large part of the reason why I believe working with an attorney who focuses solely (or at least largely) on estate planning is really the way to go.  Law is a complex topic, and estate planning is a complex subtopic.  Especially if you want someone who will help you plan for creating a legacy by planning for your Whole Family Wealth™ like we do.

I’m a firm believer in using professionals who are knowledgeable and focused on the tasks that I don’t focus on.  That’s why I take my car to a mechanic, I have a heating and cooling person work on my heating and air conditioning, why I go to a doctor if somethings not quite right with my body, and yes, why I go to another attorney if its not an area of law I practice.

So, know that there are no-cost options out there and seriously consider whether you want your families future and your legacy to be decided by what those no-cost options provide.  And if you want to talk with someone about other options, call us at 616-827-7596 or contact us here.  Mention this blog post and your Peace of Mind Planning Session is free (no cost!).

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The Importance of a Unique Michigan Estate Plan

September 26, 2010 /

Here’s what I’ve discovered, after working with families and preparing plans for some time: in many cases personal dynamics are more important than avoiding probate and estate taxes. Part of what I’m often discussing with my clients is beneficiary, guardian and trustee decisions–and each of these require a conversation.

But here are a few additional thoughts for you, as to why a personalized plan is critical, as well as a few other quick tips:

There are very few “simple estate plans.”  Let me reiterate – very few situations call for a “simple” estate plan.  And yet 95% of the great folks I meet with just want a “simple will” and nothing else.  That’s why I take an educational and consultative approach to my peace of mind planning sessions.  Because people are intelligent and if they understand how things “work,” they’ll make the best decision for their family.  And in many cases that is anything but “simple.”

For example, another attorney related to me the story of a man who wanted a so-called “simple” estate plan drawn up for him and his wife. In the first 15 minutes, the estate planner learned the client was a citizen of the UK, his 25-year-old son had bipolar disorder and the son was actually not his biological or adoptive child, although he and the young man’s mother have been married for 23 years.

In another case, a very wealthy man was seeking “a simple estate plan” for him, his wife, and his family. But he was in a second marriage, had three children from his first marriage, his new wife had four children from her first marriage and one of his daughters was in prison for kidnapping.

Now, these may not be your circumstances. But you, your family and your friends are unique. So, here are some of the questions you may answer in a unique way:

  • Do you donate regularly to a Michigan charity? Or make substantial gifts to family members? Do you want those gifts to continue if you lose capacity?
  • Do you own a Michigan business?
  • Do you own Michigan property or out-of-state property that should not be sold?
  • Do you have a beneficiary who is likely to cause trouble or owes you money?
  • Do you want to provide for the continuing care of a pet?
  • Do you have a working Michigan farm or farm animals?
  • Do you want to be cared for at home regardless of the cost?

Your estate plan should be carefully crafted to address your specific needs and circumstances. The more tailored your plan, the less room there is for family disagreements.

Next, you must have an up-to-date plan. Too many people either fail to prepare an estate plan or let their plan become outdated. Changes in the law occur frequently. As Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”

Plus, your circumstances can change. Toward the end of your life they seem to change faster. I recommend reviewing your plan every 3 years at a minimum, and we include ongoing 3-year reviews in all our planning levels. I reviewed one plan that had not been reviewed in 28 years and it was WAY off the mark for what my clients currently wanted to happen!  Your circumstances may call for a plan review more frequently or less frequently.  Either way, your plan should be reviewed on a regular basis.

Third, be careful not to change your plan inadvertently. Suppose, for example, you have a will or trust that provides for your estate to be distributed equally among your three children, and you have named your daughter Mary as your executor and/or trustee.

To make it easy for Mary to access your bank accounts in the event of a medical emergency, you have added Mary’s name to all of them. What you have done without realizing it is to change your plan. Those bank accounts will belong to your daughter at your death and will not be shared by your other two children. As a result, your estate might be distributed differently than you intended. It can also result in family feuds or adverse tax consequences.

Before doing any self-help planning–even something as simple as adding a child’s name to a bank account–check with a professional to see how it impacts your plan.

Finally, use your discretion, but consider telling your family in advance what arrangements you have made. Explaining your plan to your family upfront gives you the opportunity to address any concerns, answer questions and clear up misunderstandings. Once you lose capacity or die, it is too late. Many family fights could have been avoided with an open and frank discussion, so everyone is best prepared to handle a loved one’s loss of health or life. Eliminating surprises helps eliminate family fights.  That’s why we offer to have an Inter-generational Family Meeting with our clients after they have their plan in place, to help explain the plan and the responsibilities to the family, friends and institutions that were chosen to play key roles in the plan.

In summary, most people who plan do pay enough attention to concerns such as probate and estate tax avoidance.

But the estate plans that most accomplish what you want are uniquely drafted with YOUR family harmony as a priority.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

The Importance of Michigan Trust Funding

September 22, 2010 /

More and more Michigan residents have an estate plan that is “trust-based.”  This means that the key distribution document within their plan is a trust.  You can find out more about trusts by clicking here to read my post “what is a trust?” And yet many of these estate plans will fail to do everything you intended them to do.  Why?  Well, that’s the point of this post!

The key thing to remember with a trust is that it only accomplishes all its advantages if it is fully “funded.”  What do I mean by “funded?”  That means that everything you own is somehow titled (owned) in the name of the trust.  It could be by actually naming the trust as owner, making the trust a beneficiary of an account, or some other method.  The point is, a trust is like a car – your estate planning attorney should have taken you through a comprehensive process of picking the “options” you want (like a window sticker).  And yet your trust won’t accomplish all you wanted if it’s not properly funded, much like that new car won’t go anywhere without gas.

Many Michigan estate plans fail to accomplish everything you wanted because the trust is not properly funded.  And here’s the kicker – the traditional approach to estate planning is partly to blame!  That’s right, I’m putting part of the blame on how estate planning is done.  Here’s how I was initial taught: you meet with an attorney who seems to know what they’re talking about (and hopefully focuses in estate planning), but you may not want to ask many questions because you figure the attorney will just take care of it and it will be fine.  You’ll come back in a few weeks and sign some documents, again probably not asking many questions.  Then you’ll take your fancy planning binder home, put it on the shelf and mark “estate planning” off your life checklist.

If you’ve done estate planning, does that sound familiar?  Probably.  And yet your trust is likely sitting there with just $10 or your personal property in it.  Your attorney probably told you that the trust needed to be “funded” and gave you a written list of instructions on how to do it.  But you read them and found them difficult to follow and it wasn’t really emphasized that your plan could very likely fail to accomplish all you want if the trust wasn’t funded, so you don’t do it.

So what happens?  Your life, the law, and what you have changes over the years and yet your plan sits there with an unfunded trust that hasn’t kept up with any of those changes.  Then something happens and your family is stuck dealing with a plan that is outdated and may accomplish very little of what you wanted.

To me this is a HUGE problem and needed to be changed.  Well, much like the story of the little boy who was throwing little fish back in the ocean, knowing that he made a difference to “that one,” I set out to make a difference for my clients.  How?  Follow-up.  Not only do I make sure that questions are asked and answered and put a very strong emphasis on the importance of funding their trust, I take some extra steps.

I provide an asset spreadsheet listing all that you own so you can go to one sheet instead of looking through a pile of paperwork.  An added bonus is this helps with financial organization too!  I regularly check in with my clients to find out the progress they’ve made or give them a gentle nudge if the trust funding isn’t moving along.  I’ve gone as far as to call a client every month for well over a year!   Why, because it is too important to fund your trust. Sure, it may have been a little annoying, but it got them moving on funding their trust, which is the most important part.  I know that my clients trust me and have spent their hard-earned money for me to help design and implement their estate plan.  I would be letting them down if I did anything less!  And finally, I take care of all of the funding for some of my clients (for an additional fee).  This gives them the peace of mind of knowing that it’s done and done correctly.

So, what about you?  Do you have an trust-based estate plan?  Is the trust funded?  Are you SURE it’s funded and funded correctly?  If not, it’s time to do something about that!

If you want a client-centered, personal service-based approach, give us a call.  

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Tips From Your Silent Michigan Millionaire Neighbor

September 19, 2010 /

Almost everything I post has something to do with estate planning or business planning, which shouldn’t be surprising given what I do for a living, right?!  Well, I received such an overwhelmingly positive response back from my e-newsletter this week that I decided to post most of it here.  Sure, it doesn’t have much to do with estate planning or business planning (except a little bit at the end), but I hope you find it valuable nonetheless like many of my e-newsletter readers did.  And if you want to receive my weekly e-newsletter, just contact me and let me know.

Although having a million bucks isn’t what it once was, it’s still a VERY sizable chunk of security that I’m sure any of us wouldn’t mind having. In fact, Reuters recently reported that in 2009, there were 7.8 million millionaires in the United States.  Surprising?  It was to me.

That’s a lot of people!  And the odds are one or two of them are living near you.  One of them might even be your neighbor.  In fact, the odds are very good that it is your neighbor.

“But, Mike, you don’t know my neighbor.  That family doesn’t look anything like a millionaire.”

Well, guess what?  The suburban millionaire neighbor called (yes, we go way back) and we had a nice little chat. And here are a few things they shared with me–but apparently don’t want to let out of the bag.  (No offense, I’m sure.)  I write that in jest . . . actually these are nuggets I’ve garnered from books and articles I’ve read. And let me tell you, I’ve made almost every single one of these mistakes so I’m writing to myself (yet again) and still haven’t put all of them into practice.  I hope you find this as helpful as I did.

1. They always spends less than they earn. In fact their financial approach is, over the long run, you’re better off if you strive to be anonymously rich rather than deceptively poor.

2. They know that patience is truth. The odds are you won’t become financially wealthy overnight.  If you’re like them, your financial wealth will be accumulated gradually by diligently saving your money over multiple decades. (Don’t forget about your “intangible” wealth either – who you are and what’s important to you!  We all have that in abundance!)

3.  When you go to their modest three-bed two-bath house, you’re going to be drinking Folgers instead of Starbucks.  And if you need a lift, well, you’re going to get a ride in his ten-year-old economy sedan.  And if you think that makes them cheap, ask them if they care. (They don’t.)

4. They pay off their credit cards in full every month.  They understand that if they can’t afford to pay cash for something, then they can’t afford it.

5. They realized early on that money does not buy happiness. Rather, you need to focus on attaining financial freedom.

6. They understands that money is like a toddler; it is incapable of managing itself.  After all, you can’t expect your money to grow and mature as it should without some form of credible money management.

7. They’re big believers in paying yourself first. It’s an essential tenet of personal finance and a great way to build your savings and instill financial discipline.

8. Although it’s possible to gain financial wealth if you spend your life making a living doing something you don’t enjoy, they wonder why you do.  Life is too short.

9. They also know that the few millionaires that reached that milestone without a plan got there only because of dumb luck.  It’s not enough to simply declare that you want to be financially free. This is not a “Secret.”

10. When it came time to set their savings goals, they weren’t afraid to think big. Financial independence demands that you have a vision that is significantly larger than you can currently deliver upon.

11. They realize that stuff happens, that’s why it’s a mistake if you don’t insure yourself against risk. Remember that the potential for bankruptcy is always just around the corner for all of us and can be triggered from multiple sources: the death of the family’s key bread winner, divorce, or disability that leads to a loss of work.

12. They understand that time is an ally of the young. They were fortunate enough to begin saving in their twenties so they could take maximum advantage of the power of compounding interest on their nest egg.

13. They’re not impressed that others drive an over-priced luxury car and live in a McMansion that’s two sizes too big for their family of four. Little about external “signals” of wealth actually matter to them.

14. After six months of asking, they finally quit waiting for the return of their pruning shears.  They broke down and bought a new pair last month.  There’s no hard feelings though; they can afford it.

15. They don’t pay taxes and fees which could have been avoided with a simple phone call. They plan ahead before trouble strikes. Oh, and here’s the number they call to keep their family taken care of: (616) 827-7596 (that’s us 🙂)

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Avoiding a Fight Over the Michigan Family Business

September 15, 2010 /

As you know, estate planning is so important for every family, but for those with a Michigan family business it becomes even more complex–and doing it wrong can be costly.

Try these numbers on:  Only 34% of family businesses successfully pass to the second generation and only 13% make it to the third generation. Avoiding these problems is  dependent on anticipating the right estate plan, taking into account different roles in the family business.

These Michigan family business successions are most successful with wise integrated planning of three roles: family, business and ownership – each of which have different goals and objectives as well as rules of behavior. Behavior that is appropriate or tolerated at home may be inappropriate in the business environment. And while many families avoid discussions where there is disagreement, encouraging the expression of disagreement is critical in the business realm, especially the “family business” realm.

Family Dynamics
For most family businesses, the family role is the most important. The emotional issues of unconditional acceptance and equality are both the friction and the glue in many families. Families are naturally inward-focused, seeking to nurture and develop the next generation. This is how it should be.

However, the challenge here is for the older generation to pass on not simply the acumen of the family’s finances, but the strength of the family’s values. Each generation has to be actively raised to the level of “peer” by the actions and attitudes of the generation before them. Proven family character must be required for leadership in the family business, and a board of directors with at least two outsiders would help keep family values intact.

The Business Role
It’s best to keep a boundary around the realm of the business. For a business to be successful, it has to be able to change quickly. Obviously, it has to generate profits, and therefore must be outwardly focused. As a result, family members can’t be treated equally. If one family member works part time, while another chooses to work nights and weekends the monetary incentive needs to be in proportion to the profit each brings into the business.

If a business is passed from one member of the older generation to a single member of the next generation many issues can be postponed or ignored. But if the business moves from a single owner to a partnership of siblings (and then to a set of cousins who are shareholders), the business must continue to run like a business–while simultaneously dealing with a possible wicked brew of family tension. You need to plan for: leader selection, the role of non-employees, conflict resolution, and the shared control of different family branches.

Further, those actually running the business must also be trained in the financial responsibility of management, preferably before the change of ownership. There will need to be policies for fair dividend distribution for those not employed. Again, it’s a very good idea to delegate certain outside governance by a carefully selected Board of Directors.

The Ownership Role
As soon as a Michigan family business is divided into shares there will be those working “in” the business and those who merely own shares in the business. Plans must be made for buy-outs, professionalized management, mentoring, and family council meetings.

Transfer of ownership is the least complex of these three roles for estate planning, but it won’t achieve your succession goals without a solid family structure AND a healthy business structure in place.

Family businesses are complex, needing to address multiple roles. Wise estate planning for the family businesses accepts, mentors and integrates others (family role); makes a profit and demonstrates objective professionalism in its decisions (business role); and plans for the inevitable – a successful transfer of ownership to the next generation (ownership role).

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

Dangers of Do-It-Yourself Wills According to Forbes

September 12, 2010 /

I recently ran across this article on Forbes.com about “The Case Against Do-It-Yourself Wills” and found it very informative.  The gist of the article is that DIY wills are a risky venture and the vast majority of families should work with an estate planning attorney rather than going the DIY route.  Ms. Jacobs gives several real-life nightmare scenarios as a result of folks going the DIY route.

The most interesting part of the article to me, as an attorney, is her call for attorneys to re-think how we provide our services and the fees we charge for them.  I agree that, just like every “industry,” we as attorneys should be continually reviewing the service we provide to clients, how we provide it and the fee we charge for providing it.  However, I disagree with Ms. Jacobs’ assessment on two main points:

1) I disagree that somehow the value of what we provide must be tied to the amount of time it takes us to accomplish.  Just because the “billable hour” has been the norm (and mostly continues to be), does not mean that it is a true reflection of the value we provide our clients.  To tie the fee solely to the amount of time spent on a matter is to throw my law school education, continuing education, self-study time, numerous study materials and organization memberships, and my experience out the window.  To follow her reasoning, none of that matters when it comes to setting the fee.  Although I am sure there are many who agree with her, I doubt they would agree if they had to take the time required for the initial and followup education and the “hard knocks” education, and then be told that there is no compensation for their efforts.

Here’s an analogy in the medical field – lasik eye surgery.  According to this site, the average cost of a lasik procedure for one eye is $1,580, on the low end.  And yet according to this site, the average lasik procedure only takes 15 minutes per eye.  Clearly the fee is not tied to only the time spent on the procedure.  Why?  Because there were other costs that went into the procedure.  Why should attorneys be any different?  Can you imagine an attorney charging a $1,580 fee for 15 minutes worth of work?  Makes a lawyer seem a lot more reasonably priced if you ask me.

2) The second point is really two points: her explanation of her own “basic” estate planning “package,” and Jonathan Blattmachr’s comment about software enabling attorneys to do a will in 3 minutes.  If I understand Ms. Jacobs correctly, her “basic” estate plan that cost them $4,500, included his-and-hers wills, powers of attorney, living wills and life insurance trusts.  She says “by today’s standards, we got ripped off.”  Maybe, maybe not.  If by “life insurance trusts,” she means what estate planning attorneys commonly refer to as ILITs (Irrevocable Life Insurance Trusts), then her plan was anything but simple and they definitely did NOT get ripped off.  ILITs are complex, irrevocable trusts that must be drafted in intricate detail to make sure that the “assets” in the trust are not included in your estate for estate tax purposes when you pass away.   Seeing as one slip could cost you hundreds of thousand of dollars (or more) in estate taxes, I would hardly call that “simple.”  And as for getting “ripped off,” I can assure you that if she were to go to an attorney who specialized in estate planning and was more than just a form factory, she would be looking at more than she paid back in 1997.

Jonathan Blattmachr is a very highly respected estate planning attorney and rightly so – likely one of the top in the country.  However, you have to read his statement about a “will in 3 minutes” in the context of the fact that he is talking about his drafting software and how good it is.  Somewhat of a self commercial if you ask me.  And, again, he is tying the value simply to the time spent, which seems very disingenuous as I pointed out above.  Yet here is the interesting part…if you take his numbers – approximately $600 for an “expertly drafted will and legal advice” – you still would come out near the number Ms. Jacobs gave for a comprehensive estate plan.  Hmmmm.

So what do YOU think?  If attorneys shouldn’t charge for the value they provide, how should they provide?  Why should how an attorney charges be different than other professions?  I’m very interested in your thoughts and suggestions.

Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.