Category: Estate Planning

Vital Steps When Inheriting Money in 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)

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

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

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

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

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.

Avoiding a Fight Over the Michigan Family Business

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

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.

The Importance of Your Parents’ Estate Plan

A thoughtful estate plan can make your family’s lives easier. But it is your parents’ estate planning that will make your life easier.

Not every family has fostered the ability to speak openly in love–I’ve written about that necessity in the past. But if you have begun that process, here is an outline of what grown children need to know about their parents’ affairs. In fact, adults of any age should review their estate plan at least every 3 years.

Children may wish to ask their parents about their financial status but worry about being overly intrusive. Or they fear their elders may perceive their questions as motivated by self-interest. They may conclude mistakenly that their parents would prefer to keep their finances private.

However, whether it’s our parents or ourselves, we are all certainly mortal, so planning for the future is always wise. Estate planning is just as critical when we are young as when we get older. And if you think estate planning information is hard for YOU to pull together, imagine how challenging it would be for someone else who may have to step in for you during a family crisis.

As a parent, if you are willing to share some of this information with your children (or ask about it if you are a child)–especially if one of them is also the executor of the estate or trustee–they’ll appreciate having the facts and be more prepared emotionally when the time comes. They will know your wishes ultimately anyway, and good communication will lessen any surprises ahead of time. They will benefit from knowing the answers to the following questions:

Do you have enough saved for a comfortable retirement?
Many financial planners use a safe withdrawal rate by age to make sure their clients will still have enough money toward the end of their retirement. But this isn’t always the case, and it’s worth looking into.

If your spending is under this withdrawal rate, you have more than enough and probably can leave a family legacy. But if you are over this rate, you may run out of money and have to compromise your standard of living abruptly. It may be uncomfortable, even embarrassing, for parents to share their finances with their children, but grown children often want to know how their parents are doing.

Where are the important documents? The five documents your children should be able to retrieve quickly are a Michigan Will (and Trust if you have one), a Michigan Durable Power of Attorney, a Michigan Patient Advocate Designation, a directory of basic information, and the latest end-of-year financial statements.

The directory of information should list the assets of your estate along with account or policy numbers and contact phone numbers. It also helps to indicate your intentions for the distribution of each asset, which will help confirm you have the correct titling and beneficiary designations on every portion of your estate.  In my practice I refer to it as the Family Wealth Inventory or Asset Spreadsheet.

You may have structured your Michigan Will (or Trust) to divide your estate equally among your children. But if you have tried to make it easy for one child to access your bank accounts by adding his or her name, you have overridden your estate plan and left that child as a joint tenant.  This can be a problem.

Titling and beneficiary designations are legal estate planning actions. It’s best to review them with your legal adviser. Various types of assets are best designated differently in the estate plan. This is not the occasion for do-it-yourself thrift. It is a rare family that has compiled and reviewed a complete list of estate assets: bank accounts, investment accounts, retirement account, real estate holding, life insurance, health savings accounts and so on.

Are there any special distributions? Any promises you want kept should be documented. Your good intentions won’t matter if you aren’t around to implement them. If you have promised money to a charity and want that obligation kept, document it. If you have promised to loan a child money, document it. If you have promised to help fund your grandchildren’s college education, document that. Without documentation, none of these promises can be kept if you aren’t around to make the decisions.

Are there plans to remarry? If parents have remarried, inter-generational estate planning is even more critical. Prenuptial agreements and careful estate planning are required in the case of second marriages to avoid disinheriting children or grandchildren from the first marriage. The default is rarely a good option. I referenced this in a recent blog post that you can read here.

Do you have any prepaid funeral arrangements? Do you want to be buried or cremated? Do you have any preferences for a memorial service? Although it may seem macabre to plan your own funeral, a memorial service takes time and thought. It will be that much more special and comforting to your family when it is filled with your favorite music and readings.

Encourage your children’s interest in your estate planning.  And children encourage your parent’s interest in their own estate planning. . . you’ll be the one dealing with it. Most of the time, their intentions are honorable. They may simply want to understand your values and therefore your wishes.

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.

Do You Have What It Takes To Do Your Own Estate Planning?

You know me, I’m not a fan of do-it-yourself estate planning.  Sure, part of that is because I’m an attorney who specializes in estate planning so it does take away from business (can’t say I’m dishonest!).  The bigger part is that I see and hear about the disastrous results of folks who write their own wills and other planning documents.  And it doesn’t seem to matter whether they pick up a piece of paper and write it or use one of the “cheap” online or software-based will creating services.  The results can be horrendous (and costly!).

So I thought I would share this quiz I ran across at MSN Money.  It tests your knowledge of estate planning, in theory to help you determine if you know enough to make your own will.  I have to admit I was a little nervous before I took it myself.  I mean, how embarrassing would it be if I didn’t do well on it?!  Thankfully, I did very well.  I actually got a chuckle when the results said, “Are you a lawyer? . . . you know your estate planning cold.”  Whew!  What a relief 🙂

What may shock you is that the average score was 52 out of 100.  Yes, just barely half of the questions right!  And yet almost everyone I meet seems to think they can do their own estate planning just fine.  Well, do you want to take a 50-50 chance with the legacy you will leave to your children and grandchildren?  I sure wouldn’t . . . especially if you have minor children who would need to have a guardian appointed!

I did notice that it seems to be based on 2009 law given some of the possible choices given for certain questions.  And, like so many areas of law, some of the “correct” answers are arguable.  Nonetheless, it is a fun test to give you a feel for what you know (or don’t know!).

So give it a try and share how you did.  And call our office for a FREE Peace of Mind Planning Session if your score leaves something to be desired (or even if you do well . . . remember it isn’t based on Michigan law).

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.

Recipes and Whole Family Wealth

A little while back I posted about Whole Family Wealth™ – what it is and why I believe it is the most fulfilling way for an and individual or family to plan for their future (click here to read the post).  A good friend of mine followed up with a suggestion for an addition to Whole Family Wealth Planning – family recipes.  What a great idea!  I thought the story was so good that I ought to share it with you:

To me, one of the biggest parts of a family’s memories and traditions is Mom’s recipes. By the time kids reach adulthood, cooking has usually changed dramatically from their childhood. This is probably true for just about any generation. But most kids fondly remember the things their mothers made when they were children.

I thought about this a few years ago. My sisters and I frequently laughed and remembered some of the things our mom made when we were little. Like most people, her version of many standard recipes had little idiosyncracies, and there were some things that were not standard. Like Glowacki Chicken (Mom named a lot of recipes after the person that had given them to her). She also used to make ketchup gravy for pork chops, dandelion greens (which I still can’t stand to this day but my sisters go over once a year for dandelion green dinner) and oxtails.

So a few years ago I decided to make each of my siblings a cookbook of all of mom’s old recipes. I took her main cookbook that she’d used for decades and went through picking out the ones I wanted. For each one, I asked her if it was correct as written or if she did something different. If different, I noted it in the margin. I also asked her for recipes that I remembered but didn’t find in the cookbook so I could write those down. She actually insisted on typing them out for me – to make sure she got them right.

I made copies of all the them and put them in tabbed 3-ring binders. My sisters and brother were really surprised and happy to get it. I just wanted to make sure that when my mom passes, I could still have her biscuits and gravy if I wanted.

And it would be my guess that she and her siblings would value those recipes as much (or more) than any financial inheritance they may receive.  See, the “intangible assets” we all have are far more valuable than any financial assets, yet very few individuals and families take the time to include the values, insights, stories and experiences in their planning . . . and few professionals make it a priority or even know how to do it.

What do you think?  What “intangible” do you miss most about your parents, grandparents, friends, etc.?  What “intangible” of yours would you most want your children and grandchildren to know about and benefit from?

Contact us today to begin creating a plan based on your Whole Family Wealth™.

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.

Planning for Special Needs Children in Michigan

I love working with families and helping them ensure their children’s future, there’s no question about that.  Although there are special considerations for each family when it comes to planning, there are some additional considerations for families with a child who has special needs.  This post was originally one of my weekly fun and informative e-newsletters.  I received such great feedback that I thought I would share it with everyone .  Feel free to forward this along to families who come to mind, and let them know that we will certainly assist them with their unique situation.  And you can sign-up to receive my weekly e-newsletter by clicking here.  As a bonus, you will receive my free report “10 Things You May Not Know About Cheap Online Will Software.”  Enjoy . . . and share your thoughts via comment below or clicking here!

Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!).

Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.

Planning Your Family’s Wealth Around a Child With Special Needs
Here is the standard thinking, in regards to setting up your affairs with children who have special needs:
Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than a minimal amount of assets upon reaching age 18, he/she will no longer be eligible for some government benefits.

However, while these families are indeed on the right track, parents with special needs children also should:

1. Set up a second trust. I am a strong supporter of stand-alone special needs trusts.  The purpose of this additional trust would be to make sure that the provisions in the parents’ trust don’t disqualify the child from receiving any government benefits that would otherwise be available for his/her care.  It’s better to “wall off” what the child receives.  The separate trust is also there so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.

2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.

3. Plan for three retirements. These families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.

While I’m not a financial planner, I thought that these tips were so important that if you find yourself in this situation, you should raise them with your professional adviser.

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.