Category: Estate Planning

Maintaining Your Privacy in Your Estate Plan

June 3, 2012 / Michael

It seems like our personal information is becoming easier and easier to acquire these days, and a recent conversation really brought it to light. Because many of my clients have become great friends, I have a game I’ll play with them. Many will notice my middle initial and ask what my middle name is. It’s not that my middle name is horrible or anything, but it is rare, and I’m not terribly fond of it (although I’m sure I’ll get over that). So, I make them a deal. If they can guess my middle name, I’ll let them know if they are correct. None have figured it out . . .

. . . until a month or so ago. One of my more tech “savvy” clients emailed me with his guess and he was right on. I have to admit, after so many not guessing it correctly, I was curious how he found out. Turns out he used google and some public information sites on the web and was not only able to tell me my middle name, but also how old I am, where I live and where I used to live. Being tech “savvy” myself, I was quite impressed because I do what I can to not have my private information public.

And I think it brought home a key point in estate planning. Many families end up in probate court after someone passes away, either as a result of having no estate plan or having a will-based estate plan. If you thought you would avoid probate by having a will, read this previous post to find out the truth. Now, I’m not here to malign probate and to say it is some evil, horrible process. But, it is certainly a public process, as your will and what you owned is part of the probate court file that anyone can access. I’ve even seen some wills with social security numbers in them. Some may say, “big deal, I’m dead so my social security number doesn’t matter.” Well, I beg to differ – read this recent news story if you don’t think it can still be used and cause problems.

So, it’s probably no surprise that many of my clients want to maintain as much of their privacy as possible – both while they are alive and after passing. And they want their affairs to be handled privately, out of court. And that’s why many of them decide that a living trust is best for their family. To find out more about living trusts and how your family can benefit from them, check out these previous posts:

Michael Lichterman is an estate planning and charitable 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 “stuff” – it’s about who your are and what’s important to you. He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning. He enjoys creating life long relationships with his clients centered on their families values, insights, stories and experiences.

Time Can Cause Your Estate Plan to “Fail”

May 27, 2012 / Michael

It was Bob Dylan who wrote the song “The Times they are a-changin’,” and that is no less true in the world of estate planning. How? Life goes on, families change, people are born, people pass away, and our goals, wishes, and values may change to. Yet, many families don’t update their will, trust and other estate planning documents to match with the new realities of their lives.

This recent USA Today article talks about the importance of updating wills, and even moreso the importance of having an estate plan to begin with. It’s a really quick read, so I won’t recap it here. I will, however, suggest that you also read my previous blog post on the topic because it reveals a “real life” story about why updating your planning is critically important.

Give us a call at 616-827-7596 to make sure your family’s plan works how you want . . . or if you still need to put a plan in place for your family.

Planned Giving – How You Can Benefit a Charity for Generations

May 12, 2012 / Michael

Here in West Michigan we are blessed with a lot of charitable families and individuals. They give their time, energy, and yes, finances to help benefit area and national charities. One of the terms that you’ve probably seen if you’ve talked or worked with a charity is “planned giving.” As common as the term may be, it seems like very few are really aware of what it is or they have the misconception that you must be “rick” to make a planned gift.

Put simply, planned giving is a method of supporting non-profits and charities that enables philanthropic individuals or donors to make larger gifts than they could make from their income. So, a planned gift really is any major gift, made in lifetime or at death as part of a donor’s overall financial and/or estate planning. Seems simple, right? Well, for the most part it is.

As simple as the concept may be, the challenging (and fun) part is the donor working with the charity and the donor’s other advisors (estate planning and charitable planning attorney, CPA, and financial advisor) to determine the best structure for the planned gift. And by “best structure,” I’m referring to the structure that best accomplishes the donor’s goals while maximizing the benefit to the charity.

You can see some of the many options by reading my earlier blog post on non-cash gifts to charity. Make sure to give us a call to help walk through planned giving with your favorite charity (or cause).

The Added Peace of Mind of Estate Planning

May 6, 2012 / Michael

As a Grand Rapids, Michigan estate planning attorney, I consider it a true privilege to be involved with bringing added peace of mind to families throughout the West Michigan area. How? Through estate planning. As a matter of fact, the most common comment I hear from client families is that they “have so much more peace of mind about things now,” or that they “feel like a big weight has been lifted,” knowing that their family will be cared for and their legacy will continue on if something happens to them.

I think, however, that me sharing those comments with you may tend to get discounted or considered a side thought because I’m an estate planning attorney. I can understand that. So, I thought I would share a recent thank you email from a dear client (with permission). It brought home the sometimes harsh reality of life and the peace of mind provided by a caring, comprehensive estate plan. With not just permission, but her encouragement, I’m sharing the email with you. I hope you will read it through in its entirety and forward the link to this blog post to anyone and everyone you know needs to take this important step for their family. Please note that I’ve removed names and identifying items. Here is the email:

Mike,
Earlier today, the importance of having an estate plan and guardianship of my daughter was driven home for me. Our friend recently lost his sister after a long battle with cancer. She left behind 3 young children. She did not have an estate plan. Her children are now in the custody of their father, with whom they’ve never had a relationship. The father has no intention of maintaining a relationship with the children’s maternal relatives, forcing the grandparents to go to court for visitation rights. Our friend is in the process of establishing a trust fund for the children, but the father has not agreed to the terms. Unfortunately, this is only part of the story.

As I listened to our friend describe what his nieces and nephew are going through and the many things he and his family have to deal with, I felt such a sadness for the children and their family. It is such a horrible, heartbreaking situation. After my husband and I left, we walked back to our car holding hands with our daughter, and I was filled with such an overwhelming feeling of relief…Relief that our daughter will be taken care of by someone we love and trust…Relief that our parents will (hopefully!) not have to fight to see their grandchild…Relief that our daughter’s financial future will be secure…Relief that we have our estate plan done!

No parent wants to think about the “what ifs” in life. But because of you, my husband and I have thought about them, and we have a comprehensive plan to deal with them, and most importantly, our daughter will be taken care of. Words could never express how extremely grateful I am for you and all of your hard work in helping us complete our estate plan.

Thank you! Thank you! Thank you! (A million thank yous!)

Although she thanked me, I wrote her back to make sure she recognized that the true credit was her and her husband’s. Keep in mind that only approximately 35% of parents have named guardians for their children. Only 35%! It says a lot about these folks and each parent who has invested their time and their finances to make sure their child(ren) are cared for if the unthinkable happened to them.

Is it time to get your ducks in a row? Call us at 616-827-7596 to schedule your Peace of Mind Planning Session!

IMPORTANT: Michael is licensed to practice law in the State of Michigan and has offices in Kent County. I am ethically required to state that the above information does not create an attorney/client relationship. These posts should be considered general legal education and are intended to provide general information the topic discussed. Frequently, differing facts about the particular individual or family, if known, could significantly change the recommendations made in the blog post. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your state. The law changes frequently and varies from state to state.

Major Errors in Estate Planning

April 28, 2012 / Michael

I recently ran across this Forbes.com article on “7 Major Erros in Estate Planning.” The article has a no nonsense list of mistakes that I see and discuss on a daily basis as a Grand Rapids, Michigan wills and trusts attorney. I think the article’s intro paragraph makes a point that should not be overlooked. I’ll rephrase it as, “you would be surprised how many families work hard to provide for themselves and their children, yet ‘cheap out’ on the estate planning that will carry on there legacy.”

The 7 major mistakes the article lists are:

Not Having a Plan
Online or DIY rather than professionals
Failure to Review Beneficiary Designations and Titling of Assets
Failure to Consider the Estate and Gift Tax Consequences of Life Insurance
Not Maximizing annual gifts
Failure to Take Advantage of the Estate Tax Exemption in 2012
Leaving assets outright to Adult Children

The article gives a brief, helpful explanation of each of the mistakes – you should go read it. I’m happy to see that the article points out that even in situations many families may think are “basic,” a plan cannot be overemphasized. As the article states, “Even a simple plan that is well thought out and results from the identification of your personal objectives will be much more successful than nothing at all.”

One of the few faults I find in the article is that the main focus seems to be on money and taxes, rather than the who we are as people and how we want to leave a legacy for our family. I think the closest the article comes is this very accurate statement: “As in most estate planning, it is very much dependent on individual circumstances: family dynamics, net worth, financial / liquidity position, personal preferences and, even, your philosophy on the transfer of assets to future generations.” I think the articles frequent focus on “high net worth” or “wealthy individuals” is misplaced, as “regular” families like you and me can benefit from almost all of the points discussed in the article.

So, what do you think? Have you made any of the mistakes mentioned in the article? Can you think of additional common mistakes?

Transferring EE Savings Bonds to Your Living Trust

April 22, 2012 / Michael

Although their popularity seems to have gone by the wayside, it seems like we all have them or we know someone who does – U.S. Savings Bonds. According to this site, 14.9% of families have savings bonds, which makes up 0.4% of families’ assets. And according to this site, the average American household has over $1,800 in U.S. Savings Bonds. So you can see that although they are not a large part of the overal “net worth” of the average American family, they are widely owned.

As a Grand Rapids, Mi wills and trusts attorney, I’ve had a several families ask me how to transfer their U.S. Savings Bonds into their living trust. This will help ensure that they can be properly handled if you become incapacitated or pass away. The great news is that it’s not very difficult to transfer U.S. Savings Bonds to your living trust.

First, a technical matter. We don’t “transfer” the U.S. Savings Bonds to our trust . . . we have them “reissued” to properly register them to our trust. To do so, start by going to this U.S. Treasury site. From there you can download and fill out Form PDF 1851, which is specifically for reissuing the bonds in the name of a personal trust. The form has surprisingly good instructions and will guide you through properly completing the form and returning it to the U.S Treasury Department.

IMPORTANT: Michael is licensed to practice law in the State of Michigan and have offices in Kent County. I am ethically required to state that the above information does not create an attorney/client relationship. These posts should be considered general legal education and are intended to provide general information the topic discussed. Frequently, differing facts about the particular individual or family, if known, could significantly change the recommendations made in the blog post. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your state. The law changes frequently and varies from state to state.

The Critical Importance of Medical Directives

April 15, 2012 / Michael

National Healthcare Decisions Day is today, April 16th. It’s an important reminder for every adult to let someone know their most private wishes about medial treatments and possible end-of-life care.

Far too many people assume that their families would make the choices they would want in an emergency. Yet everyday we hear stories of adult children, siblings or other relatives battling during a health care crisis over “what their loved one would have wanted” in that situation.

The Terry Shiavo case is a great example of this. At the young age of 26, Shiavo suffered sudden cardiac arrest and slipped into a permanent vegetative state. She never documented her wishes about things like feeding tubes, life support and long-term quality of life, leaving her family to battle for years over these questions in court.

Her husband eventually had her feeding tube removed claiming, “That’s what she would have wanted”. But was it really? We’ll never know because Terry didn’t make her healthcare wishes known to her closest family and friends.

But it’s not enough to just tell someone about your wishes. You need to clearly document your preferences, too. Remember, emotions can run high during a health care crisis, and it might be hard for your loved ones to stop life support when they desperately want you around. Having your wishes spelled out in writing helps make these types of decisions easier for your loved ones, especially in cases when other family members don’t agree.

So in honor of National Health Care Decisions Day, I encourage you to start tough conversations with loved ones about your personal medical preferences for medical or long-term care. Here are some important questions to consider:

What are your thoughts on feeding tubes, life support and other artificial life saving devices?
Is there any type of medical care you would NEVER want?
If you were permanently disabled or incapacitated, what things would contribute or take away from your “quality of life”?
Who do you trust to make important medical decisions if you are unable to speak for yourself?
What are your thoughts on nursing home vs. in-home health care?
Who would you trust to manage your long-term care?

These are not the most fun conversations to have, but they will help to ensure that your most personal wishes are honored in a true medical emergency. Talk them over with loved ones and get something in writing that spells out your wishes and the care you want if something happens to you. If you have questions, call us at 616-827-7596 and get something in writing before an unforeseen emergency strikes.

Non Cash Contributions to Charity – A True Win-Win

April 7, 2012 / Michael

One of the great things about this country, and the West Michigan area in particular, is that we like to help others. In many cases this is shown by giving to one or more charities. It could be giving of our time through volunteering, or giving of our financial resources. Our government supports this by providing various tax benefits for giving to charity. In this previous post we gave a general overview of the many different ways each family can contribute some of their financial resources to charity. You’ll notice that the first item on the list is cash (or cash equivalents). Yet, that tends to be the most inefficient financial resource you can give.

Surprised? Many people are . . . including me before I learned more about it. You see, many of us give to charities for one of two reasons (or for both reasons): (1) we support the charity’s cause(s) or mission, and/or (2) we want the tax deduction for the contribution. And although it may not be a driving factor, why not try to maximize the tax benefits. And while we’re at it, why not try to use the tax benefits to give even more to charity with no change in effect on our “pocket book.” And that’s where “cash” contributions fall short. With a cash contribution, you may get the charitable deduction (depending on your income level), but that’s it. You may be asking, “so what if that’s it . . . I gave, got the deduction, and it’s done.” Well, what if you found out that you could get give more to your favorite charity, get an even bigger tax benefit, and not feel it any more in your “pocket book.” Impossible? Nope.

That’s where non cash charitable contributions come in. What do I mean by “non cash?” I’m talking about many of those other items on the list in the previous post. Items such as public stock, private company stock, real estate, retirement assets, life insurance, valuables and collectibles, and the list goes on. How do you get this “double benefit” with non cash assets that I mentioned earlier? Well, it varies based on the type of asset, but in many cases you receive a combination of transferring an appreciated value to the charity (e.g. more than you would have if you contributed cash), getting a tax deduction on your personal tax return (depending on your annual income), and you no longer have to pay the “gain tax” you would have otherwise had to pay on the non cash assets had you sold them and contributed the money to the charity. Wait a second . . . that’s a triple benefit! You bet!

In a future post we’ll take a look at one of the most “painless” non cash contributions you can make . . . appreciated stock. Until then, if you, someone you know, or a charity you work with has any questions, call us at 616-827-7596.

Wills vs. Trusts – The Battle Continues

March 24, 2012 / Michael

In a previous post we discussed many of the differences between wills and trusts. That discussion was from more of a “technical” standpoint, which can still leave a lot of questions. And those questions are typically the practical questions, such as “I have a couple of retirement accounts . . . would a will or trust be better for me?”

Generally speaking, here is a brief comparison of wills vs trusts relating to some practical considerations:

Wills tend to be sufficient in situations such as: simple and outright distribution of assets when privacy is not important.

Trusts tend to be better for handling the following: life insurance policies, qualified retirement plans (IRA, Roth IRA, 401k, 403b, etc.), somewhat more involved distribution of assets, maintaining privacy, possible or probably mental disability, desire to make it as easy as possible for family and loved ones, out-of-state real estate, out-of-state trustees (and beneficiaries), tax planning, protection of inheritance for spouse, children and grandchildren (or other loved ones), second marriages, and loved ones with special needs.

Keep in mind that there is no “one size fits all” answer to estate planning questions because each individual and each family is unique. Each estate plan should be too! Beware of the standard form document and a “telling you” versus “listening, learning and sharing with you” approach.

Call us at 616-827-7596, if you have questions or want to make sure your family’s plan is specific to who you are and what’s important to you.

Michael Lichterman is an estate planning and business 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 estate and asset protection planning for the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning. 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.

Learn From Whitney Houston’s Estate Plan Mistakes

March 18, 2012 / Michael

We’ve seen it before, and we’ll see it again. A “rich and famous” person passes away and their Last Will and Testament ends up on the internet. Well, the most recent one is Whitney Houston. As reported in this Forbes.com article, her Will was recently filed with the Atlanta probate court and is now available to everyone via the internet.

I recommend reading the article in its entirety to get a good feel for what Ms. Houston did that was good and what was bad, from an estate planning perspective. I’m not going to reproduce the article or Will here (although I do have a copy of it), but I want to comment on a few key items:

She had only a Will, not a living trust. You can be the judge, but I think this is a BIG mistake because now we can see everything about who will be doing what and receiving what regarding her estate plan. Privacy is a difficult thing to come by even if you’re not “rich and famous.” Ms. Houston certainly did her daughter and other family no favors by not avoiding probate. On a side note, remember that just having a trust isn’t enough . . . you need a fully funded trust.
Her daughter, Bobbi Kristina, will eventually receive everything when she is 30 years old. Each family is different, but I don’t know many families who would want a child or other family member receiving millions of dollars at 30 years old. Besides having a living trust, Ms. Houston could have structured the trust in such a way that it would benefit Bobbi Kristina for her entire life, but was not susceptible to the attacks of creditors, predators (scammers), lawsuits, and divorce. She could have created a real treasure chest for her daughter.
There is no mention of any “intangible wealth.” These would be things like letters to her daughter, recorded conversations of her feelings, hopes, wishes and dream, or stories about cherished items she owned. Of course that doesn’t mean she didn’t do it . . . but the lack of it in the conversation helps serve as a reminder that your values, insights, stories and experiences are your most valuable treasure. Capturing them for your family is truly leaving a lasting legacy.

What do you think about the article or my comments? Please share your thoughts by way of comment on this post.

Wills vs Trusts – Which Is Better For Your Family?

March 11, 2012 / Michael

Is seems like the most common question I receive as a Grand Rapids, Mi estate planning attorney – what is the difference between wills and trusts? Does my family need a will or a trust?

Well, as you might expect, the answer to the second question is different for every family. Why? Because no two families (or individuals) are the same. Oh, sure, there are plenty of attorneys out there who will look at your family’s assets and tell you what you should have. That approach doesn’t sit well with me. I think it’s best to share with you some of the advantages and disadvantages of wills and trusts, and let you determine what is best for your family based on who you are and what’s important to you.

So, here are some examples of how wills and trusts differ on a few key considerations:

Privacy:Wills – with a Will there is no privacy. Documents and proceedings after death are public record. Trusts – totally private, unless court intervention is required, which is usually a result of poor drafting, lack of funding, or loss of Trustee.
Disability Planning:Wills – no provisions for physical or mental disability. The disabled person is subject to the court process for guardianship. Need a power of attorney, updated over the years. A power of attorney can provide that disability be determined privately by family members and friends. Trusts – Handles assets upon disability without court intervention. Need a power of attorney for non-trust assets. A trust can provide that disability be determined privately by family members and friends.
Creditor/Predator Protection:Wills – None while alive. Testamentary trusts can give protection. Trusts – None while alive. Creditors have only a specified amount of time to present claims after death or they are forever barred. Trusts which become irrevocable at death can give protection.
Effort Required:Wills – Less effort now unless you require tax planning and asset protection for your heirs, but more work for your heirs after disability or death. Trusts – More effort now to properly design the trust to accomplish all of your goals upon disability and after death, but far less work for your heirs after disability or death if done correctly.
Cost Now:Wills – less. Trusts – more.
Costs to Amend:Wills and Trusts – similar.
Cost Later:Wills – average all-inclusive cost of a probate in Michigan is 3-5% of the value of the estate. Trusts – No probate fees if the trust has been fully funded and properly maintained and trust administration fees less than estate administration fees.

In a future post we’ll look at how wills and trusts compare on common family goals. Make sure to contact us at 616-827-7596 if you have any questions and to schedule a Peace of Mind Planning Session to see how wills and trusts compare in your family’s specific situation.

Estate Planning for Single People is Critically Important

March 4, 2012 / Michael

If someone asked me “what are the two biggest misconceptions about estate planning,” I know exactly what I would say: that estate planning is only for the “rich,” and that estate planning is only important for families (rather than single people). I discussed how far off the first misconception is in an earlier blog post. And based on recent conversations, I think it’s time to address the second misconception – that estate planning is only important for families and that it is not important for “single” folks.

Interestingly enough, the idea for this blog post came about as a result of a couple of great conversations with individuals who decided that, although they were not in a relationship and had no children, it would be good for them to have an estate plan. As a Grand Rapids, Mi wills and trusts attorney I say great, not just good. As we talked about what estate planning actually is they realized what a great decision they were making and that it truly is critically important.

Why? Well, if you haven’t invested your time and money to put a caring plan in place for yourself, then the State of Michigan has a default, one-size-fits-all plan for you. In my experience, that “default” plan is not even close to what my single clients have wanted. Many of them have certain family members, causes and charities they want to benefit if something happened to them, yet the “default” plan is the same for everyone and it certainly does not include those personal preferences. So, the #1 reason for a single person to have an estate plan is to make sure you leave the legacy YOU want by providing for the family, causes or charities dear to you.

The second reason is to make sure you are cared for if you become incapacitated. That could be as a result of a tragedy such as a car accident, or a scheduled period of incapacity such as surgery. A financial durable power of attorney and a healthcare durable power of attorney are the key estate planning components that help ensure your wishes are carried out during periods of incapacity. Without them, you would need to have a guardian and/or conservator appointed by the probate court. That is an unnecessary and unneeded cost of both time and money . . . and it can be avoided with proper estate planning.

The probate judge would chose the person who would handle your finances and make your healthcare decisions. Maybe it would be who you want, maybe not. And beyond that, without guidance, how would they know what your wishes are?

Taking a chance on the State’s default plan for you could be disastrous! Yet, that’s what would happen if you don’t have an estate plan.

Why take the chance? Give us a call at 616-827-7596 to have the added peace of mind of knowing your wishes will be followed and your legacy will what you want, not what the State wants for you.

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