Category: Estate Planning

Michigan Special Needs Planning – The Letter of Intent

April 4, 2011 / Michael

Law school and the years of research and continuing education that come afterward seem to place all (or most) of the emphasis on the legal aspects of a given situation. That probably doesn’t come as much of a surprise to you. But, as a Grand Rapids estate planning lawyer I’ve come to realize that the legal without the practical can leave holes in a family’s planning. That is why I focus on providing my client families with an estate plan that covers both the legal AND the practical sides of life.

And in my opinion, planning for a family who has one or more children with special needs is one of the areas where this legal/practical combination is the most important. I truly believe it starts with the special needs planning lawyer’s perspective – it should be a caring one. You can read some of my thoughts by reading my previous blog posts here and here. Those posts focus on some of the legal issues that need to be considered when planning for a child with special needs.

The list of practical considerations is even greater when planning for a child with special needs. A letter of intent is one very important practical item that parents of a special needs child should make sure is part of their estate plan. My colleague, Rania Combs, recently wrote an excellent post on the topic, which you can read by clicking here. She provides many excellent suggestions on the topics that should be covered and answers some common questions.

At Lichterman Law, we provide all our client families with a similar draft document as part of our Children Protection Plan. And for our client families who have children with special needs, we make sure to walk with them through the important legal and practical considerations that will help make sure their child with special needs is cared for by who they want, in the way they want and with all the love and support they deserve.

Call us at 616-827-7596 to find out if your family qualifies for the Lichterman Law Difference. And if you reference this blog post, we will waive the Peace of Mind Planning Session fee (a $750 value!).

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.

Is Life Insurance Asset Protected in Michigan?

March 27, 2011 / Michael

As a Grand Rapids, Michigan estate planning and asset protection attorney I’ve been asked several times, “Is life insurance protected from my creditors?” And sometimes it’s more specific, “is the cash value of life insurance protected from my creditors.”

Well, the answer is maybe yes, maybe no. You see, there is a seeming incompatibility between the statutory law and the case law (court-based law) in Michigan. In MCL 500.2207(1) it says that the proceeds of any life insurance policy payable to the wife, husband or children of the insured or to a trust for their benefit, including the cash value thereof, is exempt from claims of the insured’s creditors (read it by clicking here).

Seems to be pretty clear, right? Wrong. There are a couple of cases in Michigan where creditors were allowed to garnish the cash value of the insured’s (debtor’s) life insurance policy. The cases are:

Chrysler First Business Credit Corporation v. Rotenberg v John Hancock Mutual Life Insurance Co., 789 F. Supp 870 (1992) – read it by clicking here.
Schenck Boncher & Prasher v. Vanderlaan, 2003 Mich. App. Lexis 2082 (2003) – read it by clicking here

Well that sort of muddies the water, doesn’t it? And if you go back to MCL 500.2207(1) and read it in the context of 500.2207(2), you could read “cash value” to reference not the cash value during the insured’s lifetime, but rather only the cash value component of the proceeds after the insured’s death.

Here’s the kicker . . . there IS a way to fully protect life insurance cash value from creditors. That is the topic of a future blog post, so make sure to check back regularly.

And if you (or your client/customer) can’t wait that long. Call us at 616-827-7596 to schedule a Peace of Mind Planning Session to discover how to asset protect and tax-proof your life insurance and create a lasting legacy for generations to come.

Tips On Keeping Your Michigan Estate Out Of Court

March 20, 2011 / Michael

As a Michigan Wills, Trusts and Estate Lawyer, one of my main goals is to help my clients avoid or manage conflict, either now or after a tragedy (death or incapacity). This goal is one that I feel “traditional” estate planning pays less attention to than is deserved. It is an area where the “counselor” part of “attorney and counselor at law” becomes keenly important.

Why? Because the alternative in many cases is a costly lawsuit and/or hurt feelings. For example, I recently ran across this article, which hints at the results of poorly counseled estate planning and gives real examples of what can lead to problems mentioned above. And notice that the article is written by an estate litigation attorney. These are “real life” examples.

As the article points out, many seemingly “benign” decisions can potentially lead to disastrous results if they are not the result of proper counseling and planning.

Here are just a few of the examples the article author gives as leading to courthouse controversy over estates:

Do It Yourself (DIY) estate planning – you can read my previous blog post about DIY planning here.
Not having even a basic estate plan. Without this, you are left with the State of Michigan’s plan for you. A court will decide who gets what and who makes your healthcare decisions.
Picking the wrong person to be in charge. Many families pick certain people out of a sense of obligation, not based on how well they would perform the task for which they were chosen.

I encourage you to read the rest of the examples given in the article. And if you’re ready to take steps to make sure your legacy isn’t left to squabbling and undesired court involvement, call us at 616-827-7596.

Asset Protection with Discretionary Trusts

March 13, 2011 / Michael

Many Grand Rapids families that I talk with have never considered anything other than giving their assets to their family outright – it could be immediately when they pass away or at some later age. As a Grand Rapids, Michigan estate planning attorney I consider it my privilege to let them know the downside to that approach and what can be gained by putting some restrictions in their Michigan will or trust.

I came across an excellent example in a recent Michigan Court of Appeals case (read it here). The basics of the case are this: the beneficiary of the trust had been jailed and the State of Michigan was seeking reimbursement for those costs from the trust. Guess what? They couldn’t get to the trust assets! Why? Because it was a “discretionary” trust.

What is a discretionary trust? It is a trust that does not distribute the assets outright, but rather leaves the decisions on what is distributed and when it’s distributed to the discretion of the trustee. You can find the Michigan Trust Code definition here (MCL 700.7103(d)). You see, because the “inheritance” is not given outright to the beneficiary and the beneficiary does not have a right to demand that the trustee give him or her any of the trust assets, the trust assets are not considered the beneficiary’s assets.

The best part – even though the trust assets aren’t considered the beneficiary’s assets, the beneficiary can benefit from the trust in the trustee’s discretion as guided by the trust language itself. Think of it this way . . . by setting up your trust this way you are benefiting your family and at the same time protecting them from creditors, predators, divorce and possibly their own poor spending habits. Now THAT is truly creating a legacy.

Call us at 616-827-7596 to discover how you can provide these incredible benefits to your family!

Michigan Legacy Planning . . . Not Your Regular Estate Plan

February 27, 2011 / Michael

As a Grand Rapids, Michigan estate planning attorney I’ve heard a lot of “chicken little” comments among some of my colleagues as a result of the recent changes to estate tax law. You see, many attorneys who draft estate plans relied on fear of the estate tax as a way of attracting new clients. With the tax law changes far fewer families will be affected by the estate tax (at least temporarily).

And yet at the same time, as a Grand Rapids, Michigan wills and trusts attorney who focuses on helping families create a legacy through Whole Family Wealth™ Planning, I’m seeing an increase in families becoming part of the Lichterman Law family.

Which leads me to this USAA article I recently came across. Besides being a good overview of the recent changes to the estate tax and a reminder of the importance of having your plan reviewed, it points out the importance of viewing “estate planning” as what it truly is . . . “legacy planning.” As the article points out, “there’s far more to estate planning than just taxes.”

What “more” are they talking about? As the article says, “the real point of an estate plan is to make it as easy as possible for your heirs to carry on and to ensure your assets go where you want them to.” I agree with that, but think they left out one very important thing . . . the key behind Whole Family Wealth™ Planning. That is to use estate planning to pass on who you are and what is most important to you – your values, insights, stories and experience. To me, that is truly a lasting legacy.

Why would you want to leave your family guessing about what to do, where to go and how to handle your assets? Do you want to leave them without your most valuable asset . . . who you are as a person? Call us at 616-827-7596 right now to take the important step of starting your legacy plan. Mention this blog post and we’ll waive the Peace of Mind Planning Session fee ($750 value!).

The Importance of a Flexible Estate Plan

February 13, 2011 / Michael

I have been emphasizing the need for flexible estate plans since I first opened my practice. It seems that most people believe that estate planning is either for the “hear and now” or for the “way down the road.” If that is your view, your missing out on the “everything in between.”

I recently read this NY Times article, which sheds some light on the importance of a flexible estate plan. As the article points out, the “certainty” that Congress brought to estate tax planning in late 2010 will only apply for 2011 and 2012. After that it is anyone’s guess.

I can’t agree more with the part of the article that says “people…need to refocus their estate plans, … toward flexible plans for distribution, protection and management of their assets no matter how Congress tinkers with the tax laws.” And that is just the estate tax law. Don’t forget that each state, Michigan included, changes their estate planning laws from time to time too.

This is why I focus on planning for life, not death. It’s really about who you are and what’s important to you. How can estate planning pass on who you are? By structuring your plan in a way that guides and directs your loved ones if something happens to you and that shares your Whole Family Wealth™ with them – not just what you have, but more importantly your values, insights, stories and experiences.

One last thing…note the many advantages of trusts that are stated in the article and how it is not just about tax planning. My favorite advantage of trusts that they wisely state in the article is “protection against creditors, permitting the beneficiary to continue enjoying benefits from the trust even if bankruptcy were to occur.”

If you already have an estate plan in place, take this opportunity to have it reviewed and updated for flexibility by an attorney who focuses on estate planning. And if you don’t have an estate plan…why not? You are leaving your family’s future in the hands of the court system. Is that what you want?

Health Savings Accounts (HSAs) and Trusts

February 6, 2011 / Michael

I’ve had several people ask me recently, “can I put my health savings account into my living trust, and if so, how?” That’s a great question!

The answer is yes, but you are not actually putting it “in” the trust . . . you are naming the trust as a beneficiary. Health Savings Accounts (commonly referred to as HSAs) are interesting “animals.” We typically think of them like an ordinary bank account with a restriction that they can be used for only qualified medical expenses. However, for trust “funding” purposes, they behave more like retirement accounts (e.g. IRAs).

This means that you designate the trust as the beneficiary of the account rather than changing ownership of the account to the trust (warning: changing ownership could have negative tax consequences). If you are married, I generally suggest naming your spouse as the primary beneficiary of the account. This is because it can then be treated as the spouse’s HSA if something happens to you.

You would then name your trust as the contingent beneficiary. Naming the trust (or individuals other than a spouse) as the primary beneficiary will make the account taxable to those beneficiaries in the year of your death. A spouse is the only one who gets the special HSA treatment stated above. Single individuals should typically name the trust as the primary beneficiary.

Do you or someone you know have a question about estate planning or business planning? If so, let me know and I try to answer it in a future blog post. I’m sure you’re not the only one with the question, so you will be helping other readers by asking.

You Pay For What You Get

January 30, 2011 / Michael

“You get what you pay for,” is a phrase that we’ve all heard so much it is has become almost a cliche. What I’ve come to realize is that, although “you get what you pay for” may not be true in all cases, “you pay for what you get” seems to be true in all cases. Whether the “cost” is money, like we typically think, or something intangible such as lost time, lost opportunity, worry, regret or pain.

You may have read my post about the Honda, the big screen and estate planning. The idea being that we “pay” (money, time, emotions, etc.) for something based on the perceived value it has to us. I was reminded of this when I talked recently with a nice gentleman. At one point he said, “that’s more than I’m willing to pay.” It doesn’t matter the context – estate planning or business planning – there’s a lot going on behind the scenes in that statement.

It could be a reflection of lack of concern, lack of understanding how things work (estate planning or business planning), not fully understanding the situation, or valuing other things higher than the estate planning or business planning being considered. Ultimately, I think it is a combination of all of these (and more), although I see the value comparison being the deciding factor in most situations.

I’m not saying any decision is good, bad or indifferent. I think it is good for us to understand how we make purchase decisions and to not forget all the non-monetary considerations that come into play and how they, ultimately, lead us to the decision we make.

How do you make a decision between two or more “purchases”? Maybe it’s getting an iPad versus purchasing more life insurance, maybe it’s leasing a new car versus purchasing a new one, or getting a “discount” haircut versus going to a salon. When you stop and think about the monetary and non-monetary considerations, how do YOU make your choices? I would love to hear what you think of this!

Intangible Assets and Your Burning House

January 23, 2011 / Michael

As a Grand Rapids, Mi estate planning lawyer who focuses on helping you plan for your Whole Family Wealth™, I consider it my calling to determine what my clients truly care about and then, and only then, move forward with helping them plan to make sure their wishes are followed if something happened to them.

The tragedy of several West Michigan homes burning down (or partially down) over the past month has provided a prime example of what this Whole Family Wealth™ is. I think most would agree that having your home burn down is a horrible tragedy, only made better if nobody is injured. So what does a home burning down without any human injury have to do with estate planning?

Ask yourself this question: if your home was on fire, would you reach for the money you may have hidden in a drawer or would you try to save the photo album that has the only pictures of your children as babies? If you answered the way I expect you did, ask yourself if “traditional” estate planning is right for you or if you need something more. Traditional estate planning focuses on money and assets . . . who you are and what is important to you is not a consideration.

Give it some serious thought because your answer (and more importantly your action or inaction) is what will shape your legacy. Don’t make the mistake of thinking a “legacy” is something you have to wait until the end of your life to create. Call us at 616-827-7596 to schedule a Peace of Mind Planning Session to discover how you can share your values, insights, stories and experiences . . . not just your “stuff.” Mention this blog post and we’ll waive the planning session fee (a $750 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 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.

Inheritance Protection and Why Your Family Will Thank You

January 4, 2011 / Michael

Inheritance Protection . . . what does that mean? Well, some recent conversations I’ve had and reading this article have brought to light how unknown this very important estate planning strategy is. What if you could ensure that your beneficiaries (children, grandchildren, or other friends and family) would receive your the inheritance you provide for them in a way that could benefit them, yet not be open to creditors, predators, divorce, financial immaturity and lawsuits. Would you do it?

Unless your “estate” is quite small (including life insurance), I generally recommend that you do just that. Why? Read the article linked above. Although there is no sure thing, I think it is quite likely that Mr. Martin’s story would be very different had he received his inheritance in an inheritance protection trust. The trust could have provided for his general needs (in the Trustee’s discretion) and still not be accessible by creditors, financial predators, divorce or lawsuits.

I’ll leave you with one last example. I met with a couple some time back and when I mentioned inheritance protection, the husband said, “that must have been what my grandma did for my aunt.” Obviously, I wanted to know more and he was kind enough to share the story. It turns out that his grandma had set up inheritance protection trusts for her children. His aunt had approximately $500,000 in the trust for her benefit. And guess what? She went bankrupt!

I know you are probably thinking, “great, what a waste of $500,000!” Not at all. Because Grandma had set them up as inheritance protection trusts, the trust assets were not part of the bankruptcy. Now if Grandma had set it up like the vast majority of people and attorneys do, that money would have gone outright to the aunt and she would have lost it! Is that what you want for your family?

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, family owned business succession and pet planning – 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.

Don’t Forget Your Intangible Assets

December 27, 2010 / Michael

A good friend of mine recently shared a story with me that had my gut wrenched when I read it. She knows that I focus on helping families plan not just for that they have, but also for who they are – their values, insight, stories and experiences – and the story proves just how important that is. This is planning for your Whole Family Wealth™.

Don’t underestimate who you are and what you mean to your family, friends and society as a whole. We all have stories to share that can help and set examples for others. Yet many great people I talk with feel that “leaving a legacy” is something that they’ll do much later in life, that they don’t have a “legacy” to leave right now. Trust me when I say that is completely untrue!

And don’t just take it from me. Read this article and watch the video. You can view it by clicking here. I will let it speak for itself. Please share your thoughts and comments after you read, watch and think about it.

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, family owned business succession and pet planning – 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.

5 Priceless Presents You Should Give Your Family

December 22, 2010 / Michael

A recently read a great blog post by my colleague and Oregon estate planning lawyer, Candice Aiston. I am re-posting it hear for my readers, with Ms. Aiston’s permission. Please take the time to read it, as it could make a HUGE difference in your families future. Make it a point to give these important gifts in 2011. You never know what could happen to you, and delaying these gifts could be disaster.

The end of the year is a time when I think a lot about the state of my life, family, and career. I like to reflect on how the year went, whether goals were accomplished, what my goals are for the coming year, and how those goals match up with my values. I try to think about what my overall purpose is and realign with that. It is so easy to get caught up in the small details in life, that sometimes the big picture is lost. I like to reassess each year and make sure I am always keeping my eye on what is important.

This year as I reflect, I find that my life, family, and career goals are really very interwined. My family goal is to be a loving and responsible parent, and it turns out that my career goal is to help loving and responsible parents as well. My life’s work happens to be helping loving parents to create estate plans that protect their families if something tragic happens. Estate Planning is part of being a loving and responsible parent, but it is just one piece of that bigger goal.

If you are reading this, you probably feel similarly to the way that I do about parenting. It is serious business, and it is our responsibility to provide the best care possible for our kids and to make sure they are protected and that they have every opportunity to succeed in life. If we can toast to that, I want to share with you 5 Priceless Presents that you should give to your family. If you have not given these to your family yet, there is no time like the New Year to get started. Make it a resolution, a Responsible Parent’s Manifesto, if you want to call it that.

1. A Comprehensive Estate Plan
A Comprehensive Estate Plan is the first thing that any parent needs to get in place. Why is this first? Because you can have all of the things listed below, but put your family through hell trying to access it and pay all of the fees and taxes associated with your death or incapacity if something happens to you. Without meeting with an attorney and discussing your particular situation, you have no idea what type of situation your family faces if something happens. You need a plan that dictates the care of your kids (both short and long-term) and the handling of your assets in a way that saves your family the most time, money, and heartbreak. So, if you are a parent without an estate plan, this is your first step. Call an estate planning attorney today.

2. Life Insurance
Life insurance is an essential part of most parents’ estate plans. Most parents do not have enough in savings or assets to allow their families to live a similar lifestyle if a parent died. Life insurance replaces lost income and it can be used to pay for childcare. If you do not have life insurance, make it a priority in 2011 to get insured. The longer you wait, the more difficult and expensive getting life insurance will be. Keep in mind that life insurance makes your estate worth more, so you should consult your estate planning attorney before buying it.

3. An Emergency Savings Account
Every parent should have an emergency savings account. This economy has taught us that little is certain in life. It is not certain that you will have your job next month. It is not certain that your business will be around next month. It is not certain that your health will be good next month. It is extremely important to plan for a situation where you may not have income for 6-12 months. Otherwise, you could lose everything you have worked so hard to gain. People who lose their jobs and do not have emergency savings often have to cash in retirement accounts with severe penalties and have their homes foreclosed upon. It really can pay to sacrifice in the short-term to have that security long-term.

4. A Plan for Retirement
Retirement takes decades to plan for, and many parents do not know what they are doing when it comes to saving for it. Seeing an experienced financial advisor is such a good idea when it comes to retirement. Retirement is the biggest event for which you will ever plan. An advisor can project what you should be putting aside based on your income, expenses, projected age of retirement, and rate of inflation. They can also describe to you the various types of accounts and how each type can benefit you. They all involve different tax rules and have different rules for distribution. Your company’s retirement plan or pension may not be enough to support you during retirement.

5. A Plan for College
You would think that planning for college would be at the top of this list if you are a loving parent, right? Wrong. You first take the steps to protect your family from the worst situations, then you plan for the time when you can no longer work, and then you plan for college. The reason for this is that if there is no college fund, your child can apply for loans and grants and get a job during college. It is not ideal, but it is a heck of a lot more ideal than your grown child having to support you in your old age because you do not have the means to support yourself. It is a lot more ideal than your child flunking out of high school because when dad died without life insurance, mom had to get two jobs to make ends meet and there was no one to make sure the child was doing what he was supposed to be doing. But once you have taken care of the other things, providing a college education for your child can help your family for generations. Without having to pay back student loans, your child can start saving, planning, and living prosperously a lot earlier on than you were able to do so.

Candice N. Aiston is an Estate Planning Attorney for families in the Portland, Oregon area. She helps loving parents to prepare their families for a lifetime of security, prosperity, and guidance. If you would like to receive her free report, “The 9 Common Planning Mistakes Parents Make,” please visit http://candiceaistonlaw.com/.

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