Tag: grand rapids estate planning

The Critical Importance of Estate Planning for Women

August 28, 2011 / Michael

I recently ran across this Forbes.com article about how critically important estate planning is for women. The article points out how women have been responsible for many accomplishments throughout time and how many of them have become quite successful by any standard. Yet, even with their increased stature and accomplishment, it seems few have taken the time to do proper estate planning. The article gives a very interesting statistic comparing weight loss and estate planning . . . you’ll have to read it.

Some of the reasons pointed out in the article for women to do estate planning right now are:

Women are more likely to live longer,
Married women are more likely to outlive their spouse than are men,
“Traditional” estate planning seems to minimize the role of women in the planning, and
Your children could very well be lost in the shuffle and end up with caregivers you would not want if something happened to you.

As a Grand Rapids, Mi estate planning lawyer many of my clients have expressed one or more of the above concerns when discussing their planning. As with most estate planning articles I read, Ms. Jacobs points out the importance of naming guardians in your Will for your minor children. And like most articles, she stops there. Well, if you want to help ensure that your children don’t end up in the arms of strangers for any period of time, you need to do much more than just put guardian nominations in your Will. That’s why all of my clients with minor children have a Children Protection Plan.

And is typical of estate planning articles, the focus is on financial assets. No matter what your age, children or no children, married or not married, you should look far beyond the financial assets and work with a Michigan estate planning attorney who can help you plan for your Whole Family Wealth – not just what you have but also who you are! All women have valuable values, insights, stories and experiences that should be shared with family, friends and acquaintances. And yet, the one thing that is lost when someone passes away – the non-financial assets – is the thing that “traditional” estate planners overlook.

To all the women reading this, please read the article. Then read it again in light of this blog post. After reading both, why wouldn’t you “take charge” and move forward with your estate planning? Your family’s future could very well depend on 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.

The Importance of Updating and Reviewing Your Estate Plan

August 7, 2011 / Michael

As a Grand Rapids estate planning attorney I am privileged to meet with great families and to hear their stories. Some of those stories are just starting, some have a good portion already written, and some have been finished. If you’re familiar with me or my previous posts, you will understand why the stories are so important to me and to the type of planning I work on with clients (read previous post here).

This past week I met with a couple that has a truly remarkable life story. We spent the better part of our meeting having them share the story they’ve written so far and how we could make sure their estate plan would help them write the rest of their story during their life and after they pass on.

During the conversation I discovered that they had previously done planning with another attorney over 20 years ago. And guess what? Their plan had not been looked at, reviewed or revised since then. Some of the documents couldn’t even be found. Now this didn’t surprise me in and of itself. I’ve met with many wonderful families that took their estate plan documentation home from their attorney’s office, stuck it on a shelf, let it gather dust and never thought of it again. There was no followup from their attorney other than they typical statement that “you should review your plan every 3 to 5 years, so give me a call then and we’ll review it.”

Yet for these great folks (and the others whose plans I’ve reviewed) time marched on. Their life changed, the law changed, their assets changed and the life story they are writing changed. In this particular case, the life story changed A LOT! So much so that they asked me, “our current plan is so far off base now, can we just go ahead and trash it and start over?”

After careful review and discussion of their 20+ year old plan, we did just that. We spent the next several hours designing a plan that was based on their story – their past, their present and their hopes for the future. And with a plan tailored to their specific story, they have added peace of mind.

But we didn’t stop there. They were delighted to hear about the Lichterman Law Difference and how we include ongoing 3 year reviews in all of our planning levels. Yes, that’s right. For no extra charge we followup with them every 3 years to review their plan, their story and how both relate to current law at that time. The key is that we followup with them every three years.

I know how life can be and more importantly, that you have a life! It doesn’t surprise me that few families review their plan every 3 to 5 years. Life is busy and it gets pushed to the side, if it’s even a thought. And yet here I am, an attorney whose passion is estate planning and I’m thinking about it every day. Seems like a no-brainer that I should followup with them. And that way you can enjoy life and continue writing your life story.

The key to the story is this – you have a story you are writing as you live your life, don’t let the story be tarnished by not having an estate plan or, potentially worse, having one that becomes “stale” and fails when it is needed most. Why wouldn’t you give us a call to ensure you have a plan the carries out your story (or revise your plan to help it “catch up”)? Call us at 616-827-7596 today!

Aging Issues and Estate Plans

July 24, 2011 / Michael

As a Grand Rapids, Michigan estate planning attorney, I take special note of conversations in the media about estate planning. That’s how I ran across this recent Grand Rapids Press article entitled “Aging Issues Can Imperil Retirement.” I believe the overall emphasis of the article is important for two reasons: (1) it points out that everyone needs an estate plan; and (2) trusts are not just for the financially wealthy or for minimizing estate taxes. After a general discussion, the article lists specific, basic guidelines that can help protect seniors and their families from the consequences of declining mental health.

You’ll notice that #1 on the list is to prepare an estate plan. I couldn’t agree more. Why? No, it’s not just because I’m an estate planning attorney. It’s because everyone has an estate – either you can say how you want it handled by working with an estate planning attorney to put an estate plan in place, or you can let the Michigan government’s one-size-fits-all plan control what happen. I think it is important to quickly note the article’s mention of having a living will. As I previously wrote about in this post, living wills are not legal documents in Michigan. So make sure you have a Michigan healthcare power of attorney and patient advocate designation.

You’ll notice that having a living trust is #3 on the list. I’m happy to see that it made the list. Why? Because there are so many misconceptions about trusts . . . the biggest being that you have to be wealthy to need one or benefit from one. I assure you that most of the great families who work with me to create a trust plan for their family are not wealthy by any means. To give you some examples of “everyday people” reasons, read this previous post. I’m also pleased to see that the article discusses the benefits of a trust while you are still alive. There is a big misconception “out there” that trusts are only for when you pass away. Not so – there are huge benefits to having a trust while you are living. I will add that in my experience the fees are not usually the 2-3% stated in the article – in my experience that is a high number.

And finally I think it should be emphasized that these issues are too important to do it yourself. Here in West Michigan we have a very strong work ethic and like to “take the bull by the horns.” I know . . . I’m that way too. That’s why we have so many successful individuals and companies. However, this is not an area where you should do it yourself – there is too much to loose. To get some real world examples you can read my previous posts on the topic by clicking here, here and here.

After reading the article and this post, why wouldn’t you call us to make sure you have a plan that is uniquely you and provides for you and your family during life and after life? Call us at 616-827-7596 and mention this blog post for a special treat.

What’s Included In Your Estate Tax Estate?

July 3, 2011 / Michael

In last week’s post, we took a look at what an “estate” is here in Michigan. Guess what? That’s not the only “estate” you need to consider when working with a Grand Rapids, MI estate planning attorney (or going through the probate process . . . yuck!). You also need to consider your federal estate tax estate. No, that doesn’t necessarily mean that you will have to pay estate taxes, but you do have to add things up to find out if estate tax is due. To do that, you need to know what is included when adding up those numbers. I guarantee you there will be at least a few surprises.

The easiest way is to think about everything you own . . . everything! Real estate, bank accounts (including some or all of jointly held accounts), retirement accounts, brokerage accounts, automobiles, collectibles, business interests, and life insurance, just to name a few. Did you catch that last one? It is a surprise to many people that life insurance they own is included in determining the size of their estate tax “estate.” I regularly hear, “but I was told life insurance is not taxed!” Well, yes, it is not income taxed and it may not cause any estate tax (depending on the size of your “estate”), but it is included in determining how big your estate tax “estate” is and whether any estate taxes are due. You can read my previous post about how to avoid that by clicking here.

We’re not done yet! Here’s another big surprise to many people . . . your estate tax “estate” even includes some things you gave away! Yes, you read that right. A couple of common examples are gifts made within 3 years of death and property that you gave away but in which you retained an “interest.” The definition of “interest” for these purposes is too in depth for this post, but it is roughly (very roughly) the same as keeping a “benefit” of what you gave away (e.g. the right to say who gets it, the right to receive payments, etc.).

A little bit surprised by all that’s included? Most people are. Here’s the thing about probate (your Michigan estate) and estate taxes (your estate tax estate) . . . they are voluntary! The only people who have deal with them (or whose loved ones have to deal with them) are those who don’t plan to avoid them.

So you can see that we all have an estate and in many cases it is bigger than we thought. Knowing that, why wouldn’t you call us at 616-827-7596 to have your say in how your “estate” is handled? We look forward to planning with you.

What is a Michigan Estate?

June 26, 2011 / Michael

As a Grand Rapids, Michigan estate planning attorney, I field all sorts of calls and conversations about estate planning and probate. I also receive calls and questions about areas of law outside my practice area and I am happy to refer those folks to colleagues I trust explicitly to handle the matter well. I had just such a call this past week. Why, you may ask, would I use that story to start a post about having a Michigan estate? Well, as we were wrapping up the call the nice lady said “I really like you and you can be sure that I will call you for estate planning if I ever have an estate.”

I have news for her and everyone else . . . we ALL have estates. Sure, some are bigger and some are smaller . . . it is not necessarily the vision we may conjure up of rolling green hills with a stately colonial mansion set atop a hill with horses grazing in a field nearby. Although that sounds nice! So that begs the question – what is an “estate” for probate and estate planning purposes?

There are actually two “estates” that matter in this context – (1) your Michigan probate estate, and (2) your federal estate tax estate. In this post I will tackle the first one.

First, make sure you understand what probate is and the context(s) in which you may find yourself (or your loved ones) dealing with it. If you are unsure, you can read my post on it by clicking here.

So, what makes up a probate estate? I would start by considering the value of everything you own. Oh yeah, do not deduct any debt owed on what you own. That’s right – no deduction. Why is that? Because according to Michigan law, the value of assets that must be reported to the probate court is the “fair market value.” Yes, you can list any “encumbrance” (close to “debt,” but technically not the same), but as far as the inventory fee with the probate court, such “encumbrance” will not be deducted.

Ok, so you’ve added everything up. Is it a bigger number than you thought? For most people it is. Now, you will be happy to know that several common ways of owning assets will keep them out of your probate estate. If you have any of the following, it will not be part of your probate estate:

Jointly owned property (bank accounts and marital homes are the most common in this category). Note: this only works as long as there is more than 1 joint owner . . . because if there isn’t, it is no longer jointly owned.
Beneficiary designated assets – IF the person designated is still alive and is at least 18 years old (retirement accounts and life insurance are the most common in this category)
Assets owned by a trust. Note: just having a trust is not enough . . . it must own the property (you can read more about that in my previous posts by clicking here and here)

So there you have it. The basics of a Michigan probate estate. Keep in mind, this is just a basic overview. It is more complex when you “dig down into it,” which is why I recommend meeting with an attorney who really focuses on estate planning so you can fully understand your specific situation.

Stay tuned as next time I will share what makes up your federal estate tax estate. That one is not one you want to miss . . . I guarantee you will discover some BIG surprises in that one. And if you’re ready to make sure that your “estate” is taken care of and that it is done in a way that is unique to who you are, then call us at 616-827-7596 to schedule your Peace of Mind Planning Session.

A Creative Idea for “Supercharging” Your IRA – Part 2

June 12, 2011 / Michael

Ok, so you read my previous post about the incredible legacy you can create by “Supercharging” your IRA. The logical questions are: what are the drawbacks to the “traditional” approach to IRA beneficiary planning and how do I do the “supercharged” strategy? Well, I’m glad you asked. That is what this post is about.

So, how is IRA beneficiary planning typically done and what are the drawbacks? Usually, a married couple will name each other as the beneficiary of their IRAs. This is done for many reasons, two of the most common being love and the additional “rollover” options provided to a surviving spouse by the tax code. Yet, there is a problem . . . spouses are usually near the same age. That means when the first spouse dies, the “stretch” tax deferral period of the deceased’s spouse’s IRA will typically be rather short. This goes against the goal of many IRA holders’ desire to maximize the “stretch” period to take full advantage of the tax-deferred growth of their IRA after their passing.

One option is to name a person from a younger generation as the beneficiary of the IRA. There’s a problem with that too . . . the surviving spouse is left out of enjoying the “fruits of labor” from the IRA. The “Supercharged IRA” strategy mentioned above is the way to have your cake and eat it too.

In this strategy, a younger person is named as the beneficiary of the IRA. Or better yet, an IRA Legacy Trust for the benefit of younger people is named so that you can not only maximize the “stretch” tax-deferral period but also make sure the IRA proceeds are asset protected for future generations (from creditors, predators, divorce and poor spending habits). As mentioned in my previous post, the required minimum distributions from the IRA are used to purchase a permanent life insurance policy on the life of the IRA holder with the spouse named as the primary beneficiary (or better yet, an Irrevocable Life Insurance Trust purchases and holds the policy so that it is asset protected from the insured’s creditors, predators and potential divorce).

What is accomplished? The IRA tax-deferral stretch is much greater because a younger person is beneficiary and the surviving spouse doesn’t miss the IRA benefits because he or she receives the insurance proceeds, which can be much greater than the IRA due to leveraging the life insurance premium. An additional benefit of this strategy is that it can be used for non-traditional couples and single individuals.

Make sure to discuss this strategy with a financial adviser, life insurance agent and estate planning attorney who are familiar with it and accustom to the mechanics of implementing it in your situation.

A Creative Idea for “Supercharging” Your IRA – Part 1

June 5, 2011 / Michael

As a Grand Rapids, MI estate planning attorney, I regularly help individuals and families plan for how to transfer their IRA accounts according to the legacy they want to leave. One scenario that provides an incredible opportunity is when you don’t need the required minimum distributions (RMDs) for living expenses. If you don’t need your traditional IRA funds to live on during retirement, you may be focused on building up this nest egg for your children or other loved ones and be tempted to avoid taking any withdrawals from it. After all, the larger your IRA is, the larger your children’s inheritance will be, right?

Unfortunately, this isn’t necessarily the case. After age 70½ you must take RMDs annually. If you don’t, you’ll owe a 50% penalty on the amount you should have taken but didn’t — in addition to any ordinary income tax you owe. So, for example, if your RMD was $12,000 for a given calendar year, you would owe a $6,000 penalty. That’s $6,000 that would go to “Uncle Sam” rather than to a loved one or charity.

A much better option can be to take the RMD, pay the ordinary income tax on it and use the remaining amount to pay the premium on a life insurance policy. This strategy can “supercharge” your retirement plan by providing a way to maximize the “stretch out” of RMD payments after your death, lengthening the tax deferral period. The longer the RMDs are “stretched out,” the longer the IRA assets can grow tax deferred. Then you can use the RMD payments to leverage the benefits of life insurance to greatly increase the ultimate amount received by your loved ones, charities or others.

Curious how it works and how you can use it? Stay tuned . . . I will cover that in a future blog post.

The Downside to Joint Account Ownership

May 29, 2011 / Michael

As a Michigan estate planning attorney, I regularly see families that own much (if not all) of their property jointly. Joint tenancy involves both (or multiple) people having full ownership of the asset. I see it most commonly with homes, bank accounts and non-retirement investment accounts.

Now don’t get me wrong, there are situations where owning something jointly is just fine. However, I regularly see it as a replacement for proper estate planning (for example, putting children on your accounts as joint owners). That is a very bad thing. Why? We’ll cover that in a second, but first lets think about why people own property jointly.

Many people consider it easy. Well, I can’t argue with that. It is easy. You just put the names of all the owners on the document(s) proving ownership. Some consider it a gesture of love. After all, the idea of jointly owning something seems to have a “love” or “trust” connotation. “I love you enough that I’m giving us both full right to this.” Very common in a marriage (traditional or otherwise). Finally, some people know that jointly owned property bypasses the probate court process when the first joint owner dies. That’s true.

Yet each of those “pluses” comes with a whole host of “minuses.” Here’s a look at some examples:

No control – you have given up some control while alive and a lot of control if you become incapacitated or pass away. Ultimately, what you have may pass to people you would have never wanted to receive it.
Probate. Yes, jointly owned property bypasses the probate process, but that only delays it . . . it does not avoid it.
For unmarried individuals, there could be unintentional estate or gift taxes.
Loss of planning opportunities now and down the road.
It is available to the other person’s creditors and you lose asset protection possibilities when you pass away.

As with all planning, each family situation is unique. If you jointly own property with someone else, don’t you think you owe it to yourself and your family to find out what would happen and how you can make sure your wishes are followed? Call us at 616-827-7596 to schedule a Peace of Mind Planning Session and have your questions answered.

Non-Tax Reasons for Estate Planning

May 22, 2011 / Michael

If you read this previous post, you know that I’ve had several recent conversations with families and other professionals that think estate planning is “dead” due to the increase in the estate tax exemption. Those conversations have continued, which prompted this follow up post.

It’s true that many families believe that estate planning is all about minimizing taxes and distributing your “assets” to the next generation. I believe that approach places the emphasis on the wrong considerations. Sure, minimizing taxes and distributing assets are considerations for estate planning, but without a bigger context they will lead to an estate plan that is not much more than a form document.

The emphasis should be on creating a legacy for your family. No, that doesn’t mean you have to be a gazillionaire . . . it means that you create your plan in a way that will benefit those you want and do so in a way that shares your values, insights, stories and experiences with them and others. It can even make them better people (or encourage them to stay a “good person” if they already are).

Think about it this way . . . which of these concerns you more:

Your family loses 35% of the value of your estate that is over $5 million (if at all) -or- that 50% of the legacy you pass on to them is lost in a divorce?
Your young children (or grandchildren) receive less money for their care -or- that they are cared for by someone you would never want raising them?
Your child with special needs is disqualified from government benefits -or- that they never reach their full potential because they are limited to government benefits and limited supplementary services?
That there is a tax owed when your family business goes to your children -or- that your children fight over who runs the business or hold a grudge because they didn’t want anything to do with the business and are stuck with it anyway

See the difference? The focus should be on the personal considerations and the legacy that will be passed on . . . taxes can almost always be handled.

Ready to have a plan that is based on who you are and what’s important to you? Contact us at 616-827-7596 to schedule your Peace of Mind Planning Session.

Your Michigan Family Cottage and Estate Planning

May 8, 2011 / Michael

From the small cabin in the woods to the multi-million dollar cottages on Lake Michigan, many Michigan families have a “home away from home.” Maybe it’s a cottage, maybe it’s a second home. In either case, it is a place filled with memories, stories and important family moments. As a Grand Rapids, Michigan estate planning and cottage succession planning attorney, it is no surprise to me that many cottage owners want to ensure that the “family cottage” stays in the family for as long as possible. They want to make sure future generations have the same opportunity for family bonding and memories that they’ve had.

And yet many Michigan cottage owners do the complete opposite of what it necessary to reach this goal. Many assume that “it will work itself out.” Or they figure that “all my kids get along and they know that I want to keep it in the family as long as possible . . . I trust them to take care of it.” In my experience, relying on things to “work themselves out” virtually guarantees that they won’t.

Cottage planning is not putting your children’s names on the deed to the property or letting your foundational estate plan handle the distribution. Cottage planning is much more . . . and rightly so given the number of family members who can ultimately benefit from it.

The goal of cottage planning is to create a legal structure that will help ensure the cottage stays in the family for generations to come . . . rather than leaving it to chance. A proper cottage succession plan is created with a unique blend of estate planning, business planning and real estate law. If done correctly, it can even protect the cottage from creditors, lawsuits and divorce among the future generations. Truly creating a legacy that you can be proud of.

In future posts I will delve into some of the cottage planning strategies that work. In the meantime, call us at 616-827-7596 if you want to make sure that the “handing down” of your cottage isn’t left to chance.

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, cottage planning 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.

The Biggest Misconception About Trusts

April 24, 2011 / Michael

Last week I wrote a post about the biggest misconception about wills. The same recent conversation that I mentioned in that post also reminded me of what I believe is THE biggest misconception about Trusts. Remember what my friend said? “So I have my will or trust, so I don’t have to worry about going through probate…”

The Myth: having a trust means that you don’t go through probate. And the buzzer says “bzzzzt,” wrong. You may be thinking, “what?! Mike, you are off your rocker. That’s why I have a trust . . . to avoid probate!” Just *having* a trust does not bypass the probate process. To bypass probate, the trust must be “fully funded.” “Funding” a trust is the process of changing ownership or beneficiaries of an asset to the trust. I still have not had a trust come through my office for a review that was fully funded. Yes, you read that right. I know they’re out there, but I have yet to have one come in for review! Not exactly what you thought when you started creating your legacy, huh? If you’re curious to know more, you can read my blog post on the topic by clicking here.

The Biggest Misconception About Wills

April 17, 2011 / Michael

As a Grand Rapids Estate Planning attorney, I regularly hear misconceptions about estate planning. A recent conversation reminded me of what I believe is THE biggest misconception about Wills. During the conversation, a friend said “so I have my will or trust, so I don’t have to worry about going through probate…”

The Myth: having a Will means you don’t go through probate. And the buzzer says “bzzzzzt,” wrong. Just having a Will virtually guarantees that you go through probate. A Will serves as a “roadmap” for the probate process – it allows you to say who you want to do certain things and how you would prefer they be done (and if you have minor children it is one of the ways to name guardians, but definitely NOT the “best” way, in my opinion). If you’re curious to know more, you can read my previous blog post on the topic by clicking here.

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