Tag: wills and trusts attorney grand rapids michigan

Who is a Michigan Heir

November 8, 2010 / Michael

I’ve had several people ask me, “what is an heir?” Well, it is better said, “who is an heir?” Michigan law says that an “heir” is a person who is entitled to inherit according to Michigan law from someone who died without a will or trust (MCL 700.1104(n)). “Person” is a loose term as it also includes the State of Michigan. Doesn’t that make you feel all warm and fuzzy? If you don’t have anyone who survives you and is entitled to your property according to Michigan law, the property goes to the state!

So why does this matter? Well, one example is if you have charitable inclinations and would want a charity (or multiple charities) to receive something if you passed away. Or, at the very least, receive something rather than having it go to the State. Sorry, it’s not going to happen if you don’t have a will or trust because state law does not list charities as an “heir.”

Or, say you have several children, one of which is financially very well off and does not need to inherit anything from you (or doesn’t want to). They are still an “heir” if you do not have a will or trust that says otherwise. Or a relative who has a substance abuse or addiction problem. Many people feel bad about “disinheriting” someone, and I understand that. Even saying the word makes it sound mean. But there are certain situations where it may be desirable, such as the previous examples.

The key here is that a Michigan “heir” really matters to only those folks who have not planned for their family’s protection and well-being if something happened to them. Here’s the good part – you CAN say who receives what! You just have to take the time to meet with an estate planning attorney who take the time to help you put your goals and desires into action. Sure there is a cost, but what is the alternative…having the State make that determination for you? To many, that is a far more costly situation as it leaves what happens to your legacy up to the State, not you.

If you want to have your say in your legacy, call us now at 616-827-7596 to schedule your Peace of Mind Planning Session. Mention this blog post and we’ll waive the planning session fee ($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 planning for the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective. He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

A Week Dedicated to Estate Planning

October 17, 2010 / Michael

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

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

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

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

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

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

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

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

The “Story Leading Question” and True Values Planning

August 15, 2010 / Michael

If you haven’t had the opportunity to read the earlier posts in the series on story based planning written by my colleague and mentor, Scott Farnsworth, you can do so here, here and here (sounds funny to have all those here’s!). They give an important backdrop to this post on “story-leading questions.” I have found story leading questions to be one of the most transformative processes I’ve implemented when working with clients. It “opens a door,” as Scott says, to really learning more about who each client is and what’s important to them – true Whole Family Wealth™ Planning.

In “The Power of Story-based Planning, Part 3” I wrote that “the best way to genuinely understand our clients and their values is to ask them thoughtful and insightful story-leading questions in an appropriate setting and then settle back and listen to their answers with all the love and attention and encouragement we can muster. I have learned that who they are and what they deeply value are woven into the stories they tell and can be discovered by a caring advisor.”

So what are story-leading questions? Simply put, they are questions that invite the other person to answer with a narrative. They open the door to a story.

I have found that good story-leading questions exhibit a warm and welcoming interest in the life of another. Good story-leading questions are appropriate to the level of trust and intimacy between those conversing. They don’t put the other person on the spot, nor feel judgmental.

Good story-leading questions also allow the person answering a number of ways to answer the question, rather than leaving them only one possible option.

Story-leading questions are like wizard’s matches: they ignite a warm, crackling exchange of life-experiences and life-lessons. Sometimes, they even kindle bonfires of story sharing. A good story-leading question naturally and comfortably invites the other person to recall and share a little bit of their life with the person posing the question.

Most of us already have a wide array of story-leading questions that we use but most of us are not mindful of them or how powerful they can be, especially when we remember to ask them “in an appropriate setting and then settle back and listen to the answers with all the love and attention and encouragement we can muster,” to quote myself.

Here’s an experiment you can try. When you go home this evening and when the time is right, try out this simple story-leading question with someone you love: “So what was interesting or unusual about your day today?”

Or ask a young parent: “What has your child learned to do lately?”

Or ask a child: “What’s something you’ve discovered lately that makes you happy?”

Or ask an older person: “What’s happening with your grandchildren?”

Or ask a friend: “What’ve you been up to since the last time we talked?”

Then listen, really listen. Show with your countenance and your body language that you deeply want to hear the answer. Don’t rush, don’t compete, don’t minimize or infantilize in any way what they say. Just listen.

I promise if you do, you will discover — or rediscover — magic.

This same approach works in our professional lives. Story-leading questions and attentive, caring listening can transform the planning process.

Our clients safeguard a treasure trove of information about themselves, their lives, their loved ones, and their visions for the future behind a heavy locked door. Opening the door requires two sets of keys. One set is the questions and the other is the listening. Accessing this valuable cache of information can lead to the creation of elegant and appropriate planning for these clients.

Great story-leading questions and attentive, respectful listening are the keys.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping families and business owners create a lasting legacy by planning for their Whole Family Wealth™. He focuses on planning for doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned business succession, and the “sandwich generation” (caring for parents and children) – and does 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.

Are You Getting REAL Values-Based Planning or an Impostor?

August 11, 2010 / Michael

This is the third in a series of posts on Story Based Planning written by my colleague and mentor, Scott Farnsworth. In this post Scott tackles TRUE values-based planning and what has become a substitute that “poses” as values-based planning . . . questionnaire based planning. Here is what Scott has to say:

In an earlier post I wrote that “values-based planning” is founded on the notion that each client has a personal set of values that should be ascertained early in the planning process and then used to fashion a financial plan or estate plan unique to that client. Most enlightened planners today would concur that financial and estate plans based on client values are far superior to the “one-size-fits-all” cookie-cutter plans that many of us grew up doing.

The question with regard to values-based planning is not whether we should create plans based on client values. The answer to that one is duh-obvious: Yes. The issue is not WHETHER we should do values-based planning, but rather HOW to do it so that it actually works.

In other words, how do we respectfully and accurately ascertain each client’s unique and deeply-held values upon which their planning will be based? What methodology will allow us – and our clients – to look into their hearts, to see there what truly matters, and to then discern how to create a plan with them based on what we have discovered?

Unfortunately, the widely-heralded “values-based planning revolution” has been in my view a case of one step forward, two steps back. This is largely because in nearly every instance what started out to be “values-based planning” quickly morphed into what I call “questionnaire-based planning.” Indeed, with a few notable exceptions, virtually every so-called “values-based” approach is designed to be implemented by means of a cleverly designed, carefully worded questionnaire.

I think that is a tragic turn of events, and here’s why:

A. Questionnaires are blunt instruments that deliver cut-and-dried, categorical answers. As a result, they seduce planners into seeing clients as cut and dried and categorical. But that’s not the way we humans are, especially when we drill down to a values level. We are not pegs to be pushed into differently shaped holes, or colored bobbles to be sorted into different boxes. We are each unique. We are full of nuances, contradictions, uncertainties, and places where the lines are blurred. We don’t fit into four or five neat categories, as most questionnaires require.

Some would argue that being able to offer clients a plan based on which one of several categories they fall into, as determined by their questionnaire responses, is substantially better than the old “one-size-fits-all” method of planning. While it may be an improvement, it is not true values-based planning. Offering clients a choice of cookie cutters is still cookie-cutter planning.

B. Questionnaires have built-in biases, which are based on the assumptions and prejudices of their creators. Regardless of whether these biases are accidental or intentional, a biased questionnaire skews the results away from the client’s true values. When you start with untrue assumptions, you always end up with incorrect conclusions.

I have seen long, beautiful, and well-worded questionnaires that were supposed to assess a client’s values and direct the planner to the type of plan the client needed. Oddly, it seemed that nearly everyone using that questionnaire was steered toward essentially the same plan, one that favored the aims and products promoted by the questionnaire designer. It seems to me that when everyone gets the same answer, maybe the questionnaire is asking the wrong questions.

C. Questionnaires can be “gamed” by clever clients. The process of answering questions in a questionnaire invites clients to consider not just their answers, but the impact of their answers on the planner and the planning process. “Will this answer raise or lower the fee?” “Will this answer make me seem more wealthy or less wealthy?” “Will this answer cast me in a negative light?” “Will I appear miserly, judgmental, prejudiced, immature, or short-sighted if I answer that way?” “Will I be exposing my weaknesses, and will that allow her to take advantage of me in some way?”

Human nature being what it is, the odds are high that clients’ responses will be less than candid and unguarded. Consequently, there is a high probability that questionnaire answers will be scrubbed, distorted, shaded, or flat-out wrong. This makes the results of a questionnaire unreliable as a basis for serious values-based planning.

D. Questionnaires lead to dull, inattentive planners. Questionnaire-based planning doesn’t require planners to listen deeply and attentively to clients, to ask insightful questions, or to employ judgment and wisdom to discern how to weave the client’s life-lessons into the plan. The “correct answers” or the client’s “categories” just “magically” pop out from the responses. Yeah, right.

True values discovery requires careful and attentive listening. Each client and the stories they tell are alive with insight and meaning. They are full of clues and pieces of answers. Real people living real lives are like that. The right answers don’t just pop out; they have to be teased out and then pieced together like a jigsaw puzzle. But when you make a commitment to discover for yourself – and for the client – a clear and complete understanding of what’s really in their heart, their deepest purposes for planning, you discover that the results are unquestionably worth the effort.

E. Questionnaires don’t lead to values-based planning. Questionnaire-based planning is neat, clean, analytical, and easy, but it is incapable of drilling all the way down to the values-bearing strata deep inside the client. No matter how cleverly worded, a questionnaire can never respectfully and accurately ascertain each client’s uniquely personal values. The results are too shallow and mechanical. The intention may be right but the methodology is wrong. Thus, whenever planning becomes questionnaire-based, it ceases to be truly values-based. I call it “faux values-based planning.”

Please understand that I believe there is an appropriate role for questionnaires in the financial planning and estate planning process, which is to help gather data. I have no problem using questionnaires as fact finders. They just don’t work to discover and discern significant client values.

So What?

“So what’s the harm,” you may ask, “in doing questionnaire-based planning? It’s definitely a lot better than the old way we used to do it.”

The most significant harm is that when financial planners and estate planners – even smart, sincere, and well-intentioned planners – think they are doing values-based planning but are only doing faux values-based planning, they stop seeking the real thing. They become enamored with zirconium and fail to find the acres of diamonds just over the next hill. They take the shortcut and never realize they just missed the best part of the journey. As a result, they rob themselves and their clients of the magnificent experience of true values-based planning.

Good is the enemy of great.

The moment earnest planners apply the label “values-based planning” to something that is not and once they start to believe they are doing “values-based planning,” even though it is really only the “faux” variety, they lose the sense of urgency to discover the real thing and are unable to see the need to do more. Once they get locked in, it is nearly impossible to unlock them. As a wise person once said in another context, “the problem is not what they don’t know. It’s what they do know that just ain’t so.”

Values on the cheap vs. paying the price

While questionnaire-based planning may appear neat, clean, analytical, and easy, it is really only values-based planning on the cheap. The real process of values discovery – like virtually every other authentically meaningful human endeavor such as nurturing a fulfilling marriage, raising independent children, growing a beautiful garden, or building a success business – can be disorderly, messy, intuitive, and sometimes challenging. It requires real work. It requires that we pay the price to come to know, really know, our clients. It cannot be achieved with clever techniques.

The Solution

To move into the beautiful new world of true values-based planning, the solution is not to try to come up with a more artful questionnaire. The solution is to recognize that their stories — the oldest and most natural form of human communication – are rich and ripe with the unvarnished truth about our clients’ values. We just need to ask the right questions and then listen, really listen.

I have found that the best way to genuinely understand our clients and their values is to ask them thoughtful and insightful story-leading questions in an appropriate setting and then settle back and listen to their answers with all the love and attention and encouragement we can muster. I have learned that who they are and what they deeply value are woven into the stories they tell and can be discovered by a caring advisor. That is the essence of what I call “Story-based Planning in a Thinking Environment.”

I’m happy to say that I use a questionnaire mostly for fact finding, not for developing a values-based plan. I make it a point in every Peace of Mind Planning Session or Whole Family Wealth™ Planning Session to purposely set the questionnaire aside and spend a significant amount of time listen to my clients’ stories.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan. He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does 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 Your Values – Story-Based Planning (Part 2)

August 8, 2010 / Michael

Your values are important to you, otherwise you wouldn’t hold them as values. So why don’t we plan to pass on our values as much as we plan to pass on our retirement account, our cars and other assets we have? It’s a great question and one that is tackled by my colleague and mentor Scott Farnsworth in the second in a series on Story-Based Planning. You can read the first post here. Here is what Scott has to say:

For at least the last decade, the hottest buzzword in the planning professions has been “values-based.” You couldn’t turn around without running into “values-based” selling, financial planning, estate planning, you name it. But what in the world is “values-based planning” anyway?

Looking under the label and behind the question is helpful, I believe. In truth, all planning is based on someone’s values, so the question behind the question is whose values? To acknowledge our professions’ dirty little secret, the truth of the matter is that in the “pre-values-based planning era” nearly all planning was based on the professional’s values or, at best, on the values we assumed the clients held.

If the professional was selling life insurance, lo and behold, one of the key values was “tax-free liquidity at death.” If the professional was selling living trusts, it was generally assumed the clients valued “avoiding probate,” “reducing estate taxes,” and “distributing the assets” in some orderly fashion, usually in a way consistent with the drafter’s trust templates. If the professional was selling investments, every financial plan was based on the premise that the client wanted to pay for his kids’ college and then retire comfortably a few years before he turned 65.

Not surprisingly, every plan a planner created looked strikingly similar to every other plan he created: they were all based on the planner’s values and assumptions, not the client’s.

What the term “values-based planning” was trying to communicate was the notion that each client has a personal set of values that ought to be ascertained early on in the planning process and then used to fashion a financial plan or estate plan that was unique – truly unique – to that client. The real question then became, for those planners actually trying to create plans based on client values, “how do you ascertain the client’s values?” At least now the issue was correctly framed.

This breakthrough led to the advent of what I call “questionnaire-based planning.” Client values, the planning professions assume, can be ascertained through a cleverly designed multi-page questionnaire. But while “questionnaire-based planning” is far better than its predecessors, it still fails in its primary objective: to develop for the planner and the client a clear understanding of what’s in the client’s heart – the client’s deepest purposes for planning. For that you need story-based planning.

In the next installment I’ll outline why “questionnaire-based planning” is merely masquerading as genuine values-based planning. It looks good on the outside, but inside it has no real power to get to the heart of the matter.

To be continued.

The Power of Story Based Planning – Introduction

August 4, 2010 / Michael

If you read my post here about Whole Family Wealth Planning™, you know how important it is to share your values, insights, stories and experiences. It got me thinking that I should share a series of posts written by my colleague and mentor, Scott Farnsworth. As we walk through this area via Scott’s thoughts, please share your thoughts as well via comment below or contacting us.

Virtually all my “official” training as an estate planning attorney and a Certified Financial Planner has been about numbers. Tax rates, code sections, rates of return on investments, asset allocation models-the unwavering focus has been on something quantifiable. The underlying message always came through loud and clear: unless something can be tallied on a ledger sheet, it isn’t worthy of our professional attention and probably isn’t all that important. Only “numbers-based planning” is real planning.

But my gut-and my real-life experience-told me something different. They told me that when numbers-based planning collided with human beings, i.e., our clients and their children and grandchildren, either the planning was never actually implemented by the clients, or the wheels came off when the planning landed with a thud on the succeeding generations. They told me that the most clever and tightly-wound estate or financial plans could and would be unraveled by the people they were designed to “help” or “protect.” They told that we planners ignore the human issues at our peril, and at the peril of the beautiful numbers-based plans we crank out.

My sense was often that with numbers-based planning, the tax tail was wagging the dog-driving the planning instead of riding in the back seat along with all the other significant but not critical factors. One significant study found that the likelihood of a family-based business surviving into the second generation was inversely correlated to the amount of tax planning the first generation had done. (Correlates of Success in Family Business Transitions, Morris, Williams, Allen, and Avila, Journal of Business Venturing 12, 365-401, 1997). In other words, the tax doctors were actually killing the patients they were hired to “save.”

Numbers-based planning might work if we were planning for robots, but we’re not. We’re planning for real flesh-and-blood people. I recall a series of conversations with a couple from New York City who had spent tens of thousands of dollars for one of the premier law firms in the country to draft a plan to care for their estate and their two teenage children. The plan touched all the legal and tax-planning bases, but in the words of the wife it was “cold and impersonal, not what I want to leave for my children.” The expensive, well-drafted plan was never executed but remained nothing more than a pile of paper, glistening with lawyerly brilliance on the surface but empty and meaningless underneath.

Unfortunately, that couple’s experience is repeated all too often. In my view, such outcomes will not change until we take a fundamentally different approach to this whole business of estate and financial planning. They will not change until we spend more time listening to client stories than tallying up their balance sheets; until we tailor their plans to the human hopes, dreams, and fears imbedded in their stories; and until the plans we create help them tell the story of their legacy-of who they really are and what impact they have had and hope to have on the people and causes they love. I call this approach story-based planning.

Michigan Special Needs Children – Caring Through Planning

August 1, 2010 / Michael

This post is an excerpt from a recent issue of my weekly e-newsletter. I received such a positive response that I thought I would share it with my blog readers as well. If you would like to receive these fun, informative and helpful weekly e-newsletter, click here and put in your information.

Today I want to talk about special children.

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.

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.

Let me know what you think!

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 any government benefit programs.

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 their 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.

Warmly (and until next week!),
Mike

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan. He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children). 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.

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