Tag: wyoming mi trusts

Wills vs. Trusts – The Battle Continues

March 24, 2012 /

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.

Michigan Celebrity Dies Without An Estate Plan

February 12, 2012 /

If you are a sportsman who lived in Michigan over the past 30 years or so, the name Fred Trost may sound familiar to you.  Fred Trost was a celebrity among Michigan outdoorsmen, hosting “Michigan Outdoors” and “Practical Sportsman” on PBS.  I remember growing up watching his show, having an affinity to it over the others because he was from right here in Michigan.  Sadly, Mr. Trost passed away unexpectedly in 2007.

And to add to the shock, he died without an estate plan.  This caused no small problem in his family, with the in-fighting recently coming to an end with his wife winning a $195,000 lawsuit against his son (not her son).  You can read about it by clicking here.  Although we’ll never know, it is quite possible that much of the conflict and hurt could have been avoided with a caring and comprehensive estate plan.

You may say, “c’mon Mike, how could an estate plan have helped in this situation?  This was a matter of contract between his wife and his son.”  Well, you may be right.  But as a Grand Rapids, Mi wills and trusts attorney I’ve seen situations that were not too far off from this one that did not come to this level of conflict directly as a result of a caring and comprehensive estate plan.  Why?  Because the estate plan covered all the contingencies.  For example, in this case, Mr. Trost could have used an estate plan to say what would happen if he passed away before he received his anticipated inheritance and what would happen if his son received it as a result of Mr. Trost’s premature death (read the article to see how that caused a problem).  Or, he could have provided a way to “equalize his estate,” by using life insurance to make the monetary amounts more “fair.”  

One interesting item that was not mentioned in the article is what intrinsic value the show tapes had.  Sure, maybe they are financially valuable if they can be replayed, but I believe their bigger value to Trost’s wife is a way to remember the husband that she loved.  Remember, his “stuff” is still here, but he is gone.  When we lose someone for whom we care deeply, we usually look for something that reminds us of them.  It could be that the show tapes are that physical way for his wife to remember him.  Something of a family legacy.

Ultimately, we’ll never know what could have happened and how Mr. Trost’s family could have got along, because the fact is, he didn’t invest the time or money to do the planning that may have avoided it.  I encourage you to not make the same mistake.  Call us at 616-827-7596 to schedule a Peace of Mind Planning Session to help make sure your family is cared for and kept together in the most loving way possible.

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.

Watch Those Beneficiary Designations

February 4, 2012 /

Many families have retirement accounts and life insurance as a way to plan for the future.  As common as they may be, a lot of confusion remains about what happens with those accounts if something happens to you (the account owner and insured).  Many married folks believe they go to their surviving spouse and then maybe their kids.  Maybe yes, maybe no.

You see, retirement accounts and life insurance are what we call beneficiary designated assets.  This means that you instruct the retirement account custodian (the financial institution) and the life insurance company to distribute those asset to the person (or people) you name on a beneficiary designation form.  You may or may not remember filling one out, but you did.  As a Grand Rapids, Mi estate planning lawyer, I’ve seen many cases where beneficiary designations caused serious problems when the account owner passed away because they weren’t updated for changed life circumstances.

For instance, just this past week I had a family share just such a story with me.  They had a relative who got divorced 20+ years ago and who had a decent sized retirement account.  When he divorced his ex-wife, he decided to name his sister-in-law as the beneficiary on his retirement accounts because he did not want his minor children to receive the funds through the probate process.  By the way . . . that is NOT estate planning and is almost always a very bad idea from a planning standpoint.

So, time went on, his kids grew up into fine adults, and life kept rolling . . . until it stopped.  He died.  Guess what?  He never changed the beneficiary designation on his retirement account and it all went to his sister-in-law . . . his kids received NOTHING!  As you might expect, the kids challenged this by taking the sister-in-law to court.  The judge sided with the sister-in-law.  That may seem unfair, but the judge was correct.  The beneficiary designation is a contract you have with the financial institution that they are to pay the assets to the person (or people) you named – if they don’t, they are in serious trouble.

This is just one example of why it is SO important to review your financial planning and estate planning on a regular basis.  There are many more stories – some with more disastrous outcomes.  This is a large part of why we include ongoing 3-year reviews at NO CHARGE for all of our estate planning clients and why we are developing a ClientCare Plan Monitoring system for our clients.  Your life will change, the law will change, and  what you have will change . . . your plan needs to change with it so it doesn’t fail.

If you don’t have a plan in place for your family, call us right away to schedule a Peace of Mind Planning Session.  And if you have a plan but your planning experience was dry, transactional, not explained well, and form driven, give us a call for a plan review meeting. In both situations we will share with you how planning works and make sure you have an active role in designing your family’s estate plan – it is not one size fits all.  Call us at 616-827-7596.

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.

Using Trust Protectors to Maximize Estate Plan Flexibility

January 29, 2012 /

I’m the type of person who genuinely believes anything can be done.  And as a Grand Rapids, MI estate planning attorney I bring that same attitude to helping craft caring estate plans for wonderful West Michigan families.  How?  Flexibility.  That’s right – not the standard form document that seems to try and wedge your family into whatever box is the “standard,” but rather a plan that let’s you share your goals, aspirations, hopes, values, experiences and stories, and makes it a reality.  One of the biggest “wishes” is that a plan will be flexible enough to handle changed circumstances throughout life.  One incredibly powerful tool used to accomplish this is a trust protector.

Trust protectors (aka Trust Advisors) have long been used in British Commonwealth countries, originating with offshore asset protection trusts. With these trusts, their role was limited mostly to overseeing the foreign trustee and to make sure the trust maker’s intent was fulfilled.

Today, trust protectors are increasingly being used with trusts that are located here in Michigan. And, while their main job is still to oversee the trustee and make sure your intentions are followed after unforeseen changes in the law and other matters, they can be given additional duties that will provide you and your beneficiaries with added flexibility, security and peace of mind.

What is a Trust Protector?
A trust protector is someone you name in your trust agreement to oversee your trustee and make sure your trust carries on in the way you intended. This should be a trusted friend or advisor, someone who knows and understands your motives, family values and desires when you created your trust. In the case of a trust that will last many years, like a multi-generational trust, a trust protector is often an institution rather than a specific person.

A trust protector can begin to act immediately (for example, if your trust is irrevocable), or can take an active role only under certain circumstances (for example, at your incapacity or death). Think of your trust protector as your substitute, someone who can speak for you if there is uncertainty in interpreting your trust’s instructions, or the law changes and that change affects your trust. Your trust protector also can provide guidance for the trustee and protect your beneficiaries from a trustee that is not meeting its responsibilities, is overreaching, or is unresponsive.

How Much Power Should You Give Your Trust Protector?
The trust protector’s duties and powers are defined in the trust document, and can range from extremely limited to extremely broad. How much power you give your trust protector is completely up to you. Traditionally, the trust protector’s role has been a defensive one: to ensure that the trustee carries out the trustmaker’s wishes and to protect the beneficiaries from an under-performing or over-reaching trustee. But if you give your trust protector more power, the role can become a proactive one, allowing your trust protector to act before wrongs occur.

Some of the duties and powers you can give your trust protector include:

Oversee, Remove and Replace the Trustee
Your trust protector can oversee your trustee, providing guidance in interpreting your trust’s instructions and holding the trustee accountable. You can also give your trust protector the power to remove and replace the trustee. This authority can be restrictive, limited to specific bad behavior by the trustee that can include being unresponsive to the beneficiaries, not providing acceptable record-keeping, reporting and tax filings, or charging too much for services. The authority can also be extensive, allowing the trust protector to remove and replace the trustee for no specific reason (without cause). Usually potential replacements (successor trustees) are named in the trust agreement, but it may also be possible for the trust protector to select a successor trustee.

Just having these oversight provisions in place is often enough to keep a trustee in line. And if it does become necessary to remove a trustee, it is much easier for the trust protector to do this (because he or she already has the authority) than for the beneficiaries to reach an agreement and ask for court removal, which is a time-consuming, expensive and unpleasant procedure.

You can also allow your trust protector to control spending by the trustee, and even limit the trustee’s compensation, which can go a long way toward preventing disputes.

Resolve Disputes
You can also make your trust protector the mediator if disputes should arise between co-trustees, between the trustee and a beneficiary, or even among beneficiaries. Having the trust protector as the final arbiter in disputes over interpreting the provisions of the trust document can sometimes avoid costly and unpleasant trust litigation.

You could even give your trust protector the ability to sue or defend lawsuits involving the trust assets.

Modify Your Estate Plan
You may also want to allow your trust protector to actually make some changes to your trust. For example, you could allow your trust protector to change the situs (location in which the trust is regulated) to a state that has more favorable asset protection or income tax laws, should the need arise.

You could also give your trust protector the power to amend or revoke the trust agreement, in its entirety or in part; to add or delete specific beneficiaries or classes of beneficiaries; or to change the terms of distributions to beneficiaries. These powers may be extremely beneficial to the trust’s ability to follow your intentions as tax laws change, as well as to protect the assets from potential predators and creditors.

Delegate Responsibilities among Advisors
Traditionally, and still with many trusts, the trustee handles everything – recordkeeping, tax returns, distributions, investing, etc. But over time, people have discovered that it is beneficial to allocate some of this responsibility to different parties that have different strengths. 

Consider giving your trust protector the ability to appoint, oversee and substitute other professionals. For example, the management of your trust could be divided like this:

  • An Administrative Trustee maintains trust records, accounts, and tax returns. If the trust is governed by laws in a different state (often for tax or asset protection reasons), the administrator will usually be a local institution or professional.
  • A Distribution Trustee or Adviser that has discretion and can make or withhold distributions from the trust to the beneficiaries. Typically this will be an objective third party, which insulates the trustee from pressure and liability associated with the power to distribute trust assets. This is especially important if a beneficiary’s creditor tries to force distributions from the trust.
  • An Investment Trustee or Adviser oversees or directs trust investments, and may be granted specific powers, including: to hold, maintain or cancel life insurance; to direct the sale or exchange of property; and to open, manage and close accounts. A general trustee is held to the prudent investment standard because of its fiduciary duty and, as a result, has restrictions on the investments it can make. Having an investment advisor that is not bound by the prudent investor rule or held to the same standard will provide more flexibility in investments.
  • The “General” Trustee handles everything that is not delegated.

Who Should Serve as Trust Protector?
Ideally, your trust protector should be someone who knows you, your motives, desires, and intentions when you established your trust. It cannot be you or a family member who is a beneficiary of your trust because of possible tax complications. An unrelated third party – a family friend, an advisor, the attorney who drafted your trust, or your family CPA – is often the best choice. They obviously must be willing to serve in this capacity, and your trust agreement should specify if they are to be paid for their services.

Who Should Have the Power to Remove or Replace the Trust Protector?
This probably should not be you, unless the replacement is explicitly limited in the document to someone who is not related or subordinate to you. You could possibly give this power to the beneficiaries or an unrelated third party. Leaving this decision to the courts would be time-consuming and costly.

If your plan has asset protection elements, no beneficiary should have the power to remove or replace the trust protector. Doing so could cause your trust to be under the control of a beneficiary and that could put the entire asset protection part of your plan in jeopardy.

Conclusion
The use of trust protectors is an excellent way to provide added flexibility, security and peace of mind in trust planning, especially since you can control how much power the trust protector is given. If you would like to discuss adding a trust protector to your estate planning, please call our office. We are ready to help.

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.

Forbes Puts Estate Planning As a “Must Do” in 2012

January 8, 2012 /

I recently ran across this article on Forbes.com entitled “12 Financial Resolutions for 2012.”  The article has a good list of financial-based goals that every family should focus on for 2012.  And I’m very happy to see that they list estate planning right near the top (#2 to be exact)!

As a Grand Rapids, MI wills and trusts attorney I’m pleasantly surprised to see estate planning on the list . . . especially near the top where it belongs.  Why am I surprised (even if it’s pleasantly)?  Well, the article alludes to it when it says that it is “notoriously easy to procrastinate” on an estate plan.  Most folks don’t think about it or put it off, sometimes until it is too late!  I believe that is, in part, because estate planning doesn’t receive much press . . . or at least not much positive press.

The article also makes a point that folks close to me have heard over and over and over: “you never know when [you] might need [an estate plan, including] an advance healthcare directive, durable powers of attorney, and a will and/or trust.”  Fortunately or unfortunately, estate planning is really the only area of law that we can’t get away from – one day we will pass on from this life.  Like the article says, we don’t know when that will be, so it’s best to put a plan in pace now.  It will give you some serious added peace of mind . . . trust me.

Head on over and read the article, as there are many other great suggestions.  Make sure to share your thoughts here on the blog by way of comment below.  And give us a call at 616-827-7596 to schedule your Peace of Mind Planning Session and have added peace of mind knowing you have a caring plan in place for your family.

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.

What is a Michigan Gun Trust?

January 2, 2012 /

As a Grand Rapids, MI estate and legacy planning attorney, I am always researching ways to better protect, preserve, and pass on my clients’ legacies in the way they want.  In some cases, this may mean protecting and preserving a prized firearm or a firearm collection.

Think about it for a moment . . . there are four million members of the National Rifle Association (NRA) and an estimated 270+ million firearms in this country.  Many families also have guns and other weapons as heirlooms that they would like to keep in the family and pass down from generation to generation.  Although some may think their estate plan (or lack thereof) will “take care of” their firearms, sadly, many will find out that is not the case . . . and they will find out too late to do anything about it.

You see, firearms present some unique challenges. The National Firearms Act (NFA) as well as state and local laws strictly regulate possession of certain weapons and may affect the transfer of permissible weapons. For example, convicted felons, those with a history of mental illness, persons convicted of misdemeanor domestic violence offenses, convicted users of illegal drugs, dishonorably discharged veterans, and persons who have renounced their U.S. citizenship are not allowed to own or possess certain weapons.

When an estate includes firearms or other weapons, the executor must be careful to avoid violating these laws.  Transferring a weapon to an heir to fulfill a bequest could subject the executor and/or the heir to criminal penalties.  Just having a weapon appraised could result in its seizure.  An out-of-state heir creates even more problems.

A revocable living trust designed specifically for the ownership, transfer and possession of weapons (commonly known as a gun, NFA or firearm trust) can avoid some of the problems or at least make them manageable. A corporation or LLC can also be used to own weapons, but trusts do not require annual filing fees, public disclosure or a separate tax return. Here are some of the main points:

  • The trust is the owner of the weapons.
  • The trust document must be carefully written to account for the different types of weapons held and comply with the applicable laws.
  • The name of the trust, once established, should not be changed. Because the regulated weapon is registered in the trust’s name, a change in the name of the trust would require that it be re-registered and a transfer tax paid.
  • The trust can name several trustees, each of whom may lawfully possess the weapon without triggering transfer requirements. (Persons not allowed by law to own or have access to the weapons in the trust are not eligible to be a trustee.)
  • Weapons can be purchased by a trustee to avoid having to pay a transfer tax.
  • Once a weapon becomes a trust asset, any beneficiary (including a minor child) may use it. However, the trustee is still responsible to determine the capacity of the beneficiary to use it.
  • Unlike a traditional revocable living trust which can be revoked at any time by the creator of the trust, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) must approve the termination of a gun trust and the distribution of its assets to the beneficiaries.
  • No regulated weapons held in the trust may be transported across state lines without prior BATFE approval.
  • Also, since weapon laws vary from state to state, gun trusts may not be valid from one state to another as a traditional revocable living trust would be.

As you can see, one mis-step in a Michigan gun trust can have disastrous results for those involved (and possibly others).  Give us a call at 616-827-7596 to help make sure you are protecting, preserving, and passing on the legacy you want and that you don’t “mis-fire” with your firearms in your planning.

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.

Grand Rapids Press Article About Living Wills

November 27, 2011 /

It probably seems like all I’ve been writing about lately is healthcare related issues.  There is a good reason for that.  Recently I’ve been close to and read about many healthcare related situations where the treatment (or lack thereof) was very much related to the planning that the individual did (or didn’t do).  Maybe I see and hear about more of these situations because I’m a Grand Rapids, Michigan estate planning attorney.  However, I don’t think that is the case.  Why?

Because the news media are writing about it too, due to the importance of the planning involved and what can happen if you don’t have a well-drafted and well thought out estate plan in place during a healthcare crisis.  One such example is an article in the November 20, 2011 Grand Rapids Press (Section A4) entitled “Living will?  Call me later.  Aging boomers feel too good to plan for death.”  The article is a result of an Associated Press – LifeGoesStrong.com poll.

The gist of the article was that, due to healthier lifestyles and a fear of thinking about death, a majority of “baby boomers” (64%) say they don’t have a health care proxy or living will.  Of the people they interviewed, one said “I’m very healthy for my age, so death and dying isn’t on my mind,” another said, “I just feel like it’s something I’ll probably think about in my late 60s or 70s,” and my personal favorite, ” you always think something is going to happen to the other guy, not you.”

The article correctly points out that how you feel doesn’t determine what happens to you.  I think that is the most important statement of the entire article, yet they fail to elaborate on it much . . . so I will.  There are many “healthy” people who still need surgery, are involved in accidents, and have health issues resulting in disability, incapacity or even death.  For example, just this past year, West Michigan lost a loving husband and father and a true gentleman, when he passed away during the Fifth Third River Bank Run.  Those who knew him said he was the picture of health.  Yet, it was a nascent condition that showed up that caused his passing.  In the past six months I’ve also read about two individuals who passed away of brain aneurysms while working out.  Both were described as being very healthy.

You see, our health is something we can control only to a point.  Our bodies are complex and wonderfully created “machines,” and there can be many undiscovered conditions in a “healthy person.”  A healthcare power of attorney or patient advocate designation is something everyone should have, no matter how “young,” “old,” “healthy,” or “unhealthy.”  From the 18 year old embarking on college or their career, to the 90+ year old World War II veteran who still walks several miles a day – everyone needs these critical documents.

There are two points made in the article that I feel need some correction.  First, the article emphasizes the importance of “living wills.”  As a I wrote in this previous blog post, living wills are not legally binding in Michigan.  Michigan is one of only a few states that have no living will statute.  That said, I always have an in-depth discussion with my clients about care and end of life wishes.  These become part of their healthcare power of attorney and patient advocate designation.

Second, the article mentions that each state has its own forms for healthcare proxies and living wills.  It then goes on to say that “while it’s a legal document, . . . you don’t need an attorney to draft one.”  Technically, that is correct – because there are some forms available, you don’t need an attorney to draft one for you.  But you can say that about any estate planning document (e.g., wills, trusts, financial powers of attorney).  The question you should ask is should you meet with a Michigan attorney who focuses on estate planning to discuss the issues involved and draft a plan that ensures those wishes/desires will be followed?

The answer is “yes!”  The documents are the documents.  The value is in the counseling and discussion involved and implementing those wishes/desires by way of a comprehensive plan involving a healthcare power of attorney (among the other important estate planning documents).

Sure, we all think it will happen to “the other guy,” just like the quote in the article.  But one day, “the other guy” (or woman) will be each of us.  When that time comes, it is too late to put these important planning items in place.  Take action now, while you can, by calling us at 616-827-7596.

Michael Lichterman is an estate planning and elder law attorney who helps families and create a lasting legacy.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  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.

 

Estate Planning Pitfall – Not Having A Stand-alone HIPAA Authorization

November 5, 2011 /

The research is clear – we are living longer and needing more medical care as a result.  This makes the Power of Attorney for Healthcare (also referred to as a Patient Advocate Designation) a critical component of any well-drafted, comprehensive estate plan.

But did you know that there is another healthcare-related document that can be critically important to managing your finances when you are unable to do so yourself . . . a document that many estate plans lack?  It’s a stand-alone HIPAA authorization and it can help ensure a smooth transition for your financial agent(s) and help your family stay out of court.

You see, the trusted family, friends, or financial institutions that many individuals choose to manage their financial affairs if they are incapacitated are not necessarily the same ones chosen to make healthcare decisions.  A comprehensive estate plan will use Financial Powers of Attorney and Trusts to help ensure your finances can be handled by those you trust most if your are unable to manage them yourself.

Many times the authority given to others in Financial Powers of Attorney or Trusts do not become “effective” until you are incapacitated or otherwise unable to manage your financial affairs.  A physician is usually involved in making the determination of incapacity and signing the necessary certifications so that your financial agents can begin managing your financial affairs.

Traditional planning and the Health Insurance Portability and Accountability Act (HIPAA) can throw a wrench into the situation.  How?  HIPAA restricts access to your medical records to those who you authorize.  Because your financial agents may not be the same as your healthcare agents, any HIPAA authorizing language in your Healthcare Power of Attorney will not cover them (you do have HIPAA authorizations in your Healthcare Power of Attorney, right?).  Without that authorization, the physician most likely will not sign off on the necessary documentation and your family (and agents) could end up having to go to court to move forward.  This would likely lead to costs and delays you no doubt wanted to avoid.

That’s where the stand-alone HIPAA authorization comes in.  It allows you to name individuals who can have access to your medical records without giving them authority to make medical decisions.  Certainly your healthcare agents would be included, but you should also consider including your financial agents and trustees (if you have a trust).  Doing so, will help ensure that the transition of authority can be a smooth one and your estate plan works when it is needed most.

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.

Beware the Double Tragedy in Estate Planning

October 23, 2011 /

Last week was National Estate Planning Awareness Week.  An entire week dedicated to raising awareness of the critical importance of estate planning.  It is estimated that over 120 million Americans do not have up to date estate plans.  And according to a recent study, 70% of respondents said that Americans fail to plan because they lack awareness as to why they should.  Even worse, 62% of respondents to the same survey believed that many Americans do not plan because they have the erroneous assumption that estate planning is only for the wealthy.  It certainly is not – read my blog post on the topic here.

So what does that have to do with the double tragedy I refer to in the title?  Even a better question is, what is the double tragedy?  It is this: a dear family member or friend passing away (or you passing away) and a complete lack of an estate plan or a poorly drafted estate plan.  I call it the double tragedy because your family will be dealing with the loss of someone they loved dearly, so why add to their frustration, grief and hardship by leaving them with a mess with your estate due to lack of planning or a “cheapo” estate plan.

Sure, sometimes things go smoothly, but that certainly is not the case in many circumstances.  Why take the chance?  Take the time and money to work with an attorney who focuses on estate planning to help create a comprehensive plan that will show your family how much you cared . . . even after you are no longer here for them.

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.

What Is a Pour-Over Will?

September 25, 2011 /

As a Grand Rapids, MI estate planning attorney, I see  a growing number of families who recognize the benefits of a living trust centered estate plan and want a living trust as the foundation of their estate plan.  Many times the other documents in a comprehensive living trust plan are overlooked or giving only a small amount of attention.

One such important planning document is the pour-over will.  No, it’s not actually called that in most cases.  “Pour-over” is the common way to refer to it and helps explain what it is and how it works.  Although the hope is that you never need to use your pour-over will, it plays a very important role if you do.

A pour-over will is . . . well, a will.  More specifically it is the type of will that is often used in a comprehensive living trust estate plan.  In such a plan, the living trust plays the most important role.  In your living trust you will control who receives what, how they receive it, when they receive it, what happens if you are incapacitated, who is responsible for managing the trust assets, and much more.  Think of it as the “hub” of the estate planning “wheel.”

Well, the catch is this – a living trust controls only what it owns.  Said another way, if the living trust doesn’t own it, whatever “it” is will go through the probate court process (unless it is directed by a beneficiary designation or other non-probate transfer mechanism).  That is why it is so critically important to make sure your living trust is fully funded (read my blog post on the topic by clicking here).  But what happens if something you own is not owned by the living trust and ends up going through the probate court process?

That’s where the pour-over will comes in.  The reason this type of will is commonly referred to as “pour over” is because it is designed to make sure anything that is part of your probate estate goes into your living trust after you pass away – it “pours” it into the trust.  It does this by directing that it happen – the will says that any property left in the probate estate at the end of the probate process will be distributed to the living trust.

And like all the parts of a comprehensive living trust estate plan, it is important to make sure your pour-over will is reviewed on a regular basis.  If not, it could fail to do what you wanted it to do!

Have questions?  Call us at 616-827-7596 or contact us via email.

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.

My First Legal Zoom “Estate Plan” Review

September 18, 2011 /

Well, this past week I reviewed my first “estate plan” from legal zoom.  I’ve read about others’ reviews.  In fact, I even referenced an article on do-it-yourself planning in a previous blog post.  This, however, was my first look at a legal zoom estate plan for a potential client who wanted me to review it.  I have to give this person a lot of credit for being willing to have it reviewed.  To not just assume that everything was right (like many people), and to have an open and honest discussion about what it was . . . and more importantly, what it was not.

I’m not going to detail every question I had, every shortcoming of the plan and everything that was not how my potential client wanted it to be.  To do that would take far too much time and you wouldn’t want to read all of it anyway.  Instead, I will highlight a few of the items.  To be fair, these are not just my thoughts as an estate planning attorney.  Each of these items is something the potential client wanted changed because it didn’t work how he wanted it to.  But how would he have known that while filling out the legal zoom questionnaire?  He wouldn’t . . . more on that later.

Here are the biggest issues we came across while discussing the Legal Zoom “estate plan:”

  1. It wasn’t a comprehensive plan – it was just a living trust and a pour-over will.  At a minimum, he should have also had a financial power of attorney and a healthcare power of attorney.  Although the powers of attorney are important in every estate plan, they are particularly important in this gentleman’s situation due to his health condition.  Sure, it could be that he chose only the trust/will combination while going through the Legal Zoom online questionnaire, and it shouldn’t be considered Legal Zoom’s fault that he did that.  I’m not saying it’s anyone’s “fault,” but the fact is, without a good discussion about what estate planning is, what it is not, what is most important to him and what planning is needed to carry out his wishes, how could he have known?!
  2. This is probably second only to the one above.  He had listed several people he wanted to receive varying shares of his estate.  If someone passed away before they received their share, he wanted it to go to their children or, if they had no children, to the others he had listed.  UH OH – that’s not what the trust said.  It said that if any of the folks passed away, it would go to his “heirs” according to Michigan law, many of which were not people on his list and many who would receive much more than he wanted!
  3. There was no HIPAA authorization.  This means that although he wanted a living trust to help keep his affairs out of court during life and after death, someone would have to go through the court process to be appointed as guardian if they needed access to his medical records.  Definitely not what he wanted.
  4. Neither the will nor the trust had a reference to a written list of personal property.  This would have allowed him to say who received what of his personal belongings without him having to change the will/trust each time.  Honestly, I can’t remember reviewing a Michigan estate plan in the past few years that did not have this provision.  I see this as a miss on Legal Zoom’s part.
  5. There were several typos in the documents (for example, the signature section for the trustee had all the trustees names under the signature line written like it was one long name . . . one very long name!).  I don’t know if this was user error or programming error.  Either way, it was a typo.  Have I seen typos before?  Sure, attorneys are humans too and we make mistake sometimes.  However I’ve never seen one that blatant.
  6. Finally, although he had a living trust, it was not “funded.”  That means that the trust didn’t own anything (read my blog post on the topic here).  Ultimately, this meant that although he wanted to avoid the probate court process when he passed away, that would not be the case.  Everything except his life insurance would go through the probate court process before it ended up in the trust and the life insurance would all go to one individual.  See #2 above for why that would be bad.

Please know that the above list is by no means exhaustive.  That is the list of the things that bothered my client the most.  Oh yeah, notice how I changed the phrase to “my client?”  He’s a client now.  He wanted to make sure his estate plan was unique to his family situation and that it would work when needed . . . he didn’t feel the Legal Zoom “estate plan” did that.

I think he summed it up best at the end of the Peace of Mind Planning Session when he said, “wow – well, I guess I just didn’t know what I didn’t know.  I’m glad I had you review it.”

If you have a “do it yourself” estate plan (Legal Zoom or otherwise) and would like the added Peace of Mind of having it reviewed, call us at 616-827-7596.  The review is free and there is no obligation.  Why leave it up to chance?  Give us a call.

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.

Aging Issues and Estate Plans

July 24, 2011 /

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.

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.