Michigan Estate Planning Blog

How to Help Create an Estate Plan

 

We all have assets that need to go to someone when we die. Without an estate plan, the decision as to who gets your assets is left to state law, explains Money Talks News’ recent article entitled “Why Everyone Needs an Estate Plan.”

You don’t have to delay until you’re gray to get an estate plan in place. Estate planning can benefit you at any age. No one can predict the future, and if the unexpected occurs and you pass at a young age, an estate plan can designate who will get guardianship of your minor children or the pets you leave behind.

Hiring an experienced estate planning attorney who can write up the necessary legal documents may be smart when you decide to put together an estate plan. You can also take these steps to put your estate plan in place.

Make an inventory of your assets — list your tangible and intangible assets and their estimated value. Tangible assets include your home or other real estate holdings, vehicles, fine jewelry and collectibles. Intangible assets are things such as your bank account, life insurance policies, retirement accounts, investments (stocks, bonds, and mutual funds) and businesses you own.

Review your beneficiaries — make certain your retirement account and life insurance policies have designated beneficiaries and the information is up to date.

Review the estate tax and inheritance tax laws in your state.

Review your estate plan regularly — things in your life may change, so you should reassess your estate plan when these changes happen. Life events, such as marriage, divorce, having a child, losing a loved one, or getting a new job, are all good times to take another scan of your estate plan.

Failing to have an estate plan can cause a lot of stress for your family. They can be torn apart in disputes over the division of assets after a loved one dies.

Life is full of unknowns, so whether you’re a young parent or a senior, having an estate plan in place to carry out your wishes after you die will lessen the burden on those you love and give them time to grieve.

Reference: Money Talks News (Oct. 21, 2022) “Why Everyone Needs an Estate Plan”

What’s Involved with Being a Trustee?

There’s an old saying that the two best days in a boat owner’s life are the day they buy their boat and the day they sell it.

Forbes’ recent article entitled “How To Be An Effective Trustee” says that a similar notion applies to being a trustee – it’s an honor to be named and then a huge relief when it’s over. That’s because being a trustee is difficult.

Remember that a trust is a fiduciary relationship in which one party (the trustor) gives another party (the trustee) the right to hold title to property or assets for the benefit of a third party (the beneficiary). Trusts are created to provide legal protection for the trustor’s assets, to make certain those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.

Being a trustee requires knowledge about a wide range of topics, including:

The trustee’s fiduciary duties, which include loyalty, impartiality, duty of care, protection of trust property, enforcement of claims and the duty to inform and account to beneficiaries, among others (violation of these duties exposes the trustee to liability).

Understanding the details of the trust, like the specifics of the distribution instructions.
Investments and the ability to engage and monitor investment managers.

Administrative matters, such as record keeping and principal and income accounting.

Estate planning, trusts and the basics of the estate, gift and generation skipping taxes.

Income tax, including how trusts are taxed both by the federal government and the state.

A trustee must also be able to productively communicate and work with the beneficiaries on their financial wellness and distribution needs, which is an area that can be full of conflict.

It’s a daunting list. Talk with an experienced estate planning attorney to discussion your situation in detail.

Reference: Forbes (May 31, 2022) “How To Be An Effective Trustee”

Has the Pandemic Made People More Aware of Estate Planning?

 

The COVID-19 pandemic has led many more Americans to pay attention to estate planning, but just a third of them have taken action, according to a recent report.

Financial Advisor IQ’s recent article entitled “More Americans Set Up Estate Plans Since Start of Pandemic” reports that more than 50% of Americans think estate planning is at least somewhat important, senior living referral service Caring.com found in a survey of more than 2,600 American adults. Caring.com didn't disclose when the survey was conducted.

The number of those aged 18 to 34 with estate planning documents has increased 50% since the beginning of the pandemic, according to the survey. Americans who’ve suffered through a serious COVID case are also 66% more likely to have a will than those who haven’t, Caring.com found.
Roughly 48% who have had a serious case have estate planning in place, as do 41% of those who have loved ones who had one. That’s compared to 29% who have no experience with a serious COVID -19 case, according to the survey.

Overall, two out of three American adults don’t have a will — the percentage has only inched up from 32.1% in 2020 to 32.9% in 2021 to 33.1% this year.

More than 60% of those without a will have done nothing toward getting a will or any estate planning document, according to the survey.

The most cited reason for not having a will is simply not getting around to it. That’s cited by 40% of all Americans without one.

That’s particularly prevalent among those earning $80,000 a year or more and without a will, 63% of whom say they haven’t had time to do so, as well as those with postgraduate education, two out of three of whom say they haven’t got around to it, according to the survey.

On the other hand, 48% of those earning $80,000 or more say they do have a will or another estate planning document.

That represents a 7% increase since 2020, Caring.com says.

However, a third (33%) of Americans overall say they don’t have an estate plan because they don’t have enough to leave behind, according to the survey.

Meanwhile, 12% say they don’t know how to get a will or living trust, and about 13% believe it’s too expensive to set up. Another 6% think it takes too long, and 9% say they don’t have anyone to leave their assets to, Caring.com found.

Reference: Financial Advisor IQ (April 25, 2022) “More Americans Set Up Estate Plans Since Start of Pandemic”

How Out of Date is Your Estate Plan?

Estates plans are like a snapshot of your life at a particular point in time. An old photograph shows how you looked at the time it was taken. An old estate plan shows how your property and life circumstances looked at the time it was made. However, just as the way you look changes so does your property and life circumstances. If you never change your estate plan, it might stop doing what you want. As Forbes points out, in an article titled “Why You Should Update Your Estate Plan,” if you do not update your estate plan when your life circumstances change, then you might be risking costly legal battles for your heirs. Significant property acquisitions that are not accounted for in your estate plan can lead to problems. Having additional children or getting divorced can cause problems, if you do not change your estate plan. Tax law changes could make your old estate plan ineffectual. You should plan to update your estate plan every time your life changes significantly. If you get married, change your plan. If you start a new business, change your plan. Any significant life event that has occurred since you first created your estate plan may trigger a needed change or two in your estate plan. You should also plan on meeting with your estate planning attorney every few years to make sure that your plan takes into account any changes to tax laws. If you do not, your plan might not do what you think it should do.

Reference:Forbes (July 3, 2014) “Why You Should Update Your Estate Plan”

 

For more information, see www.jerryreiflawyer.com

Does Everyone Need a Revocable Living Trust?

When many people first consult an estate planning attorney, they assume they already know what they need in their estate plans before the attorney even says a single word. As revocable living trusts continue in popularity, many of these first-time visitors think that is the solution to their estate planning needs. Usually a friend or family member who has a trust will suggest it, or they may have read articles online suggesting everyone needs to have a revocable living trust. The truth is that revocable living trusts are designed for particular estate planning situations. They are not necessary in every situation. A recent article in Financial Planning titled “Does Your Client Need a Revocable Trust?” considered common situations that might call for a revocable living trust. The list includes: • Probate Avoidance – If an estate might have issues in probate, a revocable living trust can be used to keep it out of probate. Not every estate will have issues with probate, however. • Privacy Concerns – Wills are often subject to public scrutiny through the probate process. Because a trust does not go through probate, the details of an estate plan can be kept private. • Second Marriages & Blended Families – Trusts can provide a way to ensure that assets go to a second wife first and that the remainder then goes to children of a first marriage, if that is the objective. • Incapacity Planning – Trusts can provide a way for someone to manage your assets in the event you become too sick to do so yourself. • Special Needs – If you have a relative with special needs, a trust can be used to provide for their care without jeopardizing their public assistance benefits. Again, these are the primary reasons why you might want to have a revocable living trust as part of your estate plan. However, the important thing to remember is to go to an estate planning attorney's office with an open mind. Let the attorney tell you what the best options for your estate plan are.

Reference: Financial Planning (July 14, 2014) “Does Your Client Need a Revocable Trust?”

For more information, see www.jerryreiflawyer.com

What College Did Not Teach You: Grads Need Estate Plans

Young people also should plan how their assets will be distributed in case something were to happen to them. Estate planning is more than just deciding how your assets will be distributed. That is a large part of it, but there are other documents every good estate plan should include. Regardless of your age, you might not think you have very much – but you probably have enough to want to have a say in who gets what. A recent article in the National Law Review, titled “Five Estate Planning Documents Every Young Professional Should Have,” lists the documents that every recent college graduate will want to include as part of his or her estate plan: • General Durable Power of Attorney – This is a simple document that lets you choose who will handle your finances in case you are in an accident or get ill and cannot do it yourself. • Health Care Power of Attorney – This document allows you to choose who will make medical decisions for you, if you are incapacitated and cannot make them for yourself. • Will – Your will does not have to be complicated. However, if you want your property or any piece of it to go to someone in particular, then you need a will to make that happen. • Beneficiary Designation – On many of your financial accounts, such as the retirement account and life insurance your first employer gives you, designating a beneficiary allows you to decide who gets the assets of the account after you pass away. • Beneficiary Deed – If you have an interest in real property, you might want to consider a beneficiary deed as they allow you to say who gets that interest after you pass away. However, these are not always appropriate so speak to an experienced estate planning attorney to see if a beneficiary deed is right for you. Estate planning is for everyone, recent graduates included.

Reference: National Law Review (July 7, 2014) “Five Estate Planning Documents Every Young Professional Should Have”

For more information, see www.jerryreiflawyer.com

To Marry Or Not To Marry, But To Plan Accordingly Either Way Saginaw, MI

It has been said that marriage is a young persons’ game, but love isn’t. These days, more and more Americans are meeting new loves or (finally) their true loves later in life. These later-in-life marriages can be tricky. On the other hand, even if you leave marriage to the young and idealistic, there is some planning that really has to be in place. The sociology of later-in-life marriage is fascinating, both in thinking about the recent jump in numbers and the more recent decrease. Either with or without tying the knot it is also a practical issue with legal ramifications, and for those later-in-life loves not destined for marriage there is some practical advice to be gleaned in a recent article on the subject in The New York Times titled “Welcoming Love at an Older Age, but Not Necessarily Marriage.” The article has the voice of several experts and more than a few horror stories to share. You see, marriage is an emotional union, but it is also an economic and legal one. This may come far more naturally to 20-somethings than boomers. It seems the older you get the more you have and the more you have to think about. If you are to marry, then the separate pasts, lives, and families have to account for it all and mesh together, which is a tricky enterprise when everything from college financial aid for children/grandchildren to Medicare or Medicaid benefits may instantly be affected. To not marry doesn’t necessarily make all of those issues go away, but it might add new ones. For example, how will you legally care for one another and how will you own assets like the home. And of course, there is always the possibility of a split – even this late in life – and the question then of how protected your assets comes to the forefront. Do take a look at the original article, especially if marriage is not the end-goal, and be sure to structure this new stage in life so that it might also be a happy one.

Reference: The New York Times (April 25, 2014) “Welcoming Love at an Older Age, but Not Necessarily Marriage”

For more information, see www.jerryreiflawyer.com

 

Estate Planning By Rules, Not A Checklist Saginaw, MI

A plan for your estate that’s not committed to paper is no plan at all. But, you might protest, how can you finalize the plan when you don’t yet know the tax rules that are going to be in effect? The thing is that every estate at every stage should have a plan in place because, if nothing else, there are always the basics that have to be attended to, and yes, even if they may be likely to change. Planning for the estate is really an ongoing activity. Accordingly, estate planning is not a “one-and-done” event, but rather it is a process to continue as things inevitably change. In this sense, you might say that proper planning, as an activity, is not guided by a checklist but by rules to follow. InvestingDaily offered some useful perspective on the rule-driven process of planning in a recent article titled “10 Basic Rules of Every Estate Plan.” Here are the ten: 1. Do something 2. Keep track of your estate 3. Estimate cash flow 4. Choose executors and trustees 5. Anticipate conflicts and reduce them 6. Don’t search for a perfect solution 7. Don’t be a control freak 8. Make your general plan known 9. Don’t circulate your will 10. Things change 11. Keep it as simple as possible I’ll leave it to the original article to explain each of the ten one by one, and there is much to be said for each. What strikes me is that each rule is really an ongoing process or else a mantra to be repeated. Although not exhaustive, especially for those of us with special considerations, these are at least the basic rules and should serve as a helpful guide. In the end, if you treat estate planning as the process that it is, then such thinking will help keep you in the right mindset to enjoy ongoing estate planning peace of mind.

Reference: InvestingDaily (April 17, 2014) “10 Basic Rules of Every Estate Plan”

For more information, see www.jerryreiflawyer.com

 

To Marry Or Not To Marry, But To Plan Accordingly Either Way Mid Michigan

It has been said that marriage is a young persons’ game, but love isn’t. These days, more and more Americans are meeting new loves or (finally) their true loves later in life. These later-in-life marriages can be tricky. On the other hand, even if you leave marriage to the young and idealistic, there is some planning that really has to be in place. The sociology of later-in-life marriage is fascinating, both in thinking about the recent jump in numbers and the more recent decrease. Either with or without tying the knot it is also a practical issue with legal ramifications, and for those later-in-life loves not destined for marriage there is some practical advice to be gleaned in a recent article on the subject in The New York Times titled “Welcoming Love at an Older Age, but Not Necessarily Marriage.” The article has the voice of several experts and more than a few horror stories to share. You see, marriage is an emotional union, but it is also an economic and legal one. This may come far more naturally to 20-somethings than boomers. It seems the older you get the more you have and the more you have to think about. If you are to marry, then the separate pasts, lives, and families have to account for it all and mesh together, which is a tricky enterprise when everything from college financial aid for children/grandchildren to Medicare or Medicaid benefits may instantly be affected. To not marry doesn’t necessarily make all of those issues go away, but it might add new ones. For example, how will you legally care for one another and how will you own assets like the home. And of course, there is always the possibility of a split – even this late in life – and the question then of how protected your assets comes to the forefront. Do take a look at the original article, especially if marriage is not the end-goal, and be sure to structure this new stage in life so that it might also be a happy one.

Reference: The New York Times (April 25, 2014) “Welcoming Love at an Older Age, but Not Necessarily Marriage”

For more information, see www.jerryreiflawyer.com

Estate Planning By Rules, Not A Checklist

A plan for your estate that’s not committed to paper is no plan at all. But, you might protest, how can you finalize the plan when you don’t yet know the tax rules that are going to be in effect? The thing is that every estate at every stage should have a plan in place because, if nothing else, there are always the basics that have to be attended to, and yes, even if they may be likely to change. Planning for the estate is really an ongoing activity. Accordingly, estate planning is not a “one-and-done” event, but rather it is a process to continue as things inevitably change. In this sense, you might say that proper planning, as an activity, is not guided by a checklist but by rules to follow. InvestingDaily offered some useful perspective on the rule-driven process of planning in a recent article titled “10 Basic Rules of Every Estate Plan.” Here are the ten: 1. Do something 2. Keep track of your estate 3. Estimate cash flow 4. Choose executors and trustees 5. Anticipate conflicts and reduce them 6. Don’t search for a perfect solution 7. Don’t be a control freak 8. Make your general plan known 9. Don’t circulate your will 10. Things change 11. Keep it as simple as possible I’ll leave it to the original article to explain each of the ten one by one, and there is much to be said for each. What strikes me is that each rule is really an ongoing process or else a mantra to be repeated. Although not exhaustive, especially for those of us with special considerations, these are at least the basic rules and should serve as a helpful guide. In the end, if you treat estate planning as the process that it is, then such thinking will help keep you in the right mindset to enjoy ongoing estate planning peace of mind.

Reference: InvestingDaily (April 17, 2014) “10 Basic Rules of Every Estate Plan”

For  more information, see www.jerryreiflawyer.com

Changes on the Horizon for Reverse Mortgage Loans Mid-Michigan

Much about the housing marketing has changed over the last few years, including increased regulation in the banking and loan industries. So far one type of loan, the reverse mortgage, has been relatively unaffected in that time. But changes are on the horizon for this unique lending option. A reverse mortgage is a special type of home loan that allows homeowners to convert a portion of their home equity into cash. The equity you built up over years of making mortgage payments can be paid to you to supplement your income. The issue was recently brought up in a Reuters article titled, “Federal clampdown looming on reverse mortgages.” According to the Department of Housing and Urban Development, reverse mortgages are a safe plan that can help older Americans supplement Social Security, meet unexpected medical expenses, and make home improvements. Unfortunately, riskier loan structures are making reverse mortgages increasingly dangerous. In response, the federal government is planning to take a more conservative approach when evaluating new reverse mortgage loan applications. This means reverse mortgage loans will be harder to acquire in coming months. For purposes of estate planning, the reverse mortgage is an idea worth exploring. In practice, when your home is no longer used as a primary residence, the cash, interest, and other finance charges from the reverse mortgage loan must be repaid. However, all proceeds beyond such amounts owed on the reverse mortgage belong to your spouse or estate and no debt is passed along to the estate or heirs. This makes the reverse mortgage option an appealing idea for older homeowners who may need supplemental income, but hope to avoid passing on debt to family members. If you think you may be in need of additional income and have the home equity available, a reverse mortgage may be just the ticket. Seek appropriate counsel to find out if this lending option is right for you and your loved ones.

Reference: Reuters (December 5, 2012) “Federal clampdown looming on reverse mortgages”

For more information, see www.jerryreiflawyer.com

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Estate Plans Outdated for Wealthy Families

While you are living, essentially your estate plan is living too. And just as your life is evolving, your estate plan should change accordingly. Unfortunately, Congress and the White House are constantly shifting. As a result, your estate plan must adapt, improvise and overcome. For wealthy families in particular, many of their estate plans are simply out of date, and that’s not something you can afford to let slide. According to a Private Wealth article titled, “Estate Plans Of Rich Families Out Of Date, Survey Says,” and a study conducted by Rothstein Krass, “More than three quarters of the estate plans of the ultra-wealthy clients studied were at least three years old despite the fact that nearly 95% of them have experienced significant life changes since the estate plans were drawn up.” However you spin that finding, it’s a sad state of affairs for many families, and your family need not become part of that sad statistic. Simply put, if your life (or the lives of your loved ones) changes, for better or worse, you need to adjust your estate planning accordingly. The past few years have been devastating to families building wealth between generations and to families working hard to build wealth in this generation. As a result, just about every family needs to make some adjustments in its estate planning. Maybe now is a good time to schedule a review with your estate planning attorney.

Reference: Private Wealth (September 25, 2012) “Estate Plans Of Rich Families Out Of Date, Survey Says”

The Importance of Recurrent Estate Plan Updates

It is apparent that 2012 is a unique year for planning with the current estate tax and gifting laws. But as the years go by and laws change, are you paying attention to your estate plans and how they could be affected? Such was the case back in 2010 when there was no estate tax, a very unique situation that some did not plan for. It just goes to show that changing laws matter, and that your estate plans must change accordingly. For fresh evidence of the necessity for annual visitation of the estate plan, and for the oddities of 2010, Financial Planner magazine recently published an article titled “Family Feud: Review Estate Plans Annually.” It’s the case of the family behind Magnolia Audio Visual, and the couple that sold its retail rights to Best Buy and accumulated a cool $100 million estate in the process. Unfortunately, the parents weren’t as savvy with their estate planning. The estate plan provided that the maximum amount allowable under the federal estate tax threshold would be passed down to the children, with the rest to pass to the surviving spouse to thereby avoid immediate estate taxation. Unfortunately, the plan didn’t account for the fact that 2010 didn’t have an estate tax (thanks to expiring Bush-era laws and a gridlocked Congress). The wife died. When the husband nevertheless claimed the estate that was to pass to the children under the estate tax planning, the children were noticeably irked. It seems they had been passed over and were in danger of losing a fortune afforded under the once-in-a-lifetime and quite unintended tax loophole. Accordingly, the children filed suit against their father on the grounds of “non-compliance, forgery and the use of undue influence.” This case serves as a lesson to all that we should frequently update our estate plans to ensure our wishes are carried through to our loved ones.

Reference: Financial
Planning (September 1, 2012) “Family Feud: Review Estate Plans Annually”

 

Brooke Astor Estate Settles – Lessons Learned For Estate Planners

One of the more public and famous estate law cases just ended after five years in probate. Yes, the estate of Brooke Astor is now closed after a settlement was finally reached. In the end, her (87 year old) son saw his anticipated inheritance divided by two and his control over influential charitable interests stripped away. None other than The New York Times followed the Astor case and covered the settlement in a recent article titled Settlement in Battle Over Astor Estate Is Reached. At the crux of the case was the son’s stealing from his mother’s wealth (the son and her attorney were both convicted, sentenced and remain free pending appeal) and arranging for the revision of her Last Will when she already was suffering from dementia. Originally, Ms. Astor’s Last Will left massive philanthropic gifts from her $100 million estate. However, later versions were revised to leave such massive bequests to her son instead. In the end, the court found these later revisions to be more the product of duress than volition, and her son now receives a paltry $14.5 million. I would recommend the original article for more on the Astor family and the intrigue surrounding the estate (and its planning). Certainly, there are lessons to be learned from this case. The main lesson I would draw is that substantial estate changes later in life tend to draw substantial scrutiny when the estate must be administered.

Reference: The New York Times (March 28, 2012) “Settlement in Battle Over Astor Estate Is Reached”

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ESTATE PLANNING: IT’S AN ART, NOT A SCIENCE

I always tell clients that estate planning is a lifetime process, not a one-time event. Part of that process includes updating your asset inventory and modifying estate plan accordingly if necessary. Forgotten (hidden) assets can be the un-doing of an otherwise properly planned estate. Even a plan that starts out based on a complete accounting will be thrown out of whack if the estate owner doesn't come in to update it after a big life event like marriage or the sale of a business. This is why we work with each of our clients to keep the lines of communication open. We utilize this blog, our Twitter, our Website, monthly e-newsletter and even periodic mailings to remind our clients of the need to keep estate plans current.