Michigan Estate Planning Blog

Major Blunders in Estate Planning

Kiplinger’s recent article entitled “5 Common Estate Planning Mistakes to Avoid” warns that if you overlook an important step or make a misstep in your estate planning, everything could be undone. You could instead burden your family with a challenging and headache-inducing estate.

There are many ways to get things wrong. Let’s look at a few:

1. Not preparing for incapacity. The main reason to create a will is because we know that some day we’ll pass away. A will lets your family know how to distribute your property and other assets. A well-thought-out estate plan should identify the people authorized to make important decisions on your behalf regarding finances, health care and other critical matters. This is accomplished with powers of attorney. Once you are unconscious or afflicted with dementia, it will be too late. Make a list of decision-makers now, inform them of your wishes and create the necessary powers of attorney
2. Failing to include funeral and burial wishes. If you can purchase a burial plot and make funeral plans, put this in your estate planning documents. If you don’t, it may mean a lot of work for your family after your death. Name someone to be in charge of the funeral and burial arrangements and make sure that person understands your wishes. If you don’t detail your wishes prior to your death, it may become an issue for your loved ones.
3. Ignoring the tax implications of transferring property. As generous as it may seem to give property to your family during your lifetime, it is usually much smarter – and far more generous – to delay the transfer until you’re deceased. If you convey the deed to property to your next of kin before you die, they may see a hefty tax bill whenever they sell the same property. That’s because the basis for that property will be tagged to the date on which you made your purchase, not the date you made your gift. As a result, it could leave your heirs scrambling to pay an enormous sum that would have been averted, had they been granted the deed after your death.
4. Failing to designate backups for decision-makers. The best of plans can go south without a secondary beneficiary. This will address any unforeseen events. Name backups for your executor and other decision-makers. If they can’t fulfill their obligations, a court will name substitutes unless you’ve already planned for these contingencies.
5.  Not tracking beneficiary designations. In addition to stating the beneficiaries and their respective shares in your will, you must also communicate a directive to your bank that sets forth the interests in your account after your death. If you fail to do this, the bank’s rules will override anything you’re written in your will as to that account. That means your percentages will be different from those expressed in your will.
6. Take steps now to make certain there are no hidden issues that will haunt your family after you’ve passed.
7. Reference: Kiplinger (Oct. 17, 2022) “5 Common Estate Planning Mistakes to Avoid”

What Do I Need to Know about Wills?

 

Some people mistakenly think that not having a will enables their assets to bypass the time and expense of probate.
That’s 100% not true–if you die without a will, your property still must go through probate when there is no surviving joint owner or designated beneficiary, says FedWeek’s recent article entitled “Expressing Your Will with a Will.”
You really should have a will.
If probate avoidance is a concern, you can create a trust. By using a revocable trust, you can retain control over the trust assets while you are alive.
The assets placed in trust during your lifetime can be distributed at your death, under the instructions of the trust, without going through probate.
After you draft a will, do not forget about it.
Significant life events, like births, deaths, marriages and divorces, all may raise the need to revisit your last wishes.
After each change, be certain that your current will is both safe and accessible.
One way to do this is to leave your will with your executor, especially if you name a financial institution rather than an individual.
If you decide to keep your will somewhere else, your executor and other loved ones should know where it is.
The estate planning attorney who prepared your will should have a copy, as well as a memo stating the location of the original.
Regardless of where you put your will, you should have another document for your funeral and burial instructions.
Wills are typically not read until days or weeks after death, so it will not help your family make decisions about a funeral or a memorial service.
As a result, a separate letter should be drafted to state your final wishes. Your executor should know where these instructions can be located.
Reference: FedWeek (Feb. 22, 2022) “Expressing Your Will with a Will”

Organize Your Important Papers and Get Personal and Financial Affairs in Order

 

Organizing your important papers and getting your personal and financial affairs in order is a wise move and wonderful gift to your family. The Daily Journal’s recent article entitled “How to get your affairs in order” says to collect your important personal, financial and legal information. Here is a list of areas on which to focus:
Contacts: Make a list of names and phone numbers of close friends, doctors, lawyers, accountants, brokers and insurance agents.
Medical information: Include a list of medications you take, along with any allergies and illnesses.
Personal documents: These are things like your birth certificate, Social Security card, marriage license, tax records and military discharge papers.
Digital assets: List your digital assets, including everything from social media accounts to online banking accounts to home utilities you manage online. It should include usernames and passwords.
Pets: If you have a pet, give instructions for their care.
End of life: Indicate your wishes for organ and tissue donation and state your funeral instructions. If you have made pre-arrangements with a funeral home, include a copy of the agreement, the contact information and if it is prepaid.
Will and trusts: Include the original copy of your will and other estate planning documents.
Advance health care directives: A living will and medical power of attorney state your wishes as to your end-of-life medical treatment, when you can no longer make decisions for yourself.
Financial accounts: List your bank accounts, brokerage and mutual fund accounts and any other financial assets.
Debts and liabilities: State any loans, leases or debts you have — mortgages owed, car loans, student loans, medical bills, credit card debts, along with a list of all credit and charge cards, including the card numbers and contact information.
Company benefits: List any retirement plans, pensions, or health benefits from your current or former employer, including the contact information of the benefits administrator.
Insurance: List the policies you own, such as life, long-term care, home, auto, Medicare, Medigap and prescription drugs. Add policy numbers, agents and contact info numbers.
Property: Note your real estate, vehicles and other properties you own, rent, or lease and include documents, such as deeds, titles and loan or lease agreements.
Gather all your organized information and files in a convenient location, like a fireproof filing cabinet or safe in your home. Review and update it every year, and do not forget to tell your loved ones where it is located.
Reference: Daily Journal (Jan. 6, 2022) “How to get your affairs in order”

Why Do I Need a Will?

Some people mistakenly think that not having a will allows their probate assets to bypass the time and expense of probate. No, that is not true.
Probate assets are those assets with no surviving joint owner, designated beneficiary, or are not titled in a revocable living trust.
If you die without a will, your probate property still must go through probate, says Fed Week’s recent article entitled “Expressing Your Will with a Will.”
Therefore, you should have a will. If probate avoidance is a concern, you can ask an experienced estate planning attorney about utilizing various non-probate transfer methods, to include creating a trust. If you have a revocable living trust, you can keep control over the trust assets while you are alive.
The assets placed in revocable living trust during your lifetime can be distributed at your death, under the terms of the trust, without the requirement of probate.
When you draft a will, you cannot simply forget about it. Special life events, such as births, adoptions, deaths, marriages, and divorces, all may require you to revisit your will. After each change, make certain that your current will is both safe and accessible. You can leave a copy of your will with your executor.
If you decide to keep your will somewhere else, your executor and other loved ones should know that location. The estate planning attorney who prepared your will should have a copy, as well as a memo revealing the location of the original.
Regardless of where you put your will, you should create a separate document for your funeral and burial instructions. That is because wills typically are not read until days or weeks after death.
It will not help your survivors make prompt decisions about a funeral or a memorial service.
A separate letter should be used to specify your final wishes and your executor should know where these instructions are located.
These arrangements include seeing if there is a pre-arranged funeral plan, meeting with a funeral director to make arrangements for the funeral services, confirming cemetery arrangements and choosing the necessary casket or urn, grave marker and funeral stationery.
Reference: Fed Week (Feb. 22, 2022) “Expressing Your Will with a Will”

Why Is Estate Planning So Important?

 

Big Easy Magazine’s recent article “Estate Planning Is Essential and Here’s Why” says that writing a last will isn’t limited to what happens to your house, car, company, or other assets after you die. It also states who will take care of your minor children, if they are orphaned.
Your instructions for burial and other smaller things can be included.
If you fail to provide specific instructions, the state intestacy laws will apply upon your death. Here is a glimpse of the consequences of not writing your last will:
Your burial preferences may not be honored.
Your properties may be managed by an individual you don’t necessarily trust. Without a named executor to your last will, some other family member may be asked to file taxes, make transfers and manage your estate.
Family members may not get an inheritance. Under intestacy laws, same-sex relationships and common-law marriages may not be recognized. So, your partner may not get a portion of your estate.
Your favorite charity may be left out. If you are committed to leaving a legacy, your charity, religious organization, or other organization of choice should be mentioned in the last will.
The government will name the guardians for your minor children.
With a last will, you can designate a guardian for your children and avoid additional taxes. Ask an experienced estate planning attorney about developing a comprehensive estate plan.
Aside from this, estate planning can also save your loved ones considerable angst and money.
A detailed last will with your instructions will avoid complications and provide comfort, while your loved ones recover emotionally from their loss.
Reference: Big Easy Magazine (May 17, 2021) “Estate Planning Is Essential and Here’s Why”

 

Nothing is Certain but Death and Taxes

The notion of planning for death and taxes at your passing is not an easy subject to tackle. And although it may be a hard topic to think about, delaying your planning can cause many issues for your family when you are gone. Anyone who has stuck by their family during the passing of a loved one knows just how powerful the ensuing emotional (and financial) tsunami can be. There are many decisions that must be made during a time of grief. This fact of life was recently addressed in a Forbes article titled “Are You Ready For Both Death And Taxes?” Death taxes aside, death itself presents choices that must be made. You, and you alone, are in the best position to make proper estate plans to preserve and protect your assets and your family at your passing. The original article presents a good, better, and best approach. However, what is the best approach? In the end, you know your assets and loved ones better than anyone else.

Reference: Forbes (August 21, 2012) “Are You Ready For Both Death And Taxes?”

 

Nothing is Certain but Death and Taxes

The notion of planning for death and taxes at your passing is not an easy subject to tackle. And although it may be a hard topic to think about, delaying your planning can cause many issues for your family when you are gone. Anyone who has stuck by their family during the passing of a loved one knows just how powerful the ensuing emotional (and financial) tsunami can be. There are many decisions that must be made during a time of grief. This fact of life was recently addressed in a Forbes article titled “Are You Ready For Both Death And Taxes?” Death taxes aside, death itself presents choices that must be made. You, and you alone, are in the best position to make proper estate plans to preserve and protect your assets and your family at your passing. The original article presents a good, better, and best approach. However, what is the best approach? In the end, you know your assets and loved ones better than anyone else.

Reference: Forbes (August 21, 2012) “Are You Ready For Both Death And Taxes?”