Michigan Estate Planning Blog

Think of Estate Planning as a Gift to Loved Ones

 

When you think of a gift for your family, you might think about matching sweaters or a family vacation. However, the gift of an estate plan will be remembered because it demonstrates your ability to take care of your family and could help build wealth across generations. A recent article from CNBC Money Report, “Here’s why estate planning is a gift to your family,” explains how this works.

Remember, there’s no relationship between creating a will and signing documents and something happening to you immediately afterward. This notion keeps many otherwise responsible adults from taking care of their estate plans. Don’t fall prey to it.

Another point is that families fight over money and possessions, even when relationships are good. Without clear instructions provided in an estate plan, a family undergoing the loss of a parent is vulnerable to fighting and litigation.

You’ll want to have a Last Will and Testament and, depending on your situation, possibly trusts, a Power of Attorney for financial and legal matters if you are incapacitated and a Healthcare Proxy (sometimes called a Healthcare Power of Attorney), so someone can make medical decisions and talk with treating doctors in case you can’t communicate.

What happens when there is no estate plan? The courts will make all of your decisions, regardless of the wishes of your loved ones. Your entire estate will go through probate, and a stranger could be named to take charge of it, with a hefty fee to compensate them for their services.

If you have minor children and no will, the court will name a guardian to raise your children. Will it be someone you would have picked or your distant cousin who lives hundreds of miles away? There’s no way to know.

Assets titled properly or those with a named beneficiary will go directly to those named on the accounts without going through probate. This is one of the attractions of trusts, which never become public.

Part of creating an estate plan includes reviewing your accounts and beneficiary designations to ensure that the people named as your beneficiaries are still correct. If you have any old accounts you haven’t looked at in decades, now is the time to ensure that you’re not leaving your pension to an old college pal—unless that’s your intention.

Estate planning is about empowering the present and planning for the future. Chances are you’ve read many news articles about celebrities with massive estate problems because they failed to plan. Leaving a mess for your family to deal with is probably not the legacy you had in mind.

Give yourself and your loved ones the peace of mind knowing you’ve taken care of your estate plan. Be remembered as someone who cared enough to do the right thing. Consult with an experienced estate planning attorney today.

Reference: CNBC Money Report (Jan. 7, 2025) “Here’s why estate planning is a gift for your family”

How Estate Planning Cares for Future Generations

 

Building and owning a business or saving prudently can lead to more than a comfortable life—it can create a legacy to be passed on to family members and charitable groups. Estate planning for a legacy takes many forms, explains an article from Cincinnati Business Courier, “Taking Care of Future Generations: Estate Planning Strategies and Trends.”

The primary purpose of estate planning is to transfer assets smoothly and when possible, without court involvement. High net-worth families use estate planning to use existing tax opportunities to structure their assets, so they may be passed to the next generation in a tax-efficient manner.

Estate planning is also necessary to allow assets to pass without turmoil and stress. Having a detailed estate planning, where wishes are clear and assets are carefully inventoried, prevents heirs from having to undergo legal and logistical contortions to receive an inheritance.

The planning process varies from state to state. However, the general process is the same. An estate planning attorney discusses the family, the business or other assets and the wishes to be achieved. Some states, like Kentucky and Pennsylvania, still have inheritance taxes in addition to state estate taxes. As of this writing, few families are impacted by federal estate taxes, although this may change in the future.

Wills may be the best known part of estate planning. However, the will is only part of an estate plan. If prepared properly, most property passes without a will and, therefore, without probate. Trusts are the most commonly used tool in estate planning. Trusts are created to serve as separate legal entities which distribute assets upon the death of the grantor (the person who created the trust). Assets distributed by a trust don’t go through probate and are distributed according to the language of a trust. This level of control, in addition to taking out any court involvement, are one reason why trusts are so popular in estate planning.

A Power of Attorney is very important in estate planning. The person who has been named the POA steps in to handle general financial matters and helps maintain the normal course of life—paying bills and maintaining a home—if someone becomes incapacitated. A Medical Power of Attorney gives the power to talk with treating physicians and make decisions.

An estate plan also includes naming an executor, the person in charge of administering the estate. You’ll want to select a person who is, above all, trustworthy. They will also need to be organize, financially savvy and able to manage the beneficiaries and the family’s dynamics.

Estate planning often involves lifetime gifts, also known as planned giving. Giving to charities while living allows the donor to see the impact of their generosity, which can be very rewarding. The same can be said about giving to loved ones. The benefit of taking assets out of the taxable estate is a motivating factor for some, but not all, lifetime giving.

Giving is also done through family foundations and donor advised funds (DAFs). The DAF is becoming more popular because the charitable deduction is created when the fund is created, while there is still access to the funds. Foundations are typically created only by extremely high net worth families, as there are extensive costs involved in creating a foundation. However, a family foundation is an excellent way to bring younger generations into the tradition of philanthropy.

An estate planning attorney will walk you through the necessary steps, explore options and help outline your wishes for the legacy you wish to leave to loved ones. It is a gift to the family, providing peace of mind for you and a plan for the future.

Reference: Cincinnati Business Courier (Nov. 15, 2024) “Taking Care of Future Generations: Estate Planning Strategies and Trends”

Make Life Easier for Heirs: Get Your Estate Organized

 

The holiday season is not when most of us think about death and dying. However, we do think about gift-giving. Estate planning is a gift for your family. Wouldn’t you prefer a package wrapped in festive paper and decorated with ribbons than an unwrapped item hastily stuffed into a shopping bag? The article “5 Things to Do Now to Make Your Estate Simpler for Your Heirs” from The Wall Street Journal offers a starting point.

Update all estate planning documents. Failing to update estate planning documents, including finalizing new documents, can wreak havoc on families. One example is a woman who took about two decades to update her will and then died before signing the papers. Her will included giving assets to stepchildren she hadn’t seen in more than twenty years. Her adult children are spending thousands to have the new will enforced by a judge, even though it’s unsigned.

When did you last examine the beneficiary designations for all your financial accounts? Life insurance, retirement accounts, bank and investment accounts, pensions and other financial accounts provide an opportunity to name a person or people to receive the assets directly upon your death. If your old college pal is the person you thought of when you started your 401(k) with your first job, your wife may not appreciate his receiving hundreds of thousands of dollars upon your death.

Named beneficiaries receive assets directly from the financial institution and do not go through probate. No matter what language is in a will or even a living trust, these assets belong to the people you named to receive them. You should have a list of all of these accounts and know who the beneficiaries are.

Digital assets are now part of estate plans. There are very few people today who don’t have digital assets. These include the content in your emails, photos stored on the cloud, websites, content on social media platforms, online businesses and anything you’ve created online. Most people don’t understand the Terms of Service Agreement they make between the service provider and themselves when they click on the link to approve the TOSA. However, this is a legally binding contract delineating what the platform owns and what the user owns. You may not own books, movies, or other digital assets; you might have rented them unknowingly.

Digital assets need to be organized for heirs, since there isn’t a paper trail for them to follow like in previous decades. You can create a spreadsheet, use a password manager or a pad of paper. However, there should be a means for your digital executor to identify and access your digital assets.

Some digital platforms allow you to name a “legacy” contact who can take care of your digital assets after you’ve passed. You’ll need to go through each of your digital assets to find out which platform has this or related features. If it seems annoying, imagine how your heirs will feel trying to untangle your digital assets.

If your estate includes cryptocurrency, this is especially important. Millions of dollars of crypto have been lost because people have failed to secure their pass keys or digital wallets.

Deal with personal property now. Especially if you have multiple heirs, hoping the kids “work things out” could be a recipe for disaster. Make a list of your personal items and who you want to receive what. In some families, this is relatively straightforward. However, your adult children will be grieving after your passing and vulnerable to disputes. Another tactic: give items while you’re living.

Get your estate planning documents organized. Create a three-ring binder with all essential documents. Contact information for your estate planning attorney, CPA and financial advisor should be provided. Include a list of bills paid online, like utility, mortgage, taxes, health insurance, car insurance, etc. Also included are Power of Attorney, Health Care Power of Attorney, Living Will, Trusts and other estate planning documents. Tell your executor and adult children where the folder is.

An organized estate plan helps avoid family conflict. Having documents prepared, property assigned and accounts recorded all takes time. However, by doing so, you’ve minimized the work for loved ones and minimized reasons for quarrels during what will already be a difficult time.

Reference: The Wall Street Journal (Nov. 14, 2024) “5 Things to Do Now to Make Your Estate Simpler for Your Heirs”

Planning to Protect Your Children’s Inheritance: Asset Protection

 

No one likes to think about the possibility of losing a lifetime of earnings through unfortunate events like divorce, spendthrift heirs, or litigation. However, ignoring these risks won’t prevent them. A recent article from Kiplinger, “Want Your Kids to Inherit? You Need an Asset Protection Plan, ” explains several asset protection strategies used to protect wealth from disappearing in nefarious ways.

Prenuptial agreements aren’t the most welcoming topic when your adult child announces their engagement. Still, this should be discussed and encouraged no matter how much you love your prospective new family member. A prenuptial agreement or prenup is a contract between two adults agreeing on how they will distribute assets in case of divorce. This legally binding document addresses assets, debts, spousal support, alimony, gifts and inheritances. It’s also helpful as a supporting document if one of the spouses should die unexpectedly. However, the couple should have a will, power of attorney and other estate planning documents created as soon as they are married.

Depending on the state, there may be laws concerning when the prenup is signed for it to be valid. Signing a prenup under duress could make it invalid, so this needs to be addressed in a timely manner.

Another option is to create a postnuptial agreement (postnup). Spouses may contractually agree to terms outlining the distribution of assets in the event of a divorce after the wedding.

Asset protection includes determining and formalizing how assets will be passed on to heirs. Parents should consider creating trusts as part of their estate plan. Trusts allow grantors (the person creating the trust) a much higher degree of control over who receives the assets in the trust and takes them out of the probate estate.

For example, the trust may call for a beneficiary to receive a portion of their inheritance at ages 30 and 40 and the balance at age 50. An heir with a drug dependency might be required to complete a rehabilitation program or maintain employment over a steady period of time before the trustee can distribute some or all of the assets in the trust.

If assets are left through a will, a number of vulnerabilities are created. First, they are part of the probate estate and subject to federal and state taxes. Second, the will becomes a public document when it goes through probate, so creditors can learn if someone is receiving an inheritance. Creditors may include ex-spouses, credit card companies and financial institutions.

An experienced estate planning attorney is familiar with the tools used to protect assets and ensure that they pass to the next generation according to your wishes. Protecting a lifetime of hard work is a worthy endeavor, creating a legacy and providing security for those you love.

Reference: Kiplinger (Nov. 9, 2024) “Want Your Kids to Inherit? You Need an Asset Protection Plan”

Millennials Need Estate Planning

 

One family jokes about their mother’s large blue binder, affectionately calling it “Mom’s Book of Life.” She has assembled physical copies of estate planning documents, including medical directives for next of kin, account information, passwords and a list of assets. Her adult children thought they were too young to deal with such matters, reports a recent article, “I’m Way Too Young For Estate Planning. Or Am I?” from The Wall Street Journal. On reflection, they realized they, too, needed an estate plan.

Someone as young as 18 could benefit from having an estate plan, and someone in their 30s definitely needs one. Once a young person becomes a legal adult, their parents no longer have any say in financial or health matters without properly prepared estate planning documents.

Everyone over 18 should have an advanced healthcare directive, sometimes called a healthcare proxy or healthcare power of attorney. This allows people of your choosing the ability to make decisions about your healthcare if you become incapacitated: too sick or severely injured and unable to communicate your wishes.

Adults of all ages also need a power of attorney. This document gives another person the legal authority to access and manage your finances in case of incapacity.

A will, also known as a last will and testament, is needed to direct how you want your assets to be distributed after death. Even if you don’t own a home or car, chances are you have some personal property and may want specific people to receive certain items. Creating a will and getting used to the concept of planning for the future is a good habit.

If you have an extensive online life, digital assets will also require some planning. An inventory of your digital assets, including email accounts, apps, social media, cryptocurrency, photos, videos, etc., should be created, so a digital executor can manage the accounts. Some platforms permit naming a legacy contact, while others require specific directions on what should be done with your content.

Student loans, 401(k)s from employers and other financial accounts should be inventoried. However, this information doesn’t go into the will. The will becomes a public document once submitted to the court for probate, so any specific account information should be kept in an inventory of assets and debts.

Creating an estate plan can open a conversation with older relatives and parents about their plans for end-of-life care, a difficult but important dialogue. Talking about their wishes before something happens will allow you or other relatives to know beforehand, rather than spending the rest of your life worrying about a decision made in an emergency situation.

Estate plans need to be changed as you go through your life. New partners or spouses may need to be added, or a deceased parent may need to be removed as an executor. Getting used to addressing these life matters is part of being a responsible and loving adult.

Reference: The Wall Street Journal (Oct. 18, 2024) “I’m Way Too Young For Estate Planning. Or Am I?”

What Is Legacy and Estate Planning?

 

Creating a last will and testament is part of planning for the future. Leaving a legacy is another. Both are part of an estate plan, which addresses planning for incapacity during your lifetime and the disposition of your property after you’ve passed. A comprehensive estate plan is a worthy endeavor, says a recent article from North Shore News, “How to secure your legacy with estate planning.”

The core components of an estate plan include a last will, power of attorney and advance directives for health care decisions, sometimes called health care power of attorney or health care proxy. Your family will face additional stress and expenses if you don’t have a last will. Your wishes for the disposition of property won’t be honored, unless you proactively have an estate plan created.

Will charitable giving be part of your legacy? This also requires advance planning. When you make donations to individual charities or use Donor Advised Funds, you create a legacy of giving and may also create tax benefits. An experienced estate planning attorney will help create a plan to maximize the tax advantages of charitable gifting.

Estate planning is especially important for women, who statistically live longer than men and tend to have lower earning power. Women need to consider who will be their caregivers if their partners predecease them or if they are solo agers.

Discussing family dynamics with an estate planning attorney can help ensure that the estate plan is created to address individual needs. Estate planning is never a one-size-fits-all plan.

Estate planning also requires regular reviews. One estate planning attorney advises her clients to revisit their estate plans every time there’s a presidential election. It’s an easy way to remember the passing of four years, which is a good time to review an estate plan.

A carefully crafted and regularly updated estate plan addresses changes to your life and the laws governing wills, trusts and retirement accounts. The SECURE Act made major changes to how assets in retirement accounts are distributed to heirs, for instance. The addition of Roth IRA and SEP accounts created huge changes in the passing of assets to the next generation.

Your estate planning attorney will give you and your family the peace of mind of knowing you’re prepared for the future, including the unexpected events, happy and sad, that life brings.

Reference: North Shore News (October, 2024) “How to secure your legacy with estate planning”

How Younger Adults Take Charge of Estate Planning

However, recent anecdotal trends show a new, positive shift among millennials or Gen-Z individuals. According to a recent article from Forbes, “Why Gen-Z Is Suddenly Creating Wills And Trusts—And You Should Too,” within recent months, more and more millennials and Gen-Zers who are being told to create an estate plan are actually going ahead and doing so.

The article says Gen-Zers and millennials have become the “quiet leaders” of estate planning. Several things are driving this shift:

Digital Assets. Younger people, even those of modest means, have significant digital assets, including cryptocurrencies, online businesses and many social media accounts.

COVID. Living through a global pandemic and experiencing the unexpected loss of family members raised awareness relatively early in their adult years of the repercussions of not having an estate plan.

Changing Family Structures. “Modern Family” is more than entertainment. Today’s family is more likely to be different than the traditional family structure of the past, and clear directives are needed to prepare for asset distribution.

Valuing Philanthropy. Younger adults are more aware of the role nonprofits play, whether in their immediate communities or globally. They are also more likely to give a portion of their estate to nonprofit organizations.

Financial Savvy. Younger adults are more candid than past generations with their peers about money and how to protect it through estate planning as part of money management and investment strategies.

Having an estate plan can protect a legacy for family and children, while not having one could mean giving half of your estate to the government in taxes. An estate planning attorney can help to avoid or minimize probate, a court process requiring your will to become a public document. Probate can delay the distribution of property and can be costly.

Another reason to have a will is to minimize family conflict. Your family won’t be left guessing how you want your assets to be distributed. It is also less likely that there will be family fights or misunderstandings after you’ve passed.

Estate plans are not just for wealthy people but anyone who cares enough about their family to protect them. Younger adults embracing estate planning is a good sign for the future.

Reference: Forbes (April 17, 2024) “Why Gen-Z Is Suddenly Creating Wills And Trusts—And You Should Too”

Would Your Family Benefit from a Living Trust?

 

Estate planning is rarely on top of anyone’s bucket list. However, taking charge of your legacy is a gift to your family and should be done sooner rather than later. A recent article from The Motley Fool explains why a living trust should be part of your estate plan. The title says it all: “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family.”

At its essence, a trust is a way for one person to own and manage another person’s property or even to manage their own property. The IRS definition of a trust is as follows: “In general, a trust is a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another.”

A living trust requires you (the grantor) to transfer assets into it. If you manage the trust yourself, you are also the trustee. This lets you make all decisions for the trust while leaving instructions in very specific language for its distribution by a successor trustee (or two successor trustees) after you pass away.

Having the correct language is essential for the trust to achieve your goals, which is best prepared by an experienced estate planning attorney. They will know how the laws of your jurisdiction treat trusts and what language must be included for the trust to be valid.
Property can also be distributed through a last will and testament. However, there are several advantages to using a living trust.

Trusts avoid the time and costs of probate. During probate, the court supervises the distribution of assets. It takes time—months or, depending on the complexity of the estate, years. During this time, heirs don’t have access to assets, which they may have been counting on to pay for final expenses or maintain a home.

Trusts keep your life and death private. Once a will is filed with the court, it becomes a public document. Anyone who wants to can review its contents. Creditors, ex-spouses, estranged family members and salespeople can all review the will. This is why phone calls and mailings from realtors and financial advisors after a death in the family often besiege loved ones. Trusts remain private and are only reviewed by the trustee and, in some cases, beneficiaries.

Revocable trusts are flexible. While a revocable trust doesn’t provide the same level of tax protection as an irrevocable trust, it allows you, as the grantor, to make changes. You can add or delete beneficiaries, move assets in or out of the trust and change your appointed successor trustees.

A trust of any kind is not a do-it-yourself project. Consult an experienced estate planning attorney to define your goals and determine the best trust for your situation.

Reference: The Motley Fool (Feb. 12, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family”

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

How Do You Plan a Business Succession?

 

When business owners die without estate or succession plans, chaos ensues as family members clash over leadership decisions and determining the direction of the business. Even the closest families can quickly descend into a battlefield of hurt feelings, endless arguments and faction-building, according to the article “How to Make Your Business Outlive You” from next avenue.

Family disagreements often escalate into legal disputes. Lacking leadership, businesses spiral downward and often must be liquidated, leaving behind broken families with severely depleted assets.

This scenario occurs in small businesses on a regular basis. Owners with the vision and tenacity to take their ideas and create a successful enterprise are often so passionate that they can’t imagine the business without them.

A well-defined succession plan matters to more than just the family and their customers. According to the Small Business Association, businesses with less than 500 employees account for 99.9% of all firms in the U.S., 43.5% of the country’s total economic output, and just under 66% of new jobs created. A well-designed succession plan contributes to the national economy,

Having a succession plan in place protects the business and the family from unforeseen circumstances and creates a roadmap for the future. What is the best time to start? When all is well, leaders are healthy and there’s no internal drama.

Start by contemplating your legacy. How do you want your family and employees to benefit from the value created by the business? Clarifying this will drive much of what follows.

Seek professional guidance. An estate planning attorney should be one of several professionals to ensure that the plan complies with laws and regulations in your jurisdiction. You also want to be sure your business succession plan aligns with your estate plan. Otherwise, the resulting confusion could lead to prolonged difficulties and even litigation.

You’ll need a power of attorney for someone to be able to make decisions if the business owner becomes incapacitated. A buy-sell agreement establishes a fair market value for the company. Life and disability insurance policies provide financial security for the owner and key personnel.

Put it in legally enforceable documents. Discussions only go so far. Executing a formal series of documents ensures that the plan will be enforceable by a court if needed. Language should be clear, with no ambiguity, to transfer ownership and business shares.

Potential successors need to be identified. Will everyone step up to the next level if the business owner becomes incapacitated or dies? This isn’t always the best solution. Sometimes, skills override structure.

Reviewing and updating the business plan should be done as often as you update an estate plan. Whenever there is a major event in the business, review the plan to see if it is still relevant.

A succession plan is all about legacy, continuity, safeguarding a business, letting employees know they are valued and reducing volatility in the family’s future. It allows the business owner to communicate their values and vision, even if they are not present to be part of the future.

Reference: next avenue (Dec. 12, 2023) “How to Make Your Business Outlive You”

What’s the Best Way to Manage an Inheritance?

 

Inheriting wealth comes with its own set of challenges and emotions, whether it’s a modest amount or a significant amount. A recent article from Kiplinger, “Three Essential Strategies for Managing Your Inheritance,” explains three key considerations to help manage an inheritance responsibly.

Understanding tax implications. Taxes take a bite out of inherited wealth and require the help of an experienced estate planning attorney to guide you through the maze of taxes. The type of assets inherited, and the laws of your state will affect tax liabilities. For the most part, life insurance proceeds are tax-free. However, inherited retirement accounts, including traditional IRAs or 401(k)s, are not.

When the asset inherited is real property, there may be a benefit from a step-up in basis, which can minimize capital gains taxes if the decision is made to sell the property.

Federal estate tax exemptions are still extremely high. However, there may be state estate taxes or inheritance taxes to consider.

Confusion about taxes often occurs because the rules differ for diverse asset types. Inherited IRAs, for instance, may be taxed heavily if the withdrawals are not appropriately managed. Understanding the rules makes all the difference.

Investing? Act wisely. Sudden wealth often causes people to act irresponsibly. It’s tempting to take a risk with investments. However, wealth can evaporate very quickly if not managed with care and prudence. Before making any big financial decisions, evaluate your overall financial picture. Wealth may be best used to pay off debt, invest and save for the future.

If you don’t have an emergency fund, this is the time to establish one, enhance retirement savings and rid yourself of any debt. You’ll want to chart a course to balance growth with wealth preservation.

Make a long-term plan for the future. A large inheritance can substantially impact your life goals and retirement plans. It’s an excellent opportunity to reassess your finances and consider making adjustments. Is early retirement your goal? Are there charitable causes you’d like to support? If you have or plan to have children, could your inheritance be used for their college education?

An inheritance is also a time to ensure that your estate plan is in place. This includes trusts, wills and health care directives to manage and protect your wealth. An inheritance of any size requires estate planning to protect yourself and your family.

Estate planning goes beyond having a will. It’s about ensuring assets are distributed according to your wishes. Trusts are excellent tools for managing wealth and allow for control over how assets are used by future generations, in addition to providing tax benefits and creditor protection.

If you’re navigating an inheritance, take time to plan before you act. You’ll want to make wise choices to honor the legacy behind the inheritance while creating your own legacy.

Reference: Kiplinger (Dec. 8, 2023) “Three Essential Strategies for Managing Your Inheritance”

 

Top Benefits of Estate Planning

Despite the hard lessons learned during the COVID pandemic, surveys repeatedly show most Americans still don’t have an estate plan in place. According to the article “Five benefits of estate planning” from The Aspen Times, a comprehensive estate plan ensures your assets are distributed according to your wishes when you die, minimizes taxes on your estate and protects your loved ones, especially those who depend on you financially. In addition, estate planning protects you while you are living and ensures that your wishes are followed, if you become incapacitated.

Protect Yourself and Your Assets During Your Lifetime. No one likes to consider themselves at risk of incapacity. However, this happens. If you become mentally or physically incapacitated during your lifetime, you might not be able to earn income, or make decisions for yourself. Part of an estate plan includes documents to address these risks to protect yourself, your family and your assets.

Designating a health care proxy and a power of attorney gives people you choose the ability to make decisions on your behalf. Otherwise, the responsibility for your medical, legal and financial decisions may go to someone you don’t even know.

Asset Distribution. Without a last will, your home state’s laws govern the distribution of your assets. Your intentions to care for certain individuals won’t be relevant, as the law itself decides who gets what. A last will is used to state exactly how you want assets to be distributed. Your last will should be updated as your financial situation and/or family dynamics change. You should also review designated beneficiaries on investment accounts and insurance policies regularly and especially after any major life changes.

Minimize Transfer Taxes. While there’s no way to predict what taxes will take effect in the future, it’s safe to assume there will be taxes on your estate. If you hope to leave wealth of any size to your family, proper estate planning is crucial. There are many different strategies to minimize taxes on inherited wealth, including life insurance, Roth IRA conversions, lifetime giving and trusts. Your estate planning attorney will be able to create a plan suited for your unique situation.

Protect Family Wealth. As people accumulate wealth, they often become the targets of frivolous lawsuits. For this reason, placing assets in certain types of trusts can ensure efficient wealth transfer, as well as protecting assets from predators and creditors.

Create and Continue a Legacy. Legacy planning is part of the estate planning process. Many people donate money or assets on their death to causes they supported during their lifetime. These goals can be achieved by contributing to a donor advised fund, creating a family foundation or setting up a philanthropic trust.

Creating an estate plan is also a useful tool for having candid discussions with the family about the future, avoiding future conflicts and making your estate administration easier for loved ones.

Reference: The Aspen Times (Jan. 24, 2023) “Five benefits of estate planning”

Top Benefits of Estate Planning

Despite the hard lessons learned during the COVID pandemic, surveys repeatedly show most Americans still don’t have an estate plan in place. According to the article “Five benefits of estate planning” from The Aspen Times, a comprehensive estate plan ensures your assets are distributed according to your wishes when you die, minimizes taxes on your estate and protects your loved ones, especially those who depend on you financially. In addition, estate planning protects you while you are living and ensures that your wishes are followed, if you become incapacitated.

Protect Yourself and Your Assets During Your Lifetime. No one likes to consider themselves at risk of incapacity. However, this happens. If you become mentally or physically incapacitated during your lifetime, you might not be able to earn income, or make decisions for yourself. Part of an estate plan includes documents to address these risks to protect yourself, your family and your assets.

Designating a health care proxy and a power of attorney gives people you choose the ability to make decisions on your behalf. Otherwise, the responsibility for your medical, legal and financial decisions may go to someone you don’t even know.

Asset Distribution. Without a last will, your home state’s laws govern the distribution of your assets. Your intentions to care for certain individuals won’t be relevant, as the law itself decides who gets what. A last will is used to state exactly how you want assets to be distributed. Your last will should be updated as your financial situation and/or family dynamics change. You should also review designated beneficiaries on investment accounts and insurance policies regularly and especially after any major life changes.

Minimize Transfer Taxes. While there’s no way to predict what taxes will take effect in the future, it’s safe to assume there will be taxes on your estate. If you hope to leave wealth of any size to your family, proper estate planning is crucial. There are many different strategies to minimize taxes on inherited wealth, including life insurance, Roth IRA conversions, lifetime giving and trusts. Your estate planning attorney will be able to create a plan suited for your unique situation.

Protect Family Wealth. As people accumulate wealth, they often become the targets of frivolous lawsuits. For this reason, placing assets in certain types of trusts can ensure efficient wealth transfer, as well as protecting assets from predators and creditors.

Create and Continue a Legacy. Legacy planning is part of the estate planning process. Many people donate money or assets on their death to causes they supported during their lifetime. These goals can be achieved by contributing to a donor advised fund, creating a family foundation or setting up a philanthropic trust.

Creating an estate plan is also a useful tool for having candid discussions with the family about the future, avoiding future conflicts and making your estate administration easier for loved ones.

Reference: The Aspen Times (Jan. 24, 2023) “Five benefits of estate planning”

10 Steps To Giving On Purpose Mid-Michigan

Can your philanthropy do more than just help the cause or causes important to you? Yes, as many well-to-do but generous Americans can attest. If you are philanthropically inclined and have an appreciation “for things that matter most,” then why not bless your family as well as your charities as part of your legacy. To make philanthropy a part of your legacy, you do not have to be a Carnegie to have your name put on this or that building. For most of us, our family is our most important and lasting legacy. Consequently, philanthropy can be what binds a family together and passes down real enduring values to the younger generations, all while doing tangible good today. This is not automatic. It requires more than estate planning, or even charitable gift planning, but what is called legacy planning. To give you a quick run-down and even a guide, you might consider the ten steps that formed the basis of a recent Private Wealth magazine article titled “10-Step Legacy Planning.” The ten by title alone are: 1. Identify What Inspires 2. Create A Giving Mission Statement 3. Review Giving History 4. Engage The Next Generation 5. Research Non-Profit Organizations 6. Form A [Family] Focused Team 7. Decide Where To Give 8. Build The Strategy 9. Present Customized Recommendations 10. Implement The Strategy Be sure to read the original article for the details on these ten steps. In the meantime, there is no time like the present to get started on the first step. So, what “inspires” you?

Reference: Private Wealth (January 7, 2014) “10-Step Legacy Planning

For more information, see www.jerryreiflawyer.com

 

Legacies, Like Gardens, Take Time And Planning Saginaw, MI

What is a “Legacy”? That can be hard to define with any certainty. We kind of know it when we see it. There are those monuments, those legends, and those gifts about which there is no question. Whether it is in the name of a particular family or a community, it is unquestionably a legacy. So it is with a garden created roughly a century ago by members of the Morris family in Pennsylvania. For those with high ambitions to leave a legacy, consider a recent meditation in the form of a Barron's Penta article titled “A Lesson in Family Legacy.” It is the story of that Morris family garden. The garden is no patch of soil, either at its start or in the present day. No, it is the Morris Arboretum of the University of Pennsylvania, a famous landmark still giving to the public and the University. However, it was not always that way, nor was it as pretty as the article describes. In fact, the Morris family of Pennsylvania, namely siblings John and Lydia Morris, raised the garden from the soil and left their name in place long after their own passing or the passing of their house through the form of an endowment. While not every garden can be a monument, or every gift a legacy, it does require a unique perspective when it comes to coordinating your assets, goals and values. What will be your legacy?

Reference: Barron's Penta (October 4, 2013) “A Lesson in Family Legacy”

For more information, see www.jerryreiflawyer.com

 

 

So, What Will Be Your Legacy? Saginaw, MI

Sometimes it can be easy to see the trees, but miss the forest. This is true when it comes to planning for your estate. You can get mired in the tax laws, the tricks and the tools, and even some petty family squabbling. Then again, there are those planners who find direction in an old axiom: “Don’t just leave an estate. Leave a legacy.” An estate is just so much stuff, figuratively or literally. However, a legacy is so much more. Whether a beloved memory or even a contribution to those around you. Usually, we seek to leave behind an estate for the good of our family, and we work to protect this gift from what problems may lie in wait. When you are considering this notion of your “legacy,” take time to think through what you are trying to achieve. So how do work out your legacy? Fortunately, a recent article in Forbes titled “4 Smart Ways To Leave A Legacy” can help get you started. Certainly, there is no one way to leave a legacy, or even a single way to guarantee it. In the end, it is your call when it comes to the legacy you wish to leave.

Reference: Forbes (August 1, 2013) “4 Smart Ways To Leave A Legacy”

For more information, see www.jerryreiflawyer.com

 

 

Racing the Clock on 2012 Mega Gifts

When it comes to 2013 taxation, the future may be catastrophic for estate tax planning. As each day of 2012 passes us by, incredible wealth transfer opportunities are dwindling away. Can you beat the clock before time runs out? These last few months are either a time to seize the unprecedented gifting opportunity of a $5.12 million gift tax exemption, or a time to run out the clock on this opportunity perhaps for the rest of your lifetime. The gift tax exemption is scheduled to return to $1 million. If you are looking to seize the opportunity in 2012, then you will find encouragement in a recent Forbes article titled “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling.” In short, the article notes that there are ways to give now without spoiling future opportunities, if you think carefully about the right kinds of assets to give. The author of the article calls such strategic assets “legacy assets,” and offers this quote from an attorney comrade: Legacy assets are ideal for the “megagift” for several reasons: 1. art, real estate, family business interest and other Legacy Assets are secular investments, that is held for more than 10 years, and so the gifting of an asset does not substantially reduce the lifestyle or disposable financial wealth of the client, 2. The financial value of Legacy Assets is not correlated to the investment market, 3. The personal and social value of legacy assets is both real and significant, 4. Since there is both a financial and a social value to the ownership of legacy assets, they work well with charitable split interest trusts that can significantly leverage the Unified Credit, and 5. There are techniques that can be used with legacy assets that cannot be used for investment assets. In terms of a Mega Gift, legacy assets are definitely worth considering. Remember, the time is now to act on these amazing wealth transfer opportunities. Don’t wait until it’s too late and the ball is already dropping in Time’s Square.

Reference: Forbes (October 14, 2012) “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling”

Estate Planning for your Family Intangibles

Giving a gift is one thing, giving a lesson is another entirely. With a gift, you may make another happy, but with a lesson, you may make another wise. Interestingly, intangible gifts such as wisdom and values are of rising concern with baby boomers. This concern is evidenced by the findings in a recent survey, as reported in an article in TIME Magazine’s Moneyland. In the article, titled “How to Give Heirs What They Most Want (It Won’t Cost Much),” more and more people consider “family stories” to be their greatest legacy, along with the lessons behind them. In fact, a whopping 86% of boomers named “family stories” as the most important part of their legacy, even if they also had complex assets to leave or a family tradition of wealth to continue. Against this backdrop, the question today, as it has always been, is about how to instill or commemorate such values and heritage. The article concludes with this thought: “It takes reflection to understand what is most important in your life and how you might get that message to heirs. But it won’t be a waste of time. Sometimes a scrapbook is worth more than an investment portfolio.” For more ideas on this subject, be sure to consult the original article and speak with your estate planning attorney for creative approaches other clients have taken in the past.

Reference: TIME Moneyland (June 12, 2012) “How to Give Heirs What They Most Want (It Won’t Cost Much)”

Charitable Giving – Leaving A Lasting Legacy

At some point in your life, there comes a moment when it becomes important – vital, in fact – to focus your energies on a cause and give to charity with all the passion that went into amassing your worth. But what drives so many generous givers to this moment? A recent Wall Street Journal article points out that it’s the age-old, if hackneyed, idea: legacy. Beyond a doubt, there are certain tax advantages to well-timed and well-planned charity; the tax code is designed for this. But also it is important to realize that there is a history to the tax code. Regardless however convoluted the reason, many a tax advantage exists beyond the lobbying of non-profits and the work of those set to take advantage for fiduciary reasons. No, such advantages exist to recognize the urge to provide a legacy. Planning for your estate and your wealth, in life and after death, is usually about “legacy” in one form or another. Your family is part of your legacy, that is oftentimes a give, but the missions you held dear in life are just as much a part of your legacy. In fact, they are an extension of your ideas, dreams and hopes for the world, or some small corner of it. The original article goes as far as to say that legacy, in broad terms, is why we give to charity in the first place. So, what will your legacy be, and what do you want to leave for the world? If there is something that you care about, perhaps it is worth acting upon, either in life or as a bequest.

Reference: The Wall Street Journal (March 8, 2012) “Why the Rich Give to Charity”

Charitable Giving – Leaving A Lasting Legacy

At some point in your life, there comes a moment when it becomes important – vital, in fact – to focus your energies on a cause and give to charity with all the passion that went into amassing your worth. But what drives so many generous givers to this moment? A recent Wall Street Journal article points out that it’s the age-old, if hackneyed, idea: legacy. Beyond a doubt, there are certain tax advantages to well-timed and well-planned charity; the tax code is designed for this. But also it is important to realize that there is a history to the tax code. Regardless however convoluted the reason, many a tax advantage exists beyond the lobbying of non-profits and the work of those set to take advantage for fiduciary reasons. No, such advantages exist to recognize the urge to provide a legacy. Planning for your estate and your wealth, in life and after death, is usually about “legacy” in one form or another. Your family is part of your legacy, that is oftentimes a give, but the missions you held dear in life are just as much a part of your legacy. In fact, they are an extension of your ideas, dreams and hopes for the world, or some small corner of it. The original article goes as far as to say that legacy, in broad terms, is why we give to charity in the first place. So, what will your legacy be, and what do you want to leave for the world? If there is something that you care about, perhaps it is worth acting upon, either in life or as a bequest.

Reference: The Wall Street Journal (March 8, 2012) “Why the Rich Give to Charity”