Michigan Estate Planning Blog

What are Risks of a DIY Estate Plan?

 

The number of online tools purporting to create estate plans easily and cheaply makes it tempting to forgo working with an estate planning attorney, but the long-term consequences of a DIY estate plan could be disastrous. A recent article from mondaq, “Risks of DIY Estate Planning” takes a close look at what can go wrong.

Estate and tax laws are both complicated and nuanced. Without an experienced estate planning attorney overseeing the creation of an estate plan, a homegrown plan isn’t likely to achieve the desired results. In addition, chances are good it won’t follow state law. If a last will and testament is found to be invalid during probate, it’s as if there was no will at all.

Estate planning needs to be created for each person’s unique situation. Do family members get along, or should the estate plan be designed to be litigation-proof? Are there large assets held in trust or corporations with complex tax consequences? If there are family members with special needs, have the proper trusts been established to protect them over their lifetimes?

Tax planning is often a significant part of an estate plan. Depending on your state and where you own property or businesses, your estate must consider many different types of taxes. Transfer tax, capital gains taxes, income taxes, and estate taxes are just a few of the taxes to be addressed. If the estate plan doesn’t dovetail with tax liabilities, beneficiaries could find themselves with a far smaller inheritance than anticipated.

Today’s modern family is not as straightforward as in the past. Families come in many different variations, all of which have their own special challenges. Blended families are fairly common, and a traditional “I love you” will, where one spouse leaves the other everything and vice versa, may result in some children being disinherited. Same-sex married couples with children need to be sure their children, biological and adopted, are protected with an estate plan designed to protect all members of the family.

Comprehensive estate plans should address asset distribution issues, guardianship for minor children, and name an executor and heirs. A Power of Attorney is needed so spouses may be involved in each other’s healthcare. Living Wills are required to clarify wishes for end-of-life care, as are Advanced Medical Directives. There are a host of documents to be created and decisions to be made, all of which require the knowledge and experience of an established estate planning attorney.

Reference: mondaq (July 1, 2024) “Risks of DIY Estate Planning”

Same-Sex Marriage And The Supreme Court

It’s been something of a fairly eventful Supreme Court season this year. With many important decisions covering many important topics, few issues have been so radically altered as that of same-sex marriage. The Supreme Court, in its last actions of this term, rendered two important decisions on the topic of same-sex marriage. Now it’s time to figure out what these rulings mean moving forward. A recent article in The New York Times, titled “How the Court’s Ruling Will Affect Same-Sex Spouses,” provides a good start. For those planning for their estates, the important decision was rendered in US v. Windsor, a case many have been following quite intently and for good reason. The case centered on a common conundrum of many in same-sex marriages: married by state law, but strangers by federal law. And of course, the Federal law in issue was The Defense of Marriage Act, or DOMA, as signed into law by President Clinton. DOMA changed the definition of marriage to literally require different gender partners, but this has been struck down. Consequently, all of the federal benefits ascribed to the term “marriage” will extend to same-sex marriages as well. These include, but are not limited to, social security, estate and gift tax law, and common law spousal provisions. In short, it’s a groundswell and the ground won’t stop moving until we figure out all of the ramifications. Read the original article for more specifics, but many questions remain. For example, will estate planning be just the same for same-sex marriage now?

Reference: The New York Times (June 26, 2013) “How the Court’s Ruling Will Affect Same-Sex Spouses”

For more information, see www.jerryreiflawyer.com

 

Same-Sex Adoption Snags Saginaw, Michigan

Children change everything. That’s never truer than when those seeking to adopt a child are same-sex partners. With state laws mixed on the matter and federal laws as yet unchanged, same-sex adoption is far from settled. In the meantime, same-sex couples need to define their “families” from the laws as they are. The Wall Street Journal recently provided some insight in an article titled “For Same-Sex Couples, the Finances Get Even More Complicated.” Essentially, fundamental financial and estate planning is not optional for same-sex couples. According to the article, some 2 million to 2.8 million children are being reared in same-sex households. Now, more than ever, same-sex couples must ensure that their wills, trusts, powers of attorney and health care directives are ship-shape. In the context of adoption, this means making proper provision for the guardians of an adopted minor child. And there is a lot of need. Bottom line: same-sex couples that adopt children need to make sure all of their financial and legal ducks are in a row. For many this may mean a commitment to life insurance or to a carefully-drafted estate plan.

Reference: The Wall Street Journal (February 24, 2013) “For Same-Sex Couples, the Finances Get Even More Complicated”

For more information, see www.jerryreiflawyer.com

 

Same-Sex Couples Endure Complex Estate Planning Issues Saginaw Michigan

With the election now over, gay marriage advocates see something entirely new across the states. As you probably know, three new states approved same sex marriage: Maine, Maryland, and Washington. What do these new developments mean for same-sex couples and their estate planning challenges? With the three newest states to uphold same-sex marriage, that makes an official total of nine states plus the District of Columbia, plus an assortment of 12 other states with various forms of “civil unions” and “domestic partnerships.” It’s a good sign for advocates, but all the same it’s important to remain in perspective, as put by Forbes staffer Deborah Jacobs not too long after the election: “Gay Marriage Scores Victories In All Four States That Considered It, But Tough Road Lies Ahead.” For planners, being able to take care of one another and your family, either with legal rights or transfers of assets, is a matter of balancing the right legal appointments, documents, and tax codes. But same-sex couples occupy a strange place that requires a steady hand: states vary greatly even when they permit same-sex marriage, the institution that opens up so many planning avenues, and yet the federal government doesn’t recognize any of them. As we watch the Supreme Court take on the Defense of Marriage Act (DOMA), there may be more new developments on the horizon. Whatever the outcome may be, same-sex couples still face unique and complex trials when it comes to their estate plans.

Reference: Forbes (November 7, 2012) “Gay Marriage Scores Victories In All Four States That Considered It, But Tough Road Lies Ahead”

For more information, see www.jerryreiflawyer.com

 

Filing a “Protective Claim” for Same-Sex Estate Planning

The legality and constitutionality of same-sex marriage has not been far from the news or the estate planning of some who are affected. This particularly is true after the ruling of U.S. District Court Judge Barbara S. Jones in Windsor v. United States. When it comes to “same-sex” estate planning, there are significant tax burdens at play. However, according to a recent article in MarketWatch titled “Ruling poses tax issues for same-sex couples,” that doesn’t mean that you have to consider the protective claim. So, what is a protective claim? Any form of taxation is subject to a sort of protective claim. All that is required is that you pay your tax and then file an amended return. It should be filed on the basis of what your return should be if current litigation is decided in that favor. Still, the stakes are simply that much higher in this case with the many tax benefits that marriage as a federally-recognized institution brings. Some may consider it premature, but, in the case of either income taxes or estate taxes, taking the defensive position of a protective claim may be worth it. At the very least, there’s nothing to lose.

Reference: MarketWatch (July 10, 2012) “Ruling poses tax issues for same-sex couples

Estate Planning: Securing Legal Ties for Children of Same-Sex Couples

When same-sex couples become parents, regardless of where they live, they frequently are well-advised to establish strong legal relationships to bolster parental ties to their children. Take, for example, the legal complications surrounding same-sex unions as recently explored in The New York Times. The article, titled “A Family With Two Moms, Except in the Eyes of the Law,” found that many same-sex couples do start families and do bear children. As a result, very careful estate planning is essential, especially given current state and federal laws. For any couple with minor children, fundamental estate planning focuses on providing backup parents (i.e., guardians) to raise them and trustworthy stewards to protect their inheritance. When it comes to same-sex couples, making such provisions for minor children likely means navigating a dicey web of laws that may (or may not) tilt in their favor. To make matters even more complicated, a simple relocation from one state to another may upset your comprehensive estate planning and require a top-to-bottom review of your existing estate plans. In the end, not only must you fully define your own legal structure, but you must also do so well in advance and make changes as they inevitably occur in the law and in your life.

Reference: The New York Times (July 20, 2012) “A Family With Two Moms, Except in the Eyes of the Law”

Filing a “Protective Claim” for Same-Sex Estate Planning

The legality and constitutionality of same-sex marriage has not been far from the news or the estate planning of some who are affected. This particularly is true after the ruling of U.S. District Court Judge Barbara S. Jones in Windsor v. United States. When it comes to “same-sex” estate planning, there are significant tax burdens at play. However, according to a recent article in MarketWatch titled “Ruling poses tax issues for same-sex couples,” that doesn’t mean that you have to consider the protective claim. So, what is a protective claim? Any form of taxation is subject to a sort of protective claim. All that is required is that you pay your tax and then file an amended return. It should be filed on the basis of what your return should be if current litigation is decided in that favor. Still, the stakes are simply that much higher in this case with the many tax benefits that marriage as a federally-recognized institution brings. Some may consider it premature, but, in the case of either income taxes or estate taxes, taking the defensive position of a protective claim may be worth it. At the very least, there’s nothing to lose.

Reference: MarketWatch (July 10, 2012) “Ruling poses tax issues for same-sex couples”