ATF Regulation 41F and Gun Trusts – Moving Forward

Well, the “dreaded” day is upon us.  The ATF’s rule 41F goes into effect tomorrow, Wednesday, July 13, 2016.  All Form 1 and Form 4’s that are postmarked July 12th or earlier will be processed under the current guidelines.  All that are postmarked on or after July 13th will be subject to the new guidelines.  If you are not familiar with 41F, you can read my previous blog post on it by clicking here.

I’m writing today because the ATF finally issued the new versions of the Form 1, Form 4 and Responsible Person Questionnaire that will need to be used starting July 13, 2016 going forward.  They have said they will not accept the existing forms for submissions on or after July 13, 2016.  Since the process takes plenty long on its own, do yourself a favor and make sure you use these new forms.  Here is where you can get each of them:

Form 1

Form 4

Responsible Person Questionnaire

If you need to order fingerprint cards, you can do that by clicking here.  You can find the ATF’s latest FAQ by clicking here.

Now, despite saying “dreaded” in my opening paragraph, the sky is not falling on gun trusts.  No doubt, there is definitely more red tape going forward.  But, gun trusts will remain the best option for many people who have (or plan to have) NFA items and/or a firearms collection.  The multiple authorized user and inheritance options will stay (and are very important).

If you have any questions, please contact me.

What Does New ATF Regulation 41F Do?

By now you have no doubt heard of the President’s latest efforts at gun control.  There is a LOT of misinformation about it in the media (not surprising), so I thought I would provide a quick summary.  For this post I am focusing on only the ATF’s final rule 41f (formerly known as rule 41p).  In case you prefer the full text rather than a summary, you can read all 67 pages here.

silencerATF rule 41f will change the requirements for purchasing Title II NFA items (silencers, short-barreled rifles, short-barreled shotguns, and full auto).   As noted above, 41f was previously known as 41p.  Although I still do not support the rule, the final rule ended up being much better than the proposed rule was.  Here is a quick list of the effects:

  • Individual purchasers will no longer need their Chief Law Enforcement Officer (CLEO) to approve their application, but they will need to notify the CLEO that they are applying for a tax stamp for a NFA item before submitting their application and will need to include the notice in their application materials.
  • In addition to the existing requirements, gun trust applicants will need to include the following with their application: (1) fingerprint cards, (2) passport quality photos,  and (3) a “responsible person” form.  These requirements apply to all current Trustees of the gun trust.   In the case of gun trusts I draft, that will be the client and their Co-trustees.  If someone else drafted your gun trust, you will need to check with the drafter for what is required or, if preferred, have me review and update the trust, as needed.  The gun trust applicant will also need to notify the CLEO before submitting their application and include a copy of the notice with their application materials.
  • Gun trust applicants may not need to do all of the above steps every time they apply.  So long as the gun trust applicant had an application approved in the previous 24 months and there has been no change to the documentation (e.g., gun trust, responsible person forms, etc.) previously provided, the applicant needs to provide only the following, in addition to the Form 4 or Form 1: (1) certification that the information had no changed since the prior approval, and (2) identification of the application for which the documentation had been submitted by form number, serial number, and date approved.  My recommendation would be to include a copy of the previously approved Form 4 or Form 1 (as the case may be) with the new application.
  • The changes do not take effect until 180 days after the rule is published in the Federal Register.  It was published on January 15, 2016, making the effective date July 13, 2016.  The existing process remains in place until July 13, 2016, and all applications (Form 1 and Form 4) that are “in process” on or before July 13, 2016 will be process under the existing rules, not the new rules.

machinegun-medSo, knowing that gun trusts are a significant part of my firearms law practice, what do I think of these changes?  As you might expect, I think the changes for individuals are great because it is less burdensome, and the changes for trusts are completely unnecessary and overly burdensome.  Is it the end of gun trusts?  No way!  First, from now until July 13, 2016 is a sweet opportunity to get a gun trust in place and purchase all the NFA items you want and can afford without having to deal with the overly burdensome requirements of the new regulation.  Second, gun trusts (LLCs and Corporations too, if necessary) are still going to be the only way to allow multiple people to have access to an item.  For instance, if I did not have a gun trust and instead I owned NFA items in my individual name, the mere fact that my wife has access to my gun safe without me present would be illegal.  Although others can use a NFA item under the direct supervision of an individual owner, with individual ownership only the person to whom the item is registered via tax stamp is allowed to have access to it.  With a gun trust, any Trustee can have access to and use the item without anyone else needing to be there and/or supervise.  This has and should continue to be one of the main reasons to have a gun trust.  The main effect I see the new regulations having on gun trusts is in the selection of Co-trustees.  I think more often than not, the Co-trustees of a gun trust will need to be geographically close due to the logistical difficulties of long distance coordination of fingerprinting, etc., under the new regulation.

And with all regulations and laws, us firearms law and gun trust attorneys are already putting our heads together on ways to handle and work around the upcoming changes.  Keep your eyes peeled for future updates, this is a rapidly changing area and I hope to keep you up-to-date through this e-newsletter.

If you or someone you know have any questions or would like to get a gun trust started (if you do not have one already), please contact me.

Michael Lichterman is an estate planning and gun trust attorney who helps families and firearm owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for finances – it’s about who your are and what’s important to you.  He focuses on estate and asset protection planning for  firearm owners (both NFA regulated and non-NFA regulated), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.

What Is a Trustee Supposed to Do?

This summer has brought an increase in contested probate matters – that is, family and/or friends not getting along, or people taking advantage of others based on their position of power in someone’s estate planning documents. In many of the cases, it was actual or alleged breach of duties by a person appointed as Trustee.

I will not get into the gory details of the cases we’ve had this summer (several of which are still pending), but I do think they emphasize one thing – we all should know who/what a Trustee is, what they are required to do, and what they can be liable for. Of course, I am not going to be able to go into too much detail in this post . . . well, I could, but it would put you to sleep, if you are not asleep already 😉

In short, a Trustee owns and manages property for the benefit of someone else. Most commonly, this is someone named to administer and distribute your revocable living trust during a period of your incapacity or after you pass away. It is not like managing your own finances. A Trustee has the power and the obligation to manage someone else’s (your) assets for the benefit of the beneficiaries named in the trust. It is not a role to take lightly.

As far as the powers the Trustee has, basically they can do anything you can do. Sell, buy, transfer, get loans, make loans, and, if the your trust specifically gives them the power, they can handle your business, specially regulated assets (e.g. firearms), and many other things.

But, as they say, with great power, comes great responsibility. The Trustee has several duties and obligations, all of which fall under the general heading of “fiduciary duties” – that is, duties that are owed to others based on the Trustee’s relation to them as Trustee. A short and non-exhaustive list of Trustee duties are:

  • Marshalling assets: gathering all of your assets together
  • Acquire a tax ID number, if the trust does not already have one
  • Inventory and appraise (formally or informally) trust asset
  •  Send legally required notices to trust beneficiaries within a certain timeframe
  • Keep the trust beneficiaries informed of trust assets
  • Invest trust assets as a “prudent person” would
  • Keep “accountings” (e.g. values, income and expenses) of trust assets and provide reports to beneficiaries no less than annually
  • Prepare and file trust tax returns (or, preferably, work with a qualified CPA to prepare and file them)
  • Make distributions as required in the Trustee agreement
  • When the trust is fully administered, close the trust

As you can see, there is a lot for a Trustee to do and to do correctly. The top two recommendations I make to Trustees are: (1) keep meticulous records on everything you do and why you did it, and (2) enlist the assistance of professionals, such as an Attorney, Financial Advisor, and CPA, to make sure you are properly administering the trust and the assets owned by it.

When choosing a Trustee, you should choose someone you trust and who is either capable of handling the above items on his/her own, or is willing to work with professionals who can guide him/her through the process. Given what is involved, it is not uncommon for families to choose a professional Trustee, such as a bank or trust company.

In closing, I would recommend that you bookmark this post.  Or, better yet, keep it yourself and share it to anyone who is named as a Trustee in your plan or who may be named in someone else’s plan (friend or family member).  It will be a good starting point if you (or they) are called upon to act as Trustee.

And remember, if you ever have a questions, please contact me.

Growing Issues with Elder Financial Abuse

I just wanted to write a quick blog post on the topic of elder financial abuse, as we are seeing a rise in these cases.  I have to admit that I am shocked at how some “friends” and even family take advantage of the more experienced generations.  Many times, the elder is taken advantage of by someone they trust.  And it is quite common to see the elder suffering from some level of cognitive impairment, such as alzheimer’s or dementia.  To get some basic information on what to look out for, take a look at these two sites: and

As I mentioned, we are helping several families right now with holding responsible the scammers who took advantage of their older family member and recovering what we can of the financial losses.  Look for a follow-up blog post on the topic in the future.  In the meantime, if you or someone you know has an “older” friend or family member who they suspect may be a victim of elder financial abuse, please contact me.

The Importance of Planning Communication

grandmaI have had a lot of conversations recently centered around communication and financial information.  Each had its own twist, the context rarely being the same.  But, the two recurring themes were: (1) lack of organization and communication about your financial situations can cause a lot of frustration and expense if you are disabled or pass away, and (2) the process of creating and properly funding a living trust can help keep #1 from happening. I know it is not necessarily fun or exciting to talk about. Be that as it may, it can make a HUGE difference.

Here is one of the “bad” examples.  The person had a will-based estate plan that was put in place some time ago.  It will not shock you to know that a lot changed over the years.  In addition to not keeping the estate plan updated, the person never shared anything about the person’s financial situation (what they had, where it was, etc.).  I am now working with their family to try and sort everything out.  It is proving quite difficult.  Each financial institution seems to have different requirements for finding out information about accounts, and quite honestly, the family does not even know where to look.  It has led to a lot of frustration on their end and much higher legal fees as we help walk them through it and get the information they need.

On the flip side are a couple of clients who passed away in 2014.  Both had a trust-based plan that was fully funded.  If you are curious about what I mean by “fully funded”, you can read a blog post of mine on the topic by clicking here.  Because I work with clients to make sure their trust is fully funded, including putting together a spreadsheet of their assets, there is a list of the “what” and “where”.  I also tend to find that by talking through the financial side of things with clients, they seem to be more willing to talk about it with those they have trusted with handling their financial affairs during their incapacity or after their passing.  In both of these cases, those people who were called upon to act as successor Trustees were able to quickly get a handle of the financial side of things which, in turn, led to a quick, smooth, and less costly transition.

Now, don’t get me wrong – there are always exceptions to these examples.  Having a will-based plan does not mean that administering your estate will be a frustrating and costly experience.  And likewise, just having a trust does not guarantee that everything will be smooth sailing.  But, I have generally found the exceptions to be few and far between.  Whether a will-based plan or a trust-based plan, the important part is to make sure to keep track of your financial affairs and communicate with those you choose to help with your estate.  A well-qualified financial advisor can be a big help with this process too, so do not overlook them.

As you know, I welcome questions, comments, and stories about the topic, so please let me know if you have any.

How Do I Apply For a Tax Stamp with a Michigan Gun Trust?

machine_gunAs a Michigan NFA gun trust attorney, there are some questions that I am asked on a regular basis.  I am going to try to cover them over a series of posts.  The first and, by far, most common question is, “how do I apply for a tax stamp for my NFA item using my gun trust?”  The “how” is heavy on the paperwork side.

If you worked with me to put your gun trust together, you must send the following to the ATF to get a tax stamp:

  • A copy of the entire trust itself (this includes the trustee declarations at the end of the trust);
  • The signed Assignment Page to the trust listing the make/model/serial number of the item you are purchasing or manufacturing;
  • A copy of all amendments to the trust (if there are any);
  • Two original double-sided ATF Form 4 (if purchasing the item or otherwise having it transferred to you) or ATF Form 1 (if manufacturing . . . for example, making a short-barreled rifle (SBR) or short-barreled shotgun (SBS) from an existing rifle or shotgun);
  • A Certification of Compliance (ATF Form 5330.20); and
  • A check for the tax ($200 for a Form 4 or Form 1) made out to “Bureau of Alcohol, Tobacco, Firearms and Explosives”.

Currently, all of the above should be sent by a trackable courier to the following:

National Firearms Act Branch
Bureau of Alcohol, Tobacco, Firearms and Explosives
P.O. Box 530298
Atlanta, GA 30353-0298

If you do not yet have a gun trust in place, do not wait any longer.  Now is the time.  Call me at 827-7596 and I will help you take the important step of putting a gun trust together!

ABLE Accounts and Michigan Special Needs Planning

In the flurry of new laws passed at the end of 2013, there was a law that provides additional options for individuals with special needs or disabilities.  The law is called the ABLE Act – the “Achieving a Better Life Experience” Act. It had overwhelming support from all political parties, something that is rare these days. As you might expect, I am not able to cover all the details one blog post, especially when much of the “nuts and bolts” of how ABLE accounts will work has yet to be figured out through the regulatory process.  So, I will attempt to summarize the act and some important considerations.

10674802805_a9b0103bf6_mThe ABLE Act recognizes that there are additional financial strains faced by individuals with disabilities and their families, including those in the Grand Rapids, Michigan area.  In short, the ABLE Act allows for individuals to utilize a tax-free, state-based private savings account, referred to as an ABLE account, for the care of people with disabilities. This ABLE account can be used to supplement government benefits for “qualified disability expenses” such as medical and dental care, education, employment training, housing, and transportation, while not disqualifying a disabled individual from governmental benefits. As a result of the ABLE Act, eligible individuals and families are now allowed to establish ABLE savings accounts that will not affect their eligibility for Supplemental Security Income, Medicaid and other public benefits.

The ABLE Act states that eligibility will be limited to those individuals with “significant disabilities” with an age of onset of disability before turning 26 years of age. It is important to note that the person does not have to be under 26 years of age, just that the onset of the disability was before turning 26 years of age. Additionally, there are dollar limits on the amount that can be contributed to an ABLE account, both on an annual basis and as a total dollar amount in the account.  The annual contribution limit is $14,000 and the overall amount allowed in the account is $100,000.  To exceed either limit would disqualify the account as an ABLE account, a potentially disastrous result.

Keep in mind, this is not something you can set up immediately. Congress put the general structure in place and it was signed in to law, however regulations must be established before states can begin to set up procedures for managing ABLE accounts. It will likely be late this year before you can set up an ABLE account.

Keep in mind, an ABLE account is not a one size fits all solution for everyone.  An ABLE account is not without its drawbacks.  One of the biggest drawbacks of an ABLE account is that any money remaining in the account upon the passing of the ABLE account holder must be used first to pay back the State for care provided to the account holder.  Many of the planning options that are already available for someone with different abilities continue to provide a better approach for many families.  For example, a special needs trust will likely continue to be the best option for many Grand Rapids, MI area individuals and families.  Why?  For a few main reasons:

  • There is no maximum annual contribution amount
  • There is no maximum allowed amount
  • There is much more flexibility in how the assets are invested
  • You maintain more control over how the assets are used
  • Assets in a special needs trust are not subject to the Medicaid and/or SSI payback to which an ABLE account is subject.

I cannot overemphasize the importance of that last point.  If you, as a family member or friend put money into an ABLE account for someone, that money will be subject to Medicaid and/or SSI claims upon the ABLE account holder’s passing.   Yet, if you established a special needs trust (or contributed to one that was already established), no such “payback” is required and you can specify what happens with the remaining trust assets when the beneficiary passes away.  In short, you have more control.

All that said, an ABLE account is another “tool” in the planning “toolbox” and will help some families and individuals who may otherwise be disqualified from government benefits.

Breaking News from Lichterman Law – Firm Announcement

The Greek philosopher Heraclitus once said, “[t]he only constant is change.” Maybe you’ve heard or experienced that before, or maybe you try to avoid Greek philosophers . . . whatever your situation may be, we are surrounded by change in our daily lives. For goodness sake, we live in Michigan. If anyone is familiar with change, it’s us Michiganders when it comes to weather.

And in my life I’ve experienced many changes, as I’m sure you have. Some great, some good, and some not quite as good. And as I look back, I’m thankful in a way for each one . . . I’ve certainly learned a lot. And that leads me to my next change . . .

. . . effective July 1, 2013, I will be joining the law firm of Bolhouse, Baar & Hofstee in Grandville. For some who read this, the change may come as a shock. Many of you know that I truly love what I do. As cliché as it may sound, I feel Estate Planning and Business Planning are my calling as an attorney. I mean, why else would I read and learn more about it on evenings and weekends, right? ☺ And anyone who knows me well, knows that I don’t jump to decisions quickly . . . if anything, I tend on the long side when making decisions (some would call it OCD . . . I like to call it “detail oriented”). The recent addition of Medicaid planning to my practice areas is a good example.

If I were reading this I would wonder, “so, Mike, why did you decide to join another firm.” The short answer is because I want to spend more time with clients and reaching out to families and businesses in West Michigan – I love sharing time and working with folks. But, as the “chief cook and bottle washer” (a phrase my dad uses), much, if not most, of my time over the past 4 years has been spent on administrative duties of owning/running a business. Turns out that a law practice is not unlike most other small businesses in that regard.

The other main reason is that it helps me address the single most common question clients have asked me about my practice – “what happens if something happens to you?” It’s not only a fair question; it’s a very good one. Being part of a caring firm will help my client families have added peace of mind, knowing that if something happens to me, I have caring colleagues familiar with my practice who can come along side you if something comes up.

And yes, there may be other possible solutions. After praying about it and talking with my family, pastor, and key mentors in my life, I determined that joining a firm provides my clients with the best solution.

I imagine the next question is, “why Bolhouse, Baar & Hofstee?” The short answer: their attorneys are excellent, well respected, and both attorneys and staff are truly caring people. You know, the kind of folks you just “hit it off with.” You see, over the past year I’ve been approached by several firms about joining their practice. But, after many meetings, discussions, and prayer, I just didn’t feel any were a good fit for the way I practice and the client families I serve. That is, none except Bolhouse, Baar & Hofstee.

So, with that as the background, the official switchover will be on July 1st. After the switchover, I will still be spending much of my time at my current office at 5252 Clyde Park, but I will also spend time and meet with client families at Bolhouse, Baar & Hofstee’s office in downtown Grandville (in the historic Grandville State Bank building). You’ll still be able to use the same phone number for a period of time (or you can use (616) 531-7711) and my new email address will be My fax number will be (616) 531-7757. All should be “up and running” on July 1st.

I’m looking forward to the future and to having you continue to be part of our wonderful client family. The privilege is mine, I assure you. If you have any questions about this change, or anything at all, please call or email me. I welcome the conversation!


Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

How Much Does a Michigan Will Cost?

“Yeah, hi, I’m just calling to find out how much a will costs here in Michigan?”  As a Grand Rapids, Mi wills and trusts attorney, that is probably the single most common question I get asked when someone calls my office about estate planning.  The right answer . . . “it depends.”  Sure, lawyers get a bad rap for giving that answer, but think about it for a second.  

Do you think all people are the same?  All families?  Do you think everyone’s goals are the same, that they have the same number of children, that those children are “good” or “bad,” or maybe no children at all.  Are they married, single, single and in a committed relationship?  Is it a second marriage, and if so, did they each have children before getting married to each other?  Did they have children after they married each other.

Or, how about goals.  Do they give to charity?  If so, which ones and how much?  What are there values – what drives their daily decisions?  What important stories do they have to share that should be passed down to future generations?  What is their income, expenses, and income tax situation?  Does anyone owe them money?  Do they expect to inherit?  How important is creditor protection to them?

You see, there are MANY different considerations that go into crafting/drafting a comprehensive estate plan that is specific to an individual or family.  And that’s what makes it difficult (virtually impossible) to “quote a fee” over the phone.  As an estate planning lawyer I spend much of my time learning and applying many different laws to client situations.  But even with knowing the law, I have no context in a 10 minute phone call.  We need time to learn from each other – I need to learn about your family and who you are (we call this Whole Family Wealth planning), and you can learn about how the law works (or doesn’t work) for your situation so you can make the best decision for your family.

Oh, sure, there are plenty of attorneys out there that will quote fees right over the phone.  And I’m ok with that – it’s their choice and their approach.  And quite honestly, families that are just looking for a form document to appease their conscience are not a good fit for the way we help families.  But, for those who want to have a plan for their family, who want to actually understand how that plan works and have a vital role in creating it, and who want to create a lasting legacy for their family, we are the ones you should call.  So why not “take the bull by the horns” and call us at 616-827-7596 today!  And if you mention this blog post, we’ll have a special discount for you.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

Recent Changes in Michigan Estate and Probate Law

I probably sound like a broken record when I talk about the “living” nature of an estate plan. I always remind our client families that it’s critically important to review their estate plan on a regular basis (for example, every 3-5 years), and especially when you experience life changes. That’s why we include ongoing 3-year reviews in all of our planing levels. You life will change, what you have will change, and what you want to have happen will change. Your plan needs to keep up with those changes or it is likely to fail you when it’s needed the most.

And . . . the law will change (often)!  So, being fresh off several days of continuing ed, I thought I would share some of the key changes in Michigan’s law related to estate planning and probate. “Recent” means within the last 1-2 years. So here goes:

  • Probate inventory fee. This is probably the biggest change of them all. The “inventory fee” that each estate is required to pay to the probate court will be less for almost everyone (at least until 2018). That’s because the value of real estate that is used to compute the inventory fee is now based on the equity value of the real estate rather than the market value (MCL 600.871(2)). Think of all the underwater or barely above water homes we’ve seen so much of in the past several years. Using equity value rather than market value can appreciably lower the inventory fee.
  • Trust decanting. No, I’m not talking about wine . . . I promise. Generally speaking, trust decanting is “pouring over” the assets of a trust into a different trust and may be done for various reasons (changing terms of the trust, changing administrative or tax provisions, etc.). And this can be done even if the original trust is irrevocable (either because you wanted it that way from the outset or because someone has passed away and a previously revocable trust became irrevocable). There was some belief that case law (e.g., court-based law) allowed for “decanting,” but now we don’t have to worry about that “grey area,” because Michigan law explicitly allows it. I’m very much in favor of this because it provides client families with more flexibility.
  • 529 Plan creditor protection. This is a HUGE planning opportunity for client families planning for their children’s college education. Effective January 2, 2013, 529 plans are protected from creditors whether owned by the parent or child (MCL 600.6023(1)(l)(iii)). This is a great way to help make sure the college savings aren’t taken by creditors.
  • Property tax uncapping. Big change here for certain transfers of real estate made after December 31, 2013. Current law stated that a “transfer” of real estate “uncaps” the annual property tax increase restriction on assessors. As of December 13, 2013, it will not be a “transfer” (and therefore will not uncap the property tax value) to change ownership of residential real estate if the person (or people) who is taking ownership is related to the current owner within the first degree (MCL 211.27a(7)(s)). Now, there are some questions about the what “first degree” means and we’re hoping for some clarification from either the legislature or the regulators. I’ll do my best to keep you updated on how they define that.

There were many more changes, but I figured most readers are probably sleeping by now so I just listed the changes I feel are most important to my estate planning and probate client families. I welcome any questions or comments you have on these items or anything else.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

Fighting Over the Family Legacy

I recently read this New York Times article on the family in-fighting over the estate of the late Merton Simpson.   Mr. Simpson was a painter and pioneering champion of African art who accumulated a collection said to be worth millions of dollars.  The story is sad, for sure.  It is also a reminder for all of us of the value of family and of having clearly spelled out wishes to help guide our chosen representatives in carrying on our legacy.  I encourage you to read the entire article – it’s not very long.

It also brings to mind something I always strongly encourage each of my clients to do – talk to others about your planning and what your wishes are for you legacy.  Many times the “others” you talk to will be family or very close friends, but it may also include close business associates, church leaders, or other people who you trust and know you well.  It’s often a great idea to record yourself sharing these thoughts.  That’s what I do with each client I work with – we have a Priceless Conversation.  Sadly, it seems that Mr. Simpson was taken advantage of by at least some of his family and friends.  Although it was a good thing that a guardian was appointed for him, it seems that the downward spiral in family and business relations was almost passed the point of resolution by that point.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.

How to Transfer a Credit Union Account to Your Trust

As noted in this slightly dated CNN Money article, the number of credit union accounts is growing.   The cause, according to the article, is that “a growing number of consumers grew fed up with the fees at the nation’s biggest banks and took their money elsewhere.”  I’ve noticed in many of my conversations that a large driver is better customer service (actual or perceived) or the credit union has a relationship with the person’s employer.  And, not surprisingly, I find that many (if not most) of my client families have one or more credit union accounts.  I’m a huge fan of great service, so I love to see my client families getting great service.  But, as a dedicated Grand Rapids, Mi estate planning attorney I’m troubled to find out that many of them are receiving bad advice about how to properly coordinate their credit union accounts with their living trust estate plan.

As with most things in life, the “best” way to handle something is based on each family – your goals, values, and how they want their trust to work.  And generally speaking we recommend that our client families have their trust own their bank and credit union accounts.  Up until a couple of years ago, clients were able to just change the owner of the account with new signature cards, whether it was a bank or credit union account.  About two years ago I started getting client calls saying that their credit union recommended against changing the ownership of the account.

Why?  Well, for whatever reason the credit unions started requiring you open a new account to change ownership (e.g. you could not change the owner on an existing account).   I honestly don’t know if that is an internal policy issue at each credit union or if it was an “edict” from the government regulators, so please know that I’m not bashing credit unions … I’m not.  And this may not be the case at all credit unions, but I have not had an exception to this rule for any of my client families over the past couple of years, so it seems to be a common practice.

Although I don’t necessarily agree with the policy, what I really find troubling is that almost every one of our client families was told, “you don’t want to change the owner because that requires opening a new account, changing all your auto-deposits and auto-deductions, and then closing out your old account.  You can just name your trust as beneficiary of your account – that’s the same thing.”  Please don’t misunderstand me – I understand the practical *pain in the butt* it is to change all those automatic things, believe me.  But, the fact is that naming a beneficiary is not the same thing as having your trust as the owner.

As I wrote in this previous blog post, trusts are an incredible incapacity planning tool.   But, it’s only a great incapacity planning tool for those things that it owns.  If it’s not in the name of your trust, your trustee won’t have legal authority to handle or take care of it during your incapacity.  So, in the above example, if your trust is just a beneficiary of your credit union account, your trustee will not be able to access it during your incapacity.  But if it is “owned” by your trust, your trustee can access it to continue to pay bills, take care of you, and take care of your children or others who you help support.

So, choose what is best for your family after talking it through with your estate planning attorney, and remember the difference between owning and being a beneficiary.

Michael Lichterman is an estate planning and charitable planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™.  This goes beyond merely planning for “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their family’s values, insights, stories and experiences.