Month: October 2010

National Child Safety and Protection Month

Did you know that November is Child Safety and Protection Month?  No?  Honestly…I didn’t either.  I tend to think of the safety of our children as a minute-by-minute consideration not just something to think about one month out of the year.  And I’m sure many parents feel the same way.  It is nice that there is a month dedicated to raising awareness of such an important topic.  It may be cliche, but our children are the future.

If you peruse the website and periodicals for information on this topic you will find information on preventing childhood accidents, advice for childcare providers, ways to make your home safer for your children, and many more topics.  Whoa – something is missing!

I didn’t come across any articles on taking the critical steps to make sure your children are protected and provided for if something happened to you.  As a Grand Rapids estate planning lawyer,I’m sure you knew I would bring up estate planning.  I’m glad someone did!  Now maybe I’m just not a good “googler,” but I think the fact that I was unable to find a single article about the importance of Estate Planning in the context of this month says a lot about how most people view estate planning.  They likely think it is for “old” people who need to plan for their death.  Quite the contrary!

I firmly believe that estate planning is most important for Grand Rapids parents with minor children and that planning for life (yours and theirs) is the key to an estate plan that brings the added peace of mind we all desire.  Yet, as parents, we tend to think of “child protection” and “child safety” only in the physical sense – not getting physically hurt.  I have come to learn through conversations with people whose parents passed away when they were children, the emotional hurt of losing their parents is far worse . . . and worse still if they are thrown into “the court system” and a judge determines who cares for the children.

None of us are invincible . . . you only need to read the daily news to know that life happens.  So I encourage you, let this Child Safety and Protection Month be a “wake up” call to get an estate plan in place for your family and have the added peace of mind of knowing your children will be provided for and cared for if something happened to you.

Call our office at 616-827-7596 in the month of November to schedule a Peace of Mind Planning Session and I will waive the session fee ($750 value!).  Make sure to mention this blog post to take advantage of this special offer!

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

The Importance of Your Parents’ Estate Plan

The statistics are quite staggering: half of Americans do not have even the most basic estate planning documents (Forbes.com).  That means that only half of Americans actually have a say in what will happen if they pass away or become incapacitated…the other half are relying on their state’s one-size-fits-all law and the state court system.  Seriously?!  You want legislators and judges who don’t know you from “Joe” next door to be determining who gets what if you pass away or worse yet, who will make decisions on your behalf if you become incapacitated?

The most common reason in my experience is procrastination.  I can’t count how many times I’ve met with and talked with great people who say, “we’ve been thinking about it for a long time…we just kept putting it off.”  Well, here’s another thing to think about in addition to needing to do your own planning.  What planning, if any, have your parents done?  That’s right…do you know if your parents have an estate plan?  If so, do you know what it says and who they picked to carry out key rolls.

Your parent’s estate plan should be important to you for 2 reasons (and not the reasons you think): (1) you may likely be the one (or one of) who has to take care of their affairs if something happens to them, and (2) if something happens to you before them, their plan may control some of how your things are distributed.

Point #1: if people do have an estate plan in place, they typically pick relatives to carry out the duties of administering the Michigan estate (through Michigan probate or through Michigan –trust administration).  Guess what?  That could be you.  Do you know what your duties would be?  Do you know what your parents have done or have not done to ease the burden on you.  Think about it.  If something happens to your parents the last thing you want to think about is handling their financial affairs and administering their estate.  You’ve just lost folks who were very dear to you…what do you want to have on your shoulders in addition to the loss?

Point #2: I have had several great people I’ve met with who have named their parents (or in-laws) as the beneficiaries of their retirement accounts and/or their life insurance.  The reason: they didn’t want it to go through probate if they passed away and their children were under 18 (money paid to a minor child upon the parent’s passing must go through the probate court process).  BIG uh oh with that “planning technique.”  Why?  Because once that money is paid to the parents it is their money.  I don’t doubt that they are great people and would do whatever you requested, but there are a lot of things over which they have no control.  Do they have creditors?  What if they were in a car accident?  Because it is their money, it is open to all those risks (including divorce)!

And more importantly for the subject of this post, what does their estate plan say?  Most parents who don’t meet with a relationship-based Michigan estate planning attorney will name their children equally as the recipients of their estate when they die.  Do you see the uh-oh?  That means you and your siblings (if any) would get equal shares without any special provision for the resources you made for your children.  For example, if you have 2 siblings, that would mean that your children will only receive 1/3 of the insurance and/or retirement benefits you wanted them to receive.

See why your parents’ estate plan is so important?  I encourage you to talk with your parents about their planning (or lack of a plan!).  And if you or they have any questions, call us at (616) 827-7596.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

Critical Importance of Estate Planning for a Michigan Special Needs Child

I’ve touched on the subject before in a previous post and in my weekly client e-newsletter.  A presentation given to our Grandville, Michigan Rotary group tugged at my heart and renewed within me the passion to help spread the word about the vital importance of proper estate planning to families with children who have special needs.  Some of the great folks behind Benjamin’s Hope spoke to us about the struggles and joys of having a child with special needs (specifically autism in this case) and the vision they have for a unique location where children can reach their full potential.

I’m not going to pretend that I know what it is like to be a parent of a special needs child.  However, I have clients, friends and colleagues who have children with special needs and it has taught me this – they are children first and foremost.  They light up their parents lives and bring joy to those whose lives they touch.  And yes, there are added stresses and struggles.  The great thing about West Michigan is that there are numerous resources available to parents and their special needs children.  And although they may not qualify for them now, due to the parents’ income or other factors, there are also financial resources available through government programs and private programs.

As parents, we love our children more than anything in the world.  So why wouldn’t we want them to receive every benefit available to them?  Yet many parents put their children at risk of not receiving these benefits because they don’t spend the time or money to put a proper estate plan in place (or they don’t know what options are available).  And what if something happened to the parents? It’s a critical consideration for all parents and even moreso for the parents of a special needs child.  Who would care for your child?  Do they know how to care for a child with special needs?  Would a care manager be important?  Have you provided for one and given direction on how he or she should be involved?  Have you provided financial resources through life insurance or investments so your child can enjoy the life you want them to have?  Have you made sure to protect whatever benefits they may be entitled to as they get older or are they at risk because of the planning you’ve done (or lack of planning)?

As an attorney who focuses in estate planning, I make it a point to keep up on the unique planning opportunities available to parents with special needs children.  Please, please, please make sure to put a comprehensive plan in place.  There’s no doubt you care very deeply about your child(ren) – show it by planning for their future.  And make sure whatever attorney you work with has specific training, knowledge and experience planning for children with special needs.  We can help if you call (616) 827-7596 – mention this blog post and we will waive the fee for your Peace of Mind Planning Session ($550 value)!

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

A Week Dedicated to Estate Planning

Did you know that this week is Estate Planning Awareness week in Michigan and across the nation?  Well, it is.  And you can read the Michigan proclamation by clicking here. Interestingly enough, Governor Granholm left one important estate planning document out of her proclamation…the durable power of attorney.  Don’t forget that one!

Estate Planning is one of the most overlooked areas of personal financial management.  It is estimated that over 120 million Americans do not have up-to-date estate plans to protect their families in the event of sickness, accidents, or untimely death (yikes!).  This costs the working classes and the more affluent wasted dollars and hours of hardship each year that can be greatly minimized with action and advanced planning.

Th reasons for a week dedicated to estate planning awareness are many and varied.  Some of the reasons given in the legislation that put the week in place are:

  • Estate planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of their family, heirs, or charities;
  • Estate planning encourages timely decisions about the method of holding title to certain assets, the designation of beneficiaries, and the possible transfer of assets during life;
  • Many Americans are unaware that a lack of estate planning and “financial illiteracy” may cause their assets to be disposed of to unintended people by default through the complex process of probate;
  • Careful planning can prevent family members or other beneficiaries from being subjected to complex legal and administrative processes requiring significant expenditure of time, and greatly reduce confusion or even animosity among family members or other heirs upon the death of a loved one

And parents with minor children must not forget that estate planning is the way to make sure you’ve legally documented who you want to care for your children if you pass away or are incapacitated, so that they don’t end up in the arms of strangers or Child Protective Services!

If you haven’t put an plan in place for your family (young, older or in between), why not?  I encourage you to show your family how much your care about them by putting a plan in place before it’s too late.  If you don’t, the State of Michigan has a “one size fits all” plan for you.

And if you have put an estate plan in place for your family, when was it last updated?  Your life, the law and what you have are constantly changing . . . your plan needs to change along with it.  What happens if you don’t?  It’s difficult to say until something happens.  However, there is a good chance it will fail to accomplish what you wanted if it isn’t kept updated, and once something happens, it’s too late!

Consider talking with your family, friends and others you care about to share with them the importance of planning and keeping your plan updated.  National Estate Planning Week is a great way to start talking about the subject.  If you, your family or friends have any questions, call us at 616-827-7596 or contact us here.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

The Shocking Truth About Michigan Living Wills

The first shocking truth is this: a Living Will is not a Will at all.  A Will is a document that, when approved by the probate court, determines how and to whom your “stuff” is distributed to when you pass away.  A Living Will is a document that instructs physicians and others to withhold or withdraw life-sustaining treatment when the patient’s death is certain.  It is called a “living” will simply because the declaration is made by a person when he or she is still alive and able to make medical decisions.

The second, and bigger, shocking truth is this: Living Wills have no explicit legal support in Michigan.  That’s right, a Living Will is not a “legal document” in Michigan and is not required to be followed.  Unlike many states, Michigan has no legislation and there are no cases (that I can find) specifically authorizing living wills or requiring that they be followed.  Surprised?  Quite honestly, I was too when I first found out.

So what can you do if you want to express your wishes as to end-of-life decisions?  Michigan does have a Durable Power of Attorney and Patient Advocate Statute that allows you to designate who you want making healthcare decisions if you are unable to participate in your healthcare decisions.  I suggest including living will-like provisions in your patient advocate designation as the surest way to have them recognized.  If you absolutely want a document titled “living will,” then make sure to have a patient advocate designation as well and explicitly incorporate the living will by reference in your patient advocate designation.

Choosing someone to make medical decisions on your behalf when you are unable is one of the most important decisions you can make.  Because of how important this decision is, why wouldn’t you discuss your wishes and options with an attorney who specializes in estate planning?  Take the step of turning your wishes into directives by calling us at 616-827-7596 or contacting us here.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

Vital Steps When Inheriting Money in 2010

There’s been lots of chatter about the “windfall” situation 2010 estates find themselves in this year, with the lapse of the estate tax.

Here’s the problem–this may not be the case. It’s a bit of a technical issue, and one that should be handled in consultation with a tax professional, but this is the long and short of it:

Before this year, heirs valued inherited assets at the fair market value at the time of the decedent’s death. This year, heirs must use the decedent’s basis as their own when computing taxes owed on the sale of these assets.  You can read my previous post that helps explain carryover basis in “every day” terms by clicking here.

The following seven steps can help guide you in this situation:
1. Have assets appraised. In order to determine your estate tax bill and where you want to allocate your $1.3 million carryover basis, you need to know the value of assets in your estate.  That doesn’t mean you are required to have $1.3 million by any means.  Consider that amount as the “coupon” you get to turn in for purposes of carryover basis.

2. Locate purchase records. If you can’t prove the cost of an asset, the IRS will assume a value of zero and you’ll be responsible for capital gains taxes on the entire amount after the adjustment for your “coupon” from #1.

3. Delay selling appreciated assets.
It’s possible that inheritors may be able to escape these carryover rules by delaying the sale of the assets until next year.  It’s not guaranteed.  It all depends on what Congress decides to do.

4. Postpone distributions. Although it seems unlikely at this point, Congress could restore the estate tax retroactively. If the assets have already been distributed, paying the estate taxes will be very difficult.  This is one of the toughest decisions in my mind if you have what could be a taxable estate, since we don’t know what Congress will (or will not) do regarding this issue.

5. Extend paperwork deadlines. Just like an income tax return, you may be able to extend the deadline for the carryover basis reporting paperwork to October 15.

6. Apply the basis allowance fairly. Don’t apply it to particular assets that will benefit one beneficiary more than another.

7. Guard against an executor’s added risks. If beneficiaries disagree with the executor (or trustee as the case may be), the executor (or trustee) could do what they ask (if it doesn’t breach a fiduciary duty), but make sure to get the beneficiaries to sign a document releasing the executor from liability.

Here’s the article I found which goes into greater detail for you: http://bit.ly/cQIGmU.

If you have questions,  let me know or contact your CPA.  For purposes of this post I can’t help but make general statements.  It’s important to note, however, that these decisions are very situation specific, so call us at 616-827-7596 or contact us here to get your questions answered.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

Selecting a Michigan Healthcare Agent (Patient Advocate)

As I prepare a post about the importance of designating a Michigan health care agent, I ran across a great post by my friend and colleague Jackie Bedard on How to Select Your Health Care Agent – click here to read it. There really isn’t too much I can add to the post.  It is informative and gives great questions to think about when choosing your Michigan healthcare agent.

There is one main difference in Michigan – terminology.  Here the document that governs who makes healthcare decision for you if you are unable to participate in those decisions is a Michigan patient advocate designation.  The person (or people) you choose to make these decisions is your Michigan patient advocate.

Another point to consider is that a Michigan living will is not a binding legal document.  Surprised?  Many people are!  I’ll go into more depth in a future post.  Contact us if you or someone you know has any questions or needs a caring attorney who will help counsel you through these important decisions.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.

An Issue With Typical Michigan Estate Plans in 2010

The current environment with no estate tax seems to be causing a bunch of unintended consequences (as if that’s a surprise!). Here’s another…

A standard, tax-driven Michigan estate plan for a married couple, put together by many advisers, uses what are called “A-B” trusts. Upon the death of the first spouse, the single trust may split into the decedent’s trust and the survivor’s trust (sometimes called the family trust and the marital trust). The amount in the decedent’s trust is usually equal to the federal estate tax exemption. The remaining assets go to the survivor’s trust for the surviving spouse’s benefit.

The problem with this setup in 2010 is that a deceased spouse may unintentionally give the surviving spouse nowhere near the benefit they intended. . . or even nothing! With no federal estate tax, all assets pass to the decedent’s trust under the typical language, leaving nothing for the survivor’s trust. The decedent’s trust most likely benefits the surviving spouse, but probably has many more restrictions than the survivor’s trust. For example, the surviving spouse may only be an income beneficiary with the remainder going to the children.

Although 2010 is drawing to a close soon, this issue emphasizes the importance of scheduling a review of your current plan or the plan of your family and friends, because even though the estate tax is sure to change, there are so many other aspects of your plan which are affected by this constantly changing legal and economic environment. If there’s ever been a time to work with an attorney that has a membership/maintenance plan it is NOW – that way you don’t get stuck with a bill every time Congress changes the law in a way that may harm your planning.  Don’t be caught by surprise!

And don’t even get me started on the fact that Congress still hasn’t made its mind up on what will happen next year (let alone this year).  We could well see the exemption go down to $1 million dollars.  I know what you’re saying . . . Mike that is a LOT of money.  You’re right, it IS a lot of money.  Think about this though – that amount includes everything you own including the value of life insurance…yes, life insurance.  That puts a lot of people in a position that requires considering tax planning.

If you, your family or your friends need to review your plan or make sure that you have a plan in place in these turbulent times (rather than the State’s plan for you), contact us at 616-827-7596 and mention this post for a special discount.

Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you.  He focuses on planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective.  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.