Month: December 2010

Don’t Forget Your Intangible Assets

A good friend of mine recently shared a story with me that had my gut wrenched when I read it.  She knows that I focus on helping families plan not just for that they have, but also for who they are – their values, insight, stories and experiences – and the story proves just how important that is.  This is planning for your Whole Family Wealth™.

Don’t underestimate who you are and what you mean to your family, friends and society as a whole.  We all have stories to share that can help and set examples for others.  Yet many great people I talk with feel that “leaving a legacy” is something that they’ll do much later in life, that they don’t have a “legacy” to leave right now.  Trust me when I say that is completely untrue!

And don’t just take it from me.  Read this article and watch the video.  You can view it by clicking here. I will let it speak for itself.  Please share your thoughts and comments after you read, watch and think about it.

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, family owned business succession and pet planning – 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.

5 Priceless Presents You Should Give Your Family

A recently read a great blog post by my colleague and Oregon estate planning lawyer, Candice Aiston. I am re-posting it hear for my readers, with Ms. Aiston’s permission.   Please take the time to read it, as it could make a HUGE difference in your families future.  Make it a point to give these important gifts in 2011.  You never know what could happen to you, and delaying these gifts could be disaster.

The end of the year is a time when I think a lot about the state of my life, family, and career.  I like to reflect on how the year went, whether goals were accomplished, what my goals are for the coming year, and how those goals match up with my values.  I try to think about what my overall purpose is and realign with that.  It is so easy to get caught up in the small details in life, that sometimes the big picture is lost.  I like to reassess each year and make sure I am always keeping my eye on what is important.

This year as I reflect, I find that my life, family, and career goals are really very interwined.  My family goal is to be a loving and responsible parent, and it turns out that my career goal is to help loving and responsible parents as well.  My life’s work happens to be helping loving parents to create estate plans that protect their families if something tragic happens.  Estate Planning is part of being a loving and responsible parent, but it is just one piece of that bigger goal.

If you are reading this, you probably feel similarly to the way that I do about parenting.  It is serious business, and it is our responsibility to provide the best care possible for our kids and to make sure they are protected and that they have every opportunity to succeed in life.  If we can toast to that, I want to share with you 5 Priceless Presents that you should give to your family.  If you have not given these to your family yet, there is no time like the New Year to get started.  Make it a resolution, a Responsible Parent’s Manifesto, if you want to call it that.

1. A Comprehensive Estate Plan
A Comprehensive Estate Plan is the first thing that any parent needs to get in place.  Why is this first?  Because you can have all of the things listed below, but put your family through hell trying to access it and pay all of the fees and taxes associated with your death or incapacity if something happens to you.  Without meeting with an attorney and discussing your particular situation, you have no idea what type of situation your family faces if something happens.  You need a plan that dictates the care of your kids (both short and long-term) and the handling of your assets in a way that saves your family the most time, money, and heartbreak. So, if you are a parent without an estate plan, this is your first step.  Call an estate planning attorney today.

2. Life Insurance
Life insurance is an essential part of most parents’ estate plans.  Most parents do not have enough in savings or assets to allow their families to live a similar lifestyle if a parent died.  Life insurance replaces lost income and it can be used to pay for childcare.  If you do not have life insurance, make it a priority in 2011 to get insured.  The longer you wait, the more difficult and expensive getting life insurance will be.  Keep in mind that life insurance makes your estate worth more, so you should consult your estate planning attorney before buying it.

3. An Emergency Savings Account
Every parent should have an emergency savings account.  This economy has taught us that little is certain in life.  It is not certain that you will have your job next month.  It is not certain that your business will be around next month.  It is not certain that your health will be good next month.  It is extremely important to plan for a situation where you may not have income for 6-12 months.  Otherwise, you could lose everything you have worked so hard to gain.  People who lose their jobs and do not have emergency savings often have to cash in retirement accounts with severe penalties and have their homes foreclosed upon.  It really can pay to sacrifice in the short-term to have that security long-term.

4. A Plan for Retirement
Retirement takes decades to plan for, and many parents do not know what they are doing when it comes to saving for it.  Seeing an experienced financial advisor is such a good idea when it comes to retirement.  Retirement is the biggest event for which you will ever plan.  An advisor can project what you should be putting aside based on your income, expenses, projected age of retirement, and rate of inflation.  They can also describe to you the various types of accounts and how each type can benefit you.  They all involve different tax rules and have different rules for distribution.  Your company’s retirement plan or pension may not be enough to support you during retirement.

5. A Plan for College
You would think that planning for college would be at the top of this list if you are a loving parent, right?  Wrong.  You first take the steps to protect your family from the worst situations, then you plan for the time when you can no longer work, and then you plan for college.  The reason for this is that if there is no college fund, your child can apply for loans and grants and get a job during college.  It is not ideal, but it is a heck of a lot more ideal than your grown child having to support you in your old age because you do not have the means to support yourself.  It is a lot more ideal than your child flunking out of high school because when dad died without life insurance, mom had to get two jobs to make ends meet and there was no one to make sure the child was doing what he was supposed to be doing.  But once you have taken care of the other things, providing a college education for your child can help your family for generations.  Without having to pay back student loans, your child can start saving, planning, and living prosperously a lot earlier on than you were able to do so.

Candice N. Aiston is an Estate Planning Attorney for families in the Portland, Oregon area.  She helps loving parents to prepare their families for a lifetime of security, prosperity, and guidance.  If you would like to receive her free report, “The 9 Common Planning Mistakes Parents Make,” please visit http://candiceaistonlaw.com/.

Critical Estate Planning Components From The Tax Bill

As I’m sure almost everyone has heard by now, the 2010 Tax Relief Act was passed by Congress and signed into law by President Obama.  To many it was surprising enough that they passed anything.  And to see what they actually passed is . . . well, almost unbelievable from an estate planning attorney’s perspective.  It’s definitely not something we saw coming.  If you know me, you are familiar with my favorite phrase when it comes to estate planning law – “never a dull moment” – and this is no exception.

Here is a brief summary of the estate planning components of the new law:

  • Originally there was no estate tax in 2010.  Now there is a retroactive estate tax on amounts over $5.0 million per individual which will be taxed at a 35%  rate.  However, estates of individuals passing away in 2010 will get to choose between the retroactive tax or the “no tax” and it’s carryover basis regime that I previously wrote about here and here.
  • The estate tax will be imposed on individual estates in excess of $5 million in 2011 and 2012 at a rate of 35%.
  • The gift tax exemption will be $5 million.  That’s right – MUCH higher than it has been or anyone anticipated it would be.  This will allow for some incredible, once-in-a-lifetime opportunities to create a legacy that will last for generations to come.
  • Portability is added.  This is a new concept to many people (and many attorneys too!).  For married couples, any unused portion of the estate tax exemption from the first spouse to die can be used as an added exemption when the second spouse passes.  Watch out though, as there are certain procedures that must be followed when the first spouse passes for this to work.
  • The generation skipping transfer tax exemption amount is increased to $5 million as well.  I see exciting planning opportunities combining this with the gift tax exemption amount.

The critical part to this is IT ONLY LASTS FOR TWO YEARS!  It seems that a lot of the popular media is glossing over that.  Look at how close Congress came to letting the law revert back to 2001 law this time (hint: we were less than 15 days away from it!).  Don’t count on them to keep fixing these “roll forwards” every time.  This should be a big red flag to get your estate plan reviewed by an attorney who specializes in estate planning.  And if you don’t have a plan, make sure you work with a lawyer who can provide a plan with the flexibility needed to handle these changes and who will keep the lines of communication open so your plan doesn’t go “stale.”

Quite honestly my head is spinning with added possibilities that families can achieve because of this legislation.  Stay tuned as I will be sharing the ideas as quick as I can come up with them!  And don’t forget to call us at 616-827-7596 to help your family have the added peace of mind of knowing YOUR goals and values, not the Government’s goals, will be passed on to your family if something happens to you.

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, family owned business succession and pet planning – 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.

Don’t Forget Your Pets When Estate Planning

You may have read the post I wrote about Michigan Pet Trusts.  If not, you can read it by clicking here. If you care about your pets, it is a must read.  Almost every pet owner I meet truly cares for their pets.  Yet very few (and I mean VERY few) have any planning in place to ensure that their beloved “child with a fur coat” will be cared for if something happens to them.  The alternative is not pretty – suffice it to say that what happens to a lot of animals whose caregivers didn’t plan is…well, less than ideal.  The statistics are staggering.

A good friend of mine recently directed me to this USA Today article about estate planning for pets.  Overall I think the article is good . . . if for no other reason than it raises awareness of the need for estate planning for pets.  I will not “rehash” the entire article here, so make sure to read it for yourself.  I will, however, provide my thoughts on some of points in the article:

  • Some may scoff at the Leona Helmsley story – how much she gave to care for her dog and to animal humane groups.  Keep in mind that each of our situations is unique . . . we each have different things that are important to us in differing ways.  From the stories I read, Ms. Helmsley’s children may have left something to be desired.  It could be that her dog, Trouble, provided her the companion and love she needed . . . even moreso than family.
  • Always keep in mind the source of information (even the author you’re reading right now!).  Ms. Hirschfeld’s Pet Protection Agreement provided by Legal Zoom is mentioned several times in the article.  I have no doubt that she knows what she is talking about . . . just keep in mind that it’s more than likely that she receives a “cut” from the  sale of Pet Protection Agreements.  Interestingly, I looked at the Legal Zoom page for the agreement and noted a quote by the President of The Humane Society of the United States regarding peace of mind from having the Pet Protection Agreement.  Much like estate planning for your human family, I believe much of the “peace of mind” provided by online solutions is a false peace of mind.  Why?  Because you don’t know what you don’t know.  I’m the same way.  Why do I not perform my own surgery?  Fix my own roof?  Install my own furnace?  Because I don’t know how and even with a lot of study there are still things I won’t know because they only come from experience.  Plan how you feel best, but my suggestion for true peace of mind is to work with an attorney who focuses on pet planning.  And yes, I realize that you should consider the source when reading that last statement too 🙂
  • The author points out that Ms. Helmsley likely could afford “pretty decent lawyers.”  That doesn’t mean, however, that those lawyers had any experience with estate planning for pets.  Keep that in mind when planning for your own pets.  If you have to ask about how to plan for your pets rather than having the lawyer include it in their questionnaire or bring it up in a meeting, that should be a sign to you.
  • I see a multi-pronged approach as the most likely to ensure your pets are cared for by who and in the way you want: a pet trust, pet information sheet, pet care instructions and having conversations regarding care with those you would choose to care for your pet while you can have the conversation.
  • Much like planning for your human family, estate planning for pets is a process, not a transaction.  Your life will change, your pets may change, the lives of the chosen caregivers will change and the laws will change.  If your planning doesn’t change with it, it may not work the way you wanted when it is needed most.

What do you think?  I always enjoy hearing from my blog readers.  And don’t forget to call us today at 616-827-7596 to help make sure your pets won’t be “left out in the cold” (or worse!) if something happens to you.

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, family owned business succession and pet planning – 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.

How Should I Sign Business Documents?

It depends on whether you are right handed or left handed.  Ok, not really.  This is a question I hear on a regular basis and an important one to make sure you do correctly.  Many Michigan business owners form their company as a Corporation or a Limited Liability Company (LLC).  They do this because they want to protect their personal assets from business liabilities, among many other reasons.  Many Grand Rapids business owners have read stories about lawsuits against a company and “piercing the veil” to access the owner’s personal assets.  That is definitely something to avoid.

A key component in avoiding “veil piercing” is to make sure you treat your business as just that . . . a business . . . separate and apart from you, the owner.  And how you sign documents on the company’s behalf can reinforce that notion.  I generally recommend the following: [Your Name], as [Your Title] of [Business Name].  For example, “John Doe, as Member of Masters of the Universe LLC.”

This clearly sets out that you are signing the document in your business capacity, not your personal capacity.  I also recommend always including the abbreviation for the type of business entity – LLC or Inc. – at the end so that you are putting the other parties to the document on notice that the business name is not just a sole proprietorship.

Sure, signing this way can take a little extra time and room on the paper, but it’s time (and room) well spent if it help reinforce your business entity’s existence and protect your personal assets from business liability.  If you need to make sure your Grand Rapids small business is working like a “well oiled” machine, call us at 616-827-7596 for a small business “tune up.”  Mention this blog post and we’ll waive the typical “tune up” fee ($950 value!).