Month: February 2011

Michigan Legacy Planning . . . Not Your Regular Estate Plan

February 27, 2011 /

As a Grand Rapids, Michigan estate planning attorney I’ve heard a lot of “chicken little” comments among some of my colleagues as a result of the recent changes to estate tax law.  You see, many attorneys who draft estate plans relied on fear of the estate tax as a way of attracting new clients.  With the tax law changes far fewer families will be affected by the estate tax (at least temporarily).

And yet at the same time, as a Grand Rapids, Michigan wills and trusts attorney who focuses on helping families create a legacy through Whole Family Wealth™ Planning, I’m seeing an increase in families becoming part of the Lichterman Law family.

Which leads me to this USAA article I recently came across.  Besides being a good overview of the recent changes to the estate tax and a reminder of the importance of having your plan reviewed, it points out the importance of viewing “estate planning” as what it truly is . . . “legacy planning.”  As the article points out, “there’s far more to estate planning than just taxes.”

What “more” are they talking about?  As the article says, “the real point of an estate plan is to make it as easy as possible for your heirs to carry on and to ensure your assets go where you want them to.”  I agree with that, but think they left out one very important thing . . . the key behind Whole Family Wealth™ Planning.  That is to use estate planning to pass on who you are and what is most important to you – your values, insights, stories and experience.  To me, that is truly a lasting legacy.

Why would you want to leave your family guessing about what to do, where to go and how to handle your assets?  Do you want to leave them without your most valuable asset . . . who you are as a person?  Call us at 616-827-7596 right now to take the important step of starting your legacy plan.  Mention this blog post and we’ll waive the Peace of Mind Planning Session fee ($750 value!).

Michael Lichterman is an estate planning and business 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 estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), 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 Michigan Charging Order?

February 21, 2011 /

As a Michigan Business Attorney and Estate Planning Attorney I have worked with numerous business owners and individuals to help protect their business and/or their family assets.  In many cases that protection involves forming a Michigan Limited Liability Company (an LLC).  One of the main reasons for forming LLCs is right there in their name . . . limited liability.

Many Michigan business owners desire to limit their personal liability for their business activities.  The idea being, if the business is liable for some damage to a person, business or property, the business owner does not want his or her personal assets (home, financial accounts, cars, etc.) at risk for the business liability.  Simply forming the LLC is not enough, but it is a good first step.  I will discuss additional liability limiting steps in a future post.

It’s a fact of life for many businesses and business owners . . . the dreaded lawsuit.  And what happens if you lose?  Well, you become a “judgment debtor,” meaning you are a debtor to the individual(s) or business(es) that won the lawsuit against your business.  And they have all sorts of “remedies” – actions they can take to collect on the court judgment amount.  One of those is commonly referred to as a charging order.

A charging order is a court-authorized right granted to a judgment creditor to attach distributions made from a business entity (such as a LLC) to a debtor who is a Member in the entity.  In a way, it is similar to garnishment of wages or income.  It does not give the creditor ownership or management rights in the LLC.

Remember that a charging order was just one of the “remedies” available to a judgment creditor?  Well, many business owners and individuals who want to protect their assets would like it to be the only remedy.  Can you guess why?  Let me know what you think by commenting on this post.  I will let you in on the reason in my next post and uncover the Michigan law relating to the “charging order only” remedy.

Michael Lichterman is a relationship-based business attorney who leverages his business, marketing and legal knowledge to help business owners and entrepreneurs create a Foundation for Business Success™.  This goes beyond merely drafting a set of documents – it’s about  proactively preparing the business and the business owner for continued growth while remembering the “human side” of running a business.  He best serves small business owners (less than 50 employees) and entrepreneurs.  He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients  and their businesses – many of which have become great friends and trusted confidants.

The Importance of a Flexible Estate Plan

February 13, 2011 /

I have been emphasizing the need for flexible estate plans since I first opened my practice.  It seems that most people believe that estate planning is either for the “hear and now” or for the “way down the road.”  If that is your view, your missing out on the “everything in between.”

I recently read this NY Times article, which sheds some light on the importance of a flexible estate plan.  As the article points out, the “certainty” that Congress brought to estate tax planning in late 2010 will only apply for 2011 and 2012.  After that it is anyone’s guess.

I can’t agree more with the part of the article that says “people…need to refocus their estate plans, … toward flexible plans for distribution, protection and management of their assets no matter how Congress tinkers with the tax laws.”  And that is just the estate tax law.  Don’t forget that each state, Michigan included, changes their estate planning laws from time to time too.

This is why I focus on planning for life, not death.  It’s really about who you are and what’s important to you.  How can estate planning pass on who you are?  By structuring your plan in a way that guides and directs your loved ones if something happens to you and that shares your Whole Family Wealth™ with them – not just what you have, but more importantly your values, insights, stories and experiences.

One last thing…note the many advantages of trusts that are stated in the article and how it is not just about tax planning.  My favorite advantage of trusts that they wisely state in the article is “protection against creditors, permitting the beneficiary to continue enjoying benefits from the trust even if bankruptcy were to occur.”

If you already have an estate plan in place, take this opportunity to have it reviewed and updated for flexibility by an attorney who focuses on estate planning.  And if you don’t have an estate plan…why not?  You are leaving your family’s future in the hands of the court system.  Is that what you want?

Michael Lichterman is an estate planning and business 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 estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), 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.

Health Savings Accounts (HSAs) and Trusts

February 6, 2011 /

I’ve had several people ask me recently, “can I put my health savings account into my living trust, and if so, how?”  That’s a great question!

The answer is yes, but you are not actually putting it “in” the trust . . . you are naming the trust as a beneficiary.  Health Savings Accounts (commonly referred to as HSAs) are interesting “animals.”  We typically think of them like an ordinary bank account with a restriction that they can be used for only qualified medical expenses.  However, for trust “funding” purposes, they behave more like retirement accounts (e.g. IRAs).

This means that you designate the trust as the beneficiary of the account rather than changing ownership of the account to the trust (warning: changing ownership could have negative tax consequences).  If you are married, I generally suggest naming your spouse as the primary beneficiary of the account.  This is because it can then be treated as the spouse’s HSA if something happens to you.

You would then name your trust as the contingent beneficiary.  Naming the trust (or individuals other than a spouse) as the primary beneficiary will make the account taxable to those beneficiaries in the year of your death.  A spouse is the only one who gets the special HSA treatment stated above.  Single individuals should typically name the trust as the primary beneficiary.

Do you or someone you know have a question about estate planning or business planning?  If so, let me know and I try to answer it in a future blog post.  I’m sure you’re not the only one with the question, so you will be helping other readers by asking.

Michael Lichterman is an estate planning and business 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 estate and asset protection planning for  the “experienced” generation, the “sandwich generation” (caring for parents and children), 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.