Month: April 2011

The Biggest Misconception About Trusts

Last week I wrote a post about the biggest misconception about wills.  The same recent conversation that I mentioned in that post also reminded me of what I believe is THE biggest misconception about Trusts.  Remember what my friend said?  “So I have my will or trust, so I don’t have to worry about going through probate…”

The Myth: having a trust means that you don’t go through probate.  And the buzzer says “bzzzzt,” wrong.  You may be thinking, “what?!  Mike, you are off your rocker.  That’s why I have a trust . . . to avoid probate!”  Just *having* a trust does not bypass the probate process.  To bypass probate, the trust must be “fully funded.”  “Funding” a trust is the process of changing ownership or beneficiaries of an asset to the trust.  I still have not had a trust come through my office for a review that was fully funded.  Yes, you read that right.  I know they’re out there, but I have yet to have one come in for review!  Not exactly what you thought when you started creating your legacy, huh?  If you’re curious to know more, you can read my blog post on the topic by clicking here.

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.

The Biggest Misconception About Wills

As a Grand Rapids Estate Planning attorney, I regularly hear misconceptions about estate planning.  A recent conversation reminded me of what I believe is THE biggest misconception about Wills.  During the conversation, a friend said “so I have my will or trust, so I don’t have to worry about going through probate…”

The Myth: having a Will means you don’t go through probate.  And the buzzer says “bzzzzzt,” wrong.  Just having a Will virtually guarantees that you go through probate.  A Will serves as a “roadmap” for the probate process – it allows you to say who you want to do certain things and how you would prefer they be done (and if you have minor children it is one of the ways to name guardians, but definitely NOT the “best” way, in my opinion).  If you’re curious to know more, you can read my previous blog post on the topic by clicking here.

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.

Beneficiary Designations – Doing It Wrong Could Disinherit Your Children

I wrote about beneficiary designations once before in this post.  And yet there is a common comment I hear . . . “when is it actually a problem if your beneficiary designation isn’t changed . . . the rest of your estate plan will sort it out.”  Well, that’s not true.  Having beneficiary designations on retirement accounts, life insurance and other similar assets “match up” with the rest of your estate plan is critical to having the plan work the way you want.  And if you haven’t done estate planning (other than Michigan’s default law plan for you), beneficiary designations are equally important.

With that in mind, here is an example of a “real life” situation that turned out WAY different than the parents expected (I’m sure)!  It is the case of Kennedy v. Plan Administrator for DuPont, which was decided recently in 2009. Certainly you didn’t think beneficiary designations would be important enough to go all the way to the U.S. Supreme Court, right?  Well, they are!  Although there is more detail in the opinion, the short version goes like this.

Dad had invested in his employer’s Savings and Investment Plan (SIP) for some time.  His wife was named as beneficiary.  They divorced.  In the divorce agreement, his wife relinquished all claims to his company benefits.  Dad, however, did not change the beneficiary designation on his account in his employer’s SIP.  Dad died several years later with about $400,000 in the plan.  The employer paid all the money to his Dad’s ex-wife, who was still the designated beneficiary.  Dad’s estate sued the employer to recover the funds that they felt should go to the estate according to the divorce agreement, his estate plan and state law.  The Supreme Court unanimously ruled for the employer.

Dad’s failure to revisit his beneficiary selections thwarted his estate plan and effectively disinherited his daughter from what she likely would have received had he made the change.

And THAT is a great example of how important beneficiary designations are.  And even moreso, it shows how important it is to work with a Michigan estate planning lawyer who will regularly followup with you to make sure the necessary changes are made and that your estate plan continues to follow your wishes as they change throughout life . . . not just when you initially created the plan.  That is truly creating a legacy for generations to come.  Remember, you get what you pay for (maybe) and you pay for what you get.

Ready to make sure your wishes are followed throughout life and not just the short term?  Call us at 616-827-7596 to schedule a Peace of Mind Planning Session.  Mention this blog post and get a special gift.

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.

Michigan Special Needs Planning – The Letter of Intent

Law school and the years of research and continuing education that come afterward seem to place all (or most) of the emphasis on the legal aspects of a given situation.  That probably doesn’t come as much of a surprise to you.  But, as a Grand Rapids estate planning lawyer I’ve come to realize that the legal without the practical can leave holes in a family’s planning.  That is why I focus on providing my client families with an estate plan that covers both the legal AND the practical sides of life.

And in my opinion, planning for a family who has one or more children with special needs is one of the areas where this legal/practical combination is the most important.  I truly believe it starts with the special needs planning lawyer’s perspective – it should be a caring one.  You can read some of my thoughts by reading my previous blog posts here and here.  Those posts focus on some of the legal issues that need to be considered when planning for a child with special needs.

The list of practical considerations is even greater when planning for a child with special needs.  A letter of intent is one very important practical item that parents of a special needs child should make sure is part of their estate plan.  My colleague, Rania Combs, recently wrote an excellent post on the topic, which you can read by clicking here.  She provides many excellent suggestions on the topics that should be covered and answers some common questions.

At Lichterman Law, we provide all our client families with a similar draft document as part of our Children Protection Plan.  And for our client families who have children with special needs, we make sure to walk with them through the important legal and practical considerations that will help make sure their child with special needs is cared for by who they want, in the way they want and with all the love and support they deserve.

Call us at 616-827-7596 to find out if your family qualifies for the Lichterman Law Difference.  And if you reference this blog post, we will waive the Peace of Mind Planning Session fee (a $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.