Month: March 2012

Wills vs. Trusts – The Battle Continues

March 24, 2012 /

In a previous post we discussed many of the differences between wills and trusts. That discussion was from more of a “technical” standpoint, which can still leave a lot of questions. And those questions are typically the practical questions, such as “I have a couple of retirement accounts . . . would a will or trust be better for me?”

Generally speaking, here is a brief comparison of wills vs trusts relating to some practical considerations:

Wills tend to be sufficient in situations such as: simple and outright distribution of assets when privacy is not important.

Trusts tend to be better for handling the following: life insurance policies, qualified retirement plans (IRA, Roth IRA, 401k, 403b, etc.), somewhat more involved distribution of assets, maintaining privacy, possible or probably mental disability, desire to make it as easy as possible for family and loved ones, out-of-state real estate, out-of-state trustees (and beneficiaries), tax planning, protection of inheritance for spouse, children and grandchildren (or other loved ones), second marriages, and loved ones with special needs.

Keep in mind that there is no “one size fits all” answer to estate planning questions because each individual and each family is unique. Each estate plan should be too! Beware of the standard form document and a “telling you” versus “listening, learning and sharing with you” approach.

Call us at 616-827-7596, if you have questions or want to make sure your family’s plan is specific to who you are and what’s important to you.

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.

Learn From Whitney Houston’s Estate Plan Mistakes

March 18, 2012 /

We’ve seen it before, and we’ll see it again.  A “rich and famous” person passes away and their Last Will and Testament ends up on the internet.  Well, the most recent one is Whitney Houston.  As reported in this Forbes.com article, her Will was recently filed with the Atlanta probate court and is now available to everyone via the internet.

I recommend reading the article in its entirety to get a good feel for what Ms. Houston did that was good and what was bad, from an estate planning perspective.  I’m not going to reproduce the article or Will here (although I do have a copy of it), but I want to comment on a few key items:

  • She had only a Will, not a living trust.  You can be the judge, but I think this is a BIG mistake because now we can see everything about who will be doing what and receiving what regarding her estate plan.  Privacy is a difficult thing to come by even if you’re not “rich and famous.”  Ms. Houston certainly did her daughter and other family no favors by not avoiding probate.  On a side note, remember that just having a trust isn’t enough . . . you need a fully funded trust.
  • Her daughter, Bobbi Kristina, will eventually receive everything when she is 30 years old.  Each family is different, but I don’t know many families who would want a child or other family member receiving millions of dollars at 30 years old.  Besides having a living trust, Ms. Houston could have structured the trust in such a way that it would benefit Bobbi Kristina for her entire life, but was not susceptible to the attacks of creditors, predators (scammers), lawsuits, and divorce.  She could have created a real treasure chest for her daughter.
  • There is no mention of any “intangible wealth.”  These would be things like letters to her daughter, recorded conversations of her feelings, hopes, wishes and dream, or stories about cherished items she owned.  Of course that doesn’t mean she didn’t do it . . . but the lack of it in the conversation helps serve as a reminder that your values, insights, stories and experiences are your most valuable treasure.  Capturing them for your family is truly leaving a lasting legacy.

What do you think about the article or my comments?  Please share your thoughts by way of comment on this post.

 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.

Wills vs Trusts – Which Is Better For Your Family?

March 11, 2012 /

Is seems like the most common question I receive as a Grand Rapids, Mi estate planning attorney – what is the difference between wills and trusts?  Does my family need a will or a trust?

Well, as you might expect, the answer to the second question is different for every family.  Why?  Because no two families (or individuals) are the same.  Oh, sure, there are plenty of attorneys out there who will look at your family’s assets and tell you what you should have.  That approach doesn’t sit well with me.  I think it’s best to share with you some of the advantages and disadvantages of wills and trusts, and let you determine what is best for your family based on who you are and what’s important to you.

So, here are some examples of how wills and trusts differ on a few key considerations:

  • Privacy:Wills – with a Will there is no privacy.  Documents and proceedings after death are public record.  Trusts – totally private, unless court intervention is required, which is usually a result of poor drafting, lack of funding, or loss of Trustee.
  • Disability Planning:Wills – no provisions for physical or mental disability.  The disabled person is subject to the court process for guardianship. Need a power of attorney, updated over the years. A power of attorney can provide that disability be determined privately by family members and friends.  Trusts – Handles assets upon disability without court intervention.  Need a power of attorney for non-trust assets. A trust can provide that disability be determined privately by family members and friends.
  • Creditor/Predator Protection:Wills – None while alive. Testamentary trusts can give protection.  Trusts – None while alive. Creditors have only a specified amount of time to present claims after death or they are forever barred. Trusts which become irrevocable at death can give protection.
  • Effort Required:Wills – Less effort now unless you require tax planning and asset protection for your heirs, but more work for your heirs after disability or death.  Trusts – More effort now to properly design the trust to accomplish all of your goals upon disability and after death, but far less work for your heirs after disability or death if done correctly.
  • Cost Now:Wills – less.  Trusts – more.
  • Costs to Amend:Wills and Trusts – similar.
  • Cost Later:Wills – average all-inclusive cost of a probate in Michigan is 3-5% of the value of the estate.  Trusts – No probate fees if the trust has been fully funded and properly maintained and trust administration fees less than estate administration fees.

In a future post we’ll look at how wills and trusts compare on common family goals.  Make sure to contact us at 616-827-7596 if you have any questions and to schedule a Peace of Mind Planning Session to see how wills and trusts compare in your family’s specific situation.

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.

Estate Planning for Single People is Critically Important

March 4, 2012 /

If someone asked me “what are the two biggest misconceptions about estate planning,” I know exactly what I would say: that estate planning is only for the “rich,” and that estate planning is only important for families (rather than single people).  I discussed how far off the first misconception is in an earlier blog post.  And based on recent conversations, I think it’s time to address the second misconception – that estate planning is only important for families and that it is not important for “single” folks.

Interestingly enough, the idea for this blog post came about as a result of a couple of great conversations with individuals who decided that, although they were not in a relationship and had no children, it would be good for them to have an estate plan.  As a Grand Rapids, Mi wills and trusts attorney I say great, not just good.  As we talked about what estate planning actually is they realized what a great decision they were making and that it truly is critically important.

Why?  Well, if you haven’t invested your time and money to put a caring plan in place for yourself, then the State of Michigan has a default, one-size-fits-all plan for you.  In my experience, that “default” plan is not even close to what my single clients have wanted.  Many of them have certain family members, causes and charities they want to benefit if something happened to them, yet the “default” plan is the same for everyone and it certainly does not include those personal preferences.  So, the #1 reason for a single person to have an estate plan is to make sure you leave the legacy YOU want by providing for the family, causes or charities dear to you.

The second reason is to make sure you are cared for if you become incapacitated.  That could be as a result of a tragedy such as a car accident, or a scheduled period of incapacity such as surgery.  A financial durable power of attorney and a healthcare durable power of attorney are the key estate planning components that help ensure your wishes are carried out during periods of incapacity.  Without them, you would need to have a guardian and/or conservator appointed by the probate court.  That is an unnecessary and unneeded cost of both time and money . . . and it can be avoided with proper estate planning.  

The probate judge would chose the person who would handle your finances and make your healthcare decisions. Maybe it would be who you want, maybe not.  And beyond that, without guidance, how would they know what your wishes are?

Taking a chance on the State’s default plan for you could be disastrous!  Yet, that’s what would happen if you don’t have an estate plan.

Why take the chance?  Give us a call at 616-827-7596 to have the added peace of mind of knowing your wishes will be followed and your legacy will what you want, not what the State wants for you.

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.