Month: April 2012

Major Errors in Estate Planning

April 28, 2012 /

I recently ran across this Forbes.com article on “7 Major Erros in Estate Planning.”  The article has a no nonsense list of mistakes that I see and discuss on a daily basis as a Grand Rapids, Michigan wills and trusts attorney.  I think the article’s intro paragraph makes a point that should not be overlooked.  I’ll rephrase it as, “you would be surprised how many families work hard to provide for themselves and their children, yet ‘cheap out’ on the estate planning that will carry on there legacy.”

The 7 major mistakes the article lists are:

  1. Not Having a Plan
  2. Online or DIY rather than professionals
  3. Failure to Review Beneficiary Designations and Titling of Assets
  4. Failure to Consider the Estate and Gift Tax Consequences of Life Insurance
  5. Not Maximizing annual gifts
  6. Failure to Take Advantage of the Estate Tax Exemption in 2012
  7. Leaving assets outright to Adult Children

The article gives a brief, helpful explanation of each of the mistakes – you should go read it.  I’m happy to see that the article points out that even in situations many families may think are “basic,” a plan cannot be overemphasized.  As the article states, “Even a simple plan that is well thought out and results from the identification of your personal objectives will be much more successful than nothing at all.”

One of the few faults I find in the article is that the main focus seems to be on money and taxes, rather than the who we are as people and how we want to leave a legacy for our family.   I think the closest the article comes is this very accurate statement: “As in most estate planning, it is very much dependent on individual circumstances: family dynamics, net worth, financial / liquidity position, personal preferences and, even, your philosophy on the transfer of assets to future generations.”  I think the articles frequent focus on “high net worth” or “wealthy individuals” is misplaced, as “regular” families like you and me can benefit from almost all of the points discussed in the article.

So, what do you think?  Have you made any of the mistakes mentioned in the article?  Can you think of additional common mistakes?

Michael Lichterman is an estate planning and charitable 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 “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their families values, insights, stories and experiences.

IMPORTANT: Michael is licensed to practice law in the State of Michigan and has offices in Kent County. I am ethically required to state that the above information does not create an attorney/client relationship. These posts should be considered general legal education and are intended to provide general information the topic discussed. Frequently, differing facts about the particular individual or family, if known, could significantly change the recommendations made in the blog post. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your state. The law changes frequently and varies from state to state.

Transferring EE Savings Bonds to Your Living Trust

April 22, 2012 /

Although their popularity seems to have gone by the wayside, it seems like we all have them or we know someone who does – U.S. Savings Bonds.  According to this site, 14.9% of families have savings bonds, which makes up 0.4% of families’ assets.  And according to this site, the average American household has over $1,800 in U.S. Savings Bonds.  So you can see that although they are not a large part of the overal “net worth” of the average American family, they are widely owned.

As a Grand Rapids, Mi wills and trusts attorney, I’ve had a several families ask me how to transfer their U.S. Savings Bonds into their living trust.  This will help ensure that they can be properly handled if you become incapacitated or pass away.  The great news is that it’s not very difficult to transfer U.S. Savings Bonds to your living trust.

First, a technical matter.  We don’t “transfer” the U.S. Savings Bonds to our trust . . . we have them “reissued” to properly register them to our trust.  To do so, start by going to this U.S. Treasury site.  From there you can download and fill out Form PDF 1851, which is specifically for reissuing the bonds in the name of a personal trust.  The form has surprisingly good instructions and will guide you through properly completing the form and returning it to the U.S Treasury Department.

Michael Lichterman is an estate planning and charitable 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 “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their families values, insights, stories and experiences.

IMPORTANT: Michael is licensed to practice law in the State of Michigan and have offices in Kent County. I am ethically required to state that the above information does not create an attorney/client relationship. These posts should be considered general legal education and are intended to provide general information the topic discussed. Frequently, differing facts about the particular individual or family, if known, could significantly change the recommendations made in the blog post. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your state. The law changes frequently and varies from state to state.

The Critical Importance of Medical Directives

April 15, 2012 /

National Healthcare Decisions Day is today, April 16th.  It’s an important reminder for every adult to let someone know their most private wishes about medial treatments and possible end-of-life care.

Far too many people assume that their families would make the choices they would want in an emergency. Yet everyday we hear stories of adult children, siblings or other relatives battling during a health care crisis over “what their loved one would have wanted” in that situation.

The Terry Shiavo case is a great example of this. At the young age of 26, Shiavo suffered sudden cardiac arrest and slipped into a permanent vegetative state. She never documented her wishes about things like feeding tubes, life support and long-term quality of life, leaving her family to battle for years over these questions in court.

Her husband eventually had her feeding tube removed claiming, “That’s what she would have wanted”. But was it really? We’ll never know because Terry didn’t make her healthcare wishes known to her closest family and friends.

But it’s not enough to just tell someone about your wishes. You need to clearly document your preferences, too. Remember, emotions can run high during a health care crisis, and it might be hard for your loved ones to stop life support when they desperately want you around. Having your wishes spelled out in writing helps make these types of decisions easier for your loved ones, especially in cases when other family members don’t agree.

So in honor of National Health Care Decisions Day, I encourage you to start tough conversations with loved ones about your personal medical preferences for medical or long-term care. Here are some important questions to consider:

  • What are your thoughts on feeding tubes, life support and other artificial life saving devices?
  • Is there any type of medical care you would NEVER want?
  • If you were permanently disabled or incapacitated, what things would contribute or take away from your “quality of life”?
  • Who do you trust to make important medical decisions if you are unable to speak for yourself?
  • What are your thoughts on nursing home vs. in-home health care?
  • Who would you trust to manage your long-term care?

These are not the most fun conversations to have, but they will help to ensure that your most personal wishes are honored in a true medical emergency. Talk them over with loved ones and get something in writing that spells out your wishes and the care you want if something happens to you. If you have questions, call us at 616-827-7596 and get something in writing before an unforeseen emergency strikes.

Michael Lichterman is an estate planning and charitable 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 “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their families values, insights, stories and experiences.

Non Cash Contributions to Charity – A True Win-Win

April 7, 2012 /

One of the great things about this country, and the West Michigan area in particular, is that we like to help others.  In many cases this is shown by giving to one or more charities.  It could be giving of our time through volunteering, or giving of our financial resources.  Our government supports this by providing various tax benefits for giving to charity.  In this previous post we gave a general overview of the many different ways each family can contribute some of their financial resources to charity.  You’ll notice that the first item on the list is cash (or cash equivalents).  Yet, that tends to be the most inefficient financial resource you can give.

Surprised?  Many people are . . . including me before I learned more about it.  You see, many of us give to charities for one of two reasons (or for both reasons): (1) we support the charity’s cause(s) or mission, and/or (2) we want the tax deduction for the contribution.  And although it may not be a driving factor, why not try to maximize the tax benefits.  And while we’re at it, why not try to use the tax benefits to give even more to charity with no change in effect on our “pocket book.”  And that’s where “cash” contributions fall short.  With a cash contribution, you may get the charitable deduction (depending on your income level), but that’s it.  You may be asking, “so what if that’s it . . . I gave, got the deduction, and it’s done.”  Well, what if you found out that you could get give more to your favorite charity, get an even bigger tax benefit, and not feel it any more in your “pocket book.”  Impossible?  Nope.

That’s where non cash charitable contributions come in.  What do I mean by “non cash?”  I’m talking about many of those other items on the list in the previous post.  Items such as public stock, private company stock, real estate, retirement assets, life insurance, valuables and collectibles, and the list goes on.  How do you get this “double benefit” with non cash assets that I mentioned earlier?  Well, it varies based on the type of asset, but in many cases you receive a combination of transferring an appreciated value to the charity (e.g. more than you would have if you contributed cash), getting a tax deduction on your personal tax return (depending on your annual income), and you no longer have to pay the “gain tax” you would have otherwise had to pay on the non cash assets had you sold them and contributed the money to the charity.  Wait a second . . . that’s a triple benefit!  You bet!

In a future post we’ll take a look at one of the most “painless” non cash contributions you can make . . . appreciated stock.  Until then, if you, someone you know, or a charity you work with has any questions, call us at 616-827-7596.

Michael Lichterman is an estate planning and charitable 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 “stuff” – it’s about who your are and what’s important to you.  He focuses on estate, charitable, and asset protection planning for all generations (“young” and “experienced”), the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses, and pet planning.  He enjoys creating life long relationships with his clients centered on their families values, insights, stories and experiences.