CategoryTrust Funding

The Importance of Planning Communication

grandmaI have had a lot of conversations recently centered around communication and financial information.  Each had its own twist, the context rarely being the same.  But, the two recurring themes were: (1) lack of organization and communication about your financial situations can cause a lot of frustration and expense if you are disabled or pass away, and (2) the process of creating and properly funding a living trust can help keep #1 from happening. I know it is not necessarily fun or exciting to talk about. Be that as it may, it can make a HUGE difference.

Here is one of the “bad” examples.  The person had a will-based estate plan that was put in place some time ago.  It will not shock you to know that a lot changed over the years.  In addition to not keeping the estate plan updated, the person never shared anything about the person’s financial situation (what they had, where it was, etc.).  I am now working with their family to try and sort everything out.  It is proving quite difficult.  Each financial institution seems to have different requirements for finding out information about accounts, and quite honestly, the family does not even know where to look.  It has led to a lot of frustration on their end and much higher legal fees as we help walk them through it and get the information they need.

On the flip side are a couple of clients who passed away in 2014.  Both had a trust-based plan that was fully funded.  If you are curious about what I mean by “fully funded”, you can read a blog post of mine on the topic by clicking here.  Because I work with clients to make sure their trust is fully funded, including putting together a spreadsheet of their assets, there is a list of the “what” and “where”.  I also tend to find that by talking through the financial side of things with clients, they seem to be more willing to talk about it with those they have trusted with handling their financial affairs during their incapacity or after their passing.  In both of these cases, those people who were called upon to act as successor Trustees were able to quickly get a handle of the financial side of things which, in turn, led to a quick, smooth, and less costly transition.

Now, don’t get me wrong – there are always exceptions to these examples.  Having a will-based plan does not mean that administering your estate will be a frustrating and costly experience.  And likewise, just having a trust does not guarantee that everything will be smooth sailing.  But, I have generally found the exceptions to be few and far between.  Whether a will-based plan or a trust-based plan, the important part is to make sure to keep track of your financial affairs and communicate with those you choose to help with your estate.  A well-qualified financial advisor can be a big help with this process too, so do not overlook them.

As you know, I welcome questions, comments, and stories about the topic, so please let me know if you have any.

How to Transfer a Credit Union Account to Your Trust

As noted in this slightly dated CNN Money article, the number of credit union accounts is growing.   The cause, according to the article, is that “a growing number of consumers grew fed up with the fees at the nation’s biggest banks and took their money elsewhere.”  I’ve noticed in many of my conversations that a large driver is better customer service (actual or perceived) or the credit union has a relationship with the person’s employer.  And, not surprisingly, I find that many (if not most) of my client families have one or more credit union accounts.  I’m a huge fan of great service, so I love to see my client families getting great service.  But, as a dedicated Grand Rapids, Mi estate planning attorney I’m troubled to find out that many of them are receiving bad advice about how to properly coordinate their credit union accounts with their living trust estate plan.

As with most things in life, the “best” way to handle something is based on each family – your goals, values, and how they want their trust to work.  And generally speaking we recommend that our client families have their trust own their bank and credit union accounts.  Up until a couple of years ago, clients were able to just change the owner of the account with new signature cards, whether it was a bank or credit union account.  About two years ago I started getting client calls saying that their credit union recommended against changing the ownership of the account.

Why?  Well, for whatever reason the credit unions started requiring you open a new account to change ownership (e.g. you could not change the owner on an existing account).   I honestly don’t know if that is an internal policy issue at each credit union or if it was an “edict” from the government regulators, so please know that I’m not bashing credit unions … I’m not.  And this may not be the case at all credit unions, but I have not had an exception to this rule for any of my client families over the past couple of years, so it seems to be a common practice.

Although I don’t necessarily agree with the policy, what I really find troubling is that almost every one of our client families was told, “you don’t want to change the owner because that requires opening a new account, changing all your auto-deposits and auto-deductions, and then closing out your old account.  You can just name your trust as beneficiary of your account – that’s the same thing.”  Please don’t misunderstand me – I understand the practical *pain in the butt* it is to change all those automatic things, believe me.  But, the fact is that naming a beneficiary is not the same thing as having your trust as the owner.

As I wrote in this previous blog post, trusts are an incredible incapacity planning tool.   But, it’s only a great incapacity planning tool for those things that it owns.  If it’s not in the name of your trust, your trustee won’t have legal authority to handle or take care of it during your incapacity.  So, in the above example, if your trust is just a beneficiary of your credit union account, your trustee will not be able to access it during your incapacity.  But if it is “owned” by your trust, your trustee can access it to continue to pay bills, take care of you, and take care of your children or others who you help support.

So, choose what is best for your family after talking it through with your estate planning attorney, and remember the difference between owning and being a beneficiary.

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 family’s values, insights, stories and experiences.

Should I Put My Car In My Trust?

This is the most common questions I’m asked as a Grand Rapids, Mi will and trust lawyer.  And the short answer is: usually not, but it depends.  You see, Michigan actually has a rather simple post-death automobile transfer procedure.  It isn’t the best for all situations, but it works well in many situations.  There are requirements for using the procedure.  You can find out more about the procedure and its requirements by reading this previous blog post.

Another reason for not putting your automobile into your living trust is because of a common public misperception of people who have trust . . . many people think families with trusts are “rich.”  As I’ve previously written here and here, that is certainly not the case.  Trusts have many benefits to families from all walks of life, including the heart and soul of our fine country – the middle class.  If your car or truck is registered in the name of your trust and you cause an accident, the injured party may think you are “rich” and take actions they may otherwise not think of taking, hoping to dig into your deep pockets.

All that said, there are occasions when I do recommend that my client families transfer ownership of their automobiles to their trust.  The first is when the value of their automobiles exceeds the dollar value in the post-death procedure mentioned in the first paragraph of this post.  And the second is when one or more of their automobiles is a collector car.  And, in fact, usually if they fall into the second category they almost always fall into the first category.

As with all situations involving families and the law, every situation is unique.  So, make sure to give us a call if you have questions, need to review your estate plan, or your family needs a caring plan in place!

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 family’s values, insights, stories and experiences.