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Urgent Opportunity for IRA Distributions to Charity

January 6, 2013 /

It seems like we may have finally heard the end of this “fiscal cliff” talk . . . at least for a little while.  As many people know, Legislation was recently enacted to keep the “Bush tax cuts” from completely expiring – with some tweaks to rates and, no surprise, plenty of special interest funding.  I’m working on a blog post that will summarize the estate, gift, and charitable planning aspects of the legislation, but there is one opportunity it provides that is critically time sensitive.

That is the ability to make a tax-free transfer from your Individual Retirement Account (IRA) directly to a charity and have it count for 2012.  In the right situation, this is an incredibly opportunity – the kicker is that you must make the transfer no later than January 31, 2013.  Here are the highlights of the rules:

  • Taxpayers can make a direct transfer IRA distribution to charity without having to include the distribution in gross income (previously you would have had to include it in gross income and then take the charitable deduction on your tax return – not nearly as good a “deal”)
  • There is a $100,000 transfer limit per individual
  • The IRA owner must be at least 70.5 years old on the day of the transfer
  • Transfer from the IRA to the charity must be a direct transfer in order to qualify for the income exclusion

There are several additional technical requirements, so you really need to talk with your Michigan estate planning attorney or Michigan CPA about the opportunity and whether or not you can take avantage of it.  If you have questions, please 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 family’s values, insights, stories and experiences.

Even Everyday Families Need an Estate Plan

December 2, 2012 /

I recently came across this article on the importance of estate planning for average Americans and it brought to memory my previous blog post on a similar topic.  The article gives examples of several situations faced by “average joe’s and jane’s” who aren’t “rich” by any financial measure of the word.  There are a couple of points I want to call out because I believe they bear special emphasis:

  • If Congress doesn’t act before the end of the year (or shortly thereafter), many middle class families could be hit by the estate tax at a rate up to 55%!  Yes, you read that right – find out more in the article.
  • Blended families (e.g. second marriages) are becoming more common.  News flash – the chance of default Michigan law accomplishing your goals for your legacy are VERY slim in a blended family . . . consider the chances at almost zero.  Having a comprehensive, caring plan in place will help make sure a) your wishes for your family are met, and b) conflict between “sides” of the family are minimized.  As a matter of fact, you could very well disinherit your children.  Yes, it’s true.  Don’t believe me?  Read this previous blog post and you’ll see what I mean.

So, the moral of the story is this: if you don’t have a caring, comprehensive plan in place for you family – GET ONE!  And if you do, make sure to keep it updated as your life changes (for example, we include ongoing 3 year plan reviews at no charge for all members of our client family).  As Nike said . . . just do it!

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.

The “Fiscal Cliff” and Estate Planning

November 18, 2012 /

Unless you live under a rock or purposely don’t read, watch, or listen to the news, you’ve heard the term “fiscal cliff.”  The term that was coined to refer to the hundreds of tax cuts that will expire at the end of 2012.  I like to explain it as the tax version of the story of Cinderella – and January 1, 2012 at 12:00am, the carriage turns back into a pumpkin.

Yet, most of the articles you’ll read and news you will hear is focused on income tax items.  What about that seemingly forgotten tax – the estate tax?  Well, Forbes.com has a great article about what the current law says (warning – it’s not pretty!) and their prognostication on what will happen with the estate tax in the near future.  Click here to read the article.

Of course, I can’t just reference an article about such a hugely important topic to families and business owners without sharing my two cents.  Overall, I agree with much of what Ms. Jacobs says in the article.  But, there are a few items I think she glosses over quickly that need to be given more emphasis.  They are:

  • She continually emphasis “rich,” and “wealthy” to refer to those who would be affected and seems to do so in a patronizing tone.  I have a few issues with that.  First, “rich” and “wealthy” are relative terms and they should also take into consideration more than just what money or assets you have (see what I mean by clicking here to read about Whole Family Wealth).  Second, your “estate” for estate tax purposes is likely much bigger than you know (do you have life insurance?  It’s included!).  Click here to read about what’s included in your estate tax estate.  Finally, many business owners will be included in who she considers “rich” or “wealthy” as a result of their business profits “flowing through” to them on their income tax return – whether or not they actually get the profits (if you have questions on what I mean by that, contact me).
  • She mentions her belief that “portability” will continue – the ability for a surviving spouse to use their deceased spouse’s unused estate tax exemption.  BUT, she (and most of the folks I see writing about portability) fails to mention that to claim that unused exemption amount you must make an election on a timely filed estate tax return.  If you don’t, you lose it.  Yet, many folks won’t think to do so and will lose the unused exemption forever. Having a comprehensive estate plan in place can guarantee you get the maximum exemption – that’s just one reason why planning is SO important.
And if this comes as a surprise to you, you should read my blog more 🙂  I wrote about it 2 years ago – you can read the post by clicking here.
The most important thing you can do is invest your time and some of your money in meeting with a dedicated estate planning attorney to create a caring, comprehensive estate plan for your family.  One that has flexibility built into it so that it covers changes that Congress so much likes to make in this area of law.  Call us today at 616-827-7596 to get started!
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.

I Don’t Have an Estate, So I Don’t Need an Estate Plan

November 4, 2012 /

I recently ran across this Forbes.com article and it struck a chord.  Why?  Because I hear the same thing all the time.  Of course, you would expect that a Grand Rapids, Mi estate planning attorney would hear the comment quite often – so don’t take my word for it.  Read the article!  You may be surprised what an “estate” actually is.

Oh, and don’t forget to read a couple of my previous posts that drill down into a little more detail on what “estate” means.  You can find out what a Michigan estate is by clicking here, and what your estate tax estate is by clicking here.

Feel free to call us at 616-827-7596 with questions.  We welcome them!

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.

The Value of Family Stories in Your Estate Plan

October 27, 2012 /

Most families think of “wealth” as a dollar amount or financial standing.  Yet, the true “wealth” that all of us has is our values, insights, stories and experiences – this is what I call Whole Family Wealth.   Making sure that this “intangible” wealth is part of your estate plan is critical.  Yet, very, very few families take the step to include this true “wealth” in their plan – and, sadly, very, very few attorneys ever think about it.

But it’s beyond important, which is why we include a Priceless Conversation in our planning with each of our client families.  It’s recorded conversation on any number of topics, meant to capture a little bit of who they are and what’s important to them.  I’m very passionate about each client family doing a Priceless Conversation.  And yes, sometimes maybe even a little pushy.  But with good reason – because I’ve made the mistake of missing one and you can read about it in this previous post.  That was the hardest post I’ve written, from an emotional standpoint.

And I was beyond touched to recently read this post by one of my wonderful client families.  I’m not going to reproduce any of it here because it is well worth your time to read it yourself.  Let’s just say that they truly realize the gift they are giving their children through capturing their Whole Family Wealth through Priceless Conversations and, moreso, through their blog.  And don’t forget to read the comments at the bottom of post.  They are powerful and share personal stories of how important this “intangible” wealth is.

Ready to have an estate plan for your Whole Family Wealth not just financial assets?  Call us at 616-827-7596 to schedule a Peace of Mind Planning Session today!

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.

Even The Rich and Famous Struggle with Naming Guardians for Their Children

October 20, 2012 /

As many of my blog readers know, I’m beyond passionate about spreading the word on the importance of parents nominating guardians for their minor children.  It’s why I regularly speak at schools, daycare, preschools, MOMS groups, and MOPS groups in the Grand Rapids, Mi area.  It’s also why we make sure every family with minor children has a comprehensive Children Protection Plan in place.

As a caring parent, naming guardians for your children will be the most important decision you ever make . . . and for many, it’s the most difficult decision too.  Take, for instance, Adam Yauch – founder of Beastie Boys.  As you can see from this Forbes.com article, Yauch really struggled with naming guardians for his children.  I won’t say his decision – you’ll have to read the article for that.

Wealthy or not wealthy, famous or not famous, many parents struggle with this decision.  Unfortunately, the vast majority of parents come to the worst possible solution – they don’t name guardians at all.  Not naming anyone is not a solution – it can cause an extreme amount of hurt and anguish, and ultimately will mean that a court determine who cares for your children.  Is that what you would want?  Trust me, you can do it.  Although I’ve met with many parents who didn’t agree on who should be guardian of their children or in what order, we have always come to a solution agreeable to both parents.

It reminds me of this blog post I wrote back in 2009.  It’s worth the read – trust me.

Don’t let your children be cared for by a court-appointed guardian if something happens to you.  Give us a call at 616-827-7597 and have the added peace of mind of having a caring plan in place for your family!

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.

Where Should I Keep My Estate Plan Documents?

October 7, 2012 /

Congratulations!  You took the very important step of putting an estate plan in place for you family.  Now, where should you keep your estate planning documents?  That’s the most common question I’m asked, and it’s a good one.  And, like most questions, there isn’t necessarily one, correct answer.  There are several good options and you should choose the one that works best for your family.

At Lichterman Law, we provide our clients with a very nice, sturdy estate planning portfolio binder which contains all their original estate planning documents, copies of a few of the more often used documents, and a cd containing pdf scanned copies of all of their estate planning documents.  We recommend that our clients keep their original wills, guardian nominations, and cd in a home safe.  We also make sure that they use the Introduction tab of their estate planning portfolio binder as a place to write where those important originals are located.  No matter where you keep your estate plan documents, it’s critically important to let someone (or multiple people) know where it is, especially those people who you’ve nominated to carry out your plan (personal representatives, trustees, agents under powers of attorney, guardians for minor children, etc.).

So that’s what we recommend for our clients.  But, I realize not everyone reading this is one of our clients, so here are a few alternatives (some ok and some not):

  • Keep everything in a safe.  Although this is not a “bad” idea, I think it’s overkill and makes notifying others of the location and how to access the safe extra important, because time is of the essence when some of the estate planning documents are needed.
  • Safe deposit box at a bank or credit union.  Personally, I’m not a fan of safe deposit boxes because I’ve heard very few good stories about them.  That said, many families still place vital documents and other items in a safe deposit box.  Again, the key (pun intended) is making sure those people you’ve named for important roles in your plan know where the box is and how to access it (where the key is).
  • Somewhere “safe” in your home.  Some families don’t have an actual safe and will keep their planning documents in a “safe” place in their home.  This is ok, just make sure that “safe” place is well protected from fire and water.
  • An original will can be filed for a nominal fee with the probate court in the county you live in.  This is only an option for wills, and even then I don’t recommend it.  Why?  Because your life will change, what you have will change, what you want to have happen will change, and the laws will change, so if you truly care about your family, your estate plan will need to change too.  Sometimes there can be numerous changes over a person’s lifetime, and the court having the document is just one more thing to remember each of those time (retrieve and destroy the old will when the new one is signed).
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.

Michigan’s New Durable Financial Power of Attorney Law

September 30, 2012 /

Benjamin Franklin once said that there are two things that are certain – death and taxes.  Well, as a Grand Rapids, Mi estate planning attorney, I’m going to add one to that list – laws will constantly be changing.  I remind each of our client families that their lives, what they have, what they want to happen with what they have, and the laws will change throughout their lives.  That’s a big reason why we include ongoing three-year plan reviews for all our clients at no charge.

Today, a change to the durable financial power of attorney law goes into effect here in Michigan.  If you enjoy reading the law yourself, you can read MCL 700.5501.  I won’t go into intricate detail on all the changes, but I will point out a big one.  For durable powers of attorney signed on or after October 1, 2012, the attorney-in-fact must sign a statutory acknowledgement of his or her responsibilities.  The list of responsibilities can be found here (MCL 700.5501(4)).

It’s important to note that third parties (e.g., banks, retirement plan companies, life insurance companies, other financial institutions, and other people) will not be liable to anyone involved for their good-faith compliance with a durable power of attorney, even if there is no signed acknowledgment.  And, I think more importantly, third parties are not liable to anyone involved for requiring that the attorney-in-fact sign an acknowledgment before they will recognize the attorney-in-fact’s power under the durable power of attorney.  It wouldn’t surprise me if all financial institutions require the acknowledgment.  And if that means more of them will comply with a durable power of attorney, I’m all for it.

Practically speaking, what does that mean for you?  First, make sure you work with an attorney who focuses on estate planning, not one who “dabbles” in it, so they are up to speed on the latest laws and planning techniques.  Second, if you haven’t updated your durable power of attorney recently, now would be a good time to do it.  And third, make sure you have the your attorney-in-fact appropriately sign the required acknowledgment so that they have better odds of financial institutions following it when it’s needed most.

Give us a call if you have questions or need to have your durable power of attorney reviewed and updated.

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.

Estate Planning’s Critical Importance for Blended Families

September 16, 2012 /

Being a Grand Rapids, Mi estate planning attorney and being married to someone who works in the financial industry, I’ve seen the disaster that lack of planning (or poor planning) can cause in blended families (second marriages, “uncommon” children, etc.).  As a matter of fact, I wrote this previous post about a very common mistake that can disinherit your children.

But don’t take just my word for how important quality, comprehensive estate planning is for blended families.  Read this USA Today article about family feuds in estate planning and how they are expected to become more common due to changing demographics.  In particular, read the section titled “Tangled Family Trees.”  What to you think?

If you are part of a “blended family,” run, don’t walk, to an attorney who focuses on estate planning for blended families.  Why would you risk waiting?  Call us at 616-827-7596 today!

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.

Do it Yourself (DIY) Estate Planning – Risk Worth Taking?

September 9, 2012 /

Do it yourself (DIY) estate planning is something I’ve warned families about many times.  My first personal experience with it was reviewing an “estate plan” done on Legal Zoom.  You can read about it in this previous blog post.  Then again, you would probably expect me to discourage families from using DIY estate planning products because I’m an estate planning attorney.

The question asked by many families is, “why should I hire an attorney when we can do our own estate planning (using online forms, etc.)?”  That’s a valid question.  After all, many people change the oil in their own car and fix things around their home.  Why not create your own estate plan?

Well, I recently ran across this Forbes.com article on “What Could Happen if you Write Your Own Living Trust,” and am sharing it because it’s not written by an estate planning attorney.  I encourage you to read the article yourself, as I believe Ms. Jacobs does a great job covering some of the practical downsides of doing your own planning.  

The article’s many good points can be summed up in this statement: “The trouble with do-it-yourself planning is that even if your situation seems simple, there are many oddball things a layman wouldn’t think of that can go wrong, especially with wills and trusts. These mistakes can end up costing you or your heirs a lot more than you saved in legal fees.”

So, what do you think?  If you still want to do your own estate planning, what’s keeping you from working with an attorney?  Fees?  Reputation of attorneys?  Let us know and we’ll help you through those decisions, whether we end up working together or not.  Call us today 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 family’s values, insights, stories and experiences.

Estate Planning is Not Just About Taxes

August 26, 2012 /

It seems that many families are motivated to do estate planning only when they think a lot of their estate will be lost to taxes.  Sadly, this leaves many families without an estate plan when it’s needed most.  And unfortunately, many times their family is left with a mess due to lack of planning . . . no matter how “small” their “estate” may be.  I can’t overemphasize how important it is to remember that an “estate” is not what you think it is  – read this post and this post to find out what an estate really is.

The great news is that this fact is become more of a “known” than an “unknown.”  Proof is in this Yahoo! Finance article I came across last week.  It’s a short read and certainly worth your time.  The article points out that, even if estate taxes don’t go up at the beginning of 2013 as they are scheduled to, “I’d still take the threat of higher estate taxes as a wake-up call.”  The article goes on to 5 estate critical estate planning tasks that you should absolutely not put off.  Although there are many more, I generally agree with the 5 they list.  And, as can be seen from this previous blog post, the #1 item on the list can cause some real headaches (and heartaches).

So “take the bull by the horns” and call us at 616-827-7596 to schedule your Peace of Mind Planning Session to make sure you have all these items handled in a way that is a true reflection of your family – who you are and what is important to you.

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.

What Are Michigan Probate Letters of Authority?

August 18, 2012 /

If you’ve been called upon to help administer the estate of a relative or friend who has passed away, you may find that financial institutions are unwilling to give you access to the deceased person’s accounts without a copy of Letters of Authority.  I received just such an email this week.  A lady’s husband had passed away and she was not able to access his accounts because the financial institution required a copy of the Letters of Authority for the probate of his estate.  So, what are Letters of Authority?

First, a little background about probate.  Probate is the court process that your “stuff” (real estate, bank accounts, etc.) go through when you pass away to the extent that you owned anything in your name when you died.  You see, while we are alive we buy/sell/transfer things with our signature.  But, after we’re gone, we can no longer sign to transfer our assets.  So, a Personal Representative is appointed during the probate court process, and the Personal Representative’s signature effectively substitutes for your own.  It is the Personal Representative’s signature that will ultimately distributed the estate assets to the estate beneficiaries.

So, back to our question – what are Letters of Authority?  Letters of Authority are the legal document signed by the probate court stating that the Personal Representative is the legal representative of the estate and authorized to sign on behalf of the estate.  That’s the main reason that financial institutions request Letters of Authority – because they want to make sure they are working with the legal representative of the estate, not just someone who *says* they are.

That said, I’ve seen many situations where the financial institution’s request was not valid, such as when no probate estate is needed because the deceased person had a fully funded living trust.  If you find yourself frustrated in handling a probate estate or dealing with financial insitutions’ where the deceased person had accounts, give us a call 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 family’s values, insights, stories and experiences.