I probably sound like a broken record when I talk about the “living” nature of an estate plan. I always remind our client families that it’s critically important to review their estate plan on a regular basis (for example, every 3-5 years), and especially when you experience life changes. That’s why we include ongoing 3-year reviews in all of our planing levels. You life will change, what you have will change, and what you want to have happen will change. Your plan needs to keep up with those changes or it is likely to fail you when it’s needed the most.

And . . . the law will change (often)!  So, being fresh off several days of continuing ed, I thought I would share some of the key changes in Michigan’s law related to estate planning and probate. “Recent” means within the last 1-2 years. So here goes:

  • Probate inventory fee. This is probably the biggest change of them all. The “inventory fee” that each estate is required to pay to the probate court will be less for almost everyone (at least until 2018). That’s because the value of real estate that is used to compute the inventory fee is now based on the equity value of the real estate rather than the market value (MCL 600.871(2)). Think of all the underwater or barely above water homes we’ve seen so much of in the past several years. Using equity value rather than market value can appreciably lower the inventory fee.
  • Trust decanting. No, I’m not talking about wine . . . I promise. Generally speaking, trust decanting is “pouring over” the assets of a trust into a different trust and may be done for various reasons (changing terms of the trust, changing administrative or tax provisions, etc.). And this can be done even if the original trust is irrevocable (either because you wanted it that way from the outset or because someone has passed away and a previously revocable trust became irrevocable). There was some belief that case law (e.g., court-based law) allowed for “decanting,” but now we don’t have to worry about that “grey area,” because Michigan law explicitly allows it. I’m very much in favor of this because it provides client families with more flexibility.
  • 529 Plan creditor protection. This is a HUGE planning opportunity for client families planning for their children’s college education. Effective January 2, 2013, 529 plans are protected from creditors whether owned by the parent or child (MCL 600.6023(1)(l)(iii)). This is a great way to help make sure the college savings aren’t taken by creditors.
  • Property tax uncapping. Big change here for certain transfers of real estate made after December 31, 2013. Current law stated that a “transfer” of real estate “uncaps” the annual property tax increase restriction on assessors. As of December 13, 2013, it will not be a “transfer” (and therefore will not uncap the property tax value) to change ownership of residential real estate if the person (or people) who is taking ownership is related to the current owner within the first degree (MCL 211.27a(7)(s)). Now, there are some questions about the what “first degree” means and we’re hoping for some clarification from either the legislature or the regulators. I’ll do my best to keep you updated on how they define that.

There were many more changes, but I figured most readers are probably sleeping by now so I just listed the changes I feel are most important to my estate planning and probate client families. I welcome any questions or comments you have on these items or anything else.

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.