Tag: estate plan

The Boilerplate Debate

November 25, 2017 /

I’ve heard it a lot over the years when meeting with client families: “I did not read the boilerplate”; or “that’s not important, it’s just boilerplate”.  The general feeling tends to be that boilerplate is a pain and really does not accomplish anything.  The truth may surprise you.

What really is “boilerplate”?  The definition is “standardized pieces of text for use as clauses in contracts or as part of a computer program”.   Contrary to what many may believe, the “boilerplate” can make or break your estate plan.  You see, it is impossible to predict what will happen in your life, your family and with the laws that affect your estate plan.  At least in documents I draft, the boilerplate is there to cover all the situations I can think of that may come up.  I do not draft it thinking it will happen; I draft it knowing that I want your plan to work how you want even IF it does happen.

We had a case recently where the boilerplate was critical to carrying out my client’s wishes after passing.  A disgruntled beneficiary brought a suit to have my client’s trust declared invalid.  We won.  Then, we petitioned the court to have her removed as a beneficiary.  How could we do that?  Because the “boilerplate” of the document stated that if a beneficiary challenged the validity of the document, they would no longer be considered a beneficiary of the trust.  It was very important to my client that his wishes be carried out.  He had several friends, family and charities he wanted to benefit from his hard work and he did not want a beneficiary’s lawsuit to upend that plan or lessen the amount his chosen beneficiaries would receive.  The “boilerplate” included a “no contest clause”, which was the key to minimizing the impact of the lawsuit on the other beneficiaries.

So, next time you review your estate plan documents, take some extra time to read through the “boilerplate”.  And if you have any questions about why a particular provision is there, just ask me.  I expect there is a good reason it’s there.

Are You Getting REAL Values-Based Planning or an Impostor?

August 11, 2010 /

This is the third in a series of posts on Story Based Planning written by my colleague and mentor, Scott Farnsworth.  In this post Scott tackles TRUE values-based planning and what has become a substitute that “poses” as values-based planning . . . questionnaire based planning.  Here is what Scott has to say:

In an earlier post I wrote that “values-based planning” is founded on the notion that each client has a personal set of values that should be ascertained early in the planning process and then used to fashion a financial plan or estate plan unique to that client.  Most enlightened planners today would concur that financial and estate plans based on client values are far superior to the “one-size-fits-all” cookie-cutter plans that many of us grew up doing.

The question with regard to values-based planning is not whether we should create plans based on client values.  The answer to that one is duh-obvious: Yes.  The issue is not WHETHER we should do values-based planning, but rather HOW to do it so that it actually works.

In other words, how do we respectfully and accurately ascertain each client’s unique and deeply-held values upon which their planning will be based?  What methodology will allow us – and our clients – to look into their hearts, to see there what truly matters, and to then discern how to create a plan with them based on what we have discovered?

Unfortunately, the widely-heralded “values-based planning revolution” has been in my view a case of one step forward, two steps back.  This is largely because in nearly every instance what started out to be “values-based planning” quickly morphed into what I call “questionnaire-based planning.”  Indeed, with a few notable exceptions, virtually every so-called “values-based” approach is designed to be implemented by means of a cleverly designed, carefully worded questionnaire.

I think that is a tragic turn of events, and here’s why:

A.  Questionnaires are blunt instruments that deliver cut-and-dried, categorical answers.  As a result, they seduce planners into seeing clients as cut and dried and categorical.  But that’s not the way we humans are, especially when we drill down to a values level.  We are not pegs to be pushed into differently shaped holes, or colored bobbles to be sorted into different boxes.  We are each unique.  We are full of nuances, contradictions, uncertainties, and places where the lines are blurred.  We don’t fit into four or five neat categories, as most questionnaires require.

Some would argue that being able to offer clients a plan based on which one of several categories they fall into, as determined by their questionnaire responses, is substantially better than the old “one-size-fits-all” method of planning.  While it may be an improvement, it is not true values-based planning.  Offering clients a choice of cookie cutters is still cookie-cutter planning.

B. Questionnaires have built-in biases, which are based on the assumptions and prejudices of their creators. Regardless of whether these biases are accidental or intentional, a biased questionnaire skews the results away from the client’s true values. When you start with untrue assumptions, you always end up with incorrect conclusions.

I have seen long, beautiful, and well-worded questionnaires that were supposed to assess a client’s values and direct the planner to the type of plan the client needed.  Oddly, it seemed that nearly everyone using that questionnaire was steered toward essentially the same plan, one that favored the aims and products promoted by the questionnaire designer.  It seems to me that when everyone gets the same answer, maybe the questionnaire is asking the wrong questions.

C. Questionnaires can be “gamed” by clever clients. The process of answering questions in a questionnaire invites clients to consider not just their answers, but the impact of their answers on the planner and the planning process.  “Will this answer raise or lower the fee?”  “Will this answer make me seem more wealthy or less wealthy?”  “Will this answer cast me in a negative light?”  “Will I appear miserly, judgmental, prejudiced, immature, or short-sighted if I answer that way?”  “Will I be exposing my weaknesses, and will that allow her to take advantage of me in some way?”

Human nature being what it is, the odds are high that clients’ responses will be less than candid and unguarded.  Consequently, there is a high probability that questionnaire answers will be scrubbed, distorted, shaded, or flat-out wrong.  This makes the results of a questionnaire unreliable as a basis for serious values-based planning.

D. Questionnaires lead to dull, inattentive planners.  Questionnaire-based planning doesn’t require planners to listen deeply and attentively to clients, to ask insightful questions, or to employ judgment and wisdom to discern how to weave the client’s life-lessons into the plan.  The “correct answers” or the client’s “categories” just “magically” pop out from the responses.  Yeah, right.

True values discovery requires careful and attentive listening.  Each client and the stories they tell are alive with insight and meaning.  They are full of clues and pieces of answers.  Real people living real lives are like that.  The right answers don’t just pop out; they have to be teased out and then pieced together like a jigsaw puzzle.  But when you make a commitment to discover for yourself – and for the client – a clear and complete understanding of what’s really in their heart, their deepest purposes for planning, you discover that the results are unquestionably worth the effort.

E. Questionnaires don’t lead to values-based planning. Questionnaire-based planning is neat, clean, analytical, and easy, but it is incapable of drilling all the way down to the values-bearing strata deep inside the client.  No matter how cleverly worded, a questionnaire can never respectfully and accurately ascertain each client’s uniquely personal values.  The results are too shallow and mechanical.  The intention may be right but the methodology is wrong.   Thus, whenever planning becomes questionnaire-based, it ceases to be truly values-based.  I call it “faux values-based planning.”

Please understand that I believe there is an appropriate role for questionnaires in the financial planning and estate planning process, which is to help gather data.  I have no problem using questionnaires as fact finders.   They just don’t work to discover and discern significant client values.

So What?

“So what’s the harm,” you may ask, “in doing questionnaire-based planning?   It’s definitely a lot better than the old way we used to do it.”

The most significant harm is that when financial planners and estate planners – even smart, sincere, and well-intentioned planners – think they are doing values-based planning but are only doing faux values-based planning, they stop seeking the real thing.  They become enamored with zirconium and fail to find the acres of diamonds just over the next hill.  They take the shortcut and never realize they just missed the best part of the journey.   As a result, they rob themselves and their clients of the magnificent experience of true values-based planning.

Good is the enemy of great.

The moment earnest planners apply the label “values-based planning” to something that is not and once they start to believe they are doing “values-based planning,” even though it is really only the “faux” variety, they lose the sense of urgency to discover the real thing  and are unable to see the need to do more.  Once they get locked in, it is nearly impossible to unlock them.  As a wise person once said in another context, “the problem is not what they don’t know.  It’s what they do know that just ain’t so.”

Values on the cheap vs. paying the price

While questionnaire-based planning may appear neat, clean, analytical, and easy, it is really only values-based planning on the cheap.  The real process of values discovery – like virtually every other authentically meaningful human endeavor such as nurturing a fulfilling marriage, raising independent children, growing a beautiful garden, or building a success business – can be disorderly, messy, intuitive, and sometimes challenging.  It requires real work.  It requires that we pay the price to come to know, really know, our clients.  It cannot be achieved with clever techniques.

The Solution

To move into the beautiful new world of true values-based planning, the solution is not to try to come up with a more artful questionnaire.  The solution is to recognize that their stories — the oldest and most natural form of human communication – are rich and ripe with the unvarnished truth about our clients’ values.  We just need to ask the right questions and then listen, really listen.

I have found that the best way to genuinely understand our clients and their values is to ask them thoughtful and insightful story-leading questions in an appropriate setting and then settle back and listen to their answers with all the love and attention and encouragement we can muster.  I have learned that who they are and what they deeply value are woven into the stories they tell and can be discovered by a caring advisor.  That is the essence of what I call “Story-based Planning in a Thinking Environment.”

I’m happy to say that I use a questionnaire mostly for fact finding, not for developing a values-based plan.  I make it a point in every Peace of Mind Planning Session or Whole Family Wealth™ Planning Session to purposely set the questionnaire aside and spend a significant amount of time listen to my clients’ stories.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

Planning For Your Values – Story-Based Planning (Part 2)

August 8, 2010 /

Your values are important to you, otherwise you wouldn’t hold them as values.  So why don’t we plan to pass on our values as much as we plan to pass on our retirement account, our cars and other assets we have?  It’s a great question and one that is tackled by my colleague and mentor Scott Farnsworth in the second in a series on Story-Based Planning.  You can read the first post here.  Here is what Scott has to say:

For at least the last decade, the hottest buzzword in the planning professions has been “values-based.”   You couldn’t turn around without running into “values-based” selling, financial planning, estate planning, you name it.  But what in the world is “values-based planning” anyway?

Looking under the label and behind the question is helpful, I believe.  In truth, all planning is based on someone’s values, so the question behind the question is whose values? To acknowledge our professions’ dirty little secret, the truth of the matter is that in the “pre-values-based planning era” nearly all planning was based on the professional’s values or, at best, on the values we assumed the clients held.

If the professional was selling life insurance, lo and behold, one of the key values was “tax-free liquidity at death.”  If the professional was selling living trusts, it was generally assumed the clients valued “avoiding probate,” “reducing estate taxes,” and “distributing the assets” in some orderly fashion, usually in a way consistent with the drafter’s trust templates.  If the professional was selling investments, every financial plan was based on the premise that the client wanted to pay for his kids’ college and then retire comfortably a few years before he turned 65.

Not surprisingly, every plan a planner created looked strikingly similar to every other plan he created: they were all based on the planner’s values and assumptions, not the client’s.

What the term “values-based planning” was trying to communicate was the notion that each client has a personal set of values that ought to be ascertained early on in the planning process and then used to fashion a financial plan or estate plan that was unique – truly unique – to that client.  The real question then became, for those planners actually trying to create plans based on client values, “how do you ascertain the client’s values?” At least now the issue was correctly framed.

This breakthrough led to the advent of what I call “questionnaire-based planning.” Client values, the planning professions assume, can be ascertained through a cleverly designed multi-page questionnaire.  But while “questionnaire-based planning” is far better than its predecessors, it still fails in its primary objective: to develop for the planner and the client a clear understanding of what’s in the client’s heart – the client’s deepest purposes for planning.  For that you need story-based planning.

In the next installment I’ll outline why “questionnaire-based planning” is merely masquerading as genuine values-based planning.  It looks good on the outside, but inside it has no real power to get to the heart of the matter.

To be continued.

Scott Farnsworth, J.D., CFP is an attorney and Certified Planner with more than 30 year in the estate, business, and financial planning fields. He is the CEO of SunBridge, Inc. and the founder of the SunBridge Legacy Network. He is a nationally recognized author and expert on practical, holistic, family-friendly planning. Scott was recently named one of Financial Advisor Magazine’s ‘Innovators of the Year.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in Whole Family Wealth™ planning for professionals with minor children, doctors/physicians, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

Why Estate Planning Is Especially Important for Women

July 11, 2010 /

I love perfect timing!  I read through a recent blog post by Danielle G. Van Ess, a colleague of mine and fellow Wealth Counsel member, that fit right in with my ongoing blog series introducing estate planning.  I started the series by looking at how critically important estate planning is for various family types and situations such as parents with minor children and professionals.

Well, Ms. Van Ess recently wrote a blog post on how vital estate planning is for women (read it here) based on a Forbes.com article.  I strongly encourage you to read her post and the Forbes article – the information is too vital to pass up.  Although Massachusetts and Michigan laws may differ, many of the concepts mentioned in the articles are the same.

I won’t rehash the post or article here, however I do have a couple of thoughts to share:

  • The importance of adequate life insurance on BOTH parents cannot be overstated.  The vast majority of families  I meet with are under insured by any measure.  And I typically find that mom is more likely than dad to be under insured.  Ms. Van Ess points out the importance of life insurance for stay at home moms.  Just think dad – if something happens to mom, you are doing to have to stay home with the kids, hire in-home help or pay for daycare.  How would that financial change affect YOUR family?  Talk to your life insurance agent or financial adviser to make sure you are adequately insured.  If you would like suggestions on who to contact, just let me know.
  • Don’t underestimate your importance in putting a plan in place for your family.  I can count on one hand the number of times we’re contacted about estate planning by dad.  It is almost always mom.  You play a vital role as the key decision maker for planning.  Make sure the decision of how you plan and who you work with is the best for your family.

Do you have stories to share about the importance of the estate planning for you and your family?  For your mom, sister, aunt or friend?  Please share.  I always enjoy hearing about others’ experiences.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses throughout Grand Rapids and West Michigan.  He specializes in “whole family wealth” planning for professionals with minor children, doctors, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

A Family Mission Statement Can Help Any Family

June 30, 2010 /

This is a guest post from Ron VanSurksum, CFP originally posted on his blog here and reproduced here with his express permission.

A Family Mission Statement Can Help Any Family Manage Assets, Philanthropy and Direction

A family doesn’t need a surname like Vanderbilt to benefit from a family mission statement.  A mission statement is a collaborative document created by one or more generations of family so standards and goals can be set for the handling of all family assets, including businesses and philanthropy in particular.

While mission statements aren’t legal documents – in fact, many are done both in written form and on videotape as a companion to legal wills and directives –  their purpose is to make a record of the family’s values, goals and aspirations and how those sentiments should drive future decisions about family wealth management, business succession plans and charitable pursuits.  Multi-national companies have mission statements. Non-profit corporations have mission statements.  A mission statement for your family, helps identify and clarify specific values and goals, facilitates group decisions, instills confidence and encourages unity.

It should also identify family leadership who will work with other relatives in implementing those goals.

While the end product should produce a document built from discussion, argument and consensus, it’s not so much about the piece of paper as the process. Many families start the process as a way to build consensus about long-term financial, business, estate and philanthropic goals, but the conversation can take twists and turns that don’t directly involve the family money. In this process, a family can identify the strengths, weaknesses and unearthed priorities of all family members and might reveal leadership few had expected.

Trained financial advisors including financial planners, tax experts and estate attorneys, can help explain the process and set an agenda for families to follow in creating the mission statement. While some extended families may elect to bring in a facilitator to guide their process, there are generally four components to a family mission statement – estate issues, philanthropy, business planning and family dynamics in general.

It also helps to start with some questions that can guide the discussion.  Many experts start with questions that first get family members talking about their relationships and how their dynamics work, and then move into business and money matters.

  • What’s most important about our family?
  • What do you think our goals should be?
  • When do you feel most connected to the rest of us?
  • How should we relate to one another?
  • What are our strengths as a family?
  • Where do you think we’ll be as individuals in 5, 10 and 15 years?
  • In order, what are the five things you value most in life?
  • How should we behave toward each other?
  • How should we take care of relatives who are or become sick or disabled?
  • How should we resolve our disputes?
  • How important is the family business to you?
  • What should we be doing differently with our family money as well as our assets inside the business?
  • What professionals or structures should we bring in to help us manage our wealth?
  • What’s the best way for us to be building our wealth?
  • What do you think the role of our family should be in helping the community?
  • What should we be doing individually and as a family with regard to philanthropy?

Structurally, the written mission statement can be whatever you agree it should be – most experts say it should be no more than a paragraph long, but that’s a guideline, not a rule. It is also very important to focus on the positive, meaning what you want to accomplish and achieve as a family, as opposed to want you want to avoid. And it needn’t be set in stone – a family should have a meeting every year or two to revise or approve its mission.  The family mission statement helps a family establish its identity and the variety of voices within, and those voices may be subject to change over time. The family mission statement is a living, breathing document that can evolve over time. In today’s fast paced world, it is easy to get caught up in the here and now, a family mission statement can help you stay true to your family’s values. As a result, families may not feel the pressure to keep up with the Joneses because their mission  statement helps achieve balance. It is also very important to focus on the positive, meaning what we want to accomplish and achieve as a family, as opposed to want we want to avoid.

The right mission statement can help reset goals and diffuse tensions later. It can also be used to moderate discussions that inevitably happen after major changes within the family – death, divorce or happily, an increase in the number of heirs and participants.

As for the age of the participants, it can start in very basic form with younger children and the process can mature as they age. It’s actually a good idea to bring young members into a customized version of the process for youngsters so they can comfortably adjust to working as adults with the older members of the family.

For additional resources on how to create a family mission statement, please consider utilizing any of these websites

http://www.nightingale.com/mission_select.aspx?from=homepage&element=missiontitle

http://www.ehow.com/how_2043790_write-family-mission-statement.html

http://www.franklincovey.com/msb/

June 2010 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Ronald J. VanSurksum, a local member of FPA.

Why You Should Care About Estate Planning: Professionals

June 13, 2010 /

Moving along in my Intro to Estate Planning series, we will continue to look at why planning is important for  family of different types and at different life stages.  I started by uncovering the many benefits estate planning holds for parents with children under 18.  If you are a parent with children under 18 years old and still have questions, contact me to have your questions answered.

The next group we’ll look at is more of a “type” of family rather than a stage of life: professionals.  My definition of a “professional” is broad, including doctors, lawyers, certified public accountants (CPAs), accountants, bankers, financial advisers, nurses, teachers, middle- to high-level company managers, CEOs, company Presidents, and other similar positions.  I view this group so broadly because they all share similar concerns, at varying degrees.

Some important reasons proper estate planning is critical for professionals (and their families) include:

  • Guardianship remains one of the most important reasons to estate plan if you have children under 18 years old.  Without designating who you want to raise your children in your absence, a court will decide who will care for them. If you haven’t named guardians for your children, you should run, not walk to an attorney specializing in estate planning (and focusing on guardianship decision).  If you have named guardians, you most likely made at least 1 of 6 common mistakes.  Contact me to learn more!
  • Asset Protection. As a professional with a special skill, you face a greater threat of liability.  You have worked hard to accomplish great things and are building a secure financial future for your family.  Don’t leave it exposed to future divorce, lawsuits and creditors.  And this pertains as much to you as it does to your children and grandchildren (and on down the line).  You can pass your financial wealth on to them protected from divorce, lawsuit and creditors as well.
  • Planning for your incapacity to avoid bitter conflict about your finances and your health care. You need to give people you trust the legal authority, guidance and direction on how to handle your finances and your health care.  Enhanced Powers of Attorney, EnhancedPatient Advocate Designations, and Living Trusts are key components to making sure your wishes are recognized and followed.
  • Avoiding probate.  Without a proper plan in place, your hard earned wealth will go through a time consuming and often costly court process. Wouldn’t you rather your family be able to benefit right away and receive more of what you worked so hard to accomplish?
  • Passing on your “whole family wealth,” not just your money.  This includes your values, insights, stories and experiences – who you are and what is important to you.  In my experience this is THE most overlooked part of estate planning.  The professionals I’ve worked with have accomplished a lot and continue to reach new levels of accomplishment.  Yet in most circumstances they have not taken the time to explain their struggles, how they overcame, and what they learned – these are far more important than money to their kids, grandkids, and future generations.

These are just a few of the reasons professionals need an estate plan.  Can you think of more?  Please share your thoughts and experiences.

With my next post in the series, I will look at the “sandwich generation” – people who have concerns about their parents and their children.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses in Grand Rapids, Grandville, Cascade, Forest Hills, Ada, Byron Center, Caledonia, and the surrounding areas.  He specializes in “whole family wealth” planning for professionals with minor children, doctors, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

Make sure you pass on your “whole family wealth,” not just your money.  This includes your values, insights, stories and experiences – who you are and what is important to you.  In my experience this is THE most overlooked part of estate planning.  It happens to be one of the most fulfilling privileges I have when working with families.

Why Should I Care About Estate Planning?

June 3, 2010 /

Having figured out what estate planning “is” in my previous post, let’s move on to why estate planning is important.  Because the topic is so broad, I’m going to break it down and address it based on common life stages.  If you are curious how it applies to YOU, contact me and let’s talk about it.

Let’s start by looking at how critically important estate planning is for parents with kids under 18 years old.  It really doesn’t matter if all or some of your children are under 18.  These important issues apply if any of them is under 18:

  • Establish guardianship for your children under 18 – not doing so will leave their care up to a court to decide.  Someone who doesn’t know you and what’s important to you, your family dynamics, and your desires for your children’s future, will be the one making the decision who will raise them.
  • Establish temporary guardianship for your children – not doing so could leave them in the hands of child protective services or temporary/permanent foster care.
  • Make sure you have a comprehensive protection plan for your children so your babysitter, family, friends and guardians/temporary guardians know what to do if something happens to you and have the legal documentation to prove it.  We include instructions for these important people and even include a family emergency ID card for your wallet/purse.
  • Have your estate structured so your kids don’t succumb to “lottery winner syndrome” when they receive all of their inheritance outright at 18 years old.  Think about that for a second.  Let’s take an example: 2 children and an estate valued at $500,000 (and remember life insurance is included in the amount they receive).   Each child will receive whatever amount of their $250,000 share is not used up by the time they are 18.  Can you imagine?  Let’s say that ends up being $100,000.  How would you have handled $100,000 when you were 18?  I know how I would have handled it and it’s not pretty.  I read one study that said over half of outright inheritances are spent within 3 years of receiving them – no matter how much was received.
  • If you are a professional and subject to potential liability, make sure you structure your plan in a way that ensures your assets are there to benefit your kids and not lost to lawsuits, creditors and other liabilities.
  • Make sure you pass on your “whole family wealth,” not just your money.  This includes your values, insights, stories and experiences – who you are and what is important to you.  In my experience this is THE most overlooked part of estate planning.  It happens to be one of the most fulfilling privileges I have when working with families.
  • Have a health care directive (patient advocate designation) in place for yourself and your children to minimize conflict about your medical care.

These are just a few of the reasons families with kids under 18 need an estate plan.  Can you think of more?  Please share your thoughts and experiences.

With my next post in the series, I will look at why planning is vital for “professionals” – and you may be surprised how many families are in that group.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses in Grand Rapids, Grandville, Cascade, Forest Hills, Ada, Byron Center, Caledonia, and the surrounding areas.  He specializes in “whole family wealth” planning for professionals with minor children, doctors, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

Michael Lichterman is an attorney specializing in estate planning and helping provide peace of mind to families and businesses in Grand Rapids, Grandville, Cascade, Forest Hills, Ada, Byron Center, Caledonia, and the surrounding areas.  He specializes in “whole family wealth” planning for professionals with minor children, doctors, nurses, lawyers, and the “sandwich generation” (caring for parents and children) – and does so from a Christian perspective.  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.

What Is Estate Planning?

May 31, 2010 /

Based on some recent conversations, it has become clear to me that there is much confusion about estate planning.  What is it?  What does it mean?  Why do it?  How to do it?  Why work with an attorney?  And many more questions I hear on a regular basis.  So, I’ll be doing a series of blog posts introducing estate planning and its various components.  I don’t know how many posts it will be.   I’m pulling many of the topics from my day-to-day conversations, so I’ll keep the series going as long as there are questions.  If you have questions, please ask! I’ll make sure to work your questions into this series.

So, the first question – what is estate planning?  Wikipedia defines estate planning as “the process of anticipating and arranging for the disposal of an estate.”  I believe a much better definition is one I heard from a colleague of mine from Wealth Counsel:

“I want to control my property while I’m alive, take care of me and my loved ones if I become disabled, and give what I have, to whom I want, the way I want, and when I want.  Furthermore, if I can, I want to save every last tax dollar, professional fee, and court cost legally possible.”

The one item I always add to that definition is: “to make sure that my children are cared for by who I want, in the way I want.”  Of course, this applies only to parents who have minor and/or disabled children.

So here we have the definition, the starting point.  Within the definition are many more considerations.  To accomplish these goals of estate planning, the following documents are commonly used: wills, trusts, general durable power of attorney, and health care powers of attorney/patient advocate designation.  And if you work with a comprehensive Grand Rapids estate planning attorney, there are additional considerations and documents meant to help you pass on your “whole family wealth” – not just what you own, but who you are and what’s important to you!  Because if you think about it, the money and the “stuff” will still be around when you pass away, but it is who you are as a person that will be lost – your values, insights, stories and experiences.  Check back for the next installment in this series to discover some additional considerations that are vital to having a great estate plan for your family.

Michael Lichterman is a dedicated estate planning attorney helping provide peace of mind to families and businesses in Grand Rapids, Grandville, Cascade, Forest Hills, Ada, Byron Center, Caledonia, and the surrounding areas.  He specializes in the needs of professionals with minor children, doctors, nurses, and those in the “sandwich generation” (caring for parents and children), and does so from a Christian perspective.  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.

Traveling Without an Estate Plan – Why Leaving the Stove On Is the Least of Your Worries

May 25, 2010 /

Yep, it’s that time of year again . . . traveling season.  Memorial Day weekend is coming up, the kids will soon be out of school, and the summer travel season will be in full force.  No matter how well we plan, we always seem to forget something before leaving on vacation – or at least think we forgot something.  What about you?  Have you every worried that you left the stove on, forgot to put the garage door down (I always forget that one!), or didn’t lock the door to the house?  I’m sure you have.  Those are some of the common worries.  So let me ask, have you ever worried about what would happen to your children if something happened to you?

Most parents haven’t thought about this, or at least never did anything to take care of it.  Did you know that only about 1/3 of parents have named guardians for their children . . . ONLY 1/3?!  And yet we consider them to be the most precious gift and most important part of our lives (and they are!).  I encourage you to take it upon yourself to put an estate plan in place to make sure your kids are cared for by who YOU want in the way YOU want . . . BEFORE you go on vacation.

I frequently get calls to the office from parents who realize at the last minute that they need a plan in place – sometimes literally a day or two before leaving!  Sadly, it’s often too late to put something in place that is even somewhat thought-out before they leave.  It may go without saying – procrastination is the number one reason I see for families not having the needed legal documentation in place.  I can’t count how many times I’ve counseled caring parents through making these important decisions, and hear “yeah, we’ve been thinking about it for years, but have always put off the step of doing something about it.”

Here are three critically important items to have in place before vacation:

  • Name guardians for your children and make sure it is legally documented – don’t let the court system decide who will care for your children.  Make sure you plan for the long-term AND the short-term.
  • Have a power of attorney for health care and patient advocate designation in place so your family isn’t caught in a bitter conflict over your medical care
  • Have your finances in order so they aren’t lost to taxes or a lengthy court process

Make sure to take these important steps before YOU go on vacation.  And make sure to work with an attorney that specializes/focuses on estate planning for families. If you have questions – ask!  Give me a call, email me, or comment on this post so you can have your questions answered and have some added peace of mind before your next trip.

The Cheap, Online Will – A Real Life Example

May 11, 2010 /

Ok, you just have to read this post from Gregory Luce.  He is in the process of evaluating the differences between an online will and one drafted by an estate planning attorney.  He gives a very fair, well-reasoned analysis of the document and “extras” along with it – the positives and the negatives.  As can be expected, there are flaws in the document.  I encourage you to read the comments at the bottom of the post as they point out many areas of concern.  Some of the items could cause the “effect” of the will to be drastically different than what Mr. Luce intended.

Of course I made sure to add my $.02, which centered on the wholly inadequate guardianship provisions.  I regularly refer to 6 common mistakes that parents make when naming guardians for their children and most, if not all, of them show up in this situation.

Read the post, read the comments, and then let me know what you think.  Sure, it may be less in the short run to do the cheap online will and have the misplaced peace of mind it provides.  But at what cost?  Disinheriting a child?  Having someone challenge it and win?  Having someone taking care of your children who you would never choose . . . or not in the order you would choose?  I look forward to your comments!

Make Your Heirs Rich, Not Your Lawyer

May 7, 2010 /

Say what?  Yes, you read that right.  It is the title of an article I read at the Motley Fool (read it by clicking here).  The main focus of the article is how you want to be remembered after you are gone and how your estate planning (0r lack thereof) can greatly influence your legacy.  They put quite an emphasis on wills, which is interesting because many of the more complex situations the article talks about are far better handled through a trust.  And in some of the examples, a will is almost completely inadequate.  I would also suggest that you review your plan every 3 years, at a minimum, rather than the 5 suggested by the article.  Think back three years and ask yourself how much the law, your life, and what you own has changed.  Those items change on a regular basis – so should your plan.

I’m happy to see them mention estate planning in the context of disability planning.  This is often overlooked . . . sadly, even by some lawyers.  Estate planning is not just “death planning.”   It is more than that . . . it is ensuring that the right decisions are made on your behalf if you are unable to make them yourself due to incapacity or disability.

What do you think about the article and the issues raised by it?  Please feel free to share – I enjoy reading and responding to the comments and emails.

Be Careful Who You Pick As A Trustee

May 4, 2010 /

Although statistics show that the number of people who have an estate plan is not increasing, I do see a larger portion of individuals and couples making the decision to have a trust-based estate plan.  That is, an estate plan where a trust is the main document that controls how things are distributed when they pass away.  One of, if not the, most important decisions you make with a trust-based plan is who will be the trustee and who will be the backup (“successor”) trustees.  The trustee is the person/people/entity that makes sure the terms of the trust are followed.  Depending on the trust’s design, the trustee may have a large amount of discretion on who receives money/property from the trust, how they receive it, and when they receive it.  Yet, in many cases, the decision on who will be the trustees/successor trusties is made hastily, without much thought.

This can be a big mistake!  If you have done your planning correctly and fully “funded” your trust (e.g., transferred assets to it), your trust will have most (if not all) of your assets.  Considering that the trustee will make certain decisions relating to the trust, the choice should not be taken lightly.  The trustee should be someone you trust (no pun intended . . . ok, yes, the pun was intended).  However, don’t stop the inquiry there.  It should also be someone who has sufficient financial management and administrative ability (or is wise enough to hire professionals to handle those tasks for them).  And consider the option of splitting the trustee role  among one or more people/entities.  For example, you could have a “distribution trustee” who determines when to make distributions, and an “administrative trustee” who keeps track of all the accounting, tax, and other detailed financial matters.

I recently had a conversation with a great client.  She shared with me that her father had a trust set up and properly “funded” (I say bravo to him, because not “funding” the trust is the single biggest mistake I see when reviewing estate plans).  He named a local bank as the trustee for distribution and administrative purposes.  He set out several scenarios in his trust about how he wanted to provide for his children (education, businesses, homes, etc.).   One of the main assets in the trust was stock in a certain company.  Long story short, the stock dropped significantly in value and the trustee (the bank) would not sell it.  It believed the stock would come back and that to sell it at the depressed price would violate the bank’s duty as trustee.  This all happened about the time this client was supposed to be getting a distribution to help with education.  She never did get the distribution for education (or much else for that matter).  The good part is that she did a great job on her own and is quite successful today.

I’m not saying you shouldn’t consider a bank or trust company as a trustee, I give the example to show how important it is to fully consider the various options for who the trustee is.  Each situation is different.  That is why you need to make sure your estate planning attorney takes a client-centered relationship approach to your planning . . . not a transactional approach.