Here’s what I’ve discovered, after working with families and preparing plans for some time: in many cases personal dynamics are more important than avoiding probate and estate taxes. Part of what I’m often discussing with my clients is beneficiary, guardian and trustee decisions–and each of these require a conversation.
But here are a few additional thoughts for you, as to why a personalized plan is critical, as well as a few other quick tips:
There are very few “simple estate plans.” Let me reiterate – very few situations call for a “simple” estate plan. And yet 95% of the great folks I meet with just want a “simple will” and nothing else. That’s why I take an educational and consultative approach to my peace of mind planning sessions. Because people are intelligent and if they understand how things “work,” they’ll make the best decision for their family. And in many cases that is anything but “simple.”
For example, another attorney related to me the story of a man who wanted a so-called “simple” estate plan drawn up for him and his wife. In the first 15 minutes, the estate planner learned the client was a citizen of the UK, his 25-year-old son had bipolar disorder and the son was actually not his biological or adoptive child, although he and the young man’s mother have been married for 23 years.
In another case, a very wealthy man was seeking “a simple estate plan” for him, his wife, and his family. But he was in a second marriage, had three children from his first marriage, his new wife had four children from her first marriage and one of his daughters was in prison for kidnapping.
Now, these may not be your circumstances. But you, your family and your friends are unique. So, here are some of the questions you may answer in a unique way:
- Do you donate regularly to a Michigan charity? Or make substantial gifts to family members? Do you want those gifts to continue if you lose capacity?
- Do you own a Michigan business?
- Do you own Michigan property or out-of-state property that should not be sold?
- Do you have a beneficiary who is likely to cause trouble or owes you money?
- Do you want to provide for the continuing care of a pet?
- Do you have a working Michigan farm or farm animals?
- Do you want to be cared for at home regardless of the cost?
Your estate plan should be carefully crafted to address your specific needs and circumstances. The more tailored your plan, the less room there is for family disagreements.
Next, you must have an up-to-date plan. Too many people either fail to prepare an estate plan or let their plan become outdated. Changes in the law occur frequently. As Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”
Plus, your circumstances can change. Toward the end of your life they seem to change faster. I recommend reviewing your plan every 3 years at a minimum, and we include ongoing 3-year reviews in all our planning levels. I reviewed one plan that had not been reviewed in 28 years and it was WAY off the mark for what my clients currently wanted to happen! Your circumstances may call for a plan review more frequently or less frequently. Either way, your plan should be reviewed on a regular basis.
Third, be careful not to change your plan inadvertently. Suppose, for example, you have a will or trust that provides for your estate to be distributed equally among your three children, and you have named your daughter Mary as your executor and/or trustee.
To make it easy for Mary to access your bank accounts in the event of a medical emergency, you have added Mary’s name to all of them. What you have done without realizing it is to change your plan. Those bank accounts will belong to your daughter at your death and will not be shared by your other two children. As a result, your estate might be distributed differently than you intended. It can also result in family feuds or adverse tax consequences.
Before doing any self-help planning–even something as simple as adding a child’s name to a bank account–check with a professional to see how it impacts your plan.
Finally, use your discretion, but consider telling your family in advance what arrangements you have made. Explaining your plan to your family upfront gives you the opportunity to address any concerns, answer questions and clear up misunderstandings. Once you lose capacity or die, it is too late. Many family fights could have been avoided with an open and frank discussion, so everyone is best prepared to handle a loved one’s loss of health or life. Eliminating surprises helps eliminate family fights. That’s why we offer to have an Inter-generational Family Meeting with our clients after they have their plan in place, to help explain the plan and the responsibilities to the family, friends and institutions that were chosen to play key roles in the plan.
In summary, most people who plan do pay enough attention to concerns such as probate and estate tax avoidance.
But the estate plans that most accomplish what you want are uniquely drafted with YOUR family harmony as a priority.
Michael Lichterman is an estate 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 finances – it’s about who your are and what’s important to you. He focuses on planning for the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do 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.