Estate Planning in Michigan| An Estate Planning Lawyer's View

New Location

2008-07-16T12:10:00.002-05:00

We've moved!

I've switched to using wordpress, so please visit www.estateplanning-mi.com for the new location and new posts.

Thank you!

2008-05-30T15:56:00.003-05:00

I saw an interesting article from AARP that discussed how to approach and talk about your final wishes.

How to Begin
The first conversation you must have is with yourself, to find out what your feelings are regarding your own death.

Where do you want to die? At home? In a hospital or medical facility? Do you want to move to be closer to relatives, friends or other loved ones?
What kind of medical treatment do you want? What don't you want?
Who do you want to take care of you?
What do you think is a "good death?"
What kind of funeral services do you want?
Where do you want to be buried?

When to Start Social Secuirty Benefits?

2008-05-27T09:41:00.002-05:00

Often times clients have questions on when to begin taking out their Social Security benefits. The AARP had an interesting article on this topic recently.

Once you retire, calculate your personal breakeven point for beginning to receive a reduced amount versus delaying your benefit until your full retirement age. The closer you are to your full retirement date when you stop working, the lower the number of years to breakeven. Unfortunately, none of us has a crystal ball to tell us how long we will be collecting Social Security, so your final decision may not be based purely on the numbers.

You can read more here.

Reverse Mortgage & Keep The Home

2008-05-26T15:04:00.002-05:00

Reverse mortgages have become a popular way to turn home equity into spending money. Typically, in a reverse mortgage, the bank writes the homeowners a check every month and the homeowners never have to pay back the loan. However, the bank ends up inheriting a big chunk of the house, which usually doesn't make the homeowner or the kids very happy.

So what is a possible solution to keep the home in the family? The Family Reverse Mortgage. This strategy allows the children of the homeowners to play banker and keep the house in the family. Additionally, this can reduce estate taxes and save the parents/homeowner on the reverse mortgage fees.

Contact me to learn how to do this the right way.

Zombies + Estate Planning= Bad

2008-04-09T18:55:00.002-05:00

Funny Dilbert Cartoon!

April 16th : National Health Care Directive Day

2008-04-09T11:11:00.003-05:00

TAGS: Estate Planning, Health Care Directive, Patient Advocate, Living Wills

On April 16, 2008, join Americans across the country to talk to others about your future health care decisions and to complete your advance directive! From the website spearheading this effort...

What is an advance directive?
All adults can benefit from thinking about what their healthcare choices would be if they are unable to speak for themselves. These decisions can be written down in an advance directive so that others know what they are. Advance directives come in two main forms:

A "healthcare power of attorney" (or "proxy" or "agent" or "surrogate") documents the person you select to be your voice for your healthcare decisions if you cannot speak for yourself.

A "living will" documents what kinds of medical treatments you would or would not want at the end of life.

How can I learn more about advance directives/advance care planning?

The links below explore a variety of resources to help you make, discuss and document future healthcare wishes and decisions.

AARP: End-of-Life Planning

Aging with Dignity: Five Wishes

American Bar Association: Tool kit for Health Care Advance Planning; 10 Legal Myths about Advance Medical Directive

American Health Lawyers Association: Guide to Legal Issues in Life Limiting Conditions

American Hospital Association: Put It In Writing

Caring Connections: Advance Care Planning; Financial Information; Planning Ahead Checklist; Free Brochures

Center for Practical Bioethics: Caring Conversations Workbook

Learn more here.

Heath Ledger; Family Feud

2008-03-31T07:35:00.002-05:00

TAGS: Messy Estate Planning 101

His will which was written before Matilda's birth, left his entire estate to his parents and three sisters. Although his father, Kim, has promised Williams and the 2-year-old "will be taken care of," the uncertainty surrounding the will has started a family feud between Kim and his three estranged brothers. This shows how not updating a plan can cause family strife.

Read more here.

Who was the first person enrolled as a Medicare beneficiary?

2008-03-28T10:16:00.002-05:00

President Harry S. Truman. President Lyndon B. Johnson signed Medicare into law on July 30, 1965 and enrolled the former president as the first Medicare beneficiary and presented him with the first Medicare card

More Estate Planning Issues For Heath Ledger

2008-03-19T17:27:00.001-05:00

TAGS: Estate Planning, Heath Ledger, Messy Estate Planning 101

It turns out that Heath Ledger's estate will turn to to be quite messy. Again, this could have been avoided if he had properly updated his plan.

Heath Ledger's uncles are speaking out against his father Kim's handling of the actor's assets, saying Kim has a bad track record of estate management.

Ledger's father so mishandled the management of their grandfather's estate 15 years ago in Australia that Kim was removed as executor, the uncles claim.

"It plunged into enormous debt," Mike Ledger, one of Kim's brothers, tells PEOPLE.

Heath died in January at age 28 of an accidental mixture of prescription drugs – leaving behind a daughter, Matilda, by his ex, actress Michelle Williams. His will, written before his relationship with Williams, leaves everything to his parents and sisters.

Ledger's uncle Mike insists the family has nothing to gain by removing Kim: "Our only vested interest is to assure that Matilda is well looked after."

Mike added that Kim's recent statement that Matilda "will be taken care of" was not enough assurance. "When you are talking about large sums of money like this," he says, "it should be an independent executor, but Kim hasn't chosen that way."

Williams's Father Raises Questions
Another of Kim's brothers, Hayden, tells PEOPLE that Williams's father, Larry, asked him if Kim was capable of managing the actor's estate. "I just said, 'No, not if he handles it like ours,' " he says.

The bitter dispute among the brothers dates back more than 15 years, when Kim became an executor of their grandfather Sir Frank Ledger's estate, which they estimate was worth about $2 million in the mid 1980s. The family patriarch was a respected engineer in Perth.

According to the newspaper The Australian, Frank's daughters filed a motion in Supreme Court asking to have Kim removed as the executor. The submission to the court stated that Kim's handling of his grandfather's estate "placed the assets at risk." A report in Australia's The Sunday Times says that a Supreme Court judge eventually removed Kim from overseeing the estate.

To read the whole article at People, go here.

Senate has Approved Baucus Estate Tax Budget Amendment

2008-03-17T09:31:00.003-05:00

TAGS: Estate Planning & Federal Estate Tax

The Senate has approved the Baucus Estate Tax Budget Amendment and rejected the more expensive Kyl, Salazar Estate Tax Amendment.

The senate voted 99-1 to approve the tax which would permanently reform the estate tax with a $3.5million/individual or $7million for a married couple exemption or coupon.

The next step is that the Senate and House will have to reconcile their differing versions of the budget, and then approve the final version. That effort will begin in April, after the two-week spring recess.

Lawmakers on both sides of the pary line want to at least reform the estate tax, and no one wants current law to remain in place. (Current law allows one year of repeal in 2010 and then in 2011 returns estate tax rules to a 55 percent top rate and a $1 million exemption.) the odds are that the issue will spill over into 2009.

You can read more here.

Tax Rebates and Tax Scams

2008-03-15T10:33:00.004-05:00

Here is the information on the Tax Rebates.

Rebate Recap
How much do I get? $300/individuals or $600/couple, for Social Security recipients, disabled vets with $3,000-plus income. $600 for single tax filers with up to $75,000 adjusted gross income. Rebate reduced for singles (with no children) after $75,000; eliminated at $87,000.$1,200 for couples filing jointly with AGI of $150,000 or less. Rebate reduced for couples (with no children) after $150,000; eliminated at $174,00

Unfortunatly, any time there is money involved, there will be attempted scams involved. The AARP has a short video on the latest tax scams.

You can find information here

Heath Ledger's Will Revealed

2008-03-08T21:08:00.002-05:00

The 28-year-old actor, who died of an accidental death earlier this year, filed a three-page will in his native Australia in April 2003. The will preceded Ledger's relationship with Brokeback costar Michelle Williams and the 2005 birth of their daughter, Matilda Rose.

Read more here

He, quite possibly, at age 28 may have disinherited his child and the mother of his child. It cannot be stressed enough, estate plans need to be reviewed on an annual basis and whenever there are major life events.

How the Sub Prime Market Ruined Football!

2008-03-06T14:03:00.004-05:00

Not estate planning related, but I found this article from ESPN funny in the sense, that it's amazing the number of things blamed on the collapse of the sub prime market. You can read the article here.

The new All American Football League will have to postpone its 2008 season unless it finds new financial backing. According to a statement released by the league, the AAFL's financial crisis is tied to the national subprime mortgage crisis.

League CEO Marcus Katz co-founded a company that provides student loans.
The statement said camps would open Wednesday "if liquidity can be immediately restored." If not, plans for an inaugural season will be pushed back to 2009. Several calls to AAFL spokesman Risa Balayem were not immediately returned.

Money Magazine asks Is Your Estate Plan In Order?

2008-02-25T15:20:00.002-05:00

Good article from Money Magazine regarding a financial check up for 2008. Number Five on their list of things to do is review your estate plan.

For better or for worse, life has grown more complicated, what with a spouse, kids, a former spouse, free-spending kids, health worries. You've worked hard to protect your family. But if you die or become incapacitated, what will happen? That depends on how well you've handled estate planning.You probably have a will - by age 50, two out of three Americans do. But that's only a start. When did you last update it? And did you complete other essential paperwork? Probably not."You want to be sure your kids and spouse will be taken care of," says Robert Armstrong, president of the American Academy of Estate Planning Attorneys in San Diego. "And you don't want all your money going to your ex-spouse or, worse, her no-good second husband, which all too often is what ends up happening."

You can read the article here. http://money.cnn.com/galleries/2008/moneymag/0801/gallery.midlife_checkup.moneymag/6.html

Four Steps to take Before Enrolling in Medicare Prescription Drug Plan

2008-02-05T15:01:00.000-05:00

1) Collect all imporant inforation about your current drug plan.
2) Make a list of all medications you are currently taking to compare which plan covers your needed drugs
3) Contact insurance companies and compare versus information from Medicare which can be found at 1800-Medicare or www.medicare.gov.
4) Once all the information is gathered, start comparing plans. Take a look at premiums, deductibles, and whther all your drugs are covered by the plan.

My New Favorite Stat...

2008-01-30T11:29:00.000-05:00

Per George W. Bush (as channeled by Frank Caliendo)

between 100 and 200% of americans don't have a will or an old testament

President George W. Bush on The Need for Estate Planning

2008-01-30T10:36:00.001-05:00

Ok....sort of.

I just saw one of the Nationwide commercials performed by Frank Caliendo, who does some of the best impressions that I've seen. This is certainly not an endorsement of Nationwide or anything else -- just a link to laughs. The first one is an impression of George W. Bush speaking with two apparent retirees on estate planning entitled, "United Estates." Quite funny.

http://www.havethetalkamerica.com/video-invites

How to Hire a Michigan Estate Planning Attorney

2008-01-29T15:00:00.000-05:00

Choosing an attorney to represent you is an important but daunting task, when it comes to choosing one to work with you to plan your estate it can be downright terrifying. This person will not only know your personal history, but also your family's history as well. The decision certainly should not be made on the basis of any slick advertising. The Yellow Pages and internet are filled with ads and websites--all of which say basically the same thing. You should not hire based solely on advertising--anyone can buy a slick commercial, pay for a beautiful website, or pay for an ad in the Yellow Pages.

How Do You Choose? How do you find out who, in your local community, is the best for you, your family, your loves ones, or your business? We believe that there are certain questions to ask that will lead to the best person for your situation. It may involve some time on your part, but that's OK because the decision as to who your estate planning attorney will be is very important. If you are looking for an attorney outside the area of estate, legacy, or business planning we'd be more than happy to point you in the right direction. In fact, because we do not practice in areas outside of our focused area, we have established a network of highly qualified attorneys who will be able to aide you. All you have to do is contact us. For example, if you are looking for a personal injury, divorce, or immigration lawyer, we would be unable to help you.
The world of estate, legacy & business planning is much too specialized for someone who does not regularly practice in the areas. Too many times we have looked at cases that other, inexperienced, attorneys have handled. Often times it can seem like "amateur hour." Recently, we reviewed special needs situation where the drafting attorney had no clue as to what the proper strategy was. This type of shoddy planning is often times a loss leader for the bigger firms. If there is a contest or if assets must go through probate, the big firms can collect big as the client is left paying the hourly rate for the attorneys (and judges, court clerks, etc in the way of court costs).

If you are represented by an attorney who has never planned for a complex or high-net worth estate or a general practice attorney who "handles" a lot of areas of law, you may not be in the best of hands. We believe that it is so important that you get into the right hands for your own well being, your family, your business and your loved ones.

So how do you find out who is good in your area? Here are some tips.

1. Get a referral from an attorney that you do know. He or she will probably know someone who does specialize in your area. If you don't know anyone at all, contact our firm and we can provide you with a respected attorney in the area of law you are looking for.
2. The Yellow Pages can actually be a good source of names. Understand two things, however. Not everyone advertises in the Yellow Pages. We don't - most of our cases come from referrals from clients or other attorneys. Second, be careful about the ads that tout too many different specialties. No one can be good at everything! As we like to say, you can have a shallow amount of knowledge in numerous areas or a deep amount of knowledge in a select few areas. Who would your rather work with?
3. Your local bar association probably has a lawyer referral service. Understand that lawyers have signed up to be listed in certain specialties. Their names come up on a rotating basis. This is another good source for an initial appointment. Just take the questions we talk about here to that interview.
4. Interview several attorneys. Ask each attorney who else who else handles these cases in your area. If they won't give you any names, leave. Ask this question of each attorney. The names you see showing up on various lists of recommendation are probably good bets to be doing these cases on a regular basis in your area. This is probably the best way to find the attorney who is right for you.
5. Here are factors and good points to look for and question your attorney about. Note that not every attorney will meet all of these criteria, but the significant absence of the following should be a big question mark. You can also check out your attorneys' credentials going to the site at the bottom of the page.
o Training- Has the attorney completed the State Bar of Michigan- Institute of Continued Legal Education Probate and Estate Planning Program to earn their Certificate of Completion?
o Respect in the community - has your lawyer lectured or taught other professionals, such as financial advisors?
o Membership in WealthCounsel. WealthCounsel is a national collaborative of estate planning attorneys who share ideas on how to plan for complex and high-net worth individuals, families, and businesses Is your attorney a member of this high level group?
6. Once You Have Decided On An Attorney, Make Sure That You Both Understand Your Goals and That You Understand How the Relationship Between You and Your Attorney Will Work. How will you be charged, flat fee or hourly?
7. Find out who will actually be working on your file. Make sure that you and your attorney have a firm understanding as to who will be handling your file. Do you want some low level associate working you your file? How does that make you feel?. There are a lot of things that go on with an estate plan that do not require the attorneys attention. On the other hand, if you are hiring an attorney because of his or her planning skills, make sure that that person is going to be working with you to plan your estate.

Three Dogs Inherit $800,000.

2008-01-25T09:58:00.000-05:00

Ken Kemper of Maryland left $400,000 to his three pooches along with a $400,000 home. Myself, I am more of a cat person.

Read more here.

http://www.msnbc.msn.com/id/22431919/from/ET/

The dogs — named Buckshot, Katie and Obu-Jet — inherited $400,000 and a house in Hagerstown with the death last year of owner Ken Kemper. Altogether, their estate is worth about $800,000.

The beagle and two Labrador mixes were strays when Kemper adopted them. They now live at their house with caretaker Roy Grady.

They also get health care. When Katie got out of the yard last summer and was hit by a car, she made 40 visits to a veterinarian's office to mend her broken legs and hip. The bill was close to $6,000.

Helmsley's dog, a pampered but reportedly ill-tempered Maltese named Trouble, inherited $12 million from the late hotelier. But unlike that pooch, Kemper's pets seem content romping in their yard.

"They're the most loving dogs," Grady said.
Kemper worked for the Voice of America and commonly brought home stray dogs when he returned from overseas assignments.

The executor of Kemper's estate, longtime friend Karin Anderson, said that when the dogs die, she will probably donate the remainder of the estate to an animal charity because that's what Kemper would have wanted.

Zero Out Your Long Term Capital Gains

2008-01-23T13:21:00.000-05:00

Taxpayers for the first time now have the opprotunity to zero out their capital gains tax on long term capital gains. 2008 through 2010 are tax-advantaged years for taxpayers who fall into either the 10% or 15% federal tax brackets. Potential beneficiaries of this zero percent tax included retirees, prospective and semi-retirees, parents, and children. With proper planning these taxpayers can do the following at zero tax cost:

Generate income
Implement various asset management strategies; or
Satisfy gift and income shifting objectives

Contact an qualified attorney to take advantage of this opprotunity.

Supreme Court Limits Tax Deductions for Trusts and Estates

2008-01-19T21:48:00.000-05:00

Interesting ruling by the Supreme Court. Trusts may not deduct the full amount of investment advice on their income tax returns. Trusts may only deduct expenses when they exceed two percent of adjusted gross income (AGI).

You can read the case here:

http://www.supremecourtus.gov/opinions/07pdf/06-1286.pdf

Estate Planning Humor

2008-01-10T10:10:00.000-05:00

Dan was a single guy living at home with his father and working in thefamily business. When he found out he was going to inherit a fortune when his sickly father passed, he decided he needed a wife with which toshare his fortune.One evening at an investment meeting he spotted the most beautiful womanhe had ever seen. Her natural beauty took his breath away. "I may look like just an ordinary man," he said to her, "but in just a few years, myfather will die, and I'll inherit 20 million dollars."Impressed, the woman obtained his business card and three days later, she became his stepmother. Women are so much better at estate planning than men.

Accidental Disinheritance

2007-12-27T15:14:00.000-05:00

MSN Money had an interesting article on accidental disinhertiance.

By all accounts, Anna Nicole Smith loved her baby daughter, Dannielynn. She shielded her from the media, provided her with constant care and surrounded her with every comfort.
She also accidentally disinherited her.
Here's how: In a will executed in 2001, the celebrity model arranged to place all of her assets in a trust and identified her son, Daniel, as the beneficiary, rather than use the more inclusive term "my children" or "my issue."
When Daniel died before his mother, the trust legally lapsed for want of a living beneficiary, since Smith had failed to name a contingent beneficiary for Daniel. Then, because she failed to update her will to include Dannielynn before her own demise in 2007 at age 39, her sole surviving child was accidentally disinherited.
As a result, Smith's estate, including the fortune she might've someday been awarded from the estate of her late husband, Texas oil billionaire J. Howard Marshall II, will likely pass through the laws of intestacy -- that is, as if she had died without a will.

The rest can be found here. http://articles.moneycentral.msn.com/RetirementandWills/PlanYourEstate/MistakesThatDisinheritHeirs.aspx

The takeaway: Estate plans must be reviewed on an annual basis and whenever there are major life events.

What is the Biggest Misconception About Estate Planning?

2007-12-02T16:18:00.000-05:00

A journalist was interviewing an attorney and asked what the biggest misconception in estate planning is. Here is the response, I could not agree more.

A: The biggest misconception is that people think they do not have an estate for
which to plan. The reality is that once you have a child and any income and
assets at all, it is time to start estate planning. For example, many people do
not realize that a will is the only legal document in which one can appoint
guardians for minor children in the event of the death of both parents. Also, if
you die without a will, your assets will be distributed in accordance with the
state's distribution pattern and not necessarily in a manner that is tax
efficient or appropriate for your specific family situation. Once someone
recognizes the need to start the process, many delay in taking action because
they think it will be overly complicated and it is always difficult to discuss
your own mortality

Couldn't agree more. You can read the rest here.

Retirement Plan Trusts

2007-12-01T11:25:00.000-05:00

This past week I was part of a workshop that dealth with retirment plan trusts and wealth replacement trusts. I am quite familiar with both, but when you focus a whole day on one strategy it renews your interest in the strategy. It also, never ceases to amaze me just how many tools estate and financial planners have in their tool box when it comes to helping families protect and grow their assets. The retirment trust or Stretch IRA strategy in particular. Wow. The ability to roll a 401k over into an IRA, then lock that IRA up so it grows tax free for a spouse, children or grandchildren. What a great way to leave a legacy for your family and loved ones.

Through a combination of Wealth Replacement Trust and Stretch IRA Planning (Retirment Plan Trust), there is the ability to turn a $1 Million IRA into $14 Million to be uses by loved ones. What a great tool. That is why I love helping individuals and families with their estate planning.

Planning for Rex, Fido, Fluffly, Lexi, and Lassie...

2007-11-26T16:53:00.000-05:00

Michigan is one of 30 states that allow pet trusts, but did you know that the federal government does not currently recognize the validity of pet trusts, nor do they allow a companion animal to be the sole beneficiary of either a will or a trust.

That may change with H.R. 2491 which is working through congress. This law would allow a companion animal to be the beneficiary of a charitable remainder annuity trust. The trust could provide for the care of the animal for up to 20 years and then the remainder would goto a charity of choice.

This is good news for the 63% of American households that have pets. Already, according to the Humane Society, as many as 25% of households have included provisions for pets in their estate plans.

Estate Plan Reviews; What Are They and Who Needs Them?

2007-11-17T20:56:00.001-05:00

Just like an automobile, your estate plan needs check ups, tune ups, maintenance, repairs, and possibly a whole new reworking of your plan. Automobiles can last for an average of 7 years and can cost between $10,000 to $60,000 or even more, that’s not even including repairs or maintenance while an estate plan can be a fraction of the cost and lasts a lifetime with proper maintenance. How much did you estate plan cost you compared to a car? How often have you taken your estate plan into an attorney for a tune-up?

After you have passed what will be remembered more by the people you care about, a car you drove or an estate plan that orderly passes your assets to your loved ones in an efficient manner leaving a positive legacy for years and beyond? Imagine, if you don’t have a plan and you leave a mess for your loved ones to clean up causing hurt feelings, bickering and family squabbles. Can you put a value on knowing the peace of mind of knowing that you have done everything possible to ensure that your loved ones were taken care of the way you want so that you are remembered in a positive light?

Michigan Estate Recovery

2007-11-07T10:46:00.000-05:00

Some common questions I have answered recently regarding Michigan Estate Recover Law which was approved Sept 30, 2007.

Since Michigan has passed the new Estate Recovery Law, when does it go into effect? Well, the law is effective immediatley, however it must first get federal approval. With the move, Michigan is the last of the states to adopt an Estate Recovery Law that is inline with the Federal '93 directive.
What does the new law recover for? Why is it in effect? The purpose is to allow the state to recover medical expenses that it has paid out.
What may the state recover from? Probate Assets. This is yet another reason to see an estate planning attorney to help avoid your assets going through the probate process.
Will they take my house? There are some special exemptions for homes even if it is included in your probate assets.

It will be interesting as the details are worked out and this new system is in place.

Estate Planning is NOT just for the wealthy

2007-11-03T16:37:00.000-05:00

Do you have minor children? If yes, then you need to sit down with an estate planning attorney. You need to be able to answer the question of "If my spouse and I were to pass away today, do I know what would happen?"

The answer to that question can be solved by sitting down with an estate planning attorney. Notice, there is no mention of assets, wealth or the federal estate tax.

Pets and Estate Planning

2007-10-30T13:51:00.000-05:00

Estate planning is planning for anyone, everyone, and everything you cherish. The goal is to ensure that everything is provided and planned for, whether it is you child or even you pet. For more informaiton on planning for you pets you can visit the following website.

http://www.estateplanningforpets.org/faq.htm

What is a Conservator?

2007-10-27T22:10:00.001-05:00

What is a Conservator?

Conservators are appointed by a judge to oversee the affairs of a person who is incapacitated or minor. With proper trust planning the costly legal proceeding of appointing a conservator can be avoided.

What is an Accumulation Trust?

2007-10-27T22:07:00.001-05:00

What is an Accumulation Trust?

An Accumulation Trust is a trust in which all the income and principle is retained inside the trust and not paid out to any beneficiaries. This type of trust, as the name implies accumulates interest, thereby growing the trust assets.

What is an A/B Trust?

2007-10-27T22:02:00.000-05:00

What is an A/B Trust?

An A/B Trust is a trust that is used to reduce Federal Estate Taxes for married couples. Other names for this type of trust are Credit Shelter or By-Pass Trust. To utilize this planning strategy each spouse places their assets into a trust that upon the first to passes death is split into two trusts. One of the trusts is held separate from the spouse and utilizes the Federal Estate coupon while the other trust is controlled by the spouse and therefore qualifies for the marital deduction.

Lesson Number Nine: Botching an Attempted Joint Tenancy with a Child.

2007-09-13T19:27:00.000-05:00

People think that if two (or more) names are on a deed, title is in joint tenancy. Unless the deed specifically states "in Joint Tenancy" or words to that effect, tenancy in common (the opposite of joint tenancy) is assumed.

Rather than passing to the surviving owner, the deceased person's interest in the property passes through probate pursuant to his or her Will.

Example: Susan's parents originally took title to their home in joint tenancy. Later, to avoid probate, they deeded the home to the three of them. They didn't consult with an experienced attorney, but prepared the deed themselves. Unfortunately, they failed to indicate joint tenancy on the deed.

Mom died first, then Dad died. When Susan later tried to sell the home, the title company told her that title was held by the three of them as tenants in common.

Before the title company would insure title, Susan was required to open TWO probates, one for her mother and one for her father, costing her several thousand dollars.

Actually, this story gets MUCH worse. It seems her father had no Will, and had a son by a prior marriage. Although her father had not seen this child in many years, Susan discovered that under he inherited 50% of the father's interest in the home. She had to buy out his share at a cost of over $30,000.

Another negative aspect of tenancy in common: her original 1/3 share did not receive a step up in basis (discussed later in this report), significantly increasing the capital gains taxes paid by her upon sale.

Had this couple used a Living Trust, they could have avoided probate on both deaths, and left the property to their daughter without the half-brother even knowing about the property, saving their daughter a small fortune.

Salt and Battery

2007-09-10T20:30:00.000-05:00

Unbelievable, yet true.

http://www.thesmokinggun.com/archive/years/2007/0910071salt1.html
Arrested For Salting A Police Officer
McDonald's worker nabbed for over-seasoning Georgia cop's burger

SEPTEMBER 10--A McDonald's employee was arrested last Friday for salting a police officer. Specifically, Kendra Bull, 20, is accused of the over-seasoning of a hamburger served to Officer Wendell Adams, who was reportedly sickened by a Big N' Tasty burger served at a McDonald's in an Atlanta suburb.

Lesson Number Eight: Putting the House (or other assets) in Joint Tenancy with Children

2007-09-10T14:22:00.000-05:00

When you put your home (or any other asset) in joint tenancy with your children, it is a lot more than saying "I want you to have this after I am gone." Your children become co-owners of the property with you.

First Problem: Putting your home in joint tenancy with your children is a taxable gift under IRS regulations.

Second problem: If your child has any lawsuits against him, is going through a divorce, or has a tax lien against him, you may find out that you no longer own it with your child, but with your child's creditors or predators. They can actually foreclose on (forced the sale of) your home to get at your child's fractional share.

Third problem: When you go to sell the home, you can use your primary residence exemption (up to $250,000 of the gain on the sale of your home) only on your fractional share. Each of your children may have a LARGE long-term capital gains tax bill to be paid that could have been totally avoided if the house had still been titled just in your name.

Lesson Number Seven: Avoid Common Problems with Uniform Transfer to Minors Act Accounts

2007-09-10T14:18:00.000-05:00

You can gift securities, money, or other investments to minor children and grandchildren by gifting such assets to a custodian for the beneficiary under the Uniform Transfers To Minors Act (commonly called UTMA accounts).

Each account can have only one beneficiary and only one custodian (although a successor custodian can and should be named.)

Such a transfer is eligible for the annual gift tax exclusion (which is around $12,000) as it is treated as a direct gift to the minor.

The account is treated as the property of the minor for income tax purposes and can be used for the minor's benefit in the Custodian's discretion.

If the minor dies, the account will pass pursuant to the minor's Will (if over 18 years of age and has a Will) and if no Will, will pass pursuant to the law of intestacy.

We frequently recommend these accounts if you plan to gift small amounts (a few thousand dollars a year for a few years) to the minor. Chances are, the account will all be used up during the first year or two of college.

But if you plan to gift $12,000 per year for many years, there could be several hundred thousand dollars in the account by the time the minor reaches 21 years old.

Would that provide a disincentive for going to college? Would you really want that 21 year old to have full unrestricted access to that much money at that age?

Therefore, with larger gifts we tend to recommend the use of special trusts to avoid this problem.

If your minor grandchild dies, the account usually passes by the law of intestacy to the child's parents.

And if they are divorced, yes, 50% passes to your child's ex-spouse! Again, a specially drafted trust can protect against this contingency.

If the custodian dies and you have not named a successor custodian, then typically the probate court (at considerable expense) will appoint a successor custodian, usually the closest adult blood relative of the beneficiary.

Yes, the ex-son-in-law (your grandchild's father) may be appointed as custodian..

A common mistake is having the donor serve as custodian. If you make the gift AND are serving as custodian on your date of death, the UTMA account will be includible in your taxable estate! Yet, the goal of many people are making these gifts to remove the gifted amount from their taxable estate.

Many very capable financial advisors are unfamiliar with this IRS rule. Once the minor turns 21 years of age, this is no longer a problem.

To solve the problem in the meanwhile, we usually suggest that you name a relative (perhaps your child or your brother?) to serve as custodian

Lesson Six: 6. Loss of Control by Adding Someone Else's Name to Your Account.

2007-08-30T09:43:00.000-05:00

In the early 1990's, Jill Goodacre, a famous model from Boulder, and who was engaged to Harry Connick, Jr., lost her checking account to her father's creditors. As reported in both Denver newspapers, here is what happened:

She put her father on her checking account so he could pay her bills while she was traveling. He had several creditors, however, and one of them filed a lien on the account. The bank was forced to pay the creditor $80,000 of Jill's money. When he was added as a signer, he legally became a co‑owner of the account. He had a legal right to withdraw the entire account, and the creditor "steps into the debtor's shoes."

In addition, Jill was deemed to have made a taxable gift to her father at such time as the creditors withdrew money from the account! Don't you just love our tax laws!

Interestingly, if Jill had had a Living Trust, she could have had her father as a co-trustee with herself. As such, he still could have paid her bills from the account, but his creditors could not have attached the account. He would have been only a trustee and not an actual owner of the account.

When you simply add someone's name to your account, you are subjecting that account to his or her creditors. You don't have to be a bad person to be sued these days or to be subject to a tax lien.

A Living Trust can protect your assets while still allowing another person to pay your bills.

Public Nature of Probate- 12 Million to a Dog...

2007-08-29T13:45:00.000-05:00

All of this information is now public!! Her dirty laundry is being aired before the entire world!! All because of the public nature of probate.

If she had had a properly funded trust, no one would know ANY of this, except her family. This is a great example for those who are concerned about privacy.

http://biz.yahoo.com/ap/070829/helmsley_s_pooch.html?.v=1

Lesson Number Five; Relying on Joint Tenancy to Avoid Probate

2007-08-22T11:39:00.000-05:00

Many married couples own their home and other assets in joint tenancy so as to avoid probate. Yet, joint tenancy avoids probate only on the first death. Everything usually ends up in the probate estate when the survivor dies. Worse yet, all family assets are usually included in the survivor's taxable estate when he or she dies.

If the couple dies in a common disaster in which we cannot tell who died first, there will be TWO probates: half of the assets will be subject to the husband's probate, and half subject to the wife's probate.

By creating a Living Trust and transferring their assets to that trust, a married couple can avoid probate on both deaths, and, with proper drafting, reduce or totally eliminate estate taxes.

Lesson Number Four: Failure to Avoid Probate

2007-08-21T15:39:00.001-05:00

Probate is the court procedure for proving a Will, paying the bills, and distributing the estate.

Probate can be expensive, time consuming, and frustrating. Probate often runs 2-5% even on small estates, and can take 9 to 24 months.

Probate is a matter of public record. Once probate is opened, anyone can examine your file, even make a copy of your will and get a list of your family members and their addresses.

Probate gives disgruntled heirs a low-cost opportunity to challenge your Will. A simple letter to a probate judge by a disgruntled heir can tie up probate for a year or more.

If you own real estate in other states, your family may have to open probate in each of those states. Probate can be totally avoided by creating a Living Trust during your lifetime and then transferring record title of your assets to that trust.

Key to Benoit estate fight: Who was killed first

2007-08-17T10:10:00.000-05:00

The future of pro wrestler Chris Benoit's millions could come down to the timing of a horrible crime: Did a steroid-fueled Benoit strangle his wife and then their young son before killing himself, or did the boy die first?

http://www.msnbc.msn.com/id/20284462/from/ET/

More Messy Estate Planning

2007-08-14T09:44:00.000-05:00

2. Trying to Plan an Estate around Specific Assets

Unless there are compelling reasons why a specific asset should go to a specific person, we strongly discourage our clients from trying to plan around specific assets.

Example: Bill had three children and wanted to treat them equally. His Will even confirmed this. Several years before he died, he put his home in joint tenancy with his older son, added his daughter as a signer on his savings account, and named his younger son as the beneficiary on his life insurance policy.

When he did this, all three assets were about equal in value. But between when he did this and his death, he sold the home, put the proceeds in the savings account, and let the life insurance policy lapse. The savings account, of course, passed to the surviving owner, and not pursuant to his Will. By planning around specific assets, he actually disinherited two of his children!

By the way, this problem often surfaces in a Will as well. If an asset is no longer owned, the bequest lapses. Let's say your Will leaves rental home #1 to your son and rental home #2 to your daughter, and the balance equally to both children. If you sell rental home #2, and then die, your son still gets rental home #1 plus he gets a full 50% of your other assets and your daughter gets the other 50%.

A good attorney will discuss this "ademption" aspect with the client, even if the client insists that the rentals will never be sold. For instance, in some of our trusts we provide that the estate will be divided equally, with the son having the right to take house #1 at fair market value as part of his share, and the daughter having the right to take house #2 as part of her share.

We may, as appropriate, include such wording in your Living Trust Estate Plan.

Messy Estate Planning 101

2007-08-13T14:54:00.000-05:00

I will begin a series of posts about ways that your estate plan can not perform the way you planned or the way it should, starting first with...

1. Failure to Understand How Your Assets will Pass on Your Death.

Many people think their Wills control how their assets will pass upon their death, yet most assets today pass outside of Wills.

For instance, joint tenancy assets pass to the surviving joint tenant. If there is a surviving named beneficiary (such as on life insurance, annuities, or IRAs), then such assets pass to the surviving named beneficiary. It is only the other assets (sometimes called your "probate estate") that will pass pursuant to your Will.

Example: Bill named his oldest son as the beneficiary on his life insurance. His Will left his estate equally to his three children. The oldest son gets all of the life insurance and 1/3 of the remainder of the estate.

Another example: While still single, Don named his brother as the beneficiary on his retirement plan and his life insurance. Don purchased his first home in joint tenancy with his brother who shared the house with Don. Don later had a falling out with his brother and still later got married. Don changed his Will to leave everything to his wife.

But because Don never changed his beneficiary designations and joint tenancy, the bulk of his estate passed to his brother on Don's death and not to Don's wife.

This problem can be avoided by having a Living Trust to be the focal point of your estate plan. All or at least most assets can be titled in the name of your Living Trust or with the trust as the named beneficiary. That way, your trust will control how your assets will be distributed. If you ever want to change your estate plan, you do it only in one place.

Annuities and Trusts

2007-08-13T12:25:00.000-05:00

Annuities

In General: An annuity can be either commercial or private. A Commercial Annuity is a contract entered into with a company that sells financial products. The annuity contract of a commercial annuity provides that the company will be obligated to make payments to the beneficiary for a specified period of time. The time period may begin immediately or it may not begin until some future time. Additionally, some commercial annuities will provide benefits after the death of the owner. Thus, when funding a commercial annuity, both the lifetime beneficiaries and the after death beneficiaries will need to be funded.

A Private Annuity is also a contract to make payments for a specified period of time; however, it is entered into between individuals and the payment obligations cease at the death of the recipient. Because payments only occur during the lifetime of the recipient, the private annuity does not have any death benefits that need to be funded. Accordingly, when funding a private annuity, only lifetime benefits can be funded.

Funding Options: Due to restrictions contained in the Internal Revenue Code, changing ownership of an annuity into the name of a revocable living trust is generally not recommended. Many legal commentaries have debated whether a living trust meets the definition of an “individual” under the Code. A recent Private Letter Ruling would support the argument that a trust would qualify. However, Private Letter Rulings are only binding upon the taxpayer that requested the ruling. It may be better to err on the side of caution. The most conservative funding option available is to change the beneficiary designation to name the living trust as the primary beneficiary without changing the ownership of the Annuity

Limitations on Distribution Options: Changing the owner of the annuity to the trust may also impact on what distribution options are available under the annuity contract. Some annuity contracts provide that only a spouse or child of the annuity owner may select between different distribution options. Accordingly, if a trust is named as the beneficiary, the trust may only be able to select from a limited number of distribution options. For this reason, we generally recommend that married clients name their spouse as the primary beneficiary and their trust as the contingent beneficiary.

Radio Interview

2007-07-28T07:10:00.000-05:00

You can listen my latest radio interview by clicking here.

This is a copy of the interview heard on AM 690 WNCK back in June regarding Estate Planning.

A Poem to those who draft their own wills or use "trust kits"

2007-06-29T14:32:00.000-05:00

Ye lawyers who live upon litigants’ fees,
And who need a good many to live at your ease;
Gray or gay, wise or witty, whate’er your degree,
Plain stuff or Queen’s Counsel, take counsel of me.
When a festive occasion your spirit unbends,
You should never forget the profession’s best friends;
So we’ll send round the wine, and a bright bumper fill
To the Jolly Testator who makes his own will.

He premises his wish and his purpose to save
All disputes among friends when he’s laid in the grave;
Then he straightway proceeds more disputes to create
Than a long summer’s day would give time to relate.
He writes and erases, he blunders and blots,
He produces such puzzles and Gordian knots,
That a lawyer, intending to frame the deed ill,
Couldn’t match the testator who makes his own will.

Testators are good, but a feeling more tender,
Springs up when I think of the feminine gender!
The testatrix for me, like Telemachus’ mother,
Unweaves at one time what she wove at another;
She bequeaths, she repeats, she recalls a donation,
And ends by revoking her own revocation;
Still scribbling or scratching some new codicil,
Oh! Success to the woman who makes her own will.

‘Tisn’t easy to say, ‘mid her varying vapors,
What scraps should be deemed testamentary papers;
‘Tisn’t easy from these her intentions to find,
When perhaps she herself never knew her own mind.
Every step that we take, there arises fresh trouble;
Is the legacy lapsed? Is it single or double?
No customer brings so much grist to the mill
As the wealthy old woman who makes her own will.

The law decides questions of meum and tunin,
By kindly consenting to make the thing suum,
The Aesopian fable instructively tells
What became of the oysters, and who gets the shells;
The legatees starve, but the lawyers are fed,
The seniors have riches, the juniors have bread;
The available surplus of course will be nil,
From the worthy testators who make their own will.

You had better pay toll when you take to the road
Than attempt by a byway to reach your adobe;
You better employ a conveyancer’s hand
Than encounter the risk that your will shouldn’t stand.
From the broad beaten track when the traveler strays,
He may land in a bog or be lost in a maze;
And the law, when defied, will revenge itself still
On the man and the woman who make their own will.

Lord Neaves, of the Scottish Court of Sessions

Loving Trust

2007-06-13T22:33:00.001-05:00

An awesome book.

The book explains the thrust of what estate planning means when you utilize our firm for your estate planning needs.

Is You Estate Plan up to Date?

2007-06-06T16:11:00.000-05:00

Is Your Estate Planning Up To Date?

Take this simple test to see if it is.

1. Have you prepared a will or a trust?

Without proactive planning, you are relying on the Michigan legislature to determine how your assets pass, to whom they pass, and when they pass. In addition to having potentially undesired results, this is perhaps the most costly and time consuming means of passing your assets to your loved ones.

2. If you have done a will or trust, has it been reviewed in the last two years?

Even assuming that there have been no family or financial changes since your plan was last reviewed, there have been major tax law changes in 1997 and in 2001. An out-of-date estate plan is perhaps worse than no estate plan at all. Our experience is that people view estate planning as an event rather than a process. Keeping your plan current is vital to achieving the goals you set out to accomplish.

3. Are all of your heirs over the age of 18 and financially responsible?

Under Michigan law, children inherit property no later than age 18 without restriction. Proper planning is crucial to prevent an heir from squandering his or her inheritance, or worse, from causing harm to himself or herself.

4. Are you absolutely certain that your assets will not be subject to probate?

We encourage you to make a list of each asset you own and identify how each asset is going to avoid probate. Assets owned as “joint tenants with rights of survivorship,” assets owned in the name of a trust, and assets that pass by beneficiary designation (such as IRAs, life insurance, etc.) will avoid probate. Everything else is subject to probate. (Also, note that assets owned jointly are typically subject to probate upon the death of the last joint tenant.) Probates can be costly and typically require twelve (12) to eighteen (18) months from the date of death to conclude.

5. Do you have assets titled jointly with a child or children, or someone else?

Holding assets jointly with someone other than a spouse is quite common, but has some potentially devastating consequences of which most people are unaware. In Michigan, a creditor of a joint tenant can take the entire asset to satisfy the creditor’s claim. A creditor would include a divorcing spouse, judgment creditor, or business creditor. Additionally, problems can be created if joint tenants die in the wrong order.

6. Does your current plan provide your heirs with asset protection, divorce protection, and lawsuit protection?

The most common means of providing for heirs is with outright distributions. By doing so, however, the inheritance becomes subject to the creditors of your heirs.

7. Is this your first marriage?

Second or subsequent marriages present unique planning issues, particularly if both spouses have children from a prior marriage. Proper planning is critical to prevent undesired results.

If you answered “No” to any of the above questions or “Yes” to #5, you should make an appointment to speak to an attorney about your estate plan.

A Social Secuirty Fact Situation

2007-06-06T16:07:00.000-05:00

Question: A woman is on SSDI and Medicare Part A and B since 2002. She is currently 55 and has been on Kidney Dialysis since 2002. She sold her homeplace and has $62,000 in her account. She is now living in her mothers house her mother gifted to her in 1999.

Is there any inpact on her SSDI and Medicare Part A and B with the $62,000 cash in here account?

Answer:

The cash in her account will not effect her Medicare Part A or B. Medicare does not take into account a person's resources. (If she also has Medicaid- that could effect her Medicaid entitlement).

However, Medicare has a new law that was just enacted in 2007. There are new rules for Medicare beneficiaries with high incomes. Most people pay the standard premium of $93.50 per month. However, due to his new law, the monthly premium a person will pay in 2007 is based on what their modified adjusted gross income (MAGI) is for 2005. (In 2008, the monthly premium will be based on the MAGI for 2006. SSA will usually use the tax info. for two years previous) So, it depends on when she sold her home place. If she sold her home place in 2005, that profit from the home could effect her MAGI, and could effect her 2007 Monthly Medicare premium. Single people who have a MAGI more than $80,000 in 2005 will have to pay a higher Medicare premium in 2007. Married couples with a MAGI of more than $160,000 in 2005 will pay a higher Medicare Premium in 2007. (Your 2006 income will effect your Medicare premium for 2008, etc.)

If the sale of her home place and her SSA benefits, along with any other income, investments, etc. are more than $80,000 in 2005 she will have to pay more for her 2007 Medicare Part B premium. If she sold her home in 2006, and she was over the limit that year, her 2008 Medicare Part B premium will be affected. If she sold her home in 2007, and she was over the 80,000 adjusted income amount for an individual or 160,000 for a married couple, then she will pay more for Medicare in 2009.

Here is a link to the SSA website regarding this info:

http://www.socialsecurity.gov/pubs/10161.html#how

Estate Planning Questions and Answers

2007-06-01T21:40:00.000-05:00

A quick questions and answers or FAQ session for those considering an Estate Plan in Michigan.

DO I NEED TO PLAN FOR MY ESTATE NOW?

The decision to responsibly manage your assets and plan for your loved ones by planning for incapacity or death is not an easy discussion at any point. Too often, Estate Planning can be put off with typical explanations of “I know I need a will, but I am not ready yet,” or “I am young and in perfect health, estate planning is for the elderly.” These types of statements are uninformed and are a dangerous game to play if you value your assets and do not desire the waste of probate, unplanned property transfers, and unplanned guardianship of dependants.

WHAT IS THE BENEFIT OF PLANNING MY ESTATE NOW?

Responsible planning for any family, even the young family, will alleviate the burden on your loved ones of dealing with complex administrative, legal, and investment issues during already difficult and emotional times. At the very least, any family or individuals with children should take the basic steps of putting together a will and other estate planning documents, including powers of attorney, patient advocate documents, etc, so that if there is a death or incapacity, the tough estate issues will already have been decided.

WHEN SHOULD MY ESTATE PLAN, WILL, OR TRUST BE REVIEWED?

Estate plans need to be reviewed every two to three years, at the very least. This regular review will make sure that the Estate Plan is current with the current laws and also current with an individual’s present situation. Any major life changes should be a trigger to review your estate plan. This includes marriage, divorce, children born, retirement, job changes, change in residence, major asset purchases, and loss of children, grandchildren, or any other family.

HOW DO I KNOW WHETHER MY ATTORNEY IS SERIOUS ABOUT STAYING ON TOP OF THE LATEST ESTATE PLANNING LAWS?

An attorney’s education should never stop because new law is passed daily. Therefore, you should retain an attorney that is serious about maintaining cutting edge knowledge of the latest Estate Planning techniques and law. One way to make sure that your attorney is serious about Estate Planning is to ask whether he or she takes continuing legal education classes. The major provider in Michigan is the Institute of Continued Legal Education (ICLE). ICLE also provides certification of completion of their Estate Planning Program, in addition to offering on-going seminars. So, ask your Estate Planning attorney whether he or she is or on track for ICLE certification for Estate Planning.

Who said death and Estate Planning is not fun?

2007-06-01T18:43:00.001-05:00

http://www.youtube.com/watch?v=49GVlQ2_EK0

Women and Estate Planning, they do mix.

2007-06-01T17:43:00.000-05:00

Women play a variety of roles in their lifetime, ranging from daughter, aunt, wife, friend, mother, and grandmother. Traditionally in their relationships, the woman is the nurturer or caregiver. While nurturing or caring for others, it is easy to forget or ignore a woman’s own needs, even needs as fundamental as her own Life and Estate Planning. This is especially true, given that women live longer then men and therefore women are the ones left cleaning up the mess that can happen without proper planning with an estate planning attorney.

LIFE & ESTATE PLANNING QUESTIONS

-Who would take over all of your legal and financial responsibilities if you were incapacitated?

-Who will decide important health care decisions for you, literally choosing life or death, if you were incapacitated?

-Will your loved ones be able to access your medical documents to make healthcare related decisions?

-What legal arrangements have you made if your minor children were to suddenly become orphans?

-Who will, if your children are orphaned, become not only their teacher and mentor, but also who will control the purse strings to their inheritance?

-What have you done to insure that their inheritance is protected?

There is not a person who enjoys the prospect of sitting down to plan for their own death. However, who wants to be remembered for creating a legal, financial and emotional mess for their loved ones when they pass. Estate planning is not only planning for assets, but more importantly, planning for your loved ones.

The most important reason that a woman must be involved in the estate planning process is that, more often then not, they are the one left holding the bag when their spouse has passed due to the fact that women tend to live longer then men. Therefore it is vitally important for your family’s and your own sake to sit down with an estate planning attorney to verify that all of the family’s affairs are in order.