Attorney & Mediator
Attorney & Mediator

Linda Wasielewski

Estate Planning, Legal Affairs & Cherry Festival

eatopener_cherry (1)

Many long term Traverse City residents lay low during Cherry Festival. They hole up in their homes, trying not to come to town or conduct any business.

While that may be wise if it would involve a trip downtown because the traffic would be difficult and parking non-existent, that is not true for other locations in the city.

This could be the right time for you to decide to get started on some of those business, legal and financial matters that are on the back burner. You may find it easier to get an appointment and the parking spaces at those businesses will be plentiful.

If you have thought about getting started on your estate plan, why not call for an appointment this coming week? While you might not want to go to the grocery store or the beach downtown, you will find that many of your professionals are available to help you get started on your business, legal and financial matters.

Give me a call. I will be in all next week.

Estate Planning: The Good Old Summertime

Wedding photo

It’s summertime and it is the time for celebration. Children and grandchildren are graduating from High School and College. Perhaps you have a wedding in the family.

These celebrations should also serve as a time to re-evaluate your estate planning documents.

If your children have graduated from High School, they have in all likelihood turned 18 years old. You may be their parent but at this point you do not have any legal authority or rights concerning them. Single children over 18 should have a Durable Power of Attorney and Patient Advocate in place naming their parents as their legal and medical representatives. This will assure that in the case of an emergency, you can continue to assist them in the same way you did prior to their 18th birthday.

If your children have graduated from college, they may now be at an age that you trust their judgement. You may want to remove restrictions from your revocable trust concerning disposition of assets to them. You may want to nominate them as your agent under your Durable Power of Attorney or Patient Advocate Designation.

If there has been a wedding you may want to consider other asset disposition considerations. If you passed away at the same time as a married child, would you want to leave any asset to his or her spouse? Perhaps you are loaning them money for the down payment on a home. Should that be paid back out of their share? Or should the loan be forgiven at the time of your death?

If you have new grandchildren, have you remembered them in your estate plan? Even the smallest gift to a grandchild can mean so much. Also, if their parents were to die, would the grandchildren receive your child’s share? If so, what would be the terms and conditions for distribution.

Estate Plans are not static. They need to change as our lives change. Remember to take care of these details when you are planning for your major life events.


Clients are always interested in how to transfer their property to their heirs without the need to go through probate court at the time of their death. Another goal is to assure that the property taxes on long held real property do not uncap upon the transfer to the next generation.

For a period of time, we have been unable to accomplish both of these goals using a Lady Bird or enhanced life estate deed. This is due to the fact that while the amendments to the property tax laws had provided for transfers by jointly held property and transfers by a revocable trust to pass to the next generation without uncapping the taxes, it did not provide for the same result specifically for enhanced life estate deeds. Because of this, the state of Michigan and all local assessors would uncap property if held under a Lady Bird or enhanced life estate deed when the original owners died.

The law has now been amended to include Lady Bird or enhanced life estate deeds. The application of the law is retroactive to December 31, 2014. Therefore, these deeds are now effective for a transfer to the next generation upon the death of the original owners who die on or after January 1, 2015. The property will transfer without the need for probate and the property taxes will not uncap.

This is great news for clients who are not interested in a trust and have worked out most of their post-death transfers using beneficiary designations and transfers on death. They now can take advantage of a Lady Bird Deed to transfer their property to their children leaving little or nothing to run through the probate process.


Funeral Rose

A problematic issue for many clients in estate planning has finally been resolved. The right to determine the manner of disposition of our remains and the type of funeral was not our own. It resided with our next of kin – even if they did not agree with our wishes.

Many clients were troubled by the fact that their wishes for cremation and a very simple funeral could be altered by their family members. This changes effective June 27, 2016.

Act 57 of the Public Acts of 2016 was passed and was signed by the Governor of Michigan on March 29, 2016. This Act provides for the appointment of a Funeral Representative who has priority to make decisions about funeral arrangements and the handling, disposition or disinterment of a decedent’s body. This includes the right to elect cremation.

It will now be possible, as part of the estate planning process, to execute a document appointing the individual(s) who are trusted to make decisions in accordance with our wishes. That individual will have priority to make these arrangements, even if they are not immediate family, or next of kin.

All clients will want to add this to their estate plan to assure that their wishes are carefully carried out.

Real Estate – Downsizing and Taxes


Real Estate – Downsizing and taxes.

In the ordinary course of our lives, we purchase homes, outgrow them and move into bigger, more expensive dwellings.  Since the new home is usually more expensive than the one that we sold, there is no problem for us with a capital gain on the sale of the home.

What happens when we downsize?  When many of us approach retirement, with the kids gone, we don’t need or want all of that square footage.  The new home or condominium that we purchase might be less expensive than the house that we are selling.  Will we owe capital gains?

It will depend on how long you owned the home and how much profit you made.  For a single person, if you owned and lived in the home for at least two of the last five years, and if the profit is less than $250,000, then you will not owe any capital gain.

For a couple filing a joint return, the tax free amount will double to $500,000.  You will still have to have owned and resided in the home for the last two of five years.

The two years is a cumulative amount, does not need to be concurrent, nor does it need to be the last two years preceding the sale.  It only has to have been your principal residence for two years within the last five years prior to sale.

Also, unlike the law in the past required, this is not a one- time only exclusion.  You may use this exclusion multiple times, provided that you have owned and lived in the home for at least two years.  Therefore, you could be eligible to do this every two years.

This exclusion is enhanced for members of the military who serve “qualified official extended duty”.  In such a case, the five year period of time is extended to ten; therefore, two years of living in the home within the prior ten years.

This is good news for people who want to downsize their housing and not have to share their savings with the IRS.

End of Life Choices – not the same for everyone


Estate Planning:  End of Life Choices – not the same for everyone.


When we complete an estate plan – one of the components is a Power of Attorney for Health Care.  While we may need an advocate to assist us in getting better from a severe illness or accident, it may also involve the end of life.

Not everyone makes the same choice.  Some would like to live as long as possible and use every medical available.  Others do not choose that road.

The following is an article about Norma – a 90 year old woman who decided to forego cancer treatment in order to go on the trip of a lifetime around the United States.

The end of her life will come more quickly – but it will be lived with gusto.



Federal Gift and Estate Taxes – Do You Need to Worry?


In the past, the federal estate tax was levied on estates over $600,000.  Therefore, sophisticated trusts were required to preserve the full $1.2 Million exempt amount for married couples.

In 2013, Congress made the exempt amount $5 Million per person, as adjusted for inflation.  Therefore, for 2016, each of us gets to give away up to $5.45 Million before any tax is imposed.  There are no sunset provisions for this law any longer and it will continue to adjust upward as the rate of inflation increases it.

Additionally, the current law allows for spouses to combine their estate tax exemptions without the need for complex trust language in separate trusts.  When the first spouse dies, his or her estate only uses up that portion of the exemption necessary to cover the assets being given away.  When the second spouse dies, he or she not only has the benefit of the individual exempt amount, but can use the portion of the deceased spouses exemption not already used.  Therefore, if a couple died in 2016, no federal estate tax would be imposed until the estate exceeded $10.9 Million.

This use of the deceased spouse’s exempt amount is called “portability”.  In order to preserve the unused portion of the first spouse’s exemption, an estate tax return must be prepared event though no tax will be due.

While any law can change, it is unlikely that Congress will try to change this law in the near future.  While $5.45 Million is a generous amount, changing this amount downward would not simply affect the wealthy.  Without a generous exempt amount, small family owned businesses and family farms would be affected.  In the past, it was not unusual to see family businesses and farms sold because the family inheriting the business could not afford to pay the estate tax.  It is unlikely that Congress would return to that system as it would thwart

entrepreneurship, the small business and farming.

While high asset families should keep abreast of any changes in the federal gift and estate tax law, it should not be an issue to worry about.

When your primary wealth is in IRA’s

IRA piggybank

Estate planning addresses the varying wealth of the client together with his or her desires in passing on this wealth.  For those with cash assets and land as their primary financial holding, a revocable trust may be the right answer to control those assets for the benefit of future generations.  But, what if the primary assets are held in IRA’s?

First, IRA’s cannot be a part of your revocable trust.  To transfer them during your lifetime into your trust (as you would your home and bank accounts) would be a distribution of the assets, subjecting them to income tax.  Most individuals, therefore, simply name beneficiaries on their IRA’s to receive the balance of the funds when the individual dies.

The so-call “stretch” provisions allow for a calculation or re-calculation of a Required Minimum Distribution (RMD) for each of the beneficiaries based upon each of their life expectancies.  They each must take this RMD annually, or be subject to a 50% penalty.  The distribution of the small RMD’s is usually in line with the wishes of the individual who has died.

Many clients desire a plan where the child withdraws only the RMD, gradually over his or her lifetime.  What if the child decides to withdraw 100% of the principal and pay the tax in one year?  He or she can do this as there is no prohibition on doing so.

How can the distribution of an IRA be controlled in the same way as the assets in a revocable trust so that the wishes of the client are honored?  By establishing a separate Conduit Trust.  These IRA trusts are specially drawn to comply with the requirements set forth by the IRS so that the money is able to pass through the conduit trust in the specific manner desired without being subject to the large tax penalties that would result if the entire amount were distributed in one year.

This type of trust is ideal for the client that has a revocable trust and desires to set up a mechanism to control the distribution of his or her IRA so that it stretches over the lifetime of the child.  It is a free-standing trust and requires a trustee.  It can protect the large IRA from being wasted by children who are not mature enough to handle the large principal amount that would otherwise be available.  It also provides an income stream to that child, gradually, over his or her lifetime.

While a Conduit IRA Trust is not for every client, it is the right estate planning tool for individuals with considerable wealth in IRAs who is concerned about limiting the distribution of the principal upon death.

What happens if you die while on vacation in a foreign country?

vacation map

When we think of traveling abroad, we plan for the fun.  Our packing list includes the camera, sunscreen and the right clothes.  But, what happens if the unexpected occurs and a family member dies while on vacation?  It doesn’t happen often, but it can happen.  Whether due to a traffic accident or illness, Americans do die while on vacation in foreign countries.

First, the local authorities will need to identify the body for issuance of a death certificate.  This may be complicated by the language barriers.  While it may seem that everyone overseas speaks English, this might not be the case if you are in a remote or rural area.

Arrangements will need to be made for the transportation of the body home.  This can be very costly as the body will need to be embalmed and sealed in a casket prior to transport.  Cremation may be a very good option at this point as it will eliminate much of this cost and red-tape.  Whatever the family decides to do, it is the family’s responsibility to shoulder the cost of this transportation. If the family decides to have the body transported home, it may be a good idea to contact the local funeral home, which will be skilled in making these type of arrangements.

While the U.S. State Department through the local embassy or consulate will assist the family in finding navigating this procedure, it is not up to the State Department to shoulder the cost.

Upon issuance of the death certificate by the local jurisdiction, the Consular Office can issue a Consular Report of the Death of an American Abroad.  This can be used by the next of kin and/or Estate representatives in the U.S. courts.

Since some of us travel solo, it is important to remember to carry identification on your person at all time when abroad.  In that way, if you are to become ill, or to die, the local authorities will be able to identify you and to notify the U.S. State Department, which will in turn notify your relatives.

While worrying about this issue should not put a damper on your plans, a little advance planning is always a good idea.  Remember to carry identification and to have a list of contacts with you including next of kin.

© Copyright 2015
Linda E Wasielewski, P.L.C. by awasielewski