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.
The holidays are upon us. Most people are planning for the Christmas holidays and nothing could be further from their mind than estate planning and legal affairs.
Many of our snowbirds have already flown south for the winter; however, there are a number that stay here until the holidays are over. If so, don’t wait until the Monday before you are ready to leave to address those estate planning issues that were on your mind last month.
If you are taking copies of your documents with you, do you know where they are? Now is the time to look.
When you find them, take a quick look at them to see if they are accurate. If changes need to be made, now is the time to call your attorney for an appointment. There is still plenty of time to make amendments to your documents.
Scrambling at the last minute is not pleasant for anyone. A little planning now will assure that you are all ready to fly south after the holidays.
the school year. If you have ever had kids, you know that this is really the beginning of the “new” year.
Summer fun is over for the most part, we are getting ready for autumn – closing up the garden, putting things away. The holiday season is still a distance off.
This is the time to pull out the “to do” list. What did you mean to get done during summer – but the summer fun got in the way? What is still sitting there – nagging at you. Things that you know you should get to – but they never seem like front burner issues. It is time to get down to business before you are once again too busy and too full of excuses to tackle these nagging, yet important issues.
One of these is estate planning and financial planning. It is time to make an appointment with your financial planner if you have one – and if you don’t you need to find one. It is also time to make an appointment with an estate planning attorney.
If you don’t have an estate plan – it’s time to get one done – young or old, rich or poor, healthy or sick. You need a plan! It might be a very simple plan – or it may be quite complex involving trusts. In either case, this is the time to get down to business and get started. In this way, you will have it completed in plenty of time to get ready for the holidays. If you don’t, it will continue to nag at you as an undone to do.
What do you need to know to get started? The hardest part is deciding who. Who will be your Personal Representative or Trustee? Who will be your Agent under your Durable Power of Attorney? Who will be your Patient Advocate under your Durable Power for Health Care?
Once that is decided, the rest will fall into place. Your estate planning attorney will give you options and various tools to accomplish your goals and purposes.
If you don’t get started – you will never be done. No more excuses! Make an appointment to get started today.
Many individuals never get around to doing their estate planning – because they are waiting for the “right time”.
For many, this is a magic age – they think they need to be over 50 or over 60 years old to need an estate plan. Others wait even longer.
So what is the right time?
For those in their 60’s through their 70’s
Now is the right time. You have acquired property and wealth. While you are hoping for longevity, it is possible that you will not live into your 80’s and 90’s. Accidental injury leading to death can take any of us at any time. A serious and severe illness could strike and with the urgency of the medical issues you may not have the time or energy to thoughtfully devote to planning.
It is also more important than ever to have Powers of Attorney in place to assist you if you are disabled and unable to handle your business or financial affairs or your medical affairs.
For those in their 50’s
Now is the right time. Your children may be over 18 but are not wise enough to handle the inheritance of your assets. You are now accumulating wealth and property – hoping to add to that wealth. While it is less likely that you will pass away, as with any age, there is no magic ball to tell us what our future brings. Longevity? or illness and disability? or accidental death?
For those in their 30’ and 40’s
Now is the right time. Your children are minors. It is important to make the difficult decision concerning their care if you are not there to raise them. Who would they live with? Who would raise them according to your values? Who would manage the money that you leave behind for their benefit?
How your children would be cared for is a far more important issue than who gets the family piano. This is not an inevitability, and somewhat unlikely. However, it is not unheard of for minor children to lose both parents. Take the time to plan for their future.
For those in their 20’s
Now is the right time. You think that you own nothing but debt. You may not have any children. So why do any planning?
It is at a minimum important for you to have Durable Power of Attorneys for financial and legal matters as well as for medical matters. If you are single, who would care for these matters if you were unable to do so? While your parents may want to assist, they could not legally do so without these important documents in place.
So, when is the right time to do estate planning? Now is the right time, young or old. Get this item off of your bucket list and achieve a peace of mind knowing that you have tied up the loose ends and planned for your family.
For many with pets – dog and cats – consideration of who gets our beloved furry friends has become an important estate planning issue. Who will care when you’re not there?
It is important to plan for a home and care for these pets. Selecting a kind and caring individual that you trust is critical to the continued well-being of your dog or cat. Yet, this is less complex than larger animals – after all, the animal can be taken into a home and cared for becoming part of a new family. The amount to set aside for food, care and veterinarian fees is fairly modest.
This becomes more complex for horse owners. While you may love your horse as much as the dog or cat owner loves their animals, it isn’t as easy as taking the animal into another home. Horses require property and a constant, daily care that is more complex and time consuming than feeding a cat.
Have you planned for a disability? If you are temporarily disabled and in the hospital, do you have someone who will step in immediately to care for your equine friends? A well-meaning friend that is not familiar with the care of horses may not understand what is required. After all, this involves more than putting out a bowl of kibble once a day.
Are there funds available to pay for supplies, food, and vet bills that can immediately be accessed? Have you appointed an individual to immediately step in and take over this financial component?
Upon your death, how will your horse be cared for? Have you discussed this issue with the individual(s) that you would select to care for the horse? Are they willing and able to assume this responsibility? A large dog may only live for 10 years while a horse may live to 20 or 25 years.
How will the financial responsibility be taken care of? If you leave a stipend in your Will to the individual, the money may be distributed; however, there will be no continued oversight after your estate is closed. There will be no legal assurance that the caregiver will actually continue to care for your horse.
You may want to consider having a trust in which the trustee is able to pay for the ongoing costs associated with the upkeep and care of your horse so long as it is cared for. If the ownership is transferred to yet another individual, the trustee can then continue to make funds available to that new owner.
Who will care when you’re not there? Responsible loving owners of horses as well as dogs and cats must plan for the care of their beloved friends if they are not available due to disability or death.
There is an increasing amount of litigation at worst and family disharmony at best when it comes to carrying out the estate planning directions of parents.
There are fights over the division of personal property
There are fights over the division of the money
Family cottages become a matter of conflict instead of joy
Family businesses disintegrate becoming worthless
There is bickering over running the family farm
Why is there so much discord? It really boils down to one central issue – the parents do not have “the conversation” with their family concerning the division of their estate and their outlook on the future use of their assets.
This is a difficult subject because there are many who were raised in an era when these were not issues that were discussed with the family. They may not believe that their estate plan is any of their children’s business. While the right of parents’ privacy is important – this approach leads to the problems outlined above.
Personal Property. If you do not ask your children what they want, you may be unaware that several desire the same items. Therefore, when you state in your Will or Trust that the personal property is to be divided equally among the children, it is a recipe for disaster.
The flip side of this coin is that items you treasure may not be wanted by your children, grandchildren or other family members. Leaving them items they don’t desire will only make them feel guilty or resentful.
Money. If you are not dividing your monetary assets equally, let your family know in advance. If your children are not saving for their retirement because they believe that they will inherit substantial sums, but you are not leaving them substantial sums, they should be put on notice now.
If you have made loans to one of your children, commit this to writing and address it in your estate plan. Will the loan be forgiven at your death if it remains unpaid? Or will it become an advance upon that child’s share?
Family Cottages. Your memories of all the happy times you spent at the cottage with your children may not be shared by them. You want them to keep the cottage so that it will provide wonderful summer memories for them and their children. Have “the conversation” – ask them if they want to keep it.
It may be that some do not want the cost and responsibility of a vacation property far from their home. They may not be able to afford their fair share of the cost. They might not want to take their annual family vacation at the same place every year, yet if their share of the cost and upkeep consumes their vacation budget, they may not have any choice.
Family Businesses. Have you made a plan for your retirement from the business? Who will continue to operate your business? You may assume that since your children have worked there in the past that they would be happy to come home and run the business. This may not be a part of their plan.
If one of them is working in the business, have you put together a plan for them taking over the management and operation? Have you taught them all they need to know by giving them more and more responsibility? If you haven’t, they may be ill prepared to operate the business. It is possible that they are happy to work there but don’t want the responsibility of owning and managing the company. Again, you don’t know if you don’t ask – have “the conversation”.
If you have more than one child, how will passing on the business work? Are they all to be equal owners? If some work the business and other do not, this will be another recipe for disaster. Alternatively, if one child is given the business to own, are there sufficient assets for the others?
Family Farm. Many of the same observations concerning the family business apply to the family farm. Additionally, remember that the children living in proximity to the family farm may assist you on weekends and at critical times each year, not because they love the farm, but because they love you. They know that it has become more difficult to get all of the work done as you have gotten older so they frequently give you assistance.
It important to have “the conversation” with them. Do they really want the farm? Is it a part of their plan to operate it?
Finally, when having “the conversation” try to be open to your children’s opinions and feelings. Allow them a guilt-free environment to really tell you how they feel about these issues. Try to be non-judgmental if they do not want certain assets or businesses. By knowing where your family stands on these issues, you can craft an estate plan that will peaceably and smoothly transfer your wealth and property to your family when you pass away.
Avoid the litigation, the family squabbles and the possible splintering of your future generations over your estate – have “the conversation”.
Estate Planning is on your “to do” list – you know that the cold days of winter are the right time to get this done. But, its zero outside with a wind chill that is below zero and the roads are icy – you don’t think it’s wise to make that appointment because the driving is too dangerous.
Should you just leave this matter to the spring when the travel is easier?
No. We live in an age of really great technology and there is always the U.S. Mail and the telephone. Make an appointment for a telephone interview or skype if you like – we can discuss all of the issues that are important to you and make some important decisions. You can fill out a questionnaire and return it, or discuss the information over the telephone. You might email or fax documents to me.
You can receive your draft documents via email or U.S. mail. After your review, we can discuss them via telephone.
Finally we will meet face to face for signing the documents – selecting a good day to come in. One trip – not three.
There are ways around this freezing weather. Don’t put off your important decisions to another day. Use these days to get your estate planning done. When spring comes, you can use it for other important matters – like enjoying the warmer weather.
If you are caring for a family member that has a disability, you worry about the future. What happens when you aren’t there anymore to care for him or her?
Have you done the right kind of planning? Or, have you put it off?
Now is the time to start planning for your disabled family member’s future. You and your family should consider the following issues:
Where will my loved one live when I’m no longer here to care for him or her?
What financial needs will he or she have in the future?
How can we assure that our loved one will have the same quality of life as he or she does now?
Who will administer his or her funds? How do we assure that the funds are managed and used to the best advantage?
How do we make sure that Social Security and Medicaid benefits won’t be affected?
If we leave an inheritance, what impact will it have on his or her benefits?
The way to make certain that your loved one is well cared for when you are no longer here is to establish a Special Needs Trust.
This trust can provide for the “extras” that are not available when an individual relies totally upon public benefits. While the funds cannot be used for food or rent, there is so much more that you want your loved one to have. These funds can bridge the gap between the basic, bare bones existence that is possible on public benefits and maintaining the current standard of living. It will provide funding for dental and eye care that is not covered by Medicaid. It can also provide funds for entertainment and travel expenses.
A Special Needs Trust can provide the right future for your loved one, while providing you with peace of mind. You will be assured that the life of your loved one will be enhanced and enriched, in the way that you would do, but when you are no longer here.
There is little good to say about our current icy spell. The single digit temperatures with below zero wind chills, combined with plenty of snow make getting out difficult and undesirable.
Why not use this time as a planning opportunity?
This is the perfect time to get your finances and documents organized and up to date! What should you look at?
Life Insurance – do you know where the policies are? Do you know who your beneficiaries are? Check each policy to make certain that these are correct.
Retirement Funds (IRAs, 401Ks) – again, have you named the correct beneficiaries? Double-check to make sure that these are up to date and correct.
Estate Plan – do you have one? If not, it is time to get started.
Will or Trust – if you do have one, take it out and re-read it. Does it accurately reflect your desires and relationships today? Are the agents you selected in the past the ones that you want today? Are the beneficiaries correct? Are the amounts for each still right?
Disability – do you have a Durable Power of Attorney? A Patient Advocate Designation (Power of Attorney for Health Care)? Do these reflect your current thinking?
Where is all your paperwork? Is all of this information scattered around in different drawers and locations? Do you even know where it is?
Once the information is all accumulated – organize it. Put it all together in one location. Include life insurance policies, all retirement plans, retirement fund statements (year-end), bank account statements (year-end), investment account statements (year-end), deeds, trusts, wills, durable power of attorneys and health care directives.
If you don’t have an estate plan – start one now. Determine, with the assistance of an attorney, what will meet your needs. Then take the steps to get it done.
By the time the balmy breezes of spring arrive, your task will be complete. You will have real peace of mind knowing that all of your affairs are in good order.
In the prior article, I examined the ways to leave your family a road map in the case of your disability. Many of the same issues apply when you are doing your planning for end of life.
Execution of a Last Will and Testament or a Revocable Trust is necessary to pass your estate to those you care about at the time of your death. As with the issue of disability, it is important not only to leave those documents, but to organize the other financial components so that they are readily accessible.
As with disability planning, you will need organize all of the papers into one location:
Income. What are your sources of income and how are they paid? Are there direct deposits? Into which account? When is the money deposited? If you receive social security, caution your family that the last payment can be taken from the account electronically without prior notice if the department determines that it should not have been paid.
Monthly expenses: What are your monthly reoccurring bills? List them: mortgage, utilities, auto payment, auto insurance, homeowners insurance, credit cards, etc. Some of these will need to be paid until your estate is settled.
Next show what the name of the company, the account number, the date of the month the bill is due and how the amount is paid. Is it automatically deducted from your checking account? Is it automatically charged to your credit card? Must it be paid by check? Or paid on line? If it is paid on line, include the user name and password for the account.
With the information listed above, your family will be able to continue paying those bills that are necessary. Additionally, they will have the information necessary to cancel some of the bills such as cable television or internet services as they will no longer be required.
Financial Assets. The list of assets is critical for your family and/or Trustee or Personal Representative. If he or she does not know what you own, it is virtually impossible to get the bills paid and to distribute your trust or estate.
Place a copy of the quarterly statement for each asset account (savings, checking, financial institution) into one folder. The balance in the account is not the critical piece of information here – the account number, contact information and institution is the key.
Real Estate. Make a listing of all real estate you own or have an interest in. If there is a deed or land contract, place this with the listing.
Accounts Receivable. Does anyone owe money to you? If so, list this together with the documents that establish the debt. In this manner, your Trustee or Personal Representative will know the details so that the money can be collected.
Accounts Payable. Do you owe anyone money? Are there any loans or loan documents which establish that you owe others a debt? Place copies of this with your other estate planning documents.
Physical Assets. Make a listing of the large personal property items that you have such as boats, automobiles, coin collections, wine collections, jewelry, etc. What is their value? Where are they located? Who should they be distributed to?
Life Insurance Policies. Put these in one folder. If you can’t find them, neither will your Trustee or Personal Representative.
Outstanding Lawsuits. Are you either a Plaintiff or Defendant in a lawsuit? Put a copy of the pleadings with your estate planning documents. While individuals pass away, the lawsuits will continue until they are concluded. It may be that your estate may owe money at the conclusion or alternatively, money may be due to your estate.
Cash. If you have hidden money, you need to put this information with your estate plan. Otherwise, it may be over looked. Is there money hidden in books? Under rugs? In boxes? In pipes? Behind ceiling tiles? It would be a shame for your hard earned money to be given away in a garage sale or thrown away because it was in an unlikely place.
Funeral Plans. Do you have a prepaid funeral contract? If not, have you pre-planned your funeral. Leave details. This will assist your family in following your wishes.
Past Employers. If you have worked for any companies that had benefits due to you, leave a listing of the company, its address, the years of service with the company. In this way, if there are death benefits due, your family will be able to access them.
Veterans Benefits. Are you a Veteran? If so, place your DD 214 and other relevant information with your estate plan. In this way your family can obtain any benefits to which you are entitled at death.
While your estate planning legal documents are a critically important part of your estate plan, it is also very important to leave a road map to all of the assets and benefits that you have accumulated during your lifetime. This will make a very difficult time for your family just a bit easier.