Accordingly to a recent article from Merrill Lynch, many people still believe that a trust is only for the very wealthy. On the contrary, a trust allows someone of even modest means to ensure that his money is distributed as he wishes after his death. Merrill Lynch points out the three benefits of a trust:

More Control. A trust can set rules or conditions about when and how money is released. For example, you can establish a trust that sets a specific age or a milestone, such as graduating from college, as a condition for an inheritance to be paid.

Protection. A trust can make sure that your children, or their children, will receive their inheritance even if you divorce or remarry. It can also help shield assets if your heirs divorce or are in a profession with a high risk of litigation.

Investment Guidance. A trust allows you to appoint a professional trustee to handle a family business or investment properties so that your heirs are protected from making mistakes due to inexperience. The trustee can also manage assets for younger heirs until they reach a suitable age to make their own decisions.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

Rodney Dangerfield once joked that “my wife and I sleep in separate rooms, have dinner apart, and take separate vacations - we're doing everything we can to keep our marriage together!”  But what if your wife didn't live with you and still wanted to inherit your property after your death?

The Michigan Supreme Court recently had to decide whether a spouse was still entitled to inherit from her husband's estate or whether her marital rights had been severed by her "willful absence" from him for more than a year before he died.

James and Maggie were married in 1968, had four children, then Maggie moved out in 1976. They never lived together again. James died in 2012, without a will. A child from James' first marriage asked the probate court to determine that Maggie was not his surviving spouse and therefore not his heir.

The Michigan Supreme Court determined that "willfully absent" cannot be defined solely by physical separation since spouse may be separated for a job or military service. Rather, the Court must determine whether a spouse's physical absence brought about a practical end to the marriage or an "emotional absence".

The Court found that in 2010, James and Maggie had joined together as plaintiffs to sue James' employer. They proved that Maggie was entitled to health insurance as part of James' retirement benefits. James made clear in that lawsuit that Maggie was still his wife and that they had an ongoing relationship.

The Court found that James' daughter had the burden of proving that Maggie was "willfully absent," and the daughter's proof (of only physical absence) was not enough to sever Maggie's rights as James' wife.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

Make will on phone

The Michigan Court of Appeals was recently asked to decide if a completely electronic "will" was valid. The ruling was that it is.

Duane Horton was only 21 when he committed suicide. Before his death, he left an undated, handwritten entry in his journal. The journal entry said that his "final note" was on his phone, that the app should be open, and that if it wasn’t open it could be found on Evernote. The entry also gave an email address and password for his Evernote account.

The "final note" was a typed document with Duane's name typed at the end but no handwritten signature. The document contained a detailed paragraph about who should receive Duane's property after his death. The case ended up in court because Duane's mother objected to the "final note" - which disinherited her.

The Court of Appeals found that while there are specific formal requirements for making a will, even a document that doesn't meet those requirements can be a will if there is "clear and convincing evidence that the decedent intended the document to [be his] will."

In this case, the trial court had heard the testimony of many witnesses about Duane's intentions, and his mother's testimony about her strained relationship with him provided additional support for Duane disinheriting her. The Court of Appeals agreed with the trial court that the "final note" was a valid and enforceable will.

If you have any questions regarding setting up your own will, it is important to get advice from an experienced estate planning attorney. Contact us for a free consultation.

Simple Will
Too often, families are torn apart by trying to decide "who-gets-what" after a parent dies.

A recent story in the Denver Post compiled a few of the horror stories that estate planning attorneys see on a regular basis:

  • An irate sister who smashed a crystal vase in her attorney’s parking lot “so nobody will get it.”
  • Three siblings who spent three years and $15,000 battling over Mom’s knickknacks that still had the Kmart price tags on them.
  • The brother who was not entitled to get his inheritance while his sister’s dog was alive, so he shot the family pet.

While these are extreme scenarios, they illustrate the kind of difficulties that can arise in a family after the loss of a loved one. You have the power to prevent this kind of turmoil from happening in your family. The solution is to prepare a simple estate plan. Ask your children or other family members if there are things they would like after you are gone. Compile a list and include it with your will. Be sure to list sentimental items, like wedding rings and family photos, and the person(s) they should go to.

If you make a list, your personal representative is obligated to follow it. It removes the opportunity for an emotional battle at a time when family members are grieving.

Do you have questions about this or other estate planning issues? Contact us today for a free consultation!

capital gains tax

You may have heard that it is wise to always title assets in the name of two people, or “owners.” In the event of the death of one owner, the asset passes directly to the surviving owner and avoids probate court. However, did you know that in some cases, including an additional owner on an asset can result in an unnecessary capital gains tax?

For example, if a child is named a co-owner on a stock portfolio while a parent is living, upon the death of that parent, the child’s “tax basis” in the stock is based on the amount that the parent originally paid for the stock. In other words, when the child sells the stock, he or she will pay tax on the gain from the date the parent bought the stock until the date of sale. All of the appreciation during the parent’s lifetime will be taxed, potentially resulting in thousands, if not tens of thousands of dollars in unnecessary capital gains tax.

On the other hand, if a child inherits a stock portfolio upon a parent’s death, the child’s “tax basis” on the stock begins the day that the parent died. Therefore, when the child sells the stock, he or she will only be taxed on the gain from the date of the parent’s death until the date of sale. Any appreciation that occurred during the parent’s lifetime completely escapes tax.

For more information about estate planning, please schedule an appointment. 

estate planning tips

It is common practice to always name at least two owners on any asset. When one owner dies, the asset passes to the surviving owner and probate court can be avoided.

However, problems can arise if a parent adds only one of his children as a co-owner on an asset. The parent and child may have an “unwritten agreement” that the asset will be split equally among all siblings upon the parent’s death. Yet it is not uncommon for the child named on the asset to keep all of it for himself. Often, this is justified as a repayment for all the help that the child provided to mom and dad during their lives, and there is nothing the other siblings can do to enforce the original “unwritten agreement.”

Even if a parent adds all of his children to an asset, there is a risk if one of the children predeceases him. When surveyed, most people said they would give the inheritance of a deceased child to any grandchildren from that child. However, if only the children are named on an asset, and a child has predeceased his parents, those grandchildren have no legal right to share in that asset. They are at the mercy of a unanimous agreement between their aunts and uncles to give them a share.

Estate plans can eliminate these and many other potential problems. Whether you use a simple will or a revocable living trust, the right legal document can ensure that you don’t leave these types of problems for your children. Contact Legal Strategies to learn more about our customized estate plans.

beneficiaries of your estate

Most people have at least one asset that includes a beneficiary designation (i.e, a life insurance policy, 401(k), IRA, annuity, etc.) It is important to remember that a beneficiary designation is the “trump card” and will overrule your will, your trust, or any other document that tries to direct to whom these funds are paid at the time of your death.

Keep Beneficiaries Up to Date!

That is why it is extremely important to keep these designations up-to-date and to retain copies in your personal files. It is not unusual for an employer to lose or misplace a beneficiary designation that you previously filed. If your family cannot find a copy of a more recent designation in your personal papers, then the last designation on file with the employer will control who gets the funds.

It is not uncommon for people to forget to update these designations after a divorce. When the person dies, often many years or decades later, the ex-spouse gets an unexpected windfall because he or she is still named on an old life insurance policy or IRA.

Minor Beneficiaries? Proceed With Caution!

Even more important is to seriously consider whether to name a minor child as a beneficiary. If you do, once you are deceased, that child will get the funds on his 18th birthday – regardless of the amount of money involved or his maturity level to handle those funds. It is often much safer to have your trustee or your estate named as the beneficiary and then to have provisions in your will or trust for someone to manage the funds until the child is a more suitable age.

Enlist an Estate Planning Professional!

These scenarios illustrate how important it is to have professional assistance when planning your estate. A professional will ask questions that you may never have thought of.

Interested in taking the next step? Please Contact Us!

If you’ve had a family member die recently, you may have been surprised by how quickly you started receiving phone calls from bill collectors. According to a recent New York Times story, some debt collectors are specially trained in all five stages of grief and are paid a commission to collect debts from grieving family members.

One individual reported that he was contacted by a collection agency about his late father’s credit card – and the balance wasn’t even due yet. A widow reported that her husband had left credit card debt of over $26,000 after an unsuccessful battle with cancer. When the woman explained to the bill collector that her husband had left behind no money, only debt, she was asked if there were other family members who were in a position to pay the bill.

Know Your Rights!

What debt collectors often fail to mention is that there may be NO legal obligation for other family members to pay the decedent's debt. Only the deceased person’s assets are legally available to pay his or her bills. Assets that were jointly owned by a spouse or paid by a beneficiary designation, for example, belong to the survivor, not the debt collector. It is critical to consult a legal professional before you willingly agree to pay a debt belonging to someone else.

Questions? Please contact us for a free consultation.

Legal Strategies, P.C. 

Beth Stubbs is the Macomb County, Michigan attorney who heads up the Legal Strategies practice. Legal Strategies assists clients in the areas of estate planning, probate and real estate. 
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