Fixed Fees

October 20, 2008

Filed under: Uncategorized — Christopher J. Berry @ 3:57 pm

The Washington Post had an article about legal fees today. The premise of the article was that many in-house counsel is requesting outside counsel to work on a more fixed fee basis, instead of an hourly fee basis. My firm has been operating almost 90% on a fixed fee basis when we work with clients. It feels good to be ahead of the game on this front. You can read the post here.

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Warren Buffet; Buying American

October 17, 2008

Filed under: Uncategorized — Christopher J. Berry @ 3:58 pm

Warren Buffet had an interesting op-ed piece in the New York Times today. You can read it here. Basically, he is saying that the time to buy American stocks is now. He is buying them in his personal fund.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

It’s good to hear from one of the richest men in the world that our economy will not totattly self destruct and that there may be a light at the end of the tunnel.

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19 Year Old Passes Away From Heart Condition While Playing Basketball

October 16, 2008

Filed under: Uncategorized — Christopher J. Berry @ 3:59 pm

I didn’t know the individual, but I work out and play basketball at the same gym. Makes you realize how fragile life is. A 19 year old passed away while playing basketball at Lifetime Gym in Commerce, MI. He had a rare heart disease.

You can read the link to the article in the Detroit News here.

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Estate Planning Mistake to Avoid!

October 15, 2008

Filed under: Uncategorized — Christopher J. Berry @ 4:04 pm

Here is a quick tip and a common mistake I see many people make with regard to their estate planning.

Are your children on your bank accounts or deed to your house? If you are you could be doing a disservice to yourself and your children!

Holding any asset with anyone (other than a spouse) can be problematic and horrific when it’s your home. Many well intentioned parents in an attempt to avoid probate add their children to title of their home as joint tenants.

When this happens, the question that needs to be asked is: “is it worth possibly having my house sold out from under me, while I still plan on living in it?”

By adding another person to your assets you are opening yourself up to the claims against the other, including creditors, predators and the IRS. For example, say you child is involved in an car accident that maims another. Well when your child is sued, YOUR house may be a countable asset if you added your child to the deed as joint tenant.

Quite the scary proposition!

Another important consideration is income tax. Let’s look at an example. Say parents own a $200k home. Well, adding two children would be a $50k gift. Years go by, the parents pass and laterthe house sells for $400k. Well, those kids now have a basis of $50k instead of the $400k if they had inherited the property. They are each on the hook for $150k worth of income tax owed to the IRS! Because thay probably did not live in the house, they are also going to miss out on the $500k exemption that married couples receive for selling the home.

Estate planning is more than just preparing documents, it takes a holistic approach to an individual’s situation and an analysis of many factors.

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Michigan Estate Planning Questions to Answer

Filed under: Uncategorized — Christopher J. Berry @ 4:03 pm

Here are some common questions that can be answered through proper Michigan Estate Planning:

  1. Who will administer your estate after you pass?
  2. Who will be the guardian of your minor children?
  3. How will federal estate tax and other taxes be minimized?
  4. How will your trust or personal representative pay any death taxes if owed?
  5. How should your spouse and you hold title to assets?
  6. If you cannot care for yourself, who will take care of you?
  7. If you cannot manage your estate, who will do so on your behalf?
  8. Who will receive the proceeds of your insurance and retirement benefits?

If these are questions that you would like to answer contact our office at (248) 865- 4700 or email at

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Debate Night| Obama & McCain Plus Death & Taxes

Filed under: Uncategorized — Christopher J. Berry @ 4:02 pm

Federal Estate Tax for Estate Planning

McCain & Obama Debate | Federal Estate Taxes

With the looming McCain Obama debate tonight. I thought it would be helpful to recap what each campaign is proposing for the federal estate tax. Luckily, the Wall Street Journal had an interesting article on this very topic today. You can read the WSJ article here.

The way the current law works is that in 2008, the Federal Exemption is up to $2million. Meaning there is no Federal Estate Tax for any estates under $2million. In 2009, the number jumps up to $3.5million. In 2010, there is an unlimited exemption. Then 2011 and beyond, the exemption is at $1million.

Each canidate has discussed his views on where they would like the tax to go. Here is an important quote from the WSJ article linked above.

Sen. McCain proposes raising the exemption “as soon as possible” to $5 million and cutting the top tax rate to only 15%, says Douglas Holtz-Eakin, senior policy adviser. Sen. Obama wants to keep the exemption at $3.5 million and the top rate at 45%.Portability. Both candidates agree the exemption amount should be easily portable. “Families should not be required to undertake complex and unnecessary financial planning or be penalized for failing to take advantage of sophisticated financial strategies,” says Jason Furman, economic policy director for the Obama campaign. The Democrats’ nominee “believes we should eliminate the estate tax for 99.7% of families — and this is part of his plan to accomplish that goal,” says Mr. Furman.

Sen. McCain also favors portability. The Republican nominee “opposes situations where taxpayers may have unfavorable tax consequences” simply because they couldn’t afford — or didn’t know — “to seek sophisticated tax planning advice,” says Mr. Holtz-Eakin. “All of the costs and effort involved in such planning would be unnecessary or greatly reduced if there was portability of the estate-tax exemption. Such a proposal also meets another of John McCain’s goals of simplifying our complex tax code whenever we can.”

Under current law this year, a married couple could leave a total of $4 million to their children without federal estate tax. “But because the exemptions aren’t portable, quite a bit of planning is necessary to achieve this result,” says John M. Olivieri, a tax partner at the law firm of White & Case LLP in New York City.

Suppose a husband and wife each has $2 million. The husband dies and leaves everything to his wife. Although there’s no federal estate tax because of the marital exemption, the wife now has a $4 million estate but only a $2 million exemption, Mr. Olivieri says. Consequently, if she dies this year and leaves her $4 million to her children, “her estate will be hit with a federal estate tax of about $900,000,” based on this year’s rate structure, Mr. Olivieri says. “A similar problem arises if the entire $4 million is owned by the husband and the wife dies first.”

To avoid the problem, “many married couples expend considerable time, effort, and money to avoid wasting their combined federal exemptions,” says Mr. Olivieri. “But if the exemptions were portable, none of this would be necessary.” However, even if the exemption does become portable for federal estate-tax purposes, Mr. Olivieri points out that many people may need to take special estate-planning steps anyway because of state-tax issues.

Although many tax advisers do expect major estate-tax changes next year, no matter who wins the presidency, don’t count on them just yet. Even though the two candidates agree on portability, nobody knows how quickly such a change might happen, what the effective date might be and how the fine print of legislative language would read.

But “my sense is that portability would have bipartisan congressional support,” says Blanche Lark Christerson, managing director at Deutsche Bank Private Wealth Management in New York. “It also could simplify people’s planning and be a good thing.”

However, many people still might benefit from setting up trusts and taking other steps anyway, Ms. Christerson says. That includes many people who live in states that have “decoupled,” or separated, from the federal estate-tax system. “Also, bear in mind that even if there were no potential tax consequences and apparent need for a trust, you still might want one” for other reasons, such as protecting assets from creditors or other factors.

Valuations. This is a key issue when calculating capital-gains taxes on the sale of inherited assets. Here’s an example: Suppose your cousin dies and leaves you stock he originally purchased decades ago for $100,000 and the value of that stock has grown to $500,000 as of the date of his death. Your tax basis typically would be $500,000 — or, under certain circumstances, the value six months after the date of death. That means you don’t have to figure out what your cousin originally paid for that stock. This system is scheduled to continue through next year and undergo major changes in 2010. Critics say those changes would create additional complexity and impose unfair recordkeeping burdens on taxpayers. Advisers to both candidates have said the candidates want to retain the current system.

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EDIE the Estimator helps you with your FDIC

Filed under: Uncategorized — Christopher J. Berry @ 4:02 pm

EDIE the Estimator

EDIE the Estimator

The FDIC has came out with a webpage that hels you calculate your FDIC coverage for you deposit accounts. In this turbulent time, this type of information is key. In addition to consulting EDIE, it is probably a good time to contact you financial adivsor, financial professional to make sure you have a plan to weather this storm that is sending investment portfolios south.

To use EDIE, go here.

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The Problem With Michigan Trust Mills

October 31, 2008

Filed under: Uncategorized — Christopher J. Berry @ 3:47 pm

A financial planner friend of mine had me review an estate plan of a couple the other day. This couple had their estate plan done by one of the many “trust mills” in Michigan.

By trust mill, i mean a set up where they only meet their attorney once (if at all), and there is little to no customization done for an individuals estate plan. In other words, it is just a fill in the blank estate plan.

Typically, people are put into one of these “estate plans” by unreputable financial professionals who will tell potential clients that they can have a trust based estate plan with unlimited revisions for a set price. One way they do this is offer an “Estate Planning Seminar” where they will have an example trust in a pretty binder, then tell everyone they can have their plan done for a set fee, say $2250. This epitomizes a one-size fits all approach to estate planning, that doesn’t take into account the actual needs of the client. Typically, salesman use this trust as a loss leader to sell clients annuities.

As an estate planning attorney who actually values his clients, there is no way i would be able to quote a fee with out knowing exactly what the clients goals are and how complex it will be to meet those goals.

Back to the couple I met with. In addition to the usual problems with trust mill prepared plans, they also had three very important issues that I raised with them.

First, as a married couple, their residence was funded into the trust. In Michigan, we have what is called tenancy-in-the-entireties, which is a special designation created by the state for real property. This status gives married couples added benefits against creditors, predators, the IRS, and lawsuits. Well, someone, either the financial professional or attorney, told the clients to fund the residence into the trust, thereby destroying the added protection the couple had as married couples.

Second, the couple both had what is called “springing” powers of attorney. This is a counseling question to determine the type of financial power of attorney to use. After counseling the clients, they realized that they were in the wrong type of financial power of attorney. Luckily, they have not yet had to rely on it.

Third, their healthcare directives were out of date and not valid. This attorney who prepared their documents promised to stay in touch every year to review their estate plan (which is supposed to be free, including amendments). Well the attorney never did. So, I pointed out the changes necessary to bring the healthcare directives up to date. Our firm has a systematized membership program called Foundations that clients can opt into that will maintain their plan through the years.

The good news, the couple was able to see the mistakes and correct them before they had to rely on the faulty documents. The bad news, the couple is going back to the original attorney to have the documents corrected, since they have free changes for life.

You get what you pay for…

Michigan QPRT | Gifting Your House to Your Children

October 30, 2008

Filed under: Uncategorized — Christopher J. Berry @ 3:55 pm

With the economy and real estate values falling to record lows in Michigan, there is a an opportunity to make use of a nifty estate planning technique. Clients can put assets that have dropped in value into a trust now so that the appreciation occurs outside of your estate for tax purposes.

A real world application of one of these strategies involves using a Qualified Personal Residence Trust otherwise known as a QPRT (as an aside, us estate planners have acronyms for everything, RTL, CRT, CRLT, GRAT, GRUT, etc.).

The way it works is like this: you transfer your home into a QPRT now, with bargain basement values. This locks in a lower-gift tax amount for the move from your possesion to the trust. As an added benefit, if interest rates move higher, the discount can be even greater. After 10 years, the home can then pass to your beneficiaries, typically children. Now they own the home, outside your estate, free of any Federal Estate Taxes. If however, after 10 years, you still live in the home, you willp ay your children fair-market rent to your kids.

The WSJ just had a piece about this strategy in more detail here.

If you have any questions, feel free to contact me.

Scam Targeting the Elderly in Michigan

Filed under: Uncategorized — Christopher J. Berry @ 3:54 pm

An attorney colleague in Michigan just made us estate planners aware of the following scam that is targeting the elderly.

We have encountered a scam targeted at seniors. A lady in her late 70s was persuaded by a salesman to sign up as a local representative of a satellite television company, apparently under the suggestion that she could sell
(recommend) the service to her friends and receive commissions. She was offered and did sign an agreement to serve in this capacity, and in so doing authorized a charge of $7,500 to her credit card.
At this point I will not name the company on the contract or the satellite provider, but all of us should be on the lookout for this kind of scam.

It’s unfortunate that this type of thing happens to our seniors.


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