May 8, 2012
As a Michigan estate planning and elder care attorney, I try to stay on top of news articles referencing estate planning. Some are good, some are bad. Forbes has a pretty good article on the Seven Major Errors in Estate Planning. The author starts out commenting on how “It never fails to amaze me that so many otherwise savvy individuals, many of whom have there financial lives otherwise buttoned-up use poor judgment (or no judgment) when it comes to their estate planning.” I’d have to agree, I’ve seen many wealthy individuals who have most of their ducks in a row, but little to no estate planning. Or estate planning that was put together by an estate planning attorney, but wholly inappropriate for their situation.
The author goes on to list seven different areas where people make state planning mistakes.
Not Having a Plan
Many people come into our office with no estate plan at all. Often people will ask when is a good time to initially think about estate planning, and my answer is when they have things or people they want to protect. For example, with the birth of a child you would want to put together an estate plan that provides for your child in trust, as well as puts guardianship provisions so that your child does not go into a foster home.
Online or DIY Rather than Utilizing a Professional
There has been a noticeable uptick in people using online legal preparation software such as Legalzoom or Suze Orman. Unfortunately, relying on these web-based DIY options can be a recipe for disaster. Just look at some of my previous blog posts on the concerns with creating your own last will and testament.
Failure to Review Beneficiary Designation and Titling of Assets
Too often people will buy a living trust based estate plan from an estate planning attorney, but they will not fund it properly or fail to keep up with their funding. I say “buy” a trust based estate plan, because all they’ve done is bought a set of documents. It very well might not be worth the paper it was drafted on if it’s not funded properly. That’s the difference between a product based estate planning attorney versus a counseling based estate planning. If you’re going to go through the estate planning process, make sure you fund your trust properly. That’s why our office will do a funding audit, to make sure that your revocable living trust is funded properly.
The author lists the rest of the mistakes here: Seven Major Errors in Estate Planning.
June 22, 2011
It’s amazing how much bad information I see out there as a Michigan Medicaid planning attorney. For example, I was sitting at a meeting today and started talking with an indiviual who said he used to work for a certain “estate planning” firm in the Metro-Detroit area. Well, when I had a chance I decided to pop over to their website to see what was going on with their firm, and after jumping through all the flash animation I finally got to the content.
They pride themselves and their seminars on being “estate planning” experts, so I was intrigued when I saw that they listed “medicaid planning” on their website as a speciality. As an attorney that focuses entirely on estate planning and Michigan medicaid planning I was curious to see what informaiton they provided.
Well, according to them, there is a 36 month look back period on any divestments. Well, this information is blatantly wrong and does a disservice to people searching for Michigan medicaid planning information in Michigan on the internet. Obviously, with the implementation of the DRA back in 2007 (yes, the information they have is 4 years out of date), the new divestment penalty period is 60 months.
Estate planning with revocable living trusts answer at least three main questions which includes: Who gets what? How do you minimize settlement costs, such as probate and estate taxes? And, who is in control after the trustmaker passes away?
Barron’s has a great article entitled “The Five Biggest Ways to Bungle a Trust” that describes many of the mistakes that do-it-yourselfers face when they go at trust administration alone. As Michigan trust administration and Oakland county probate lawyers, we are often brought in to clean up theses messes.
The first way people screw up trust administration involves keeping faulty records. Generally trustees in Michigan must provide at least annual accountings to the beneficiaries. Often, these accountings are slapped together at the last minute by an overwhelmed trustee. As Michigan trust administration and estate administration lawyers, we professionally manage this process for our clients. Whether we handle it in-house or outsource it to highly qualified CPA’s, our client’s understand that it’s professionally done and the beneficiaries of the trust appreciate the clarity.
Another way that trustees botch the trust administration process is by failing to diversify the trust assets. It may be tempting to sit on a big chunk of a single stock, but often times, as prudent investors, it’s important for the trustee to diversify the portfolio so as to minimize risk for the beneficiaries.
Yet another trustee issue we see is that of biased distributions. Trustees owe a fiduciary duty to the current beneficiaries and the remaindermen. Therefore, a trustee cannot favor one beneficiary over another or allow any personal bias into the decision making.
The fourth area we, as Oakland county trust administration lawyers, see trustees making poor judgements is in the concept of the trustee expecting a payday. Trustees, when acting without the aid of an trust administration attorney, often expect at the end of the day they will get a windfall for the efforts, when in reality, more often than not, they are only entitled to reasonable expenses and fees. Quite often this is a source of probate or trust litigation.
Lastly, as a trustee acting alone, often times we’ll see that they have a false sense of safety. A trustee acting without experienced Michigan trust administration counsel can feel that there is an entitlement and honor in serving the role of trustee at the other beneficiaries will defer to any judgements or decisions you make. This generally cannot be further from the truth. Quite often beneficiaries are looking for any little mistake a trustee makes, even in the best of families.