I recently learned that my mother’s Aunt Rose (don’t we all have an Aunt Rose?) left me certain items in her Trust. Specifically, she left me “two plaques of old-fashioned women.” Now, I’m pretty sure that I’ve never seen these plaques, but the fact that my great-aunt kept me in mind has much more sentimental value than the plaques themselves. I was no older than five years old when she passed.

So often we imagine how things will be after death. We assume that there will be mourning, a full funeral, and no drama regarding our possessions. Aunt Rose had everything thought out. My parents’ house was full of her furniture, and now my wife and I have much of it in our home. It never occurred to me that she had such specific wishes for her belongings, but reading her Trust, and seeing her thoughtfulness towards me at such a young age, made me feel closer to her.

When writing your own Will and Trust, it is important to think about how it will play out in real life. A parent needs to think how children will be affected by a poorly thought our Will or Trust.

Before you set up your Trust, you and your lawyer should discuss what the purpose of the Trust is and the personality of the children that you are giving an inheritance to. Here is a side by side of two different styles of distributions that I have seen.

There is a drastic difference between the two, and not just in the length. They both can work in certain circumstances, but each one has its weakness.

The distribution on the left (Table 1) does two things. First, it will most likely result in the sale of all of the property because the only way to distribute things equally is to liquidate everything. Very often the vague Will leads to drama and arguments among the beneficiaries. Second, it takes away your opportunity to let your children and grandchildren know that you thought about them and what they might find sentimental.

The distribution on the right (Table 2) is the opposite. Here the distributions are thought out, but there is a pitfall. Unlike in the previous distribution, if any of the items are sold or lost prior to the distribution, that’s it. That person receives significantly less because the item is gone. There are no replacements. It is clear that the thought was there, but the opportunity to pass on an heirloom or a meaningful item is lost. In some cases this can cause distress or jealousy, but in some cases (like with my Aunt Rose) it is the thought that counts.

A well thought out distribution will look something like this:

Table 3

• I leave the following people the following items:
  To my third husband:
       The House
       Presidential Coin Collection
  To my daughters in equal shares:
       The Cabin in the Woods
       The Rest of my Coin Collection
       My Jewelry
• I leave the following Cash Gifts to the following People:
  My third husband - $75,000
  My older daughter - $50,000
  My five siblings - $20,000 – to be split evenly
  My only grandson - $50,000 – to be held in a Trust

This distribution combines the best of both. It shows that the beneficiaries were thought about during the writing of the Trust, and that there is a money security if the items go missing before distribution. There is no guarantee that there will be no family drama when property is distributed, but a well written Will or Trust can help diffuse negative family interactions.

Oh, and Aunt Rose, thanks for thinking of me. 

Every parent wants the best for their child. Generally, this is where Estate Planning comes into play. It is not uncommon for parents to set up Trusts with a structured distribution of 1/3 at the age of 25, 1/3 at the age of 35, and the rest at the age of 45.

For parents with handicapped children, the situation is different. The General Grantor Trust will not work for them. Generally, benefits for disabled individuals can include Social Security Income, Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon the need. For these purposes an individual is considered impoverished if their personal assets are less than $2000.

This means that if a disabled person owns more than $2000, they will not receive any benefits from the government. Any money that you leave your child would be given over to the government to pay for the care that they need. If you decide to give your child’s inheritance to another family member to care for your child and get around this law, this is considered “transferred for purposes of benefit qualification”. The government takes this into account when deciding which benefits to give your child. Meaning, that a handicapped child may not be eligible to receive benefits from the government for up to five years because of this.

This is where Special Needs Trusts come into play. Special Needs Trusts are not looked at by the government, and will not be held against a person with special needs. A Special Needs Trust needs specific language make it qualify as an exemption, and a truly competent estate planner will be able to draft one for you.

The purpose of the Trust is to supplement whatever the government gives a child. It works on a sliding scale with the government on one end and the trust on the other. If the funds from the government are not sufficient, only then will the Trust step in to balance out your child’s needs.

There are Medicaid rules that prevent the Trust from being used for housing or food; however, there is no restriction on social events like dinner parties, vacations, entertainment, and other things of that nature.

So make sure if you or someone you know has a child with special needs, pass along the information so they can make an educated choice for their loved ones.

Contrary to what many believe, a Will and a Trust are not interchangeable. An estate might not be secure without both of these documents, each playing its unique role. The Will can trace its origins to Ancient Greece. This concept has come a long way since then and is now the most used tool in Estate Planning.

In Michigan, a Will has two primary forms: the typed form with two witnesses or the handwritten form with only the testator’s signature and dated. This varying construction allows for a person to easily craft their own Will without consulting an attorney. Often, they get something wrong that either invalidates the Will, gives gifts to unintended recipients, or has unforeseen tax consequences.

The Will is the only legal document that allows for a person to choose who would look after their children that are under 18. In addition to guardianships, the Will allows for conservators to be appointed over the children’s financial decisions.

The public can access the Will (as opposed to a Trust) after it has been filed in Probate. If your estate only has a Will, the public can see who you left as your beneficiaries. This comes into play if you know one of your beneficiaries has trouble with creditors, who can search the public record and see if that beneficiary is having money come their way.

The Will cannot create gifts that are structured. Such as, John Smith gets 1/3 when he turns 30, 1/3 when he turns 40, and 1/3 when he turns 50. All Wills can do is give lump sums, which is fine is some cases, but if one has young children, the money would sit in an account controlled by their conservator until they turn 18, at which point they get the entire lump sum.

Having a Trust can solve some of the aforementioned problems; however, they have shortfalls of their own. A significant limitation is that you cannot use it to designate who can be a guardian or conservator for your minor children.

A Trust can help protect you and those you love. It can designate who can make your financial and medical decisions if you to become incapacitated, something the Will cannot do. There are Trusts for children with special needs, which are used to insure that the child will be taken care of. There are Pet Trusts or Honorary Trusts, which allow for an animal or inanimate object to be taken care of for their lifespan or 21 years, respectively. Finally, there are National Firearms Act Trusts, which allow for civilians to create trusts to own weapons that they are normally incapable of owning.

Although you can create gifts that are structured, the Trust’s biggest hole is that it is not automatically encompassing. For something to be in the Trust, it must be put there, either by transferring title or by other documentation. This is how Wills come into play. A Will can pour-over any or all of your estate into your Trust. The Will should not be the sole way of putting things into your Trust for the simple fact that it can easily be contested and overturned by a beneficiary. If that happens, then all of the items that should be going into the Trust stay out to be probated by the Court.

Unless the Trust is contested, there is no real way to get a hold of the contents of the Trust. This means that creditors are unable to anticipate when an indebted beneficiary may receive their inheritance. Additionally, Michigan recognizes a Spendthrift provision that can be put into a Trust, which prevents creditors from attacking proceeds of the Trust.

The differences between a Will and a Trust are significant. Make sure that your estate is properly protected today. 

Once you have figured out what kind of attorney you need, there are a few more things that you need to think about before putting down a retainer to the first person that pops into your search engine.

Before choosing your attorney, it is a good idea to meet with a few to see if your personalities match, and that they are looking out for your best interests. If you find that you meet someone who seems to be the stereotypical “sleazy attorney,” it won’t work, no matter how specialized and knowledgeable he or she is. You don’t want to be second-guessing and wondering if your lawyer is cheating you out of your money or is putting your case on the backburner. You want to find someone who clicks well with you because when you feel comfortable with your attorney, things run much smoother.

You are your own Rocky Balboa, and the attorney you hire should be your Mickey Goldmill. Mickey was always in Rocky’s corner, and that’s the relationship you should have with your attorney. This type of relationship is easily seen in areas of law such as Criminal and Family. In Criminal Law, we’ve all seen defense attorneys looking out for their clients. We know that they throw everything plus the kitchen sink at the court to make their client walk free. The same is true in Family Law; divorce attorneys are known for squeezing as hard as they can to get their client the best deals.

In Estate Planning, your attorney needs to be your Mickey. When drafting your documents, your attorney should be contacting you with suggestions on how to protect your family from creditors and predators. A proper estate attorney should be able to protect as much of your assets as possible to insure they go your beneficiaries. Another role of the estate attorney is to protect you from possible predators, because the danger of undue influence in Wills and Trusts can be hard to see. It may not be obvious that the home caregiver is forcing an elderly person to put them into the Will. It may be difficult to see the difference between a grandchild with truly altruistic intentions or one looking out for his inheritance.

We always see Mickey giving Rocky advice and looking out for his best interest; this is the ideal relationship between you and your attorney. Your attorney is there to give you tips and look out for your well-being. Just because a lawyer is knowledgeable does not mean he is in your corner. Make sure you get the right attorney for you.

Like many other areas of life, finding the right attorney is crucial for you and your estate plan. Some people choose to go to Superstore-style attorneys, but a good shopper knows that a specialty store will have more concrete advice regarding winter tires than the local Meijer. It works the same way with lawyers. If you get a ticket for a DIU, you go to a lawyer who specializes in them, so that he can throw every trick in the book for you. When going through a divorce, you look for an attorney who specializes in Family Law to get you what you want.

The same goes with Estate Planning, you want to hire an attorney who specializes in this field. You can go to an attorney or a law firm, which practices in multiple areas of law, but if they have the “go to” attorney who handles too many areas of law, then all you are buying are Meijer tires. The attorney is probably a great attorney, but his or her practice is just too vast to give the expertise needed.

They may not know to challenge the calibration of the radar gun when fighting a DUI, or may not ask for everything in a divorce case because they don’t quite know how to squeeze the other side.

A lot of attorneys and law firms do Estate Planning, but the problem is unless they hire a lawyer to specifically head their Estate Planning and Probate section, they will not know all the nuisances that fall within Estate Law. An inexperienced attorney, or one who doesn’t solely practice in the field, may accidently put an IRA or Roth-IRA into a trust without the appropriate language, thus triggering the clause set up by the IRS, which would require the IRA to be drained within five years. Or they may draft a trust for a grandchild without a Crummey clause, which could trigger the GST on the gift. There are so many nuisances that going to a general practitioner or someone who practices too many areas of law is just not doing justice for you and your estate.

How can you tell which attorneys are spread too thin? There are two types, there are the general practitioners, and there are the ones whose areas of practice barely overlap. Both will be able to give good general advice in the areas that they practice, but do not expect expert advice. If you see that someone practices Family Law, Criminal Law, Estate Planning, and Tax, you can see the red flag, since Family Law and Criminal Law rarely overlap. In this scenario, at least there is quite a bit of overlap between Estate Planning and Tax, and a tiny overlap between Family Law and Estate Planning. But these types of lawyers are the ones who are usually limited to good general advice.

Marriage works as a protection under Michigan law. If one dies, his spouse generally receives everything even without a Will. While this protection is a nice safety net for some, it leaves others drastically under protected, specifically same-sex marriages and unmarried couples.

Same-sex marriages are currently not recognized by the state of Michigan. This lack of recognition wreaks havoc on same-sex marriages. While talking to LGBTQ advocates, they told me that they are participating in the fight to get same-sex marriage recognized in Michigan, but when I asked them what they were doing to protect themselves under the current law, they had no response.

This worries me, as long as Michigan does not recognize same-sex marriage, all same-sex marriages need to have specific documentation in order to receive the same legal benefits. A Will and Trust will allow for personal and real possession be transferred to your loved one. The Power of Attorney, Patient Advocate, and HIPPA release form will allow your loved one to take care of you as the State allows for a husband to take care of his wife, or vice versa. In simple truth, Estate Planning levels the field to allow people to have their loved ones care for them at all times.

When talking to a client, she told me about her and her “husband,” air-quotes included. Upon inquiring, she informed me that her “husband” was her second husband and they were not actually married. She told me that they did not feel like they needed a piece of paper to tell them they were married.

I feel that her situation is not a unique one; there are plenty of couples out there that are “married” in the sense that they are loyal to each other, but are not documented. Whether you have not yet “tied-the-knot” or you have decided that you do not need the piece of paper, Estate Planning allows you to take care of each other.

“Uncle Sam requires us to review our income every year, all the more so should we review our estate plans.” –Eric Carver, Dykema

When clients discuss the topic of Wills, I have heard one of two reactions. The first response, which is very concerning, is “Oh, I don’t have Will.” The other response is “Oh, I drafted a Will a while ago.” Upon further investigation, I find that they drafted their estate plan five years ago, if not more. The longest one that I heard was 18 years.

If a person passes without a Will, he is trusting a court to divide up all of his assets. The judge will not know what he would have given to each of his children had he written a Will. There is no way to know that it is important for Courtney’s tuition to be covered, or some money set aside for Mike’s down payment. Leaving such important decisions to someone so removed from the situation is irresponsible at best.

Many see the pitfalls of this thinking, and opt to write their first Will after a major life change, mainly getting married and having children. After this, they fall into a false sense of security, assuming that what they wrote in their late twenties still applies years later.

I find this concerning because a Will and Trust should be updated, or at a minimum reviewed, at every life changing experience. These life changes can be things that affect you both directly and indirectly.

Think back over the past five years of your life and ask yourself, “What has changed?” Marriage, birth, death, graduation, all constitute as change. If a parent has set up a guardianship for their children, they need to review it when their oldest child turns 18. If someone wants to ensure that gifts are given to grandchildren directly, at each birth the Will or Trust should be updated. The creation or dissolution of friendships and family ties are reasons to ensure that those you want remembered in your Will can be.

Although we tend to think that things don’t change, change happens more often than we consciously recognize. As we walk into a new year, make a resolution to take care of your family and estate.