Estate Planning Essentials: For those with minor children

  • 116 views
Uploaded on

How to plan for your personal and financial affairs now, so that YOU (not the state of Michigan) determine what happens to your children and assets when you become incapacitated or die.

How to plan for your personal and financial affairs now, so that YOU (not the state of Michigan) determine what happens to your children and assets when you become incapacitated or die.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
116
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
  • ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Transcript

  • 1. ESTATE PLANNING ESSENTIALSFOR THOSE WITH MINOR CHILDRENMELISA M. W. MYSLIWIECFRASER TREBILCOCKTHESE MATERIALS ARE NOT INTENDED AS LEGAL ADVICE AND ARE FOR EDUCATIONAL PURPOSES ONLY.© 2013 Fraser Trebilcock Davis &Dunlap, P.C.
  • 2. Estate Planning Who: Everyone over 18 (with sufficient mentalcapacity). What: A plan for your personal andfinancial affairs now, during incapacity andafter death. Why: So that YOU (not the State ofMichigan) determine what happens toyour children and assets when youbecome incapacitated or die. Result: You protect and provide for yourfamily in a manner that is cheaper andeasier (at an already difficult time) with the
  • 3. Federal Estate, Gift & GSTTaxesYEAR ESTATE & GIFTTAXEXEMPTIONTOPESTATE, GIFT& GST TAXRATELIFETIME GIFTTAXEXEMPTION*BASIS OFINHERITEDASSETS2011(beginportability)$5 million 35% $5 million Fair marketvalue2012(begin indexingfor inflation)$5.12 million 35% $5.12 million Fair marketvalue2013** $5.25 million(projected)40% $5.25 million(projected)Fair marketvalue2014 andbeyondIncreases eachyear by a COLA40% Increases eachyear by a COLAFair marketvalue*Annual gift tax exemption for 2013 is $14,000 (COLA adjusted since1997)**American Taxpayer Relief of Act of 2012 made these exemptionamounts/rates permanent – until Congress agrees to further changes.
  • 4. Most Common Estate PlanningDocuments Will Revocable Grantor Trust (“Living Trust”) Assignments (general/specific) Durable Power of Attorney Designation of Patient Advocate HIPAA Authorization to release medicalinformation
  • 5. Minor Children – What’sImportant? Appoint a Guardian and Conservator. A guardian is responsible for the child’s supportand care. A conservator is responsible for managing thechild’s property for the benefit of the child. Hold and manage assets for the benefit of yourchildren beyond the age of 18.
  • 6. Guardian for Minor Child If parental rights of both parents or a survivingparent are terminated or suspended for anynumber of reasons (ex. death), a guardianwill need to be appointed for any unmarriedminor child. A minor guardian essentially has the powersand responsibilities of a parent.
  • 7. Who Chooses the Guardian? A parent may appoint a guardian for a minorchild by will or by another writing signed by theparent and attested by at least 2 witnesses. In certain circumstances, the court mayappoint a guardian for a minor.
  • 8. Parental Appointment ofGuardian If both parents are dead or have beenadjudged to be legally incapacitated or thesurviving parent has no parental rights or hasbeen adjudged to be legally incapacitated, aparental appointment becomes effectivewhen the guardian files an acceptance withthe appropriate court. Note: A minor 14 years of age or older mayobject, but the objection doesn’t preclude thecourt from appointing the parental nominee oranother suitable person.
  • 9. Court Appointment of Guardian The court may appoint as a guardian for aminor any person whose appointment “servesthe minor’s welfare.” Note: If the minor is 14 years of age or older, thecourt shall appoint a person nominated by theminor, unless the court finds the appointmentcontrary to the minor’s welfare.
  • 10. Conservator for Minor Child The court may appoint a conservator (or makeanother protective order in relation to a minor’sestate and affairs) if the court determines thatthe minor owns money or property thatrequires management or protection that cannototherwise be provided, has or may havebusiness affairs that may be jeopardized orprevented by minority, or needs money forsupport and education and that protection isnecessary or desirable to obtain or providemoney.
  • 11. Who Chooses the Conservator? A person nominated by the will of a deceasedparent has priority over all individuals, ifsuitable and willing to serve. Exceptions: An individual nominated by the child,if 14 years of age or older and of sufficient mentalcapacity to make an intelligent choice, hasgreater priority. The court may nominate any person that thecourt determines suitable and willing to serve ifthere is no one with statutory priority suitableand willing to serve.
  • 12. Conservator –Statutory Priority for Appointment1. A conservator or guardian of property appointed in anotherjurisdiction.2. An individual nominated by the child, if 14 years of age orolder and of sufficient mental capacity to make an intelligentchoice.3. The spouse (if the minor child is married).4. A parent or a person nominated by the will of a deceasedparent.5. A relative with whom the child has resided for more than 6months before the petition is filed.6. A person nominated by the person who is caring for orpaying benefits to the child.Other than someone nominated in 2 or 6, above, a person designatedby someone listed above has the same priority as the person listedabove.
  • 13. How is property conveyed atdeath?Trust(Terms of TrustControl)BeneficiaryDesignationJointOwnershipProbate(Intestacy Laws orTerms of Will Control)
  • 14. Minor Children as Beneficiaries If a minor is the beneficiary of anasset, through either joint ownership, abeneficiary designation, or probate (i.e. awill), a conservator is almost always appointedto hold and manage the asset(s) for the benefitof the minor child until they turn 18 years ofage. At 18 years of age, the child gains full accessto the asset(s). The only way to avoid this is tohold the assets in trust for the benefit of thechild until a later age.
  • 15. What does my Estate include? Everything you own! ½ Interest in Jointly heldproperty, Tenancies inCommon Other assets in which youhave retained an interest Things you ownindividually: Real Estate Financial Accounts Investments Life insurance Only assets in yourname alone. Excluded assets: Jointly held property Trust Assets Contracts: Life insurance 401ks, IRAs AnnuitiesGross estate -Federal EstateTaxes:Probate Estate:
  • 16. What is Probate? The legal method by which individuallyowned assets are conveyed (either byintestacy laws or by directions in a Will.) Public – Will filed with Court Time consuming (5 months minimum – 1year average) Can be Costly (2-10% of probate estate isoften spent in administration costs) Streamlined (if in unsupervisedadministration, only contested issuesrequire court involvement)
  • 17. What happens if you have no Will? The State of Michigan will decide who will inherit your estateby the intestacy laws. Surviving spouse takes the entire share if there are nodescendants or parents. Surviving spouse takes the 1st $210,000 plus ¾ of thebalance if there are no descendants, but there is a survivingparent. Surviving spouse takes the 1st $210,000 plus ½ of thebalance, if any of the decedent’s descendants are alsodescendants of the surviving spouse. Surviving spouse takes the 1st $140,000 plus ½ of thebalance, if none of the decedent’s surviving descendantsare descendants of the surviving spouse. The above dollar amounts are adjusted each year forinflation. These are 2012 numbers; 2013 numbers are notyet published. The surviving spouse’s intestate share is in addition to theexemptions and allowances, which for 2012 can total$60,000.
  • 18. What if there is no surviving spouse? Decedent’s descendants by right ofrepresentation. If no descendants, to decedent’s parents, or thesurvivor of them. If no parents, to descendants of decedent’sparents by right of representation (siblings). If no siblings, ½ to paternal grandparents, or thesurvivor, and ½ to the maternal grandparents, orto the survivor. If either side has no survivinggrandparents, then that share shall go to thedescendants of those grandparents (cousins), byright of representation. If there are no heirs, the estate will go to theState of Michigan!
  • 19. What goals can be achieved with aWill? Designate fiduciaries: PersonalRepresentative(Executor), Guardian/Conservator forMinor Children, Trustee for aTestamentary Trust Make gifts to family, friends, charity “Pourover” assets to a Revocable Trust Establish a Testamentary Trust to manageassets for your minor children, a specialneeds child, or an aging parent
  • 20. What goals can be achieved with aTrust? Avoid Probate Reduce or eliminate Federal EstateTaxes Manage personal and financial affairsduring times of capacity, incapacityand after death Preserve assets for Minor Children Support Education Health care
  • 21. What goals can be achieved with aTrust? (continued) Schedule distributions over time topreserve assets for child until moremature. (Example: 1/3 at 25, ½ ofbalance at 30, remainder at 35.) Provide amenities for Special Needschild without jeopardizing governmentalbenefits Protect assets from a child’s spendthrifthabits, creditors, spouse and spouse’screditors Provide for Spouse of a second marriageduring his/her life yet have remainder oftrust assets go to children of firstmarriage
  • 22. Trust funding is important Funding is name for putting assets in name oftrustee Retitling of accounts Deeds Beneficiary Designations Assignments Funding avoids Probate -- Without proper fundingof trust you may have a probate administrationAND a trust administration Asset by asset determination Ongoing process – don’t forget to keep funding asadditional assets are purchased/received
  • 23. Trust vs. Will: Which is better forYOU?A Will might be better if: 1st Marriage Adult children and want to pay outimmediately upon death Don’t have strong objections to Probate Estate under $500,000 (but depends oncircumstances) Most assets are non-probate assets
  • 24. Trust vs. Will (Contd.)A Trust is typically better than a Will if you have: Minor children Special Needs children Taxable estate Second marriage Spouse/child needs assistance managingassets Strong desire to avoid probate
  • 25. Durable Power of Attorney – Financial Designate a trusted spouse, child, parent, orfriend to make financial decisions when youare unavailable due to absence or incapacity,or simply for convenience. Usually avoids need for Conservatorship/stayout of court Designate your own Guardian/Conservator Durable Powers of Attorney can be effective Immediately (much more common) Upon disability (somewhat problematic)
  • 26. What can an Agent do? Conduct banking Buy/sell property Conduct/manage a business Prepare Tax returns Apply for governmental benefits Give gifts Create/Amend a Trust and transfer property to aTrust Plan for Medicaid Anything you could do personally (unless DPOA islimited in scope)
  • 27. Designation of Patient Advocate Designate a Patient Advocate to make medicaldecisions on your behalf when you can nolonger communicate your wishes for treatment Reduce likelihood that your family would need toobtain a Guardianship over you -stay out ofcourt. Often called: Health Care Durable Power of Attorney Advanced Directives Living Will BUT Michigan does not have a LivingWill statute
  • 28. What can a Patient Advocate do? Communicate your wishes for medical treatment –end-of-life and routine care Terminate or withhold life support Place you care facilities – assisted living, nursinghome, and hospice Take you home (even if against medical advice) Direct treatment for pain Make anatomical gifts (after death!) Make mental health treatment decisions if yougive specific authority
  • 29. What is a HIPAA Authorization? Federal HIPAA Laws mandate confidentiality ofyour individually identifiable health careinformation, even limiting access by yourspouse and children. Having a HIPAA Authorization will allowdoctors to release health care information tothose you choose. Access to health information is also given inthe designation of patient advocate (but that isonly effective upon incapacity).
  • 30. When Should I Update myDocuments? Change in law (see attorney every 3-5 years, more oftenif older) Want to add or delete beneficiaries (family/charity) Death in family (fiduciaries or beneficiaries) Got married/divorced/remarried/retired/moved to newstate Want to change trustee, personal representative, agent Children are older and wiser/Children are older but notwiser! Have less money (market issues)/Have more money(received inheritance) Have new assets (real estate, insurance, business) Don’t want a trust/Want a trust/Need a Different Trust(special needs, tax planning, children havecreditors/divorce)
  • 31. What should you look for in an estateplanning lawyer? Focus of practice is estate planning Familiar with additional practice areas youneed such as business successionplanning, real estate, Medicaidplanning, etc. Keeps current on changing laws Is someone you feel comfortable talkingwith Is someone you trust Will discuss how much their services willcost Will assist with funding your trust
  • 32. Why bother? Self determination – Be in charge of your estate Save money in the long run – Large estates -- Estate taxes can be reduced/avoided Family fights -- Litigation is expensive! Reduce court involvement Help your family by making a plan Reduce stress at an already difficult time Reduce second guessing on what you would want Eliminate/reduce family fights Protect your children from creditors, help them manage moneyuntil they are able to do so Select the best guardian and conservator for your child Enjoy a great feeling of relief and accomplishment!
  • 33. QUESTIONS?© 2013Fraser Trebilcock Davis & Dunlap, P.C.Fraser Trebilcock Davis & Dunlap, P.C.40 Pearl Street NW, Suite 910Grand Rapids, Michigan 49503www.fraserlawfirm.comPhone: (616) 301-0800Fax: (888) 230-3442Melisa M. W. Mysliwiecmmysliwiec@fraserlawfirm.com616-301-0800Offices located in:Lansing, Grand Rapids, Detroit, and Washington D.C.