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Estate Planning Basics

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In a seminar titled, “Get Your Ducks In A Row,” Fraser Trebilcock attorney Marlaine C. Teahan shared her legal experience with families on topics that included: differences between wills and trusts and how to choose between them, the best planning ideas for minor and special needs children, and more.

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Estate Planning Basics

  1. 1. ESTATE PLANNING BASICS NOVEMBER 9, 2016 Lansing • Detroit • Grand Rapids www.fraserlawfirm.com © Marlaine C. Teahan, Chair Trusts & Estates Department 517-377-0869 mteahan@fraserlawfirm.com 517.482.5800
  2. 2. What Are YOUR Questions & Concerns?
  3. 3. How is my property conveyed at my death? TRUST (Terms of trust control) CONTRACT (Beneficiary Designation) JOINT (Pass to joint owner) PROBATE (Only individually owned assets)
  4. 4. Federal Estate & Gift* Taxes YEAR ESTATE & GIFT TAX EXEMPTION TOP ESTATE, GIFT & GST TAX RATE LIFETIME GIFT TAX EXEMPTION* 2011 (begin portability) $5 million 35% $5 million 2012 (begin indexing for inflation) $5.12 million 35% $5.12 million 2013** $5.25 million 40% $5.25 million 2014 $5.34 million 40% $5.34 million 2015 $5.43 million 40% $5.43 million 2016 $5.45 million 40% $5.45 million 2017 $5.49 million 40% $5.49 million 2018 and beyond Increases each year by a COLA 40% Increases each year by a COLA *$14,000 annual gift tax exclusion amount. NOTE: This chart is current but Congress may change these laws.
  5. 5. Top 10 Estate Planning Needs 1. GET A TRUST. A fully funded revocable grantor trust (commonly called a “Living Trust”) avoids probate, protects children and those with special needs, and can help reduce or eliminate federal estate taxes. The terms of a trust may include who will be in charge of your assets upon your disability or death and may provide for gifts to charity, family, and friends. For many people, a trust is the centerpiece of their estate plan; for others, a Will is all you need. Each person and each family is unique, requiring unique planning.
  6. 6. 2. GET A WILL. A Will allows you to direct the persons and or charities that will receive your assets upon your death. If you do not have a Will, the State of Michigan will direct (by the intestacy laws) how your assets will be distributed. Even if you have a trust, you need to have a "pourover" Will just in case your trust is not fully funded at your death. A pourover Will transfers your probate assets to your trust so that there is only one document that controls the disposition of your assets at your death.
  7. 7. 3. GET A DURABLE POWER OF ATTORNEY FOR FINANCES. Having a Durable Power of Attorney for finances gives your designated Agent authority to handle your finances. This is very helpful if you become disabled or incompetent. Without a durable power of attorney, a Court-appointed Conservator may be needed to handle your financial affairs. 4. GET A DURABLE POWER OF ATTORNEY FOR HEALTH CARE/DESIGNATE A PATIENT ADVOCATE. When you are unable to communicate your wishes regarding your own medical care, after 2 doctors certify this fact in writing, your patient advocate can act for you to make decisions regarding your medical and end of life care, hospice, dying at home, and pain relief. Designating your patient advocate may save your loved ones a trip to probate court to be appointed your guardian.
  8. 8. 5. PLAN FOR A POSSIBLE LAY-OFF OR LOSS OF A JOB. Create an emergency fund that will get you through 2-3 months of your financial needs in the event your family’s major wage earner loses his or her job. 6. OBTAIN DISABILITY INSURANCE. An accident or illness that leaves you unable to work can cause great financial difficulties, even if it is only a short-term disability. Long-term disabilities can be even more financially devastating. If your employer does not provide short- and long-term disability, investing in these products may provide needed income for your family when you are unable to provide.
  9. 9. 7. PLAN FOR YOUR MINOR AND DISABLED CHILDREN. If parents of minor children die without a will or trust, the probate court will set up a conservatorship to protect assets inherited by the children. At 18, the children will receive their inheritance outright. Most people prefer to set up a trust that will set aside money for their children’s health, education and support, deferring ultimate distribution of funds until age 25, 30, 35, or later. If a child has special needs, a Special Needs Trust should be considered as part of the parents' estate plan; this can be part of a revocable trust or a standalone Special Needs Trust. Part of planning for your children often includes determining how much of your children’s education you want to provide. Then, consult your financial advisor to assist you in making a plan to save money for college or other training/support for your child. Another major component of planning for minor children is to designate a guardian, the person who will care for them until they reach 18. This is a difficult issue for some families but a very important one that needs advance planning. If your children are over 18, don't forget that they should do planning of their own. Durable Powers of Attorney can often avoid the need for your child to have a guardian or conservator appointed. Consider that even college kids should have their own Durable Powers of Attorney for Finances and Health Care.
  10. 10. 8. PLAN FOR YOUR RETIREMENT. Work closely with your financial planner to adequately plan for your retirement. Check out a life expectancy tool at www.livingto100.com to see how long you can expect to live. If you have a long life expectancy, you may wish to save more money now, or work a few years longer to obtain higher Social Security benefits. 9. PLAN FOR MEDICAID. Before going into a nursing home, and before applying for Medicaid, consult an attorney familiar with Medicaid’s eligibility, divestment, and estate recovery rules. Getting proper advice at this time may save your family thousands of dollars. Melisa Mysliwiec, Esq. at Fraser Trebilcock can advise you on these issues. 10. PLAN YOUR FUNERAL. Pre-planning, and possibly pre-paying, your funeral will take a burden off the shoulders of your loved ones. Decisions you make now will ease their load of decision-making during a difficult time. Consult your local funeral director for more details.
  11. 11. Ethical Will Idea Christian Preamble for the Trust of ______ *** Sola Dei Gloria- To God Alone be the Glory In the name of the Triune God, Father, Son, and Holy Spirit. Amen. First, we want our loved ones to realize that throughout our lives and in death, we have placed our full confidence and trust in our Lord and Savior Jesus Christ, who promised, "I am the resurrection and the life; he who believes in me, though he die, yet shall he live, and whoever lives and believes in me shall never die." (John 11:25-26). This confidence and trust is based on our knowledge that the wages of sin is death and on our belief that Jesus Christ, the only Son of God, suffered and died for the forgiveness of all our sins, which we neither deserve nor merit, but receive as a free gift of God, who is rich in mercy and grace. Second, in death, as in life, our greatest hope is that our heirs remain committed to the faith created in their hearts in their Holy Baptism where they obtained the promised inheritance of heaven. Third, we recognize that all of our earthly possessions are a gift from God. Therefore, we have made provisions in our trust to continue our Christian stewardship after we have gone to Heaven to be with the Lord. In particular we are leaving a gift for the Our Savior Lutheran Church Endowment Fund. This gift is made in thanksgiving for the indescribable blessings and nurturing we and our children have received from the ministry of this faithful church and school over at least 35 years. Fourth, our heirs will receive, through us, gifts from God. May you always remember that everything you have is a trust from God. We pray that you be good and wise stewards of His blessings, managing wisely and returning to Him a generous portion for the work in His Kingdom. Finally, to God be all thanks and Glory!!
  12. 12. Marlaine C. Teahan, Esq. Fraser Trebilcock Davis & Dunlap, P.C. 124 West Allegan Street, Suite 1000 Lansing, Michigan 48933 517-377-0869 Email: mteahan@fraserlawfirm.com www.fraserlawfirm.com Please call me with Questions:

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