10 Steps to Having your Legal Affairs in Order

This post was written by Kirk D. Falvay, Estate Planning Attorney

Falvay Gocha Law - Attorney Kirk D. Falvay

Kirk Falvay Estate Planning Attorney

1. Make certain you have a will.

Your will determines who inherits your property which is not jointly owned, is not in a trust, or does not pass to a beneficiary on your death. Your will also designates the individual(s) you want in charge of handling your estate.

Even if you have a living trust, you need a will. If assets are not titled in the trust name when you die, they may need to pass through probate. Your will should designate your trust as the beneficiary of your estate.

2. Consider a living trust.

A living trust, for most people, is the best way to plan their estate. It can serve as the foundation and centerpiece of a well-designed estate plan.

There are many benefits to having a trust: probate can be avoided; taxes can be minimized or avoided; inherited assets can be protected; younger or spendthrift beneficiaries can be protected, and; numerous contingencies can be considered.

To determine whether or not you should create a trust, meet with a qualified estate planning attorney.

3. Have a durable power of attorney in place.

If you have a durable power of attorney, if you get sick or are in an accident, the person you have designated should be able to take care of your legal and financial affairs under the terms of that document.

If you do not have a durable power of attorney, you may need to have a conservator appointed by the court if you become incapacitated.

4. Have a durable power of attorney for health care.

With a durable power of attorney for health care, you can designate the person you want to be in charge of making medical decisions for you if you cannot make them yourself. If you are unable to make those decisions, and you do not have this document, your family may have to go into court to have a guardian appointed for you.

5. Have a living will in place.

Make certain that you have expressed your desires, in writing, concerning having your life prolonged by artificial means if you are terminal or in a permanent coma. If you do not want life support measures in those instances, your wishes should be clearly stated in a document, and someone placed in charge to carry out your wishes.

6. Authorize the release of your medical information.

You need to have a signed document which authorizes medical care providers to give your family members or loved ones information about your healthcare or condition. Under HIPAA (Health Information Act) your doctors, and any hospital staff, are not allowed to discuss your condition without your written consent, even if you are very ill. Not all providers strictly adhere to the law, but to be safe, make certain you have such a document in place.

7. Designate a guardian for your minor children.

If both parents of a child die or are unable to care for the child, a guardian will be needed. If you have minor children, make certain that you have a written document indicating who you want to serve as guardian for your children if the need should arise. Without such a document, the court may impose a guardian who the court determines, not you, is most suitable to raise your children.

8. Check your beneficiary forms.

Make certain that your beneficiary forms designate the people you want to receive the money. Whether the form is for life insurance or a retirement account, you need to consider both the primary beneficiary and the contingent beneficiary.

If you have a trust, the trust should probably be the beneficiary of any life insurance. If you have a spouse and children, your spouse will usually be your primary beneficiary on your retirement accounts, and your children the contingent beneficiary.

Since your beneficiaries are permitted to stretch the period of time over which they receive your retirement funds, you may want to consult with a qualified estate planning attorney to make certain you are making the best choices when you designate your beneficiaries.

9. Check the titles to your real property.

Do you have a copy of all deeds to real estate you own? Do you own the property in your name or jointly with others? If it is joint, do you own it as tenants in common, or with rights of survivorship? Is the property held in the name of your trust?

How you hold the title to real estate determines what happens to it when you die. If you are unsure of the answers to any of these questions, or you do not understand the ramifications of how title is held, you should consult with a qualified estate planning or real estate attorney to make certain title is held in the correct manner.

10. Consider creating limited liability companies or corporations.

If you rent a house, you are operating a business. If you sell anything for profit, hire people to work for you, or provide services to others, you are at risk as a business owner.

The best way to minimize your risk is operate the business as a limited liability company (LLC) or a corporation. If property structured, you should be able to prevent someone from suing you personally. Without that protection, many of your personal assets may be at risk of loss if you are sued. Consider consulting with a qualified business attorney to see whether or not it makes sense for you to create and operate your business as an LLC or corporation.

10 Mistakes Which Will Result in the Need for Probate

This post was written by Kirk D. Falvay, Estate Planning Attorney

Falvay Gocha Law - Attorney Kirk D. Falvay
Kirk Falvay Estate Planning Attorney

1. Improper title to assets.

             If you are trying to avoid probate, make certain all of your bank accounts and investment accounts are: 1) held jointly; 2) have a beneficiary upon your death; or, 3) held in the name of your trust. If any of your accounts are in your name only and do not have a beneficiary on death, a probate order will be needed to transfer them when you die.

2. Lack of beneficiary.

             If you do not have a beneficiary on your life insurance or your retirement account, when you die, these funds will be payable to your estate. That means probate. If the beneficiary you named now deceased? Is it a former spouse? If so, you need to name a new beneficiary.

             What if your beneficiary predeceases you, or dies in an accident with you? Make certain you have a contingent beneficiary. Without a contingent beneficiary, in those situations, the beneficiary will be your estate.

3. You have a trust, but all of your assets are not titled in the trust name.

             One of the reasons you have a trust is to avoid probate. If any of your assets are in your individual name when you die, it probably will have to go through probate to get into your trust. Make certain that all of the assets which you own (except for certain insurances, retirement accounts, vehicles, boats, etc.) are titled in the trust name.

4. You do not have a durable power of attorney.

             If you become incapacitated and are unable to make legal and financial decisions, who will act on your behalf? If you have executed a durable power of attorney, the person you have named will be able to handle your affairs. If you do not have such a document, the probate court may need to appoint a conservator to act for you.

5. You do not have a power of attorney for health care.

             If you are unable to make informed decisions regarding your health care or living arrangements, who will act on your behalf? If you have an executed durable power of attorney for health care, the person(s) you have designated will be able to make decisions for you. Without such a document, the probate court may have to appoint a guardian for you.

6. Your children inherit from you before they are of legal age and you do not have a trust.

             If you die and leave money or property to a child who is a minor, the law will require that a conservator be appointed for the child by the probate court. The conservatorship will last until the child turns 18, and the money will be turned over to the child at that time.

             If this is not a desirable result, consider establishing a trust, either under your will, or a living trust. That way you can avoid having the probate court oversee your child’s inheritance, and can direct the distribution of the money to your children for the things and at the times that you decide.

7.  There is no back-up named for the persons you appoint to handle your affairs.

             Maybe you do have a trust, will, durable power of attorney and/or power of attorney for health care. The person you have named is probably able and well suited to perform the assigned tasks. But after you become incapacitated or die, that person could become incapacitated or die. Do your documents name a successor? Is that named successor able or willing to serve? 

             If a successor is needed and no one has been named, or the person named is unable or unwilling to serve, the probate court may need to get involved determine the successor.

8. You fail to anticipate that your beneficiary might die shortly after your death.

             If a beneficiary dies before they receive their inheritance under your will or trust, it will probably have to be paid into their estate. That requires probate. You may want to consider including a clause in your will or trust which provides that beneficiary is deemed to have died before you if they do not survive you by 60 or 90 days. That way, if they die shortly after you, you will have decided where the inheritance goes. Your will or trust should also contain provisions to direct the inheritance if the beneficiary should predecease you.

9. You fail to anticipate that your beneficiary may be incapacitated.

             If your beneficiary under your will or trust is incapable of handling the inheritance due to a mental or physical infirmity, the inheritance may end up being supervised by the probate court under a conservatorship.  Also, if you know your beneficiary is not capable of handling an inheritance, you need to consider putting the inheritance into a trust for the beneficiary when you die.

             What if the beneficiary is incapacitated because he/she was injured in the same accident as you, or become incapacitated after you were incapacitated and you are incapable of changing your estate plan? The best solution to those possibilities is to leave your assets to your beneficiaries under the terms of a trust, and make certain your trust contains provisions which anticipate such occurrences.

             Also, if your beneficiary is receiving or may be receiving public assistance benefits, you may need to create a special trust for them to assure their continued eligibility for their benefits.

10. Your trust lacks important language.

             People pull trusts off of the Internet. They buy do-it-yourself kits. They ask their divorce lawyer to write the trust. Sometimes these trusts work just fine. Everything goes smoothly and as anticipated.

             Other times the results are not so good. If a trust does not address an issue which comes up, or does not adequately give the proper direction to the trustees, probate court is needed to provide the remedy. A beneficiary or trustee may need to petition the court to resolve issues which might easily have been avoided if the trust had been thoroughly and properly drafted.

             If you are planning on settling your estate by means of a living trust, you are best served if it is drafted by a qualified estate planning attorney. Also, make certain your trust is reviewed by an attorney every five years or so, as the laws are constantly changing.

5 Secrets to Estate Planning

This post was written by Kirk D. Falvay, Estate Planning Attorney

Falvay Gocha Law - Attorney Kirk D. Falvay

Kirk Falvay Estate Planning Attorney

1. Probate is optional for your family.

You can avoid having your family deal with the probate courts and their unnecessary fees, taxes and legal costs. But to do so, you must be proactive.

If you have planned your estate around a will, you have planned an estate which will go through probate.  Having a will does not mean you avoid probate.  Probate is avoided when assets transfer on your death by beneficiary designation, joint ownership, or under the terms of a trust. Probate will be required when you own assets, other than vehicles or personal property, which are titled only in your name, have no beneficiary, or are not in a trust.

Knowing this, and in order to avoid probate, many people use joint ownership or beneficiary designation as a way to plan their estate.

There are benefits and detriments in having your assets pass to others on your death when these methods are used. The benefits are obvious – it is an easy, inexpensive way to transfer your property when you die without probate.

There are, however, detriments to this type of planning.  If the joint owner or beneficiary dies before you, or at the time of your death, your “plan” may be defeated. If the beneficiary is a minor, probate will show up in the form of a conservatorship, and the monies may be squandered when the minor becomes an adult.  If you put someone else’s name on your bank account or on other accounts, or add them to the title to your real property, their creditors can attach your accounts or property and take it from you without notice to you.

Prior to the last 25 years or so, living trusts were usually set up only by affluent families. They used trusts because they could minimize or avoid taxes for their families, and could pass their wealth down to future generations in ways which kept the wealth within the family.

Many estate planning lawyers have not promoted trusts for their clients because they have been getting rich off probating their client’s estates when their clients die.

Today, the average person can realize all of the benefits which wealthy people have always achieved by using a living trust as the foundation for a well-designed estate plan. The cost of setting up a trust is almost always going to be substantially less to the family than the expenses of going through probate. The time savings will usually be greater. Finally, unnecessary lawyer fees associated with probate will be avoided.

Access the county, people are now recognizing that living trusts are the preferred method of planning an estate, regardless of the amount of wealth they have.  Families of modest means are saving their loved ones thousands of dollars by using trusts to dispose of their estates when they die.  The only ones who suffer by such planning are the courts and the lawyers.

2. You can protect your children’s inheritance from future divorces.

The divorce rate in this country is over 50%. Many parents have children who have been divorced or will get divorced. Some parents don’t think highly of their son-in-law or daughter-in-law.

If you leave your property outright to your children on your death, you may be doing them a disservice. They don’t want to lose their inheritance in a divorce any more than you do.

There are ways you can design your estate plan so that your children’s spouses do not share the wealth you leave to your children. Most people do not realize that is possible.

A specially-designed trust can pass your wealth to your children in a way which will allow them the use and enjoyment of their inheritance, but protect it from being lost or divided in a divorce.  Here’s how such a trust works.  When you die, your trust can provide that separate trust shares be created for each of your children.  Each share remains in your trust name.  Each of your children can be in charge of his/her own share as trustee.  As trustee, the child can invest their portion of your inheritance any way they want.  They can own property, businesses, investments – whatever – all in your trust name.  They can spend the income their trust earns, and they can take out more if they need it to live on, or to pay for their children’s education.  When they die, you can let them decide where the property goes, or you can make the decision.  If structured properly, no divorce judge will be able to award your child’s inheritance to your in-laws.

As an added benefit, trusts set up in this manner can also protect your children’s inheritance from creditors – even from bankruptcy.

If you are leaving your estate to your children under a will, by beneficiary designation, or by joint ownership, these benefits will not be realized by your children.

Consider meeting with an attorney who understands these rules, and can explain to you how you can provide this protection to your children.

3. People often unintentionally disinherit their children.

A story is commonly heard.  It goes like this: “My stepmother just died, and she is not giving me anything that was my dad’s.  Her kids are getting everything.  What can I do?”

If you are married, but have children by a prior marriage, you need to take special care to assure that your children will inherit from you. If your current spouse were to survive you, and you leave him/her all of your assets and property on your death, there is no assurance that your children will ever receive anything when your spouse later dies. Your assets may go to your current spouse’s children, or to their new spouse.

If you have children by a prior marriage and have a will which leaves everything you have to them, they may still receive nothing.  If you die before your current spouse, he/she will get to decide where your property goes on their death if your property was left to them by beneficiary designation or joint ownership.  That means if your home and accounts are joint with your spouse when you die, these assets will go to him/her on your death.  You have no legal assurance these assets (or what remains) will ever go down to your children.

Often, there is no easy solution to this dilemma.  Some people leave part of their estate to their new spouse and part to their children.  Others trust their surviving spouse to include their children in their will or living trust.

If you have children by a prior marriage that you want to receive assets upon your death, or upon the death of your current spouse, you may need to consider having a living trust. A well-drafted trust can assure that your children will not lose out on their inheritance. Meet with an attorney who is experienced in assisting individuals who have children from prior marriages so you can learn about all the options available to you to assure your children’s inheritance.

4. Your will or trust will not determine who receives your IRA or 401 (k), or your life insurance.

The law in virtually all states provides the recipient of your qualified retirement accounts or your life insurance policies will be the individual(s) you designate as beneficiary of the account or the policy – not the beneficiary of your estate named in your will or trust. Great care must be taken when designating the beneficiaries of your retirement accounts and life insurance policies.

If you designate your spouse as beneficiary on your retirement accounts, he/she will be able to transfer the account to his/her own IRA. If you designate someone other than your spouse as the beneficiary, that person can stretch the withdrawals over their life expectancy. However, if that person is your minor child, the law requires that the court appoint a conservator to control the account.  Importantly, the child will be able to withdraw all the funds when the child reaches the age of 18 if the child resides in Michigan. The same problems will arise if you name minor children as beneficiaries on your life insurance.

Specially designed trusts can be used to receive your retirement accounts or your life insurance on your death. If you believe it is important that your retirement accounts or life insurance proceeds be distributed after your death in a way which will achieve your desired objectives, you should consider such a trust.

5. Having a living trust may not be enough to keep your family out of probate.

Living trusts are usually designed so that upon your death, probate will be avoided. However, families find out the hard way that just having a trust is not enough – your property and assets must be titled in such a way that the trust works as designed.

If you have a trust, most assets you own (except for vehicles, boats, and retirement accounts, for example) probably need to be held in the name of your trust. Certain jointly held real estate interests might also be an exception. If you have bank accounts or CDs, stocks or bonds, own real estate, or have a business interest solely in your name, your trust will not keep your family out of probate. All of those assets should be titled in your trust name if probate is to be avoided.

If you have a living trust, you need to review your investments from time to time to make certain they are held in your trust name. If you are unsure how to put them in the trust, or whether they should be in the trust, consult with your attorney.

Trust Administration

This post was written by Kirk D. Falvay, Estate Planning Attorney

When a person dies who has a living trust, a period of trust administration follows which is handled by the successor trustee(s) designated in trust. Unless a dispute arises, or clarification is required, this process is conducted outside of court. Therefore, a significant benefit of having a living trust is that court costs, fees, and delays may be avoided.

We provide legal services, as needed or required, to the successor trustees to assist them in settling the affairs of the decedent. This includes preparation of the necessary documents, notices, accountings, tax filings, and asset transfer forms necessary to complete the trust administration.

Even though a family member may have died who had a properly funded trust, the person(s) taking on the responsibilities of settling the estate will realize that a great deal of time and work may still be involved. The successor trustees who work with our firm find that we can guide and advise them through this process in a way that they can understand and follow, and complete to the satisfaction of the beneficiaries.

Contact Us via email or call our Bloomfield Hills office at 248-642-5535 or our Ortonville office at 248-627-2808.

Bloomfield Hills Office
40900 Woodward Avenue
Suite 250
Bloomfield Hills, MI 48304
Tel: 248-642-5535
Ortonville Office
875 S. Ortonville Road
P.O. Box 744
Ortonville, MI 48462
Tel: 248-627-2808