Ann Arbor Elder Law & Estate Planning

What Does a Personal Representative Do?

A personal representative is a fiduciary, or a person or entity who has the duty to preserve and protect an estate for the benefit of its heirs. The court appoints the personal representative, whom the decedent usually has designated in his or her will. Otherwise, the court will appoint another personal representative, starting with a surviving spouse who is a beneficiary of the will and going down the line to other relatives or individuals provided for by statute. Starting with individuals include other beneficiaries of the will, the law then designates the surviving spouse who is not a beneficiary of the will, other heirs of the decedent, or, if no one else steps forward, an individual named by a creditor and approved by the probate court.

The personal representative’s responsibilities are to follow the instructions in an individual’s will, comply with all legal requirements, and place the interests of the will’s heirs above his or her own interests. Some of the duties that a personal representative must carry out with respect to an estate are as follows:

• Opening an estate
• Giving proper legal notice to all those parties who have an interest in the estate
• Inventorying and safeguarding all of the decedent’s assets
• Handling investment accounts
• Determining how to dispose of real estate
• Pay the decedent’s debts and bills
• Notify creditors of the estate
• Resolving any claims or lawsuits that surface during the probate of the will
• Preparing and filing last income tax and estate returns
• Distributing assets to the heirs

Given the complex nature of these tasks, it is highly advisable that all personal representatives have experienced probate attorneys who can guide them through the process. It also may be necessary to employ other professionals to carry out the duties of a personal representative, such as accountants, tax preparers, and appraisers.

Naming a personal representative for your estate is only one aspect of the planning that you are likely to find necessary as you begin to age. If you are in this situation, we have the knowledge and resources to assist you. Call Legacy Law Center today and learn how our Michigan estate planning attorneys can advocate on your behalf.

Attitudes Toward End-of-Life Medical Care

The Henry J. Kaiser Family Foundation recently published the results of a comprehensive study on American attitudes toward end-of-life care. The findings of this study are important, as the over-65 population is growing rapidly, with a full 24% of the population being 65 years of age or older by the year 2060. Most of those surveyed believe that the aging of the population is a problem, and, in fact, older Americans are most likely to see the aging trend as a problem. Those Americans surveyed are split on whether the existing healthcare systems and families are prepared to deal with the natural consequences of aging.

About two-thirds of the survey respondents do not believe that the government is prepared for the huge increase in aging Americans. The survey respondents were divided fairly equally between those who believe that individuals and families should bear the costs of health and long-term care and those who believe that the government should be responsible. In particular, whites and Republicans are more likely to place responsibility for health care on the person, rather than on the government. These results sharply contrast with attitudes in other countries such as Japan, Italy, and Brazil, whose citizens tend to believe that the responsibility for health care is totally the responsibility of the government.

Setting aside financial responsibility for the elderly, three-quarters of Americans say that it is their responsibility and duty to care for their parents and meet their needs as they get older. The younger a person is, the more likely he or she is inclined to believe in this responsibility. Older adults, it seems, do not feel the same sense of responsibility. Furthermore, the survey respondents did not give high praise to either the health care system or the provision of end-of-life care. Only about 14% of the respondents replied that end-of-life care in the U.S. is good or excellent.

As the survey results show, Americans are well-aware that the population is aging and have concerns about the ability to pay for long-term care. Fortunately, when you don’t know where to turn for help, Legacy Law Center is a valuable resource that you can access as needed. If you or a loved one needs help with long-term care or estate planning, you should definitely contact an experienced Michigan elder law attorney at Legacy Law Center right away. Call Terrence Bertram at Legacy Law Center today and see what we can offer you and your family.

Will I Owe Taxes on My Retirement Income?

Many retirement assets are pre-tax accounts; taxes are owed on the contents of those accounts only when there are distributions from those accounts. These types of accounts include defined benefit pensions, IRA distributions, and most payments from defined contribution plans. If the owner of those accounts passes away, then the beneficiaries will be responsible for any taxes owed on the funds. When you own one of these accounts, you must take minimum required distributions beginning at age 70 ½, which triggers your tax liability. If you pass away, however, the person who inherits the account must take out minimum required distributions whether he or she is 70 ½ or not.

One option is to name a trust as the primary or contingent beneficiary of these accounts. If the trust is set up in the proper manner, you may be able to stretch out the tax deferment period of the retirement accounts, thus creating a higher degree of asset protection. So long as the trust is valid under state law, irrevocable, clearly identifies the trust beneficiaries and their ages, and the trust documentation is provided by the plan administrator by October 31^st of the year following the participant’s death, you can stretch out the tax deferment benefits.

You also should keep in mind that social security retirement benefits are not taxed. Additionally, if you open a Roth IRA during your lifetime, you are not using pre-tax money to do so. Therefore, when you or your account’s beneficiaries withdraw funds from a Roth IRA, there are no taxes due on those funds. If the Roth IRA has been in existence for five years prior to your death, the money in the account won’t be subject to federal income taxes, either. If your beneficiary leaves the funds in the Roth IRA account, the funds will continue to grow tax-free. Since you can do a Roth conversion at any age with other accounts that were not originally set up as Roth IRA accounts, you can even add to the funds that your beneficiaries will be able to enjoy free of taxes.

While taxes are sometimes necessary, there are measures that you can take prospectively in order to protect and preserve your income and assets for generations to come. This includes taking steps to minimize any taxes due. Due to the complexities of these issues, you need an attorney who can provide you the help necessary to get through it. At Legacy Law Center, our Ann Arbor elder law attorneys can help you through any situations that may arise as you work through the estate planning process.

What is a Funeral Representative?

The Michigan state legislature enacted a new law about funeral representatives in 2016. This law allows you to designate a person whom you trust to make your funeral arrangements. Prior to this law, your next of kin was placed in charge of your funeral, with the priority of these relatives being determined by statute. Plus, if there was a dispute over your funeral arrangements between your next of kin, such as disagreement between your children, then the majority of them would prevail in any decisions that need to be made.

The new funeral representative law is designed to avoid these types of disputes between family members who should be mourning together rather than fighting. Under the law, you can appoint a funeral representative in your will or another written document. In order for a legal document other than a will to be a valid funeral representative designation, it must be in writing, dated, and signed by an individual, either in front of a notary or two witnesses. You can later revoke this designation in writing, so long as it is signed in front of a notary or two witnesses. However, if you designate your spouse as your funeral representative and later divorce, your designation is automatically revoked.

The law also places some restrictions on whom you can designate as your funeral representative. Your funeral representative must be at least 18 years of age, and may not be a licensed health professional, employee, or volunteer of the facility that provides services to you during your final illness. Likewise, individuals employed by or affiliated with a funeral home, cemetery, or crematory that provides services for you are ineligible to serve as your funeral representative. Finally, anyone who is charged with your murder is ineligible to serve as your funeral representative.

Whomever you choose to be your funeral representative has the sole right and power to make decisions about your funeral arrangements, including where you will be buried or cremated, and, if you are cremated, what to do with the remains. Your funeral representative also has the responsibility of ensuring that all relevant funeral costs are paid, whether paid by the representative, an insurance policy, your estate, or another source.

The Ann Arbor estate planning lawyers of Legacy Law Center are experienced in ensuring that you have the comprehensive and up-to-date long-term care and estate plan in place that best will benefit you and your family. We are your trusted advisors who are skilled in looking at all facets of your life, evaluating your needs, and working collaboratively with you and your family to create a plan that meets all of your needs. Contact Legacy Law Center today and learn how we can help you make the right decisions for you and your family.

What is the Michigan Fiduciary Access to Digital Assets Act?

The Michigan Fiduciary Access to Digital Assets Act gives legal permission for people falling within certain categories to access your digital assets, which include any digital record that belongs to you, or any account that you have online that requires a password. Digital assets include things like bank accounts, social media accounts, and email accounts. In order to be eligible to access your digital assets, an individual must be one of the following:

• A person acting under a will or power of attorney
• The personal representative of a probate estate
• The trustee of a trust created by the owner of the digital assets
• A court-appointed conservator

The Michigan legislature enacted this law in order to keep up with ever-changing technology. Companies who own digital accounts or platforms have a duty to maintain online security and privacy. This duty traditionally has included refusing fiduciaries to access another party’s digital assets, even if the person was deceased. The companies who own the digital assets are referred to as digital custodians for the purposes of the Act. Now, individuals who are attempting to handle a deceased individual’s affairs can get the digital assets that they need from digital custodians in order to close out those accounts or get information that they need. However, the individual accessing the deceased’s digital assets has the same fiduciary duty as he or she has with respect to physical assets.

In order to access digital assets, an individual must submit a written request to the digital custodian, along with proof that he or she falls within one of the categories that permits access to another’s digital assets. The digital custodian has 56 days to respond.

At Legacy Law Center, we are Michigan estate planning lawyers who dedicate our practice to protecting your interests, as well as the interests of your family. Creating a comprehensive and effective estate plan is no small task, and we know that you will need guidance in navigating through this often complex process. Call our Ann Arbor office today to set up an appointment and learn how to best protect yourself and your family.

The Ethics of Medicaid Planning

A recent New York Times article discussed the ethics of Medicaid planning, which is the process of arranging your financial assets so as to ensure that you don’t spend your life savings on long-term care expenses. You will change your financial situation in order to qualify for Medicaid, which then will pay for most or all of your long-term care needs. The likelihood is that Medicaid will be a part of your life in the future when you or someone in your family needs long-term care. Since Medicaid seems to be at the center of the current healthcare debate, it is important that you understand any changes that are made. The fact is that most Americans have not saved sufficient funds for long-term care, which will put an increasing burden on an already over-burdened program.

Medicaid eligibility rules are specific to each state, but as a general rule, eligibility requires restrictions on your income and assets. In the state of Michigan, an individual can have only $2,000 worth of countable assets, along with certain assets that are exempt. or not countable. Exempt assets include a home, personal property such as clothes and jewelry, a vehicle, up to $1,500 designated as a burial fund, among other things. There also are different restrictions on assets for married couples when one spouse is residing in a nursing home and one spouse is still at home.  

In terms of income restrictions, a single individual’s income must be less than $1,336.65 per month, although there is a $60 per month personal allowance that is not figured into the income calculation. Moreover, an individual with more income can spend those excess funds on care-related expenses and still qualify for Medicaid. Again, there are different restrictions on income for married couples when one spouse needs long-term care and the other spouse still lives at home.

Long-term care is an important issue that is likely to impact either your parents or other family members at some point in your life. At Legacy Law Center, our goal is to ensure that you have an effective long-term care plan in place to meet your loved ones’ needs and protect their assets from the steadily rising costs of long-term care. We have the skills and knowledge that you need to make the decisions about long-term care planning for your loved ones. Call your Michigan long-term care attorneys at (734) 995-2383 and schedule an immediate appointment.

What Powers Are Covered Under a Power of Attorney?

A power of attorney is a legal document that allows you to designate another person to manage your financial affairs. The person whom you designate for this role is your agent. Under a power of attorney, your agent can manage your financial affairs so long as you remain competent. If you choose to execute a durable power of attorney, however, then your agent will be able to continue to manage your affairs even after you become incapacitated or incompetent.

Some of the actions that a power of attorney can take include the following:

• Signing your checks
• Depositing checks
• Paying bills
• Entering into contracts on your behalf
• Buying and selling property on your behalf
• Obtaining insurance for you
• Making investment decisions for you

Perhaps the most important requirement of a power of attorney is that you sign it when you are legally competent to do so, rather than after you have become incapacitated. If you already are incompetent or otherwise incapacitated and you sign a power of attorney, it will not be legally valid. You also must sign this legal document in front of a notary or two witnesses in order for it to be valid. Finally, your agent must sign an acknowledgment of responsibilities and duties before he or she exercises any of these powers on your behalf.

Once you complete these steps, your power of attorney is immediately effective. If you don’t want your power of attorney to go into effect right away, then you can specify in the power of attorney that you don’t want it to become effective until you become incapacitated or unable to handle your financial affairs. However, if you only want the power of attorney to become effective when you become incapacitated, you need to specifically define what that means, so there is no dispute later on when your agent starts taking actions on your behalf.

Legacy Law Center handles all facets of estate planning for clients on a daily basis. We know how to best advise you, based on your circumstances, what options for estate planning are an option for you. Take the first step and call our office today to set up a meeting time with one of our Michigan estate planning attorneys.

What is a Holographic Will?

Michigan’s Estates and Protected Individuals Code (EPIC) provides that a will is valid if it is in writing, witnessed, and signed by at least two other individuals. However, there are some exceptions to these general rules, in which a will can be legally valid even if not all of these requirements are met. One of these exceptions is the holographic will.

A holographic will is a will that is handwritten by the testator, or the person who is making the will. This is a valid will under Michigan law, so long as certain requirements are met:

• The will must be dated.
• The testator must sign the will.
• Material portions of the will must be in the testator’s handwriting.
• It is must be evident that the testator intended the document to be his or her will.

Material portions of a will include identification of the devisees, or individuals who receive property under the will, as well as the personal representative, or the individual who will handle the administration of the estate, and the individual who will have guardianship of the testator’s children. In determining whether a handwritten document qualifies as a holographic will, a court can look to other evidence, including documentation that is not in the testator’s handwriting.

Despite the validity of holographic wills, this type of will is not an ideal estate planning method. A holographic will creates a heightened possibility for dispute or contention over the provisions of the will. For example, a surviving relative of the testator may argue that the handwriting is a forgery, rather than the testator’s actual handwriting. There also could be incidents or pieces of evidence dated after the holographic will that appear to contradict it. The bottom line is that a holographic will should be avoided if at all possible.

Planning for your family’s future is a complex process that can involve many different options. However, most proper estate plans require at least a basic will. By answering some of your questions and addressing your concerns, it is our hope that we can help you create the estate plan that is best for you and your family, while avoiding common pitfalls such as the holographic will. At Legacy Law Center, we are here to advocate on behalf of all individuals and their families who need help planning for the future. Contact us today at (734) 995-2383, set up an appointment with one of our Michigan estate planning attorneys, and discover how we can help you and your family.

Long-Term Care Industry Changes

According to Genworth’s annual cost of long-term care survey, annual nursing home charges have only continued to increase, due in large part to higher labor costs. The monthly charge for a private skilled nursing home room rose about 5.5% to $8,121 per month, or a cost of $97,450 per year. Monthly charges for a semi-private skilled nursing home room also rose over 4.4%, to $7,148 per month, or $85,775 per year. Meanwhile, assisted living costs rose 3.4% to $3,750 per month, or $45,000 per year, and home health care expenses rose 6.2% to $21.50 per hour, or more than $4,000 per month. Overall, long-term care services rose an average of 4.5%, which is the second-highest annual increase in the last 14 years.

Additionally, long-term care insurance may be a necessity if these costs continue to steadily increase, as they have over the last several years. Ironically, however, sales of long-term care insurance have continued to decline precipitously. In 2016, only about 89,000 people purchased long-term care insurance policies, primarily through the private market, with the remainder being purchases through employers. At the market’s peak in 2002, about 750,000 bought long-term care insurance policies, or about eight times the number of policies sold this year. Experts attribute this sharp decline in long-term care insurance policies to the high costs of the policies and the increasing difficulty in purchasing them. For the many individuals who wait until their sixties to purchase long-term care insurance, they may find that they are not eligible to purchase it, simply due to the heightened likelihood of preexisting medical conditions that disqualify them from coverage.

These rapidly-increasing costs only underscore the need for careful Medicaid and long-term care planning well in advance of the need for long-term care. The long-term care attorneys of Legacy Law Center pride themselves on successfully guiding clients through the long-term care planning process, as well through any other related matters that may arise. We have the knowledge and resources to help you make the decisions that are best for you and your family. Don’t hesitate to call our Ann Arbor office today and learn how we can assist you.

Choosing a Trustee

Many individuals use trusts as a key part of their comprehensive estate plans. In the process of creating a trust, one step is to identify the person whom you would like to appoint as trustee. You also must choose a second person to act as successor trustee, in case the original trustee passes away, becomes incapacitated, or otherwise is unable to serve as trustee. The duties of a trustee are extremely important, in that he or she must safeguard your assets and then oversee the distribution of those assets. The nature and scope of these duties sometimes make choosing a trustee a rather difficult task. However, there are some basic guidelines that you should follow in choosing a trustee and successor trustee for your trust.

First, consider whether you want to designate an adult child or other family member to administer the terms of your trust. The advantage of close family members is that you know them well and they often feel as if they have a responsibility to you to manage the trust appropriately. On the other hand, naming one child as trustee over another child can cause hard feelings between siblings. Likewise, if the trustee is also a beneficiary of the trust, then the trustee may be more likely to put his or her own interests ahead of how you intended the trust to be administered. In many cases, and especially those with a high net worth estate, having a family member serve as trustee may be an unwise decisions, depending on your situation.

Next, if your trust contains substantial and complex assets that need special handling, a professional, such as a trust department of a bank, may be the best person and/or entity to serve as the trustee for your trust. Making daily decisions to both preserve and grow certain kinds of assets, as well as paying bills, filing quarterly or annual accountings, making investments, and managing money, can be too big a responsibility for a family member, who may simply not have the skills or education to properly handle the assets. In a case like this, a professional trustee may be the safest and most efficient way to ensure the appropriate handling of your assets. However, a professional trustee also charges fees for serving as trustee, which can deplete assets,.

In some cases, the solution may be to use both a family member and a professional trustee. For instance, your trusted family member can serve as trustee so long as he or she is able to do so. Once your family member is deceased, incapacitated, or unable to serve as trustee, a successor trustee could be a trust department of a bank or another type of professional trustee. This allows you to choose the person whom you believe is best-suited for the job, as well as ensure that there is a solid back-up plan if the named trustee is unable to serve.

If you want to have a comprehensive plan in place for the future to protect yourself and your family, our Washington estate planning attorneys can guide you through every step of the process. We are here to answer your questions, both now and in the future, about all aspects of the estate planning process, including all types of trusts. At Legacy Law Center, we have represented the interests of countless individuals throughout the estate planning process. Contact our office and set up an appointment with one of our experienced elder law attorneys today.