You may think of estate planning as something simple. You may have seen the forms for the statutory will or patient advocate designation and thought, "I can fill that out." Or maybe you have seen the advertisements for the online do-it-yourself plans.
In actuality, estate planning is anything but simple. Estate planning is one of the most complex areas of the law. Think about it. You want to make sure that you are in control of your assets while you are alive and well. In the event of your mental disability, you want to provide for you and your loved ones. And when you are gone, you want to give what you have to whom you want, when you want and the way you want. You want to do this at the lowest overall cost to you and those you love.
Planning for you and your estate, both during your lifetime and after your death, is the legal equivalent of heart surgery. You don't go to your family doctor for heart surgery; why would you go to a general practitioner for estate planning services? This planning is going to require lots of instructions. To make the proper instructions, the estate planning attorney has to have a working knowledge of six areas of the law — estate planning, elder law, business, real estate, taxation and probate.
It's pretty obvious that an estate planning attorney should know about wills, trusts and powers of attorney for both finances and health care. The attorney should also be familiar with elder law. Elder law focuses on those issues that affect seniors, including elder care and treatment, living arrangement options and governmental benefits, such as Social Security, Medicare, Medicaid and Veteran Affairs.
Although one of your goals may be to stay out of probate court, situations may arise where you may find yourself in probate court, such as if loved ones attempt to get a guardianship or conservatorship over you. Familiarity with the probate court and various types of its proceedings would allow an attorney to properly advise you in these and other situations.
Most of our estate planning clients have tax-advantaged assets, such as life insurance, an annuity, IRA or retirement plan, have unrealized gains on investments or have a taxable estate over $5.49 million (in 2016). It is very difficult to draft an effective estate plan without knowing how the taxes on these assets will be affected by the instructions in those estate planning documents.
Similarly, most of our estate planning clients own their own home. Many of them own investment real estate. Deeds look deceptively simple. However, a single word can dramatically affect your interest in the property. A thorough understanding of deeds and real estate ownership interests is a requirement for any attorney doing estate planning.
If an attorney does any amount of estate planning, he or she will undoubtedly come across clients with a business or substantial amounts of investment real estate or other assets. In order to do proper planning, it is imperative that the attorney have a handle on the tax, liability, succession and other ramifications of the various forms of business entities — including C-corporations, S-corporations, partnerships and limited-liability companies.
There are lots of attorneys doing estate planning. You see it on billboards and other advertisements. In Michigan, any attorney legally can draft powers of attorney, wills, trusts and other estate planning documents. But how can you be assured that your attorney is proficient in estate planning? You can do this by asking six simple questions:
What percentage of your practice is in estate planning and elder law? Do you want a dabbler doing your estate plan or someone who makes their living at it? There are attorneys who do estate planning, and there are estate planning attorneys. An estate planning attorney spends more than 50 percent of their time on estate planning and elder law matters. An attorney who only spends 10 percent, 20 percent or even 30 percent of their practice on these types of matters, most likely lacks the time to gain the experience and expertise needed to properly advise clients on estate planning and elder law matters.
Do you offer comprehensive estate planning services including preparation of trusts and consultations regarding elder care, governmental benefits, probate, taxation, real estate and business? As I stated above, an effective estate planner has to have a working knowledge of six areas of the law — estate planning, elder law, business, real estate, taxation and probate. For example, if the planner does not regularly prepare Medicaid applications for nursing home residents and understand current Medicaid rules, the planner does not know what powers should or should not be included in financial powers of attorney in order to protect the most assets upon nursing home admission. Ask the planner how many Medicaid applications they file in a year and what percentage approval rate they have on those applications. They should be regularly filing Medicaid applications and have an approval rate over 90 percent and 100 percent is even better.
Will you help avoid the additional cost, delays, loss of privacy and other issues related to probate or do you earn your living by probating estates? A recent survey revealed that the most quoted probate costs in Michigan and across the country is 5 percent to 10 percent of the value of assets going through the probate process. If you focus on only the upfront cost of setting up your plan, you may end up giving your loved ones a huge bill after your death. You should look at the overall costs to you and your loved ones. For example, in our office since we have been doing fully-funded trust-based estate plans in 1999, we have found that the overall costs to our clients, including setting the plan up, annual updates, administration after a disability and after death, total less than the minimum 5 percent that a probate after death would have been. A fully-funded trust is one of the biggest bargains in town.
Do you properly title, beneficiary and insure ALL of my assets in my trust?This is called fully funding your trust. It makes no sense to have a trust and not put your stuff in it. Anything left outside the trust in your sole name without a beneficiary designation will go through probate court with the corresponding costs. Make sure the attorney will work with you until your trust is fully funded. In our office, we have reviewed hundreds of trusts drafted by other attorneys. In 30 years, not one single trust was fully funded before it came to our office. In addition, in the thirteen years prior to 1999 before we started doing fully-funded trust-based estate plans, not a single one of our clients fully funded their trust. If the estate planner does not fully fund your trust or leaves it up to you to do, find another estate planner.
How many hours of continuing legal education programs on estate planning and elder law topics do you attend each year? Continuing education is how an estate planner stays current with changes in the laws and the estate planning field. The state of Michigan requires continuing education for most licensed professions as a requirement to keep the license, including teachers, cosmetologists, CPAs and doctors. However, since the state of Michigan has no continuing education requirements for attorneys, many attorneys attend none. Even though virtually all of our client time in our office is spent on estate planning and elder law matters, in order to keep current and up to date, every year each attorney attends 40 to 80 hours of continuing professional education programs on estate planning and elder law topics.
What sort of "homework" do you expect from me to prepare for our consultation? In order to prepare a fully-funded trust-based estate plan, the estate planner will need information about you, your loved ones and all of your assets. In our office, we have our clients complete a 20+ page booklet with all their information and have them bring in documentation of all their assets, including bank and brokerage statements, car titles, deeds and declaration pages of home and vehicle insurance. In addition, to make sure your estate planning goals and objectives are met, there usually will be "homework" after each appointment for both you and the law firm.
Estate planning involves reviewing and analyzing your desires and finances today, to ensure that you and your loved ones are prepared for tomorrow. It requires that you have a team of qualified professionals who will work together to make sure you receive an integrated estate plan of the highest quality. You deserve the best estate planning services possible. Your estate planning attorney should have the training and experience to turn your estate planning desires into reality.