If you die without a Will or some other form of estate planning, the state in which you reside and the IRS will simply make one for you. Of course, they have no interest in avoiding or reducing estate taxes, minimizing estate administration costs or protecting your family and legacy. The distribution of your assets will just be turned over to the Probate Court to be distributed in accordance to the government’s rule book.

There are Four Ways to Pass Property at Your Death

1. Joint Property: is a type of ownership of property or asset in which you and another co-owner have a right of survivorship, meaning that when you die, your interest in the property will pass to the surviving owner or owners by operation of law, avoiding probate. Examples of joint property ownership are joint bank accounts and jointly owned real estate.

2. Beneficiary Designation: you name a person designated as the recipient of funds or other property under the terms of a contract. For example, you have an IRA, 401k, or a Life Insurance Policy. By contract, the beneficiary you designate will receive your funds at your death, thereby avoiding probate.

3. Trust: if you put your property into a trust, and the trust is drafted and funded properly (funded means that all of your assets that you want to pass are titled in the trust), your property will pass to your beneficiaries at your death according to the terms of the trust, avoiding probate.

4. Probate Court: if you have assets titled in your name at your death and you have not provided a mechanism to pass the assets to your beneficiaries (i.e. the above three ways to pass property at your death), the only mechanism left to pass your assets is the Probate Court.

What is Probate?

Probate refers to the method by which your estate is administered and processed through the legal system after you die. The probate process essentially transfers your estate in a certain manner (for example, your debts and taxes paid before your beneficiaries receive their inheritance). Think of the probate process as the “script” that guides the transfer of your estate according to the rulebook of the state you live in.

The probate process is needlessly time consuming, frustrating and expensive. It is also open to the public, meaning creditors, predators or anyone else will have complete access to all information about your estate. For the vast majority of people, the benefits of a Will or other estate planning tools far outweigh any initial costs.

Get Educated

To learn more, join us for one of our FREE LifeCare Planning Workshops. Our estate planning experts will have upcoming workshops in Ann Arbor, Bloomfield Hills, Brighton, Dearborn, Lansing, Livonia, Novi, and Trenton. We promise that time will fly, you’ll learn a lot, and have a little bit of fun. To sign up for a LifeCare Planning Workshop click here.

The post The “10 Most Gruesome Estate Planning Mistakes” series. Mistake #1: Dying Intestate appeared first on Michigan Estate Planning.

When applying for Michigan Nursing Home Medicaid for a married couple, special planning needs to be done to protect the assets from nursing home or Medicaid spend down so that the community spouse is not completely impoverished.

Michigan Medicaid Asset Protection for Married Couples

Our elder law office with locations in Brighton, Bloomfield Hills, Livonia and Novi regularly protects almost all the assets for that community spouse and gets the spouse in the nursing qualified for Medicaid,  even if the family has $100k, $250k or more in assets.

But that’s just the first step of getting Medicaid qualified.

What happens if the community spouse, the “healthy” one, passes away first?

In Michigan, when one spouse is in a nursing home and applying for Medicaid, planning has to take into account the possibility that the spouse who is not in the nursing home may pass away first. This is because the community spouse’s death may make the spouse in the nursing home ineligible for Medicaid if proper legal planning is not done to ensure this doesn’t happen.

In order to qualify for Medicaid, a nursing home resident can have only a $2,000 in assets. However, if that community spouse passes away first and leaves those assets to the nursing home resident, the resident suddenly would be over Medicaid’s asset limit.  That’s a problem

Protection Against Loss of Medicaid Benefits

To protect against the lost of Medicaid benefits by the the community spouse passing away first, the community spouse should update their estate plan with a certified elder law attorney well versed in Medicaid planning and elder law.

That estate plan in our office would involve updating the will and trust, so as to provide for the spouse in the nursing home with a supplemental needs trust if necessary, then when the spouse in the nursing home passes away, the assets would flow to the kids or other beneficiaries.  The net effect is continuing the Medicaid benefits for the nursing home spouse, having a pot of resources to pay for additional services or care to improve quality of life, then the remaining assets going to the other beneficiaries upon death.

Expert Guidance from a Certified Elder Law Attorney

It’s important to seek out advice from a CELA (Certified Elder Law Attorney).  Any attorney can say they do elder law, only a Certified Elder Law Attorney has proven they are experts in elder law.

If you’d like help with your family’s Michigan Medicaid qualification needs, give us a call at (888) 390-4360, we serve families in Livingston, Oakland, Wayne and Macomb counties from our elder law attorney offices in Brighton, Livonia, Novi and Bloomfield Hills.

Click here to learn more: Michigan Medicaid Planning

The post What Happens to a Medicaid Recipient if the Health Spouse Dies First in Michigan? appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

The term 401k and individual retirement account (IRA) are thrown around quite a bit when discussing retirement planning and estate planning, but there are some large differences between the two accounts.

IRA vs. 401k

For starters, where there names.  A 401k is named as such due to the tax code that discusses it, while an IRA is an individual retirement plan.

Both IRAs and 401k’s allow you to put assets into an account to save for retirement.  Both allow you to begin taking distributions from these plans at age 59 1/2.

IRAs are further distinguished from 401k’s because there are two main types of IRAs.  There are Roth IRAs and traditional IRAs.  Roth IRAs allow you to pay the taxes up front and accumulate gains tax-free.  Compare that to your traditional IRA, where the taxes are paid only when you withdraw money.  A traditional IRA requires you to start taking minimum distributions at age 70 1/2, while a Roth has no such requirement.

Participation differs between IRAs and 401k’s.  In order to have a 401k, you must work for an employer that offers this as part of the benefit package.  Because this is indeed a benefit, an employer may limit who can join the plan.  An employer can then also make a contribution through deductions from a paycheck as well.

This differs from IRAs, where anyone who is younger than 70 1/2 and earns income can set up the IRA.  Typically, these are set up through a bank or financial institution.  As an individual, you are responsible for establishing the plan and contributing to it.

Beneficiaries of Your Retirement Accounts

An important point with both IRAs and 401k’s is who you name as a beneficiary.  By federal law, your spouse is automatically your beneficiary when you have a 401k, even if you list someone else.  To name someone other than your spouse as a beneficiary, you would need your spouse’s consent in writing.

An IRA allows you to name any beneficiary, with or without your spouse’s consent.

Standalone Retirement Plan Trust

Often times, it makes sense to name a Standalone Retirement Trust as the beneficiary of an IRA when leaving it to the next generation.  For more information on the benefits of the Standalone Retirement Plan Trust, contact our offices located in Brighton, Bloomfield Hills, Novi, or Livonia.

The post What is the Difference Between an IRA and a 401k appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

Michigan Veterans Benefits For Seniors

Many Michigan families do not realize that there are Veterans Benefits available to pay for home care, care contracts and assistance in the home for seniors.  As one of the few Certified Elder Law Attorneys in Michigan, my practice is devoted to helping seniors, veterans and their families navigate the long-term care legal maze.

A common mistake I see families make is that they wait to long to try to secure their Aid & Attendance veterans benefits.  It’s unfortunate because many times if they would have come into our Bloomfield Hills law office years ago, we could have had their VA Benefit turned on this whole time.

This means that families could literally be leaving thousands of dollars on the table.

For example, let’s say Joe is a senior veteran living in Troy, Michigan.  He’s living on his own, however his daughter helps him with some activities of daily living a few times a week for a couple hours a day.  Plus, he receives a couple hours of private duty home care from a commercial Oakland County home care company.

Let’s assume Joe receives $1500 per month in Social Security and has $300k in savings and a house.  He is paying the commercial home care company $1000 per month.

If Joe or his family were to go to a local veterans service organization, chances are they would tell him that he will not qualify for the full benefit (or any benefit) because he does not meet the income or asset tests.

However, if he were to come to our office, as a VA accredited attorney, I would counsel the family in setting up a Veterans Asset Protection Trust, Care Contract and submit the VA application on his behalf.  In the end I would be able to turn on a $1,700+ monthly tax free benefit.

It’s unfair that it is all in who you talk to and where you get advice from.  That is why you should seek advice from VA Accredited Certified Elder Law Attorneys.  There aren’t many of us in the state.

Michigan Veterans Benefits For Seniors

Many Michigan families do not realize that there are Veterans Benefits available to pay for home care, care contracts and assistance in the home for seniors.  As one of the few Certified Elder Law Attorneys in Michigan, my practice is devoted to helping seniors, veterans and their families navigate the long-term care legal maze.

A common mistake I see families make is that they wait to long to try to secure their Aid & Attendance veterans benefits.  It’s unfortunate because many times if they would have come into our Bloomfield Hills law office years ago, we could have had their VA Benefit turned on this whole time.

This means that families could literally be leaving thousands of dollars on the table.

For example, let’s say Joe is a senior veteran living in Troy, Michigan.  He’s living on his own, however his daughter helps him with some activities of daily living a few times a week for a couple hours a day.  Plus, he receives a couple hours of private duty home care from a commercial Oakland County home care company.

Let’s assume Joe receives $1500 per month in Social Security and has $300k in savings and a house.  He is paying the commercial home care company $1000 per month.

If Joe or his family were to go to a local veterans service organization, chances are they would tell him that he will not qualify for the full benefit (or any benefit) because he does not meet the income or asset tests.

However, if he were to come to our office, as a VA accredited attorney, I would counsel the family in setting up a Veterans Asset Protection Trust, Care Contract and submit the VA application on his behalf.  In the end I would be able to turn on a $1,700+ monthly tax free benefit.

It’s unfair that it is all in who you talk to and where you get advice from.  That is why you should seek advice from VA Accredited Certified Elder Law Attorneys.  There aren’t many of us in the state.

The post Michigan Veterans Benefits for Home Care appeared first on Elder Care Firm.

There are some times when it is obvious that your wills and trusts should be updated, but there are other times that are easier to overlook.

Major Life Changes

When there is a major change in your life, it’s time to call your Bloomfield Hills wills and trusts lawyer.  These types of changes, such as a marriage, divorce, or birth of a child may dramatically affect who you want to name as beneficiaries.  For example, if you’ve been divorced but your ex is still named in your wills and trusts, he or she could still benefit after your death.

Health situations are also another big indicator that it’s time to update your wills and trusts.  Medical care can be incredibly expensive, and you may need to rearrange your plans to accommodate the costs.  If dealing with a terminal illness or potentially life-threatening treatment, it also makes sense to ensure that your plans reflect your wishes.

Many Purchases Should Trigger Updates

Wills and trusts lawyers are able to help clients lay out a plan based on what the client has at the time.  When your situation changes through major purchases (or sales) of real estate or other valuable assets, you should update your estate plan to reflect those changes.  You want to ensure that the asset is included in your will or protected by your trust.

Purchases of, or changes in insurance policies, will likely also lead to a call to your Bloomfield Hills attorney.  These purchases will affect what you have to leave behind and will need to be reflected in your estate plan.

Annual Review

While you may not need to make changes with your wills and trusts attorney every year, it’s still a good idea to do an annual review of all your estate planning materials.  In addition to refreshing yourself on what is there, your lawyer will also be able to advise you on any laws that have recently changed that might affect decisions you’d previously made.  Just reading over the documents may be enough to notice a change that needs to be made.  Not only does this give you an opportunity to make sure your plans still fit your needs, but by keeping them up-to-date, you are strengthening your will against being invalidated later.  After all, if you’ve worked with an attorney to keep the wills and trusts fresh and in accordance with the most recent life changes, they are likely to reflect your true intentions.

Christopher J. Berry is an elder law attorney Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.theeldercarefirm.com/ or call 248.481.4000

First of all, your estate will be expected to pay off credit card debt when you die. In fact, whatever you leave behind will first be used to pay for any outstanding debt. Creditors of all kinds will have first crack at what you (or your heirs) will have. Contacting the creditors and getting these debts paid off is one of the most important jobs of the executor of your estate.

However, credit cards aren’t necessarily the first thing that will be paid off, but they are definitely on the list. If your estate doesn’t have the necessary assets to pay, then other courses of action may be available to those trying to collect on the debt. If there is another name on the account, for example, they can go after that person for an outstanding balance.

This is important to note if you’ve put your adult child on any of your accounts. Doing so is a fairly common practice, as it can make it easier for the adult child if they are helping by picking up groceries, paying bills, etc. By having them on your accounts, they can simply use their own cards for your purchases.

Unfortunately, if and when you pass away, they could become responsible for the entire balance on any of those accounts. Having them on bank accounts could even have tax implications. It is really a good idea to work with a Bloomfield Hills estate attorney in order to determine what the state and federal laws are as they apply to your situation. One possibility is to have the adult child or other caregiver listed on the account as an “authorized user.”

Just what funds are used to pay off outstanding credit card debt after death can vary. In most cases, for example, retirement accounts such as IRA and 401(k) plans with a specific beneficiary are not considered part of the estate. Those funds pass directly to the named party and do not go through probate and are not available to pay creditors. This may also be the case with life insurance policies. Things can get a bit more complicated when talking about real estate or jointly held assets, however. For example, can one spouse be forced to sell a home that has been inherited by a partner who had a large credit card debt in his or her name?

Laws regarding this and similar issues vary from state to state, which means that your best bet is to work with a Bloomfield Hills estate planning lawyer to determine what our laws mean for you and your estate.

Christopher J. Berry is a Michigan estate planning attorney and Medicaid planning lawyer dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.michiganelderlawattorney.com/ or call 248.481.4000

So, what kinds of issues need to be addressed with your trust and estates lawyer?  Whether you live in Bloomfield Hills, MI or New York City, there are some basic questions that absolutely must be answered.

You and Your Spouse

One of the most difficult issues to contemplate is what should happen if you and your spouse were both killed together.  While the chance of passing away at the same time is relatively low, it happens.  Laws are typically set up so that one spouse’s estate passes to the surviving spouse, but when both are gone at the same time, things get a little more complicated.

For example, those with minor children need to put serious thought into who will become their children’s guardian.  If you don’t make these decisions in advance, the courts will make them for you; and their choices may not reflect your own.  It’s not uncommon for grandparents to receive custody of the children in these cases if they are still living, but that still leaves open the question of which spouse’s parents would be chosen.  If you have a preference (or want someone else chosen), then you need a trust and estates lawyer in Bloomfield Hills, MI to help you make those wishes legally binding.

Children are not the only concern, of course.  Should you and your spouse be killed or incapacitated, who will take care of your finances, inherit your home, or even take care of your pets?  These are all issues which need to be considered in advance.

You and Someone Else

Your Bloomfield Hills estate planning lawyer isn’t just being nosey if he or she asks if there is someone in your life besides your spouse who may have a claim to your property.  This definitely falls into the category of “uncomfortable questions,” but if you had a relationship with someone other than your spouse, he or she may come forward after your death with the expectation of receiving an inheritance.

This can also be the case with family members who are estranged.  If you have a child you are no longer in contact with, he or she may still have a claim to your property.  Long-lost siblings or parents to whom you are no longer speaking can also still have a claim.  By setting out your plan with a trust and estates lawyer in Bloomfield Hills, you can help to ensure that only those you want to inherit will do so.

As a final note in this area of “uncomfortable topics,” if you and a spouse, previous spouse, or other person have chosen to store genetic material such as eggs, sperm, or embryos, you need to have plans for what is to become of this material.  Not only do you need to consider the material itself, but you also need to consider who might end up with children that have been conceived after you die.

Each of these issues is complicated in and of itself, but in order to come up with a workable estate plan, they must all be considered.  If your trust and estates lawyer in Bloomfield Hills doesn’t bring up some of these questions but they apply to you, it is in your best interest to bring it up now to avoid problems with your estate later.

While it’s better to fill out their form than to have no healthcare directive at all, it’s important to remember that it will not be personalized to fit your needs.  When the hospital or other institution puts their forms together, they do so for a wide, unknown audience.  The topics covered will be those which the hospital (or its lawyers) find important, rather than those which are meaningful to you and your family.

Basically, this document is where you name the person that you want to make medical decisions should you become unable to do so yourself.  Oftentimes, this person is a spouse, but if you are unmarried or simply want to appoint someone else, then a healthcare directive is especially important.  Remember that if you don’t assign the role, the legal system will do so for you, choosing a “close” blood relative, such as your adult children (or your parents, for younger folks) to make the medical decisions you are unable to make at the time.

Provide Guidance about Your Wishes

Your elder law attorney in Bloomfield Hills, MI will not only have you appoint someone, he or she will also help you to make many medical decisions in advance.  By recognizing potential medical situations and declaring your wishes, you can lessen the burden for the individual who will ultimately be responsible for your care.  For example, what are your feelings about life-sustaining measures such as feeding tubes and respirators?  Are there situations in which you would want these used and/or situations where you would not?

This is also a good place to make any religious or cultural restrictions known.  For example, some groups do not agree to have blood transfusions performed.  If this is the case for you, then your healthcare directive would be the place to make it known.  Ideally, you would discuss your thoughts and decisions with the person you have named so that he or she is aware of your feelings and can use that understanding to guide him or her if other circumstances were to happen.  Obviously, your healthcare proxy won’t cover every potential situation, so it’s beneficial for the appointed person to have a good understanding of your beliefs in order to make decisions which are in alignment with what your wishes would be.

Important to Remember

If you have gone through the effort to work with an elder lawyer in Michigan to create your personalized health care directive, make sure that it isn’t undone by filling in one of the generic healthcare proxy forms at the hospital.  If you use their form, you can negate the one you created with your attorney.