Michigan Estate Planning & Elder Law

FDIC Calculator -- Are Your Bank Accounts Covered?

“EDIE the Estimator”.  EDIE is short for the Electronic Deposit Insurance Estimator, a calculator created by the FDIC to calculate your FDIC insurance coverage for each FDIC-insured bank where you have deposit accounts.  EDIE will let you print a report for each bank, letting you know whether your deposits are within or exceed coverage limits.  Click on the link below to check your accounts:

EDIE THE ESTIMATOR

Boring But Important . . . New Simplified FDIC Insurance Rules For Trusts

The FDIC is adopting an interim rule to simplify its deposit insurance rules for revocable trust accounts.  The FDIC's main goal in implementing these revisions is to make the rules easier to understand and apply, without decreasing coverage currently available for revocable trust account owners. 

Under the new rules, a trust account owner with up to five different beneficiaries named in all his or her revocable trust accounts at one FDIC-insured institution will be insured up to $100,000 per beneficiary.  Revocable trust account owners with more than $500,000 and more than five different beneficiaries named in the trust will be insured for the greater of $500,000 or the aggregate amount of all the beneficiaries’ interests in the trust, limited to $100,000 per beneficiary.

 

The effective date of the interim rule is September 26, 2008.  A full discussion of the new rules can be found at:

Link To Full Discussion Of New FDIC Rules

It's Back To School Time . . . Are Your Children Protected?

The “kids” are back in school.  Some are going away to college.  Lost among scheduling classes, building lofts and moving furniture, are some important questions many parents forgot to ask:   Has your son or daughter signed a Health Care Power of Attorney?  Has he or she signed a medical information release (sometimes called a HIPAA Authorization)?

You may still consider your son or daughter a “child”.  But under the law, once he or she turns 18, the medical community treats your child as an adult.  What happens when a medical emergency arises and your son or daughter can’t make his or her own decisions?  Without a valid Health Care Power of Attorney appointing you as the health care agent, you can’t make decisions for him or her without going to Probate Court and becoming your child’s “legal guardian”.  And under the HIPAA law, the hospital is prohibited from even discussing the care and treatment of your child with you or anyone else.  Even in a non-emergency situation, the release allows you to take care of routine matters, like checking on your son’s or daughter’s health insurance claims.

I’m not trying to make you panic – I want to encourage you to take the time to put these important documents in place for your children, grandchildren, or other loved ones in this situation.

And The Survey Says . . . Most Americans Don't Have An Estate Plan

According to a recent survey by FindLaw.com, nearly 60% of Americans don't have an estate plan, giving them little control over what will happen to their assets and minor children, and no control over issues relating to their incapacity.  The survey further broke down estate planning by age:  More than half of Americans over age 50 have an estate plan; but only about 25% of adults between the ages of 25 and 34 have one.

If you die without an estate plan, you have what is called an "intestate" estate.  That means the distribution of your assets through the probate court process will be controlled by a default statute.  Also, the court will determine who will raise your minor children, and decide who will make financial and medical decisions for you if you become incapacitated.

What does lack of planning mean?  Financial drain.  Emotional drain.  Family conflict. 

An old quote goes something like this:  "There is never enough time to do everything, but there is always enough time to do the most important thing." 

Ask yourself: Have I taken the time to do an important thing for me and my family?

Estate Planning For Second Marriages

I have had several clients in my office recently with a common issue -- problems stemming from estate planning (or lack of proper estate planning) in a second marriage.  I have met with surviving spouses, and I have met with children and step-children.  All of them tell me the same thing: "My (spouse) (father) (mother) wouldn't have wanted it this way".  Failure to properly plan in these cases can leave the surviving spouse "on the street", or mistakenly disinherit children.

Estate planning for second marriages is a difficult challenge.  You want to provide for your spouse (and certainly want your spouse to provide for you), but you also want to protect an inheritance for your children from a previous marriage. How your assets (especially your home) are held and distributed requires special consideration.

The extent to which this "balancing" creates issues depends on each spouse's net worth, and each spouse's desires relating to other beneficiaries.  You need to ask the tough questions:  "What happens if I die first?" (Is this what you want?) and "What happens if my spouse dies first?" (Is this what you want?)

Once you determine your goals, a plan can be implemented to meet those goals, along with the desired goals of probate avoidance and tax reduction.  Too many people "leave it to chance", which results in leaving your family in conflict.

I recently saw a simple definition of "legacy" as "something handed down".  You have the ability to "hand down" good, or to "hand down" bad.  If you don't properly plan for a second marriage, you are likely to "hand down" bad.  Don't let it happen, especially when it can be easily avoided with proper planning.

Will Your Kids Be Unintentionally Disinherited?

Taking ballroom dancing lessons helped Claire cope with the recent death of her husband of 40 years.  Her instructor provided her with the companionship she was missing. Claire, with a new sense of self-esteem, soon fell head-over-heels in love. Her children were shocked when their mother announced she had married her instructor.

But the real shock came a few months later when Claire died: Her children learned their mother had placed all her assets in joint ownership with her new husband. Even though Claire's will left everything to her children, they were completely disinherited.

With second and third marriages becoming more and more common, this problem of how to provide for your current spouse without disinheriting your children (especially those from a previous marriage) has become even more complicated and widespread.

There are solutions.  For example, a trust can provide for your surviving spouse while he or she is living; then, upon your spouse's death, the remaining assets will go to your children.  If you have more than enough assets to provide for your spouse, some could be carved out separately for your children and/or grandchildren.  Instead of leaving the assets outright to your children (either at your death, or upon the death of your spouse), consider using one or more trusts.  A trust will give you added assurance: It can protect your children's inheritances from creditors, irresponsible spending and even from your children's ex-spouses if they should divorce.

If you can afford it, you may want to give your children some of their inheritance now so you see the results of your gifts. That can be very rewarding.

Exactly how this problem is resolved for you will depend on your situation and the size of your estate. It takes careful planning with an experienced attorney who can be objective and look at your situation from all kinds of angles and possibilities. Call us and set up a free consultation to discuss your situation.  We can help you make sure your kids are not unintentionally disinherited.