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Is It Time For An Estate Plan Check-Up?

March 23, 2012 / in Written by Katherine Albrecht

Like a finely tuned automobile, once an Estate Plan has been established, it requires regular maintenance to ensure that its components are working properly. Without a regular tune-up, it’s not going to run smoothly when it’s time to perform.

Privacy regulations have become more stringent in recent years, making access to your medical information more difficult for your chosen decision-makers in the event of your illness. Family situations may have changed, from the birth of grandchildren to divorce or death, making your original plans outdated.

The following checklist will help you to determine if it’s time for an Estate Plan Check-Up:

  • Are the Personal Representatives and Trustees you have named in your Will and Trust still appropriate choices?

Are the provisions for beneficiaries still appropriate?

Are the value and nature of your assets generally the same as they were when your estate plan was created?

  • Are your choices of decision-makers in your Durable Powers of Attorney and Patient Advocate Designations still appropriate?
  • Do your Durable Powers and Patient Advocate Designations contain a waiver of your HIPAA right to privacy for medical purposes so that your agent and patient advocate can obtain information to help you manage your medical care and payment for that care?
  • Do you have a separate HIPAA release that will allow your loved ones to obtain information about your condition and treatment if you are hospitalized?
  • Are your life insurance, 401k and IRA beneficiary designations up to date?

If you answered “no” to any of these questions, it’s time to schedule a visit to your estate planning attorney to make the appropriate changes.

To make the visit to your estate planner as efficient as possible, bring along a list of your current assets, including their value and how the assets are titled; copies of all current beneficiary designations; and copies of all current estate plan documents.

Do not write on your signed estate plan documents in an effort to make changes yourself. You may inadvertently invalidate the documents or create ambiguities that will be expensive to resolve after your death.


Status of the Federal Estate Tax

March 23, 2012 / in

In 2001 Congress enacted legislation gradually increasing in the federal estate tax exemption from $675,000 in 2001 to $3.5 million in 2009 and decreasing the top marginal estate tax rate from 55% to 45%. The legislation also included repeal of the federal estate tax for 2010 only.

When this legislation was enacted, estate planners predicted Congress would never allow this repeal of the estate tax to take effect. We continued to predict this right up to the time Congress adjourned at the end of 2009. We were wrong. The one-year estate tax repeal became effective January 1, 2010.

The quick fix we anticipated in early 2010, reinstating the 2009 estate tax law, has not occurred. Congress has been unable to agree on legislation, and the longer the estate tax repeal remains in effect in 2010, the less likely it is that Congress will retroactively reinstate the estate tax for 2010.

If Congress takes no action before the end of 2010, the estate tax will return beginning January 1, 2011. It will apply to estates of $1 million or more, with a 55% top marginal rate, and a 5% surtax on estates between $10 million and $17 million. If this happens, the Michigan Estate Tax, which has been inapplicable to decedents dying after December 31, 2004, will return, too. The politicians’ inaction may be intentional. The result of their inaction is a tax increase without the bad publicity of actually voting for an increase.

Carry-Over Basis

Along with the repeal of the estate tax for 2010 came the advent of “carry-over basis” for assets inherited in 2010. When the estate tax was in place, a beneficiary’s cost basis in inherited property was stepped up to the value of the property at the decedent’s death. Beneficiaries who inherit assets this year take the cost basis the assets had in the hands of the decedent during the decedent’s lifetime, usually the price the decedent paid for the asset.

The personal representative of the estate of a 2010 decedent may allocate a $1.3 million exemption to the decedent’s assets to “step-up” the cost basis of those assets. An additional $3 million exemption may be used to offset gain on assets passing to a surviving spouse. For estates with a total value of less than $1.3 million at death, carry-over basis is of little concern.

However, depending on the size of the estate and the degree to which the assets have appreciated, the capital gains tax paid when inherited assets are sold may well exceed the amount of estate tax that would have been paid.

Who Should Review Their Estate Plans?

  • Married couples with combined assets exceeding $1.3 million may want to review their estate plan provisions to insure that the available exemptions can be used to best advantage if death occurs in 2010.
  • Couples who implemented an estate plan when the estate tax exemption was greater than the value of their combined assets may want to review the appropriateness of that plan if the estate tax exemption drops to $1 million in 2011.
  • Finally, although carry-over basis only applies to assets of estates of decedents dying in 2010, you should continue to keep track of cost basis of all your assets in the event you dispose of those assets during your lifetime.

Contact Beier Howlett, P.C. at (248) 645-9400, or email


Trust Protector Can Ease Family Tensions, Assist With
Business Asset

March 23, 2012 / in Written by Katherine Albrecht

Trusts and their administration can involve complicated or delicate decision-making by family members, often resulting in uncomfortable rifts among beneficiaries and trustees. The new Michigan Trust Code (MTC), which took effect April 1, 2010, sets forth the law governing the administration of trusts in Michigan. It now offers a viable option to help administer the trust: a Trust Protector.

A Trust Protector is a person or committee named in a trust agreement to direct certain actions with respect to the trust.  This person/committe is neither the person who created the trust, nor the trustee.  As a third party, the Trust Protector may be given authority to make certain decisions that could be difficult for the trustee to make, bringing neutrality or distance to delicate family decisions, or business expertise to the operation of trust assets.  These types of decisions could include:

  • A determination whether a beneficiary has a substance abuse problem, so that the trustee should withhold or modify distributions to that beneficiary.  The designation of a Trust Protector to make these decisions could ease tension between the beneficiary and a sibling of the beneficiary who is serving as trustee.
  • The decision to terminate a trust because the circumstances for which the trust was created have changed.  For example, a trust designed to protect a child who was having marital or creditor problems may no longer be necessary once those problems have been resolved.
  • The decision to change the location where the trust is administered or to change which state’s law governs the trust.  This allows flexibility to deal with changes in state law and changes in circumstances affecting the trust.
  • Decisions regarding the operation of a business that is an asset of the trust, especially where the trustee has little or no familiarity with the business.

If your trust assets include a closely held business, if a future beneficiary of your trust requires special consideration, or if you want to provide an additional measure of flexibility in your estate plan, you may want to consider naming a Trust Protector in your trust.