What are the Advantages of a Revocable Living Trust?

The self-trusteed living trust is a popular variation of living trust. You serve as the trustee of your trust while you are alive and competent and name a successor trustee to act in the event of your death or incapacity. Assets previously held in your sole name are registered in your name as trustee of the trust. If you become incapacitated, the successor trustee continues the administration of the assets for your benefit.  After your death, the trust can continue for the benefit of others. All of the advantages of a living trust described here apply to a self-trusteed living trust.

Probate Avoidance

Probate is the court process by which title to assets owned in your name alone are transferred after your death. Probate may be expensive and time-consuming depending on the value and type of assets in your estate. Placing assets in a living trust is a method by which you can avoid the expense and delays sometimes associated with probate court proceedings.

Even more costly and time-consuming than probate proceedings for decedents are guardianship and conservator proceedings for people who have become incapacitated. Through a living trust, you select a successor trustee to manage your affairs should you become incapacitated, thereby avoiding court proceedings and the court-supervised management of your assets and affairs.

Privacy

When your estate goes through probate, your Will and other documents become public record. A living trust provides you with a greater degree of privacy because the trust provisions and the assets in your estate are not subject to public disclosure.

Estate Tax Savings

If the value of your estate is more than the amount excluded from federal estate tax, it could be subject to estate tax when you die. A trust may enable you to reduce or eliminate estate tax through the latest tax-saving techniques and ensure that more of your estate goes to the people or charities that you choose.

Management of Assets for Children or Grandchildren

You select a person to serve as successor trustee so that trust assets can be maintained in the trust after your death instead of being distributed outright to beneficiaries who may be unable to handle the management of assets themselves due to their age, disability or other factors. Without a trust, a minor receiving an inheritance would need to have a conservator appointed by the probate court to manage the inheritance. At age 18, the funds would be turned over to the beneficiary. With a trust, the trustee can manage the funds until the beneficiary is older and more mature.

 

Article written by Karen L. Stewart, Attorney and Counselor. For more information, please see my website, www.customestateplans.com.

 

Checking for Unclaimed Assets is Always a Good Idea

There are literally tens of billions of dollars of assets that owners have forgotten about that have been turned over to the government. These include things such as bank accounts, payroll checks, dividends and contents from safe deposit boxes. For example, when a bank account has no activity for a year or more, banks are required to turn that money over to the state. Another example is where a company sends a dividend check to a shareholder and the check is never cashed. These assets are turned over to the state until they are claimed by the rightful owner. In many situations, the money is never claimed.

You may ask why someone wouldn’t reclaim their assets. The simple answer is, they either forgot that they own the asset or the individual died and the family either forgot or did not know about the asset. Every state has an unclaimed property division that allows people to reclaim those assets. Every year or so, it makes sense for everyone to check to see if there were any assets forgotten about that the state has taken control over.

It would be nice if there was one place you could look and it would tell you if there were any assets from anywhere in the country that you have lost, but there is no national registry. Some states have joined with other states to combine their registries; unfortunately, Michigan is not one of them. If you have always been a resident of Michigan, then the only place you probably need to look is the state of Michigan’s registry. If you have lived in other states, you must review those registries individually as well. You can check the Michigan registry online by going to www.michigan.gov and clicking on “unclaimed property.” Another good site to check is www.missingmoney.com.

If you find there are assets you are entitled to, there is generally no statute of limitation and the procedure to reclaim your assets is not complicated. Typically, all you need to do is to complete a form and submit it to the state. However, if the unclaimed property is for a loved one who has died, it becomes a little more complicated. You have to show that you are the appropriate beneficiary. In some situations, you may have to open a probate to reclaim those assets.

There are many companies that offer services to search and help you reclaim your assets. However, these companies are not inexpensive in the fact that they charge a substantial percentage of the assets they reclaim. The majority of people, particularly those who have only lived in one state, can do the search themselves and save a substantial amount in fees.

Unfortunately, not all unclaimed assets will be turned over to the state. For example, there are billions of dollars in life insurance policies that have never been claimed and the proceeds from those policies have not been turned over to the state. Searching for lost life insurance policies is a little more difficult; in those cases, there is not a national registry, so you must contact every company individually. There is, however, a service that you can use. MIB Inc. (www.mib.com) offers a service for $75. It will search life insurance applications for you from 420 life insurance companies from January 1996 to the present.

Excerpts from Rick Bloom’s “Money Matters”, Hometownlife.com, February 16, 2017.

Michigan Dower Rights Abolished

Until very recently, Michigan had the distinction of being the only state in the union to recognize dower rights in a wife, but not reciprocal rights in her husband. On January 6, 2017, Governor Snyder signed into law SB 558 and SB 560 abolishing these rights. These bills will take effect 90 days after signing.

If the word “dower” reminds you of “dowry,” it’s because they’re from the same root, dating from the days when women could not legally own property. Dower rights allowed women the use of their husbands’ real property during their own lifetime. If you have ever wondered why a deed of real property might reference “John Smith, a married man,” that’s an allusion to Mrs. Smith’s dower rights, putting potential transferees on notice that Mrs. Smith would need to sign off on a transfer of the property.

Relatively few women in Michigan exercised their dower rights, and the laws granting them might have remained in place, but for the decision of the U.S. Supreme Court in Obergefell v. Hodges and DeBoer v. Snyder. This decision held that states must license marriage between two people of the same sex and must recognize a marriage between two people of the same sex performed in another state. All of which raised the question: how, if at all, would dower work for a woman who was married, not to a man, but for another woman?

Same-Sex Marriage and Michigan Dower Rights

Michigan statute and case law regarding dower rights were written in such a way that it was clear that they would not apply to same-sex marriage. A group of Michigan legislators attempted without success to develop some gender-neutral form of property interest. The Real Property Section of the State Bar of Michigan had reservations about the effort, citing the possible constitutional issues inherent in creating a new property interest, as well as the complication of title issues. Due in large part to these practical objections, there was insufficient support for a gender-neutral makeover for dower.

The next logical step was to consider abolishing statutory and common law dower from the Estates and Protected Individuals Code (EPIC) and eliminating the requirement that dower rights be addressed in Michigan divorce judgments. This is what SB 558 and SB 560 accomplish. There is a limited exception, preserving dower rights of a widow whose husband died prior to the effective date of these bills.

What the Abolition of Dower Means for Michigan Residents

As a practical matter, the abolition of dower rights in Michigan will probably not affect most individuals very much. The change in law slightly simplifies the transfer of real estate for married men who own real property in their sole names. Aside from that, the chief benefit of the change in the law is that it brings Michigan more in line with the realities of life in the 21st century and the laws of other states.

It remains to be seen what effect this might have on title insurance company requirements when Michigan real estate is conveyed and probate court procedures/documents. Stay tuned.

If you have any questions on Dower rights, please contact Karen Stewart at 248-735-0900.

Excerpts from Estate Planning & Elder Law Services Newsletter, January 2017.