NBI Seminar: What You Need to Know About Probate & Trust Administration

The National Business Institute (NBI) is offering a day-long seminar entitled “Probate & Trust Administration – What You Need to Know About Probate and Trust Administration,” on August 19, 2019, at the Wyndham Garden in Ann Arbor, Michigan.

(Full disclosure: I am one of the presenters.)

Program Description (From NBI):

Working through issues that arise through probate and trust administration can be daunting. Are you well-equipped with the tools you need to succeed? This insightful course will take you through steps in probate administration, including information on creditor and debt issues, tax and more. You will also get valuable insight on trust administration, including the handling of accounting, distributions and taxes. Don’t miss this opportunity to hone your probate and trust administration skills – register today!

  • Take a closer looks at the initial step for filing the estate.
  • Discuss what needs to be done to handle creditor claims and debts.
  • Make sure everything is in order for the final distribution of the estate.
  • Review what issues need to be addressed concerning taxes in probate administration.
  • Get the latest information on taxation concerns associated with trusts.
  • Explore the different types of trusts and how they are used.
  • Learn ways to manage, sell and distribute property and assets in trust administration.
  • Gain a better understanding of the distinctions between trust fiduciary accounting and income tax accounting.

This basic level seminar is designed for professionals who want to be more effective in the probate and trust administration process, such as:

  • Attorneys
  • CPAs and Accountants
  • Tax Professionals
  • Financial Planners and Wealth Managers
  • Trust Officers
  • Paralegals

Course Content:

  • Probate Process and Overview
  • Assets, Creditor Claims and Debt Considerations
  • Distributions, Final Accounting and Closing the Estate
  • Tax Issues in Probate Administration
  • Trust Taxation Issues
  • What You Need to Know About Trusts
  • Accounting/Distributions in Trust Administration
  • Ethics and Estate Administration

For more information and to register, please follow the link to:

“Probate & Trust Administration.”

DIY Estate Planning – Another Cautionary Tale

“I don’t need a lawyer. I don’t have an estate, just have a house and some bank accounts. My family can help me out, and look, here’s a form I found on the internet I can use. What can go wrong?”

Yet time and again, what appears to be a simple and effective way to avoid some legal fees ends up creating a legal quagmire costing tens of thousand of dollars to remedy. Do-it-yourselfers mostly turn to family members or the internet for help. A recent case out of Macomb County Probate Court gives us another example of just how “well” that can turn out:

In mid-2016, Martin met with several members of his family for the purpose of preparing his last will and testament. The meeting was attended by Martin’s brother, John, John’s son Paul, John’s daughter Elise, and Martin’s niece, Theresa.

John downloaded and printed a will form off the internet, and Elise completed the fill-in-the-blank form according to Martin’s instructions. The form provided that all of Martin’s assets were to be distributed equally among Martin’s 3 siblings. The family members also discussed the status of Martin’s bank accounts. After completing the form, the group went to Comerica Bank so Martin could sign the will before a notary. While there, Martin and Theresa also signed new signature cards for each of Martin’s 6 accounts at the bank to give Theresa access to the accounts as the family explained to Martin. Unfortunately, Martin died about 4 months later.

As you may have guessed, a dispute arose after Martin’s death over ownership of the Comerica bank accounts, a dispute which ended up in the Macomb County Probate Court.

At trial, Theresa asserted the funds belonged to her as the surviving joint owner. According to Comerica, signing the new cards by Martin and Theresa established them as joint owners of all 6 accounts (containing about $680,000). Martin’s niece, Elise, now personal representative of Martin’s estate, countered that the funds belonged to the estate for distribution to his siblings per the terms of Martin’s will. Martin had discussed this with the family and that certainly was his understanding and intention when he added Theresa onto the accounts. Following a bench trial, the probate judge sided with Elise that the money belonged to Martin’s estate.

Not satisfied with the probate court loss Theresa appealed to the Michigan Court of Appeals, which again sided with Elise and Martin’s estate. The court opined that although creation of the accounts in Martin and Theresa’s names was prima facia evidence of Martin’s intention to vest title of the accounts in Theresa’s name upon his death, Elise was able to overcome Theresa’s prima facia case that Theresa was entitled to survivor rights to Martin’s accounts. The court noted that Martin did not seek independent counsel and was advised only by his family. Further, the evidence at the trial showed Martin discussed creating “convenience accounts” with his family members and may have mistakenly believed that by adding Theresa as a co-owner, she was only going to be a signer on the accounts, which was consistent with what Martin and his family discussed.

Nothing is simple and straightforward when it comes to estate planning or any other legal matter. You may think you are doing one thing, but the result is something completely unexpected, which can lead to disastrous, and costly, results. (Imagine what it cost in legal fees to settle Martin’s mess.) You should look to family members for a referral, not legal advice. Yes, attorneys cost money, but you are paying for their expertise and advice, which can save you or your family much more in the long run.

Engage knowledgeable legal counsel whatever your problem. Work with an attorney you trust. Don’t be afraid to spend some money up front for good legal advice to save a lot more money later on.

The case is In re Estate of Martin Langer. You can read the full opinion of the Michigan Court of Appeals here.

The Law of Unintended Consequences – and Failure to Plan.

According to a recent story in the Boston Globe, Marcelle Harrison’s family has lived in a three-story home in Cambridge, Massachusetts for almost 40 years, during which time four generations of her family have lived. She and her family (two generations worth) may have to vacate the home because her stepfather died intestate (without a will) in 2011 after the passing of her mother two years earlier, meaning that legally her stepfather’s blood relatives back in his native country of Barbados have a stronger legal claim to her childhood home than she.

The home was purchased by her mother and step-father in 1980 for $23,000. It is now worth over $1 million. When her mother died in 2009, her step-father continued as the sole owner of the property. When he died in 2011, without naming a beneficiary for the property, Massachusetts law allows his blood relatives to claim the house over Marcelle, a stepchild.

According to Marcelle and those close to the family, her stepfather, Noel Aimes, always wanted the house to stay in the family, and in the 1990s he built additions to accommodate his growing family.

Marcelle received the news in a letter delivered to her shortly before the end of last year. “Since you were not an heir-at-law, your appointment is in jeopardy of being set aside,” wrote the state public administrator. It appears that Mr. Aimes’s relatives in Barbados plan to sell the property as soon as the estate is settled. Marcelle is terrified and unsure where her family will live if forced out of the Cambridge property.

This story illustrates the importance of having a will. Without one, it doesn’t matter what you desire to happen with your assets. The laws of the state in which you reside will dictate the disposition of your assets. This is especially relevant in second-marriage situations. Marcelle’s stepfather may have wanted the property to pass on to her and her family, but without a will that said so, Massachusetts laws dictates it go to his distant relatives in Barbados. A sad outcome to be sure.

All it takes is a bit of planning to avoid disaster. If you don’t have an estate plan in place, hopefully what’s happening to Marcelle will motivate you to take action!

You can read the entire article here.

If your estate planning house isn’t in order, give me a call, I can help. While you won’t have to live with the oftentimes disastrous consequences of dying without an estate plan, your family will.

Should Have Put A Ring On It.

Pellie was in a long term relationship with Tony that lasted over 40 years. They never married. Pellie became Tony’s caretaker when his health began to fail. Tony died in 2015. Pellie had received about $300,000 in assets from Tony up to and after his death. But Pellie believed she was entitled to much, much more. After Tony’s death, Pellie filed a claim against Tony’s trust for over $2,700,000 based upon Tony’s purported promises to take care of her. The trustee disallowed the claim. Pellie sued the trust in probate court, claiming that she and Tony had an agreement that he would take care of her after his death.

At the trial, the evidence showed that over the course of their relationship, Tony had often told here that he wanted her to take care of him and in return he would take care of her needs. Tony had verbally told Pellie that she would share in his estate. Tony’s estate plan did provide some stock and other assets to Pellie, including four bank accounts owned jointly with Pellie.

The county probate court dismissed Pellie’s lawsuit. The probate court reasoned that Tony’s promises were, in effect, a contract to make a will, and since it wasn’t in writing, the “agreement” wasn’t enforceable. Pellie appealed to the Michigan Court of Appeals, and the Court of Appeals affirmed the probate court decision.

Under Michigan law, a contract to make a will or devise, not to revoke a will or devise, or to die without a will (intestate) may only be established by either: a) provisions in a will stating the material terms of the contract; b) an express reference in a will to such a contract with extrinsic evidence proving the terms of the contract; or c) a writing signed by the deceased establishing the contract.

A party seeking to enforce such a contract must prove an actual express agreement and not merely a statement of intentions. Since Pellie could not produce a writing evidencing Tony’s agreement to provide her financial security after his death or to compensate her for caretaking services, she could not prevail.

It is pretty clear from the evidence that Tony made promises of care and support to Pellie. We don’t know why Tony didn’t adjust his estate plan to fulfill those promises; Nor do we know to whom Tony left the bulk of his assets.

Their’s was a 40 year relationship. However, without the benefit of marriage or a some type of written agreement, Pellie didn’t have a leg to stand on. Purely moral obligations are not enforceable. Had they been married, Pellie may have had claims to Tony’s assets.

When it comes to the distribution of a deceased person’s assets, oral promises or intentions aren’t worth the paper they’re written on. The moral of this story is that if you are in a relationship with another — without the benefit of marriage — you need to make sure to get any promises of financial support or security from your partner in writing.

The case is Norton-Cantrell v Anthony Bzura Trust Agreement.

You can read the Court of Appeals decision here.

The Pitfalls of DIY Estate Planning, Part ?

According to an article at news.com.au, a woman from Queensland, Australia died of cancer in 2015. In an apparent effort to save money on her estate plan, she chose to use a cheap do-it-yourself will kit. The four page document had numerous hand-written attachments and contained multiple changes. It is likely to end up costing her estate tens of thousands of dollars in legal fees and costs to sift through the numerous errors and ambiguities contained in the document.

“‘No one should attempt their own will. It is very dangerous,’’’ barrister Caite Brewer, who represented the named executors of the will. “‘This case is a good example of someone trying to save a few hundred dollars, doing their own will, which ends up costing their estate potentially twenty thousand dollars. They should see a solicitor who specialises in estate planning.’”

Couldn’t have said it better myself. Will kits are advertised as the low cost estate planning alternative to using an attorney. The will-kit publishers advertise that you will end up with a will that is legal, but never advertise that it will be right. And that’s what you pay an attorney to do, to make sure the will is right – that it accurately expresses your intentions concerning the disposition of your estate. Yes, it costs more up front, but the extra money spent to make sure your estate plan is drafted correctly will save thousands in the long run.

Read the entire article here.

Struggling with your own estate planning? Contact me, I can help.

What “Cause” is “Good Cause” to Remove a Conservator?

A “conservator” is a person appointed by a probate court to manage the assets or affairs of another (the “protected individual”) who, by reason of physical or mental disability, is incapable of controlling or managing their assets or affairs on their own. The conservator acts as a “fiduciary,” meaning that the conservator must manage the assets and affairs of the protected individual always and solely for the benefit of the protected individual.  Decisions the conservator may make regarding the protected individual’s assets or affairs must be made solely in the best interest of the protected individual; the conservator must subordinate their own wishes or preferences in their decision making.

In Michigan, a conservator may be removed for “good cause.” The Michigan statute addressing the removal of a conservator does not define the term “good cause.”  A recent case decided by the Michigan Court of Appeals addresses the issue of what is “good cause” to remove a conservator .

In 2013, Marian was appointed conservator for her mother, Mary, who was 86 years old and had begun to exhibit symptoms of dementia. Mary had eight children at the time the conservatorship was established. In 2015, one of Marian’s siblings, Rita, filed a petition to remove Marian as Mary’s conservator based upon Marian’s conduct managing Mary’s assets and affairs.

After a lengthy hearing, the local probate court found that Mary continued to require a conservator, but despite their good intentions, neither Marian, nor any of her siblings was suitable to act as Mary’s conservator. The probate court found that based upon the deep emotional connection between Mary and Marian, Marian was not capable of acting in Mary’s best interest and separating Marian’s wants from Mary’s needs. In addition, based upon the ongoing conflict among Mary’s children, the best interest of Mary required the appointment of a public administrator as Mary’s conservator.

On appeal, Marian argued that the probate court should not have removed her as conservator because she had not mismanaged Mary’s assets or affairs, or failed to perform any duty required of her as Mary’s conservator. The Michigan Court of Appeals upheld the probate court’s decision, saying that the statutory “good cause” standard for removal does not require any particular misconduct. “‘Good cause simply means a satisfactory, sound or valid reason’” for removal. The court stated that, due to Marian’s inability to remove her emotions and personal wishes form decisions pertaining to Mary’s assets and affair, she was incapable of making decisions solely in Mary’s best interest and was reason enough to warrant her removal.

Every conservatorship is different, but the duty of every conservator is the same: To act in the best interest of the protected individual. The typical person appointed as conservator for another is usually a close family member — a spouse, child, or grandchild. In such cases it is often extremely difficult to separate one’s emotions from the decision-making process. In addition, siblings or other close family members may have their own ideas what should be done with respect to the protected individual’s assets and affairs. Family in-fighting is a common occurrence and can justify a probate court to look outside the family for a suitable person to act as conservator.

As we saw with Marian, her conduct was not malicious, nor had she mismanaged Mary’s assets or affairs. She broke no laws. But when a conservator’s decisions, like Marian’s, are colored by emotion or personal desire, or may be affected by family in-fighting, those decisions may not be in the protected individual’s best interest, warranting their removal.

The case is In re Conservatorship of Mary Louise Montgomery. You can read the entire opinion here.

Are you struggling with managing the assets or affairs of another as their conservator? Give me a call, I can help.

The Pitfalls of Do-It-Yourself Planning

Ed owned a bank account at First State Bank. Two months before he died, he went to the bank and named one of his five children, daughter Ann, as a joint owner of the account. He specifically selected an account with rights of survivorship, which, under Michigan law, meant that the balance of funds in the account would become Ann’s property when Ed died. After Ed’s death, Ann asserted that the money was hers and did not have to be shared with her siblings. Ed’s other four children filed a petition with the local probate court claiming that Ed had added Ann’s name solely for convenience and that he actually intended for the account proceeds to be shared equally among all of his children. The probate court held a hearing and ruled that the evidence was sufficient to establish that Ed had indeed added Ann’s name to the account merely for convenience to assist with his bill paying should he die, and that he wanted the proceeds shared among all of his children after his death.  The Michigan Court of Appeals affirmed the ruling of the probate court.

Under Michigan law, when you add a child or other person’s name to a bank account, a legal presumption arises that you intend that funds in the account belong to the survivor when you die.  Even if you intend that the account balance be shared after your death, the law presumes otherwise. This presumption can be overcome, but only if it can be proved in a court of law, by “reasonably clear and persuasive proof,” that you did not intend that the account funds vest in the survivor.  This type of proceeding can cost a fortune in legal fees. What gets less attention is the emotional cost.   Battles like this, pitting sibling against sibling, wreak havoc within a family. While Ed thought he was doing good, the actual effect of his actions was quite the opposite.

It is never a good planning move to add a child or other person’s name to a bank account or other asset without first carefully considering all of the ramifications. What Ed may have thought would be a simple way to make sure funds would be readily available to pay his bills turned out to be anything but. Ed could have given Ann his power of attorney to access the account, or created a trust to hold the account and named Ann a trustee. In either scenario Ann would have been able to pay Ed’s bills out of the account, and remainder of the account would have been shared by all of his children after his death. Sure, there may have been legal fees associated with employing those techniques. But, when one looks at the emotional and financial cost of this family’s battle, it would have been money well spent.

Many things people do in their DIY planning appear on the surface to achieve an intended goal, but end up creating serious problems that are very expensive to fix. Always, always, always, work with a competent professional. Get the peace of mind that your intentions will be fulfilled using techniques that are best suited to your individual situation. The cost to do so is pretty reasonable in the long run.

The case is: In re Estate of EDWARD SADORSKI, SR., Deceased. You can read it here.

Are you looking for solutions to your financial or estate planning problems?  Contact me, I can help.

 

We Can Read Your Writing, We Can’t Read Your Mind

Lyle and his son, Steven, purchased a house in 2007, which became Lyle’s personal residence. The title to the property was conveyed to: “Lyle, a single man, and Steven, a single man.” Lyle passed away several years later. The Michigan Department of Health and Human Services (DHHS) filed a claim against Lyle’s probate estate for unpaid Medicaid bills in the amount of $48,084.95. DHHS sought to have the bills paid from Lyle’s share of the property.

Steven filed a petition to reform the deed to indicate a joint tenancy with rights of survivorship, arguing that Lyle intended to create a joint tenancy so that his interest in the property would pass to Steven upon his death – avoiding DHHS’s claim. DHHS responded arguing that by law, the ownership estate created by the deed between Lyle and Steven was a tenancy in common because there was no express language in the deed declaring an intent to create a joint tenancy or an intent to grant a right of survivorship.

The trial court agreed with Steven’s argument and found that the deed created a tenancy in common, but that a latent ambiguity existed regarding the survivorship right. On the basis of the ambiguity, the trial court reformed the deed to comport with Lyle’s intent to own the property with Steven as joint tenants with a right of survivorship. Under the trial court’s ruling, DHHS could not satisfy Lyle’s unpaid bill from Lyle’s interest in the property, because Lyle’s interest automatically passed to Steven upon his death. DHHS appealed.

The Court of Appeals reversed the trial court, holding that although the trial court was correct in finding that the deed’s granting clause (to “Lyle, a single man, and Steven, a single man”) created a tenancy in common between Lyle and Steven, the language of the deed, on its face, was not ambiguous and, therefore, the deed could not be reformed. The Court of Appeals ruled that based upon the clear and unambiguous language in the deed, Lyle’s interest in the property did not pass to Steven automatically upon his death and, therefore, DHHS could satisfy Lyle’s unpaid Medicaid bills from Lyle’s interest in the property.

Under Michigan law, a deed conveying title to two or more persons is presumed to create a tenancy in common unless the deed language expressly declares an intention to create a joint tenancy or a right of survivorship. As happened in Lyle’s case, the death of one co-owner under a tenancy in common does not extinguish the deceased owner’s interest in the property. That interest survives to his probate estate where creditors, like DHHS, can seize it to satisfy their claims. And the courts are powerless to help.

With any legal document, what you meant to say matters little – what matters is what your document actually says.  Deeds and other documents must be carefully drafted to clearly express and carry out your intentions.  Poor drafting can have disastrous consequences. In Lyle’s case, not having the correct language in his deed cost Steven tens of thousands of dollars ($48,084.95 to pay the DHSS claim, plus legal fees).

Work with competent legal counsel to ensure your documents are properly drafted. It can save you and your family a fortune in the long run.

The case is Steiner v DHHS, and you can read the opinion of the Court of Appeals here.

Be Careful When Hiring an Estate Sales Agent.

An estate sales isn’t your run-of-the-mill garage sale. Estate sales offer the promise of nicer things for sale and that potential rare or priceless find. Many people faced with settling a loved one’s estate will turn to an estate sales agent to sell off the deceased’s belonging.  But hiring an estate sales agent can be a risky proposition. The industry is unregulated and not every one follows ethical business practices. Furthermore, they typically charge substantial fees as a percentage of the estate sale total.  You need to do things right when hiring one:  You need to get a copy of your prospective agent’s contract and review if carefully. You must also check into their business history and practices. It can even be helpful to go to one of their sales to see them in action.  A recent article in the New York Times highlights the problems with estate sales agents through the personal experience of two siblings who hired an unscrupulous estate sale agent after their mother died.

Read Paul Sullivan, It Pays to Be Wary When Hiring an Estate Sales Agent, NY Times, September 23, 2016.

Estate Planning Isn’t Just For Married People

The majority of my estate planning clients are married couples. For them, it just seems the natural thing to do. However, estate planning for singles is just as important. While a single person may have to do some things differently, they still need to have an estate plan to avoid problems that will naturally arise during times of incapacity or after death.

Most single people do not own assets jointly with another person. By contrast, married people will naturally add their spouse to financial accounts and real estate to ensure continued access to accounts upon the disability of one of them, and the efficient succession of ownership upon the death of one of them. For singles, adding another person’s name to a financial account or real estate may have unintended consequences that can be disastrous.

When a single becomes incapacitated, access to, and control of their assets become matters for the courts to determine in the absence of documents that will allow for someone to step into their shoes with legal authority to manage their assets and affairs.

Without a will or trust, the laws of the state of his or her residence will determine how their assets are divided and distributed after death. This will necessarily require the involvement of the courts along the way.

To avoid these pitfalls, it is important for singles to put together a estate plan, just like married people do. A comprehensive estate plan will consist of 5 key elements: a will; durable power of attorney; medical power of attorney; trust; and beneficiary designations.

The will is the cornerstone of any estate plan. It allows you to name the person who will guide the administration of your estate after your death; to specify how your assets will be distributed; and to name a guardian for your minor children.

A durable power of attorney lets you appoint someone (your “agent”) to manage your day-to-day affairs if you cannot do so for yourself. Whether this person is a parent, sibling, or close friend, it must be someone you trust implicitly.

A medical power of attorney lets you appoint someone to make medical treatment decisions for you if you cannot do so for yourself. This authority can extend to end-of-life decision making. Again, the person you appoint should be someone you trust to follow your wishes concerning medical care and to be a strong advocate for you.

A trust will allow for long term management and control of assets during your lifetime and simplify the distribution of your assets upon your death. Trusts are typically used to maintain privacy, avoid the probate courts, and minimize the effect of taxes on asset distribution after death.

Finally, beneficiary designations control the distribution of assets such as life insurance proceeds and retirement accounts. If you don’t have beneficiaries named, those assets are typically paid to your estate. In the case of retirement accounts, not naming a beneficiary can result in significant income taxes being levied. If the beneficiaries are out of date, those assets are still going to go to the people named, even if you no longer want them to receive those assets.

If you are single and don’t have an estate plan in place, it’s not too late to put one together. Work with an estate planning attorney who can develop an estate plan tailored to your individual circumstances.  Give me a call, I can help.