Michigan recently became the 17th state to allow citizens to form – domestic asset protections trusts –that can shield assets from future creditors and lawsuits.
Candidates for this type of trust are those facing liability concerns, high-risk professionals and those with a large net worth.
It’s best to set up this kind of trust far in advance of any creditor problem. In fact Michigan rules state you must provide an affidavit of solvency before creating this trust. While is may seem like an additional hurdle it actually works for your benefit by confirming;
- You have authority to transfer property to the trust
- Transfers will not make you insolvent
- You do not intend to defraud any creditor
- You are not aware of any pending creditor action against you
The asset protections trust is also useful for a person planning to marry, but wanting to protect premarital wealth in the event of a divorce. In this instance all transfer of assets must be made at least 30 days prior to the marriage.
It’s important to note that when setting up an asset protection trust you become the beneficiary and must name someone else to be a trustee. Yet as the beneficiary you can:
- Direct trust investment decisions;
- Remove and replace trustees;
- Veto distributions from the trust;
- Receive discretionary distributions of income and/or principal;
- Receive the income from the trust;
- Direct how the assets are to be distributed on the transferor’s death
Asset protection trusts are irrevocable and there is two year waiting period that must be completed before assets in the trust are legally shielded from creditors.
While not for everyone the domestic asset protection trust becomes another important tool for tailoring estate planning to your individual needs.
Yes, your power of attorney may go stale.
Banks and other financial institutions are reluctant to accept a power of attorney over five years old. This reluctance has a valid basis, as powers of attorney can be used to commit fraud. An up-to-date document reassures those granting access to financial information the intentions of the person creating the document.
Refreshing your documents with us is easy. Our clients can call or stop by anytime to update us on life events that require changes to their documents. If our clients forget to call us, as a courtesy, we reach out to them by sending timely reminders for document review sessions. We enjoy these sessions with our clients and feel lucky to be a helpful part of their life.
You’re at the rental car center wondering should I purchase rental car insurance? What happens if I say no and have an accident?
Here’s what to do
Before you leave on vacation find out if you have rental car coverage through your personal auto insurance company. Many polices include this but it’s worth a call to your agent to confirm. Also check with your credit card company many offer this as a perk. If you are not covered for rental cars buy the insurance.
More tips for the road
Should you run out of gas or get a flat tire on your vacation and need roadside assistance you can save a lot of money by using your own service such as AAA. Finally take a moment to inspect your rental car at the time of pickup. Take pictures of any damage and discuss it with the agents in order to avoid false charges when you return the car.
Do you keep your documents in one spot and is everything up-to-date?
These documents need updating; passports, estate planning papers, insurance policies, financial records, property deeds, and passwords, to name a few. Choose a day to review your documents. Do you have a new address or beneficiary to add to a life insurance policy? Want to change the executor of your estate or name new guardians for your children?
When you’re satisfied everything is in order, tell someone you trust where you’ve put these important papers. All too often when clients (or their heirs) need to find these documents and can’t. This is aggravating and can even create legal headaches. Our office provides clients a Letter of Final Instruction at no charge to help with this important paper organization. Give us a call if you need one.
It’s not easy dealing with the many possessions of a loved one after they pass away. In some cases it can even create family conflict. But you can make things considerably easier for your family and beneficiaries by giving away your prized possessions before you die.
Only you know and understand the value and sentiment attached to your possessions. By giving them away during your lifetime you can be sure they are in good hands and that they will be appreciated by the new owners. In the process of giving, you will also have had the pleasure of making your loved ones feel special.
Consider too that some of your most valued possessions are not physical items, rather stories, songs or perhaps a favorite recipe. Be sure to pass these on as well as you give away your treasured belongings.
Giving consideration to how to pass on your belongings is just one part of completing an estate plan. For more information about estate plans and wills please call our office. We offer an estate planning worksheet to help you get started creating your own unique plan.
Many parents find talking about money with their children as difficult as talking about sex.It may be awkward, but talking to your children about their inheritance benefits everyone.
If kept in the dark, children may think their parents are “loaded” and expect a significant windfall upon their passing. They may worry about the cost of nursing home care and wonder if there are enough funds to cover this expense.
When talking about inheritance, parents can explain their success in accumulating assets, be that many or a few. Children can learn first hand financial lessons from their parent’s experience.
In addition to discussing amounts, it’s also important to talk about how the inheritance will be distributed. In many estate plans, distribution is delayed or paid out over time even when adult children are involved. When parents can explain their thought process, hurt feelings and family discord can be avoided ahead of time.
Finally, it’s important to remind children not to count on the money. Investments can rise and fall, unexpected health issues or family emergencies may dramatically affect a parent’s net worth. An important part of the estate planning process is to have a candid family discussion about money and inheritance. This helps everyone prepare for the future.
Anyone involved in a real estate transactions should be aware of all applicable flood zones. Recent changes in the National Flood Insurance Program and new updated flood maps will have an impact land values.
The recent updates, on which flood insurance is based, have moved many properties to new hazard levels. Some properties for the first time are now considered to be in a floodplain. This will require owners to purchase flood insurance. Because of the new rate structures for flood insurance there has been a significant increase in flood insurance premiums for homeowners.
Sellers need to be aware of the flood zone in which their property is located and disclose the information to purchasers. Failing to advise a purchaser could be considered fraudulent in some circumstances. For more information check out the Flood Insurance Rate Maps at www.msc.fema.gov. You can see actual flood maps are available at www.floodmaps.fema.gov
Most of us have car insurance, but an unusually high number of Michigan drivers are without it or have the minimal coverage dictated by law ($20,000). Nationally, one in eight drivers (12.6%) are without car insurance. In Michigan, the rate is one in five (21%) according to 2014 findings by the Insurance Research Council (IRC)
If you are seriously injured by a motorist who is uninsured or under insured you will not be able to recover the monies needed to pay for your injuries. All too often the irresponsible drivers, who cause accidents, are the same people without car insurance.
In order to protect yourself I recommend you review your uninsured and under insured motorist coverage. I suggest you have at least $500,000 of coverage for both uninsured and under insured drivers. Adding additional coverage is relatively inexpensive and will provide you the needed financial protection from the many uninsured drivers on our Michigan roads.
In virtually every real estate transaction, title insurance will be required. Both lender and purchasers want to be certain that title to the property is free and clear. That means the property is not encumbered by delinquent taxes, unpaid liens, undisclosed heirs or other entanglements.
After the signing of a purchase agreement, a request for a title commitment is sent to a title insurance company. They conduct a search of the public records to spot any blemishes on the property’s title. When problems are identified the title company typically works with the seller to correct any issues.
There are usually two title policies issued in each transaction, one to the buyer of the property and a second policy to the lender (who usually has more invested than the buyer).
Typically there is no benefit to shopping rates as prices are regulated at the state level.
At the end of the day, the purchase of title insurance provides a guarantee that you purchased what you bargained for and no one is going to challenge ownership of your land.
Many people have ideas for a new business, but get discouraged by the financial requirements to make their idea a reality. Banks have become increasingly leery of new businesses. Due to increased regulatory oversight, securing a commercial loan for a startup is challenging at best. When a bank is willing to make a loan to a new business they require the personal guarantee of the business principals adding to the risk for the entrepreneur.
The latest solution to financing a new business is crowdfunding, this involves creating a network of people (usually via the internet) who will pool their money and other resources to support your idea.
Crowdfunding avoids bank loans and their monthly payments. It also means no personal guarantee to the bank, significantly lowering the financial risk to those starting a business.
The downsides include the fact the entrepreneur’s percentage of ownership will be diluted by allowing others to share in the ownership and that, depending on the structure of the company, the investors may want a voice in the management of the company.
For many new businesses, the use crowdfunding has been the key to getting launched.