Living Trusts

A Trust is a separate entity on to itself. You and your spouse are the people who set up the trust called "Settlors" or "Grantor" and you are both the original managers of the Trust know as the "Trustees" and you are both the Primary Beneficiaries of the Trust. You will name a Successor Trustee" to continue on managing the trust after you are gone. With a Living Trust you can eliminate the need to use Probate Court in administering your assets if you become disabled, incompetent, or die. A Trust may also help reduce the risk of inexperienced and unskilled management of property by allowing you to select today an asset manager for the future.

A Trust is a written expression of your desires as to the management of assets during your lifetime if you become incapacitated and to whom the assets pass upon your death. Put another way, it is an arrangement under which one person gives some part or all of their assets to another as Trustee. Those who are to receive benefits from the Trust are known as beneficiaries. The arrangement establishes: (1) Who the beneficiaries will be, what each will receive, and when they will receive it; (2) How much investment authority will be given to the Trustee to meet the needs of the beneficiaries; and (3) What the duration of the Trust will be within the limits allowed by law.

You should meet with an attorney to discuss your estate plan and the advantages of a Living Trust. The attorney who will prepare the Living Trust documents that will give force to your estate plan is essential to the planning process. Your life insurance agent, financial planner, trust officer and accountant can also be helpful. Together, this team of experts can help you create the best plan for your family. It is just as important to select the proper Trustee as it is to select the proper estate planning attorney. While a well planned Living Trust document can be just a few pages long, well chosen words and instructions can insure that your intentions and planning objectives are met. Sumner & Associates, P.C. has been practicing estate planning for over Fourteen Years and has received the highest rating for attorneys from Martindale-Hubbell.

Durable Powers of Attorney for financial matters.

Many people fail to plan adequately for a lifetime disability. You should be concerned about the possibility of your disability, that is, your inability to legally handle your affairs. Disability can arise from a number of different causes, for example, illness (such as stroke), injury, accident, old age, or the inability to locate or contact you. If you are unable to handle your affairs, who can and will do so?

In such cases, Michigan law provides for a Probate Court proceeding to have an individual or a bank appointed to act for you. Guardianship and Conservatorship proceedings involve time, expense, and perhaps even the embarrassment of trying to prove that you are mentally incompetent. Furthermore, you have no assurance as to whom the court will appoint.

A document giving a relative or friend the power to act for you - an ordinary power of attorney is automatically suspended or revoked ( it is no longer valid) if you become incompetent, just when your family would need it most. The Michigan legislature responded to this problem by creating the "Durable Power of Attorney" which is a power of attorney that remains in effect even if you become disabled. Everyone should consider having a Durable Power of Attorney, it can save you and your family time, money, and the inconvenience of Probate Court proceedings.

Medical Powers of Attorney

The Michigan legislature recently authorized the use of a Medical Power of Attorney for Health Care in our state. The Medical Power is used during your lifetime if you should become incapacitated due to illness or an accident. By creating a Medical Power of Attorney for Health Care you can appoint another individual to make decisions concerning your care, custody, and medical treatment when you are unable to participate in medical treatment decisions. The Medical Power of Attorney for Health Care ensures that your desire to accept or refuse medical treatment is honored when you are unable to participate in medical treatment decisions.

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IS THE ESTATE TAX DEAD?

      Well, not exactly, but the size of an estate which is exempt from federal estate taxes is going up, at least for now.
       Under the Economic Growth and Tax Relief Reconciliation Act of 2001, signed into law by President Bush on June 7, 2001, the portion of your estate which is exempt from estate taxes increases in accordance with the schedule below, and then in 2010 the estate tax is repealed entirely. The catch, however, is that the new law repeals itself and brings the existing estate tax back to full force in 2011.
        For persons who died in 2003 the amount exempt from the federal estate tax is $1,000,000.00. The schedule of future changes in the exemption from the tax looks like this:
-Estates of persons who die in 2004 and 2005: $1,500,000.00.
-Estates of persons who die in 2006, 2007 or 2008: $2,000,000.00.
-Estates of persons who die in 2009: $3,500,000.00.
-Estates of persons who die in 2010: No tax this year no matter how large the estate is.
-Estates of persons who die in 2011 or later: $1,000,000.00.
           During 2010, before the new law repeals itself, there is scheduled to be a substantial increase in the capital gains tax that folks inheriting assets will have to pay. For decades the law has been that the "basis" for purposes of calculating the gain is a "stepped-up" number equal to the value of the asset at the time of the decedent's death. Starting in 2010 the stepped up basis is to be repealed, so that heirs will pay a capital gain on the difference between the value they receive upon disposing of an asset and the price for which the decedent acquired that asset.

Our hope is that as 2010 approaches enough people will be upset by the unpleasant aspects of this law so that Congress will decide to clean it up. What we would like to see is the final death of the "death tax," but a continuation of the "stepped-up" basis rule for capital gains. Everyone expects to see changes in these laws, but nobody knows what will happen. For those of us trying to help people do some estate planning, it is absolutely maddening. A Washington Post article called it "hilarious," but we don't think it's funny.