Are your "affairs” in order?
by John V. Polomsky II, Attorney-at-Law
Tips on Repairing Your Trust
Over the years, your trust will become outdated. We constantly “repair” trusts to bring them up to date. We have just completed an outline with tips on repairing your trust.
How Old Are Your Financial and Medical Powers of Attorney?
While not everyone needs a trust, everyone needs both a financial and a medical power of attorney. In 2010, the state of Michigan passed a new law to regulate financial powers of attorney, and the constant technological advances in medicine create new and important issues to consider in a medical power of attorney. Our firm works to keep its financial and medical power of attorney forms up to date.
The “Peace of Mind” Registry
A law passed in the spring of this year requires Michigan’s Department of Community Health to establish an internet website containing access for what are defined as irectives.” The term irective” simply refers to a medical power of attorney or a gift which authorizes an anatomical gift. Michigan residents can now file these directives electronically, and will each receive a wallet-sized card indicating that they have filed such a directive in the registry. They’ll also receive an email or a postcard confirming this registration. I acknowledge that some clients have concerns about such electronic databases while others don’t, so some of you might find this useful.
Many of us may not consider virtual assets as part of our net worth, but they are. And they have real value, emotionally and financially, to heirs. Keeping digital assets well documented, logically and securely stored and accessible within the family can help ensure they are preserved for future generations.
Here are four steps to documenting digital assets:
1. Know where your digital assets are and the value associated with them.
2. Inventory your digital library annually.
3. Document, print out and store updated login information at a secure location (e.g., safe deposit box or with a trusted attorney, advisor or family member). Include relevant URLs, account usernames and passwords.
4. Draft a durable power of attorney to authorize a friend or family member to be responsible specifically for digital asset management.
The nice thing about digital assets is that they can offer a means for younger family members to become engaged with the estate planning process. You may wish to assign a younger adult child or grandchild with this valuable responsibility. Be sure to consult with your estate planning attorney to ensure these assets are incorporated in your overall estate plan.
Taken from Financial Perspectives by Raymond James Financial Advisors (Summer 2015)
The Lady Bird Deed
Most likely, you received a “Warranty Deed” when you purchased your home. The Lady Bird Deed is named after Lady Bird Johnson. I like to think of a Lady Bird Deed as a substitute for a trust because it transfers property to a beneficiary or beneficiaries, and because it avoids probate. In this type of deed, the owner of the property records a deed which simply declares that the owner has all ownership rights in the property for his or her life, but at his or her death the property automatically transfers to a beneficiary or beneficiaries (called a grantee or grantees) named in the deed. Not everyone needs a trust; a Lady Bird Deed can be a good trust substitute.
You May Be Entitled to a Tax Refund
When Michigan real estate is sold, the state of Michigan assesses a real estate transfer tax. This real estate transfer tax is imposed at the rate of $3.75 per $500.00 of the total value of the property being transferred. This is shown on the closing statement. There are many exceptions to this tax, one of which is important in a time of changing real estate values. Section 6.(u) provides that no transfer tax is assessed if the state equalized value of the property is equal to or less than the state equalized value of the property on the date of its purchase or on the date of acquisition by the seller (referring to inherited property). Recently, the Michigan Supreme Court allowed this exemption in some interesting situations because they fit within the exemption. For example, a married couple purchased a principal residence in 2008 when the property’s state equalized value (SEV) was $464,300.00. In 2010, the couple sold the property for $875,000.00, although the SEV had dropped to $374,800.00. The Michigan Supreme Court held that “the petitioning taxpayer need only demonstrate that the property at issue is the principal residence of the seller or transferor, that it has an SEV at the time of the conveyance that is less than or equal to the SEV at the time of acquisition, and that it was sold or transferred for a price at which a willing buyer and a willing seller would arrive through arms-length negotiation.” If you paid this tax and want to claim a refund, you must use the state of Michigan’s form 2796 titled pplication for State Real Estate Transfer Tax Refund.” There is a four year 15 day period in which to apply for that refund.
Condominium By-Laws are Important!
Most Condominium By-Laws are long documents and are hard for a normal condominium buyer to understand, but there are important financial terms in those documents. For example, in the recent case of Great Lakes Shores, Inc. v Bartley, a condominium association sued to recover normal assessments which a condominium owner failed to pay. The association also sought to recover the attorney fees and costs which it incurred in bringing that action. The Court of Appeals held that all of this was proper because a provision in the Condominium By-Laws allowed the association to recover those attorney fees and costs.
Another Reason Condominium By-Laws are Important
In an unrelated case, Tuscany Grove Association v Perino, the Court of Appeals held that a condominium association was not entitled to sue a condominium owner for violation of some fence restrictions in the By-Laws because those very By-Laws provided that such a lawsuit could only be initiated if not less than 66 2/3% of all of the condominium owners approved of litigation expenses before the condominium association could incur any expenses or legal fees pursuing the matter.