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Succeeding with Succession
By Tony Snyder | February 12, 2010
Many people often wonder if their estate plan isn’t simply a “one size fits all” document. To the contrary, I attempt to explain: There are a fair number of factors one must consider when putting together a Michigan Revocable Living Trust.
First: Beneficiaries. What age are the beneficiaries? Are they minors? If so, they will need a trust of their own established if a Revocable Living Trust is created by Mom & Dad. If the children are adults, it becomes much easier to provide an inheritance to them. What sort of lifestyle has the spouse or children grown accustomed to? The lifestyle of Paris Hilton is significantly different than the lifestyle of most children. Nonetheless, there are certain expenses (food, clothing, shelter) that must be addressed.
Second: Successor Trustee. Once Mom & Dad have died, who will handle the Trust and the assets within? How well do you know this person and will they do what you request of them? It’s vital to name not just one, but two people that you trust enough to handle your estate. In the event one passes away or becomes unable to serve as Successor Trustee, it’s helpful to have a back-up to avoid court costs of naming a Successor Trustee through the court system.
Third: Sufficient Planning. As hard as it is to imagine, it’s important to work your way though the family tree further than just your children or grandchildren. Sure, the likelihood of Mom & Dad, the children and any grandchildren all going down in the same plane is significantly remote, yet we still need to plan for the unexpected. What about brothers and sisters? Aunts and uncles? Do you want them to inherit? The state has a plan, but will it serve your goals? It is crucial that a distribution scheme be in place for all circumstances.
Fourth: Know Thy Powers. When naming a Successor Trustee, be aware of the powers dealing with real property (house, cabin, condo), personal property (jewelry, silverware, clothing), stocks and bonds, and the like. This person is figuratively stepping into your shoes and will have the same legal rights to your “things” as you would have if you were alive to deal with them.
Fifth: Duties. The Successor Trustee has certain duties and obligations and must be up to the task. It might seem paperwork intensive, but this is your life we’re talking about. They need to publish and register the trust after your death. They will also have to provide notice and accounting to the beneficiaries and abide by a prudent investor rule. Essentially, they will be required to put money into logical, sound investments—as if it were their own money.
Lastly: Be You. Estate planning is not merely a “fill in the blank” document. You are unique and you have certain goals. Your beneficiaries will be different and you will want to accommodate to their needs. Make sure your attorney understands what your goals are and why you’re doing what you’re doing.
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