2016 was a busy year for the folks in Lansing. They passed all kinds of laws from drinking water protection to child protection, from electronic hunting and fishing licenses to traffic control. Be prepared for much more to come in 2017, but more likely from Washington DC. Changes in the laws are just one of the reasons that you may want to update your estate plan.
There are changes in your personal and family situation like births, deaths, marriages and divorces that can affect how you leave your stuff to your family. Illness, injury or disability of a family member can also determine how assets would be held or distributed.
There can also be changes in your financial situation. If you receive a sizeable sum of money such as an inheritance, personal injury award or lottery winnings, you may want to rethink how assets may be distributed after you are gone. Job changes or retirement can affect the planning that you may do. The type estate plan that you set up during your working life or when the kids are younger is sometimes quite different than the estate plan you prepare after you are retired or when the kids are grown up.
If you have a trust, are all of your assets properly titled, beneficiaried and insured in the name of the trust. This is called funding your trust. Trust funding is completely and correctly designating your trust and individuals as owners, beneficiaries and insured parties of your assets. Basically, it’s putting your stuff in your trust.
The proper funding of your trust is critical in making your estate plan work and having the results you intend. Failure to properly fund your trust may cause unanticipated results. These may include probate during your lifetime or after death; distributions not in accordance with your goals and objectives; additional taxes; and additional administrative, legal and other expenses.
As assets are bought and sold or accounts are opened and closed, the trust name may be omitted. Trusts tend to get unfunded over time. It is important to have your assets reviewed on a regular basis to be assured that you trust remains properly funded. I recommend that your trust assets be reviewed on an annual basis to determine that they did not become unfunded. So let’s look at some of the 2016 law changes that could make you want to update your estate plan.
Fiduciary Access to Digital Assets Act of 2016
This Act allows your fiduciary or financial representative to have access to your “digital assets.” Your fiduciary can be: 1) a person acting under your Will or Financial Power of Attorney; 2) a Personal Representative of your probate estate; 3) a Trustee of your trust; or 4) your court-appointed Conservator. But what are digital assets?
The definition of digital assets under the act is very broad and includes virtually any digital record that is associated with you. It includes social media accounts such as Facebook or YouTube. It also includes your online banking and investment accounts. Your online shopping accounts with amazon.com or wafair.com are considered digital assets, as are your online gaming and Bitcoin accounts.
All of your usernames and passwords should be kept securely in a place that is accessible by your fiduciary. I have known some people that just keep their usernames and passwords in their heads. If they become mentally incapacitated, their digital assets may not be able to be accessed.
Qualified Dispositions in Trusts Act of 2016
This act allows you to set up an irrevocable trust, which, if certain legal requirements are met, shields your assets from your creditors. Prior to the act, you had to go to one of sixteen other states that allowed domestic asset protection trusts. If you are concerned about possible creditor exposure, such as if you are a business owner, executive or physician, you should investigate the use of a domestic asset protection trust.
Once properly established and assets are properly transferred to the trust, your creditors generally cannot reach your assets after they have been in the trust for two years. For bankruptcy, a longer statute of limitation may apply.
Funeral Representative Act of 2016
Under this act, you can designate an individual to make decisions about your funeral arrangements and the handling, disposition, or disinterment of your body, including decisions about cremation, and the right to possess your cremated remains.
Prior to the act, you had no choice nor control of your funeral or who could make those decisions, even if you had a pre-paid funeral. The folks in Lansing had determined that for you. Your closest heir(s)-at-law were in charge, regardless of what your wishes were. You just hoped and prayed your wishes were followed.
Michigan Designated Caregiver Act of 2016
The new act allows you to name a caregiver to provide care to you in your home after you have been discharged from the hospital. It requires hospitals to work with you and your designated caregiver on your care after the hospital discharge. Once you have designated a caregiver, the caregiver’s information must be put in your medical record by the hospital.
Once you have designated a caregiver, the hospital is required to notify them of your upcoming discharge and shall attempt to consult with your caregiver to prepare them for your after-care assistance needs and issue to them the discharge plan which describes your after-care assistance needs. When possible, the hospital shall provide training and instructions to your caregiver regarding your after-care, which may include live or recorded demonstrations of your after-care. As part of consulting with your caregiver, the hospital shall attempt to provide your caregiver the opportunity to ask questions and receive answers about your after-care assistance needs.
2016 Repeal of Wife’s Dower Rights in Michigan
Since Michigan’s statehood in 1857, a wife had a one-third interest in all the real estate that her husband owned during the marriage. That is why a wife always had to sign off on the deeds for the sale of her husband’s real estate. Husbands on the other hand had no dower interest in their wives’ real property. Wives could sell their property without having the husband signing off.
After the U.S. Supreme Court’s ruling on same-sex marriages, there was a concern that dower rights could be challenged in Michigan. So the state Legislature acted to repeal dower. Starting April 5, 2017, dower rights are abolished in Michigan and wives will no longer need to sign off on the sale of their husbands real estate.
Your estate planning documents should be updated on a regular basis. How often is regular? I generally recommend that your estate plan be reviewed on an annual basis. At a minimum, you should review your plan each year to make sure that it continues to meet your needs. A better choice would be to have your estate planning attorney review your plan with you annually to be assured that your plan is never out of date.
By Matthew M. Wallace, CPA, JD
Published edited February 12, 2017 in The Times Herald newspaper Port Huron, Michigan as: 2016 law changes may trigger estate plan updates