Michigan Designated Funeral Representative

A new law, 2016 Publ. Act 57, effective June 27, 2016, authorizes a person identified as the declarant, to designate a funeral representative to make decisions about postmortem funeral arrangements and the handling, cremation, disposition, or disinterment of the declarant’s body. MCLA 700.3206(2)(a).  The Act includes authority for cremation and determination of the right to possess the cremains, which is an important change. Under prior law, all persons with equal priority as next of kin had to approve cremation.

The Act revises the priority of persons who may decide on final arrangements and inserts a “designated funeral representative” ahead of spouses, family members and others. MCLA 700.3206(3). The only authority with higher priority is a person designated to direct the disposition of a service member’s remains under federal law or Department of Defense regulation, when the decedent was a service member at the time of death. Id

Historic reenactor Les Scott, dressed as the town mortician at the door of his funeral parlor at South Park City Museum, a collection of historic buildings in Fairplay, Colorado

Historic reenactor Les Scott, dressed as the town mortician at the door of his funeral parlor at South Park City Museum, a collection of historic buildings in Fairplay, Colorado

 

A funeral representative designation may be included in another estate-planning document, such as a will or designation of patient advocate, but it must be executed with two witnesses or be notarized. MCLA 700.3206(2)(b). Like a designation of patient advocate, a funeral representative designation may not appoint or be witnessed by a person associated with a declarant’s medical provider, and persons associated with a funeral establishment, cemetery, or crematory that would provide services for the declarant are also excluded. MCLA 700.3206(2)(c).

A funeral representative designation may be revoked by the declarant, or by the representative’s resignation, absence despite reasonable efforts to locate, or refusal act within 48 hours of receiving notice of the decedent’s death. Revocation by the declarant must be in writing and signed with the formalities of the original designation. MCLA 700.3206b.

The declarant may appoint a contingent representative. MCLA 700.3206a(1). The represtentative accepts the appointment by signing an acceptance or by acting as the funeral representative. MCLA 700.3206a(2).

mortuaryCircumstances that would bar an individual from inheriting from the declarant, such as divorce or annulment of marriage to the declarant, desertion disqualify the individual. MCLA 700.2801(2).  Being convicted of abuse or killing of the declarant, disqualifies the individual, MCLA 700.2802(2)(c), and being charged with the abuse or killing of the declarante bars the individual from acting as the designated funeral representative while the charges are pending. MCLA 700.3206(12).

A major concern for an individual nominated to act as designated funeral representative is personal liability for the declarant’s final arrangements. Unless he or she is a special fiduciary, the medical examiner, or the director of corrections in the case of a prisoner, a person who acts as designated funeral representative is personally liable for the costs of disposition to the extent that payment is not covered under a trust, prepaid funeral contract, or other “effective and binding means.” MCLA 700.3206(13). This is alarming because the statute includes no requirement for the funeral director or other provider of funeral or burial services to advise the nominated funeral representative that if he or she accepts the appointment and makes the necessary dispositions that there could be personal liability. The representative is not even required to sign an acceptance of appointment, if he or she accepts by performance.

Adapted with editorial changes from John B. Payne, “Michigan Probate, 2016-17 ed.,” Chapter 13, 125-27 (Thomson Reuters 2016).

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2017 John B. Payne, Attorney

Judicial OCD in Tennessee

In Frustrating the Intent of the Testator, I observed that many appellate courts seem to delight in invalidating wills that were clearly executed by the testator.  If judges take pleasure in destroying the estate plans of the recently departed, Hon. Kenny Armstrong of the Tennessee Court of Appeals should be rapturous to the point of wetting his pants in having pulled the rug out from under an unfortunate deceased testator, his attorney, and two well-meaning, but displaced, witnesses.  It is the epitome of formalism over substance. morris bill 1

On October 10, 2008, Bill Morris (“Decedent”) executed his Last Will and Testament.  In re Estate of Morris, 2015 WL 557970, 1 (Tenn. Ct. App. February 9, 2015).  The last two pages of the document show that the drafting attorney went to great lengths to establish that the testator intended to sign his will and, in fact, signed it.  However, the Tennessee Court of Appeals managed to find grounds to throw out the will as out of conformity with the Tennessee wills statute.

As is typical in these cases, the court first said that it would “endeavor to effectuate a testator’s intent.”  Id. at 4.  The court then invalidated the will because the word “affidavit” appears between the testator’s signature and the witnesses’ attestation.  According to the court, by signing below the “affidavit,” but not above it, the witnesses signed the affidavit, which, of course, was part of the document, but not the will, itself.

It is particularly ironic that the court stated, “There is no dispute that the testator properly signed his will at the end of the document.”  Id. at 2.  Thus, in a paroxysm of perversity, the court vitiated the testator’s signature by finding a hyper-technical error in the witnesses’ signatures intended to verify the testator’s signature.morris bill 2

In Frustrating the Intent of the Testator, I said:

An attorney should spend at least an hour gathering the facts for even the simplest estate, and at least an hour going over the documents with the client, before they are executed. Attorneys who rush through will executions do not serve their clients properly.

If only it were that simple.  It is clear that Bill Morris’s attorney, the witnesses, and Bill, himself, did their very best to execute his will correctly.  Sadly, best efforts are never enough when there is a judge determined to screw up the testator’s estate plan.

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com

©2015 John B. Payne, Attorney

Do Not Get Suckered by the Asset Protection Racket

Clients frequently ask about “asset protection” strategies. These plans may include offshore trusts, Nevada or Alaska trusts, irrevocable trusts or various insurance products. Many of the clients expressing concern about exposure to tort or business liability are reacting to investment pamphlets or seminar presentations trying to scare people into signing up for services. Except for obstetricians and drill-rig operators, asset protection should not be a major goal in estate planning. Companies promoting asset protection products are generally trying to take advantage of their targets’ fears and insecurities.

When clients start talking about asset protection from law suits, the first question should be whether the client has a significant risk of being sued for a large uninsured liability. Some doctors and other professionals in high-risk activities could be sued for millions, but that risk is too small for most clients to make it a planning objective. A truck driver has a high risk of being involved in an accident that could leave one or more others dead or severely injured. However, adequate insurance is a better way to address that risk than trying to high assets.

An offshore trust is often touted as a way to safeguard assets from attachment after a lawsuit. Although assets held by a trustee in the Caymen Islands or on Nauru would be difficult for a creditor to grab, they might also be difficult for the owner who put them there to retrieve. The question the client has to consider is how much trust he or she wants to put in a stranger in a strange land. Furthermore, a U.S. judge may not have jurisdiction over assets in the Caymens, but the judgment debtor who put them there would be under the judge’s control. The debtor who ignores the judge’s order to repatriate and pay over the assets will be held in contempt and might even be put in jail.

Trusts in debtor-friendly states are subject to the same limitations. They may be hard to get at, but if the debtor is subjected to questioning under oath by the creditor, it would be unwise to commit perjury or refuse to answer questions about what happened to significant property.

The best asset protection does not require exotic financial vehicles or foreign bankers. Adequate liability insurance works far better than trying to hide wealth and allows the estate to be enjoyed, rather than secreted.

Revocable living trusts, powers of attorney, and wills are highly cost-effective and can be used to transfer wealth from generation to generation efficiently and with conformity to the testator’s desires. Leave offshore accounts and money laundering to the criminal element. Minimizing court supervision and tax burden can be achieved very reliably and at reasonable expense. What is important is to choose a competent, experienced attorney with a good reputation.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2011 John B. Payne, Attorney
 
 

Charitable Trust FAQs

What Does a Charitable Trust Do?

A charitable trust helps to reduce estate and other taxes. Certain assets carry a heavy capital gains tax or income tax burden. They cannot be liquidated without paying a large portion of the proceeds to the government. A charitable trust may allow these assets to be liquidated and placed in trust, without paying the tax. It may also generate charitable deductions to shelter other income.

What is a Charitable Remainder Trust?

A Charitable Remainder Trust (CRT) holds assets in trust for the lives of the beneficiaries, paying income on the corpus to the beneficiaries. At the end of a specified period, or on death of the beneficiaries, a charity receives the corpus. Because the gross value of the assets generates income for many years, the CRT gives you more money back than you would receive by liquidating the assets and then investing the proceeds. The large charitable deduction on the donor’s Form 1040 when the trust is established also results in tax savings that may be invested to generate even more return on investment.

What is a Charitable Lead Trust?

A Charitable Lead Trust (CLT) holds assets in trust for a period of time, often the life of the grantor, paying income on the corpus to a charity. At the end of the period, the corpus is given to specified trust beneficiaries. If you want to benefit your descendants, but do not need the income from the assets, this type of trust is very useful. The Charitable Lead Trust shelters current income, saving income tax. At the end of the trust period, the corpus is received by the beneficiaries, free of estate or other tax.

How Does a Charitable Remainder Trust Work?

Assume that you have a $750,000 parcel of vacant land with a very low tax basis. You want to sell it and invest the funds to generate a steady income. If you sold the land, you would incur capital gains tax of over $100,000, leaving you with less than $650,000 of principal to generate income. Establishing a charitable remainder trust would spawn a large charitable deduction. It would also produce a higher income stream because the entire $750,000 would remain as principal. Apart from the satisfaction of giving a large sum to a worthy cause, it makes financial sense to establish the trust. The $25,000 or more saved due to the charitable tax deduction can also be invested for additional yield.

Are There Other Benefits to Having a Trust Hold Property to Be Distributed after You Die?

Yes. If you name an individual as beneficiary of an insurance policy or of your will, and that person is incapacitated when you die, the court will probably take control of the proceeds. That is because most benefits to be paid to an incompetent person are subject to court supervision. But if the assets are in trust, and the trust instructs the trustee to do so, the trustee can use the proceeds to provide for this person, without court interference.

You can also create a more complex plan to benefit your family in a trust than you can in a will. If you have a large number of beneficiaries and you want each to have a customized plan, using a trust makes sense. For example, if you want your son to receive distributions only if he maintains sobriety, marries, wears a pony tail, or becomes a plumber, such conditions can be included in a trust. A court might refuse to enforce such limitations.

Who Can Be Beneficiaries of the Trust?

You can name any person or organization you wish, but most people name their children and/or spouse.

Can I Make Any Changes to the Trust?

A Charitable Trust is generally irrevocable, so you cannot make changes after the Trust has been set up. Read yours carefully and be sure it is exactly what you want before you sign.

When Should I Set up a Charitable Trust?

You can set one up any time, but because the Trust is irrevocable, many people wait until they are in their 50s or 60s. By then, family relationships have usually settled – and you know whom you want to include as a beneficiary.

Should I Seek Professional Assistance?

If you think a charitable trust would be of value to you and your family, talk with a competent estate planning attorney. If you are not sure whether the attorney with whom you are talking has the background you need, do not be afraid to ask about the attorney’s training and professional affiliations. A well-qualified estate planning attorney should have a tax or accounting degree or at least 15 years of experience drafting wills and trusts. The attorney should also have appropriate professional affiliations. These could include active involvement in ABA or state bar sections related to estate planning. They could also include membership in the National Association of Elder Law Attorneys and other professional groups concerned with estate planning. A well-qualified attorney will be happy to explain his credentials.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2011 John B. Payne, Attorney
 
 

Estate Planning and Probate

I once had a 14-year-old client whose 42-year-old father had died suddenly. Her parents were divorced and relations between them were very hostile. My client was disinherited by her father; he made his sister the beneficiary of his life insurance and put her on his bank account. The father may have intended that his sister use the money for his daughter’s benefit, but that did not happen. This young girl’s sad case clearly illustrates the importance of making plans for death or incapacity.

We never know when we will be taken or struck down, so advance planning is crucial. Random violence, a devastating accident, or a natural catastrophe can happen at any time to anyone. Unexpected is implied by “random” and “accident.” People do not make plans for a fatal car crash or a tornado. They just happen.

You cannot assume that your surviving family will carry out your wishes if they are not in writing and properly signed. There is no such thing as “simple” in estate planning. Even a document as common as a will or a deed can have far-reaching consequences. I am often asked how much a “simple will” or a “quit-claim deed” would cost. Such documents are inexpensive to prepare–many times they are prepared without the assistance of an attorney–but the cost can be horrendous if they are not used appropriately. Even a very small estate can turn into a nightmare if the wrong documents are used.

As an example, it used to be quite common for an attorney to prepare a quit-claim deed from a parent to children, to be filed after the parent’s death. This seemed to be an easy, cheap, and fool-proof way to pass the house without going to probate court. However, city assessors started treating such deeds as transfers when signed, not when recorded. In Michigan this can result in retroactive property tax increases and penalties amounting to tens of thousands of dollars. The cost in such cases far exceeds what the parent would have spent on a will and a trust at a silk-stocking law firm, or what it would have cost to have the house go through probate.

Even as simple and common a document as a will can have pitfalls that only an experience attorney knows how to avoid. Some judges take delight in using arcane legal principles to produce unexpected results, as was described in “Frustrating the Intent of the Testator.”

An estate plan need not be expensive, even if prepared by an expert in the field. However, there are pitfalls in small estates as well as in larger ones. Whether to use a will or a trust, and whether to plan on probating the estate are crucial considerations that require a knowledgeable legal advisor, not just a document preparer. Look for an attorney with a tax or accounting background and experience in probate court. Attorneys who do not practice in probate court may not understand the importance of careful drafting and making documents self-proving.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2011 John B. Payne, Attorney
 
 

Probate Surprise

A probate estate I tried to open this week has turned into a can of worms due to an old, old will that no one in the family, least of all the decedent, knew about. It appears that the decedent executed a will in 1943 just before he shipped out for military service during World War II. The will was signed in Georgia and the Army helpfully sent the will to the Wayne County Probate Court in Michigan to be deposited in case the soldier did not survive his deployment. Fortunately, the soldier survived the war. Unfortunately, he apparently forgot that he had executed a will in the confusion of mustering out.

The will was drawn up before the soldier and his young wife had any children. He left his entire estate to his wife, if she survived him. Otherwise, his estate was left to his brother. The soldier’s wife predeceased him, as did his brother. However, due to the way wills are interpreted, the decedent’s estate may go to his brother’s children, instead of his own. This situation provides several lessons for attorneys and clients.

First, a will is a serious legal instrument that should be given careful consideration. I suspect that the young soldier’s will was drawn up as sort of a group exercise when his unit was being deployed. This seems particularly likely because the will was a pre-printed form with only a couple of spaces for beneficiaries. When I counsel young people about drawing up a will, I advise them to consider the possibility that they may have children at some point–even if they do not have any at the time they are drawing up their will and even if they are not then married. They need to consider likely events in their future. This was not done in the young soldier’s case or he probably would have written his will to cover the possibility he might have children.

Second, the fact that the will would leave the estate to the same people who would receive it in the absence of a will does not mean that a will is unnecessary. There might be an old will out there that the perslon has forgotten about. A new will revokes a former will and that former will might have named beneficiaries who are no longer desired.

Finally, depositing a will with the probate court may not be a good idea. Family members would have a difficult time finding a will if the person moved around. It might be necessary to check with many county probate courts, both in-state and out-of-state. A will that is deposited with the court would be more difficult to revoke. The person whose will it is would have to visit the court to request that it be given back so it could be destroyed. As in this case, a will deposited with the probate court might come back to haunt the family decades after the testator’s circumstances have changed and he or she no longer wants the same distribution plan.

This cases teaches the attorney that no worst-case planning ever covers all the bases. This family would never have suspected that a 68-year-old will might turn up to disrupt their father’s estate plan. It also teaches attorneys who help veterans with their estate planning that they should keep in mind that their client might have been instructed to execute a will during pre-deployment preparations and new estate planning should take that into consideration.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2011 John B. Payne, Attorney
 
 

“I Can’t Afford an Attorney”

Oh, the lies we tell ourselves: “I’ll quit as soon as I finish this pack.” “He really loves me; I just said the wrong thing.” “I just have big bones.” One of the worst lies we tell ourselves is, “I can’t afford an attorney.”

If you are thinking that you cannot afford an attorney, it is because you need one! You ask yourself where the nearest restroom is because you feel a biological need to use one (unless you are four, and fascinated by public restrooms like every other four-year-old). You do not wonder about restrooms if you do not have a high-water or excess-cargo problem. The thought that you cannot afford an attorney must have been triggered by the realization that you need an attorney. And if you need an attorney, what you cannot afford is not to consult one.

Donald Dexter’s Case

A woman came to see me in 2008 about her deceased son’s estate. The son, whom we will call Donald Dexter, had purchased a house on land contract in the ‘70s. It was paid off in the ‘80s. However, he had not consulted a lawyer to make sure the house was in his name. Had he done so, it would have cost him a few hundred dollars at the most.

An attorney would have contacted the sellers and demanded a deed and title insurance. When he died more than 20 years later, nearly all the records had been lost. To probate the man’s estate and secure title to the property for the man’s heirs cost over $10,000 in attorney’s fees.

The county title records for Donald’s home showed only that a fellow we will call Adam Arnold received title through a quit-claim deed in the ‘50s. The only other name we had was Alice Arnold, who had written a letter to Donald in the ‘80s regarding a final payoff on a land contract. The case became like an episode of “Forgotten,” with me playing the role of Christian Slater. I found a half-dozen possible “Adam Arnolds” and eliminated them one by one. I finally got lucky when I found Alice Arnold’s probate estate in a neighboring county.

Alice’s personal representative was her sister Charlene Carter. Alice’s heirs had been Charlene and their sisters Ermine Edwards and Fiona Arnold, all in their 80s or 90s. Fiona was 95 and had been in a persistent vegetative state her whole life due to a birth trauma. From Charlene, I learned that Adam Arnold had died in the ‘50s and his wife in the ‘70s. Alice and her sisters had been the only heirs.

My client’s son’s property had not been properly disposed of in any of the relevant probate proceedings. I had to file extensive pleadings to persuade the judge that all of the persons who might have had an interest in the property had been notified and had either waived their interest or failed to respond.

Azalea Anderson’s Case

A lot of people buy property on a land contract and never receive the proper paperwork to secure title. I had a client referred to me by Lincoln Behavioral Services, where I am chair of the board of directors. We’ll call the client Azalea Anderson. Azalea bought her house on a land contract from a real estate company and paid it off in the 80s. The real estate company failed to give her a warranty deed and title insurance, as it was obligated to do. Fortunately, the real estate company was still in business, so it was easy to sue the company in an action to “quiet title.” Azalea was delighted when I sent her the recorded judgment giving her full title to her home and refunded the money she had put up for costs. I even received a small fee in the settlement I had worked out with the real estate company.

Azalea was fortunate that I was able to help her at no cost to her, but she had spent several years worrying about whether she would be able to stay in her home. It would have been much better to have consulted an attorney when she paid off her home.

Grist for Trust Mills

Do-It-Yourselfers and people who have non-lawyers create deeds, wills, or trusts for them can be even more “fun” than the procrastinators. A number of my clients have been victimized by “trust mills.” These are insurance agents or outright scammers who sell estate-planning kits door-to-door. Usually, there is an attorney in the background who signs off on the documents with little or no direct contact with the consumer. Several victims of trust mills have consulted me when they found out that the estate plans were not what they wanted and that their investments had been tied up in inappropriate annuities or other investments. Not only had they received worthless generic wills and trusts, but they had paid the trust mills more than I would have charged!

If any of these clients had consulted me when they paid off their house or purchased an estate-planning kit, they and their families would have avoided serious legal problems. A competent, responsible attorney will not charge a client more than their services are worth. Many times I tell a client that they have a legitimate complaint and could sue the other party, but there is not enough at stake for a lawsuit to be worthwhile. Even if I cannot take their case to court, they usually feel better because their situation has been professionally evaluated.

The next time you think, “I can’t afford an attorney,” call my office and make an appointment. You cannot afford not to.

 

John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
 
©2010 John B. Payne, Attorney