If you have worked with an estate planning attorney before, it goes without saying that your primary focus was on the documents themselves – a will, maybe a trust, powers of attorney, etc. And hopefully when you concluded the process and your estate planning documents were signed, you also received some instruction on the next steps for preparing your assets to transfer to your beneficiaries to put the estate plan into full effect. However, I have seen in practice that sometimes this extremely important step does not receive the attention that it deserves.
Please read on for some helpful advice on preparing your assets for eventual transfer to your beneficiaries, as well as some other miscellaneous tips that you may have not heard before:
• Don’t Wait To Update Your Beneficiary Designations – Immediately after you finalize your estate planning documents, you should contact your financial advisor, retirement account administrator, insurance agent, bank, and any other person or institution that holds your financial assets. The reason? Making sure that these financial assets have up-to-date (and properly filled out) beneficiary designations. These forms are crucial, whether you have a trust or just a “simple” will, as they will ensure that upon your death, your financial assets transfer directly to either your trust or your individual beneficiaries. Your estate planning attorney should help you make that determination, but please be warned – most attorneys do not manage updating of these forms for you (at least not without additional fees). However, your attorney should at least advise you on the different options that you have without additional charge.
• Don’t Retitle Your Vehicles Into Your Trust – Once the “trust funding” ball starts rolling, it can be tempting for the thorough, planner types to address every single asset. However, please know that vehicles are the one asset that are not usually advisable to transfer to your trust, as doing so may require you to pay a 6% use tax on the value of the vehicle (under the present rule of the Michigan Secretary of State). Instead, the better approach is to rely on the specific provisions under Michigan law that allow upon the owner’s death for transfer of motor vehicles with a total combined value of up to $60,000 and watercraft with a total value combined of up to $100,000 to a surviving spouse or heir without the need for probate administration.
• Consider Designating Particular Items Of Personal Property Ahead Of Time – A lot of clients are quick to ignore their “miscellaneous personal property” (such as family heirlooms, furniture, etc.) because they don’t perceive these items to have much monetary value. However, we have often seen that, particularly in contentious families, these items hold significant value to certain family members, and thus become the source of a lot of infighting. The solution to this issue is to either designate the beneficiary of these items directly in the will or trust, or often more conveniently, a separate letter or memorandum referenced by the will or trust that you can change as many times as you want without having to pay your attorney to update your documents.
Thinking through these items will ultimately result in getting the most benefit and value out of your estate plan.