Clients sometimes get confused about the way lawyers use the word “property.” In the legal community, the word “property” has a very broad meaning. It means anything a person or entity could own. Different types of property are then classified with different labels. For example, the term “real property” is used to mean land and things affixed to the land. “Intellectual property” refers to things like trademarks and patents. Bank accounts and investments are referred to as “intangible personal property.”
From the perspective of the child who moved to New Jersey 30 years ago, the sibling who moved back into the family home to live with (and be supported by) his aging mother is a ne’er-do-well scam artist who took advantage of and manipulated his mother as her health declined so that, in the end, her entire estate passed to him by one means or another. From the perspective of the son who lived with his mother during those final years of life, he sacrificed to allow his mother to enjoy her final years in a safe environment outside of assisted living, and she favored him out of appreciation for that sacrifice.
As Duane Horton contemplated his death, he decided to use on app on his smartphone to write a message that explained how he wanted his estate distributed when he was gone. Under Michigan law, that “document” was his will. So says the Michigan Court of Appeals in the recent case of In Re Estate of Duane Francis Horton, II.
A client with hearing loss contacts your office wanting to draft an estate plan. She relies on American Sign Language (ASL) for most of her communication. You freeze, what do you need to have to do? The answer is simple: you need to provide her with the aids or services that are required for you and her to have a normal attorney-client relationship. Under the Americans with Disabilities Act (“ADA”), that will likely include a qualified ASL interpreter at your expense.
Yes –“Stirpes”is a Word
In estate planning, lawyers sometimes use archaic legal terms. At times, these legal words are unnecessary and can create confusion. At other times, they are the best way of clearly expressing the client’s objectives. One of the phrases that often makes clients feel disconnected from the estate planning process is the term “per stirpes.”
Per stirpes is a term that is used to explain how assets are divided among future generations, if the persons who are named beneficiaries have predeceased the person leaving the gift. It is best understood by contrasting it with the other option: right of representation.
For instance, let’s say Joe has five children and leaves his estate to them in equal shares,but Joe lives to a ripe old age and three of his five children die before he does. Let’s also assume that of those three children, one has just one child, one has two children and the third has three children. Then the question becomes: do each of those six grandchildren receive an equal amount? Or do they each take the share of their parent, meaning one grandchild would get a fifth of the estate, two grandchildren would each get a tenth,and three grandchildren would each get a fifteenth?Under per stirpes, the grandchildren would get unequal shares.
Under right to representation, each would get an equal share.
A diagram might help:
Lou and Cindy each get 1/5 under either scenario.
Per stirpes would give Wanda Mary’s 1/5 share; Larry and Frank would share Tim’s 1/5 so they would each get 1/10,and Sara, Susan and Carl divide Mark’s1/5 and each get 1/15. Right of representation would give all of the grandchildren the same amount:1/10(which is 3/5divided equally among the six grandchildren).
Right of representation is sometimes referred to as equal at each generation. Per stirpes is about each grandchild having only an interest in their parent’s share. Per stirpes or right of representation would only make a difference if more than one child dies, and then only if those children have a differing number of descendants of their own. But it comes up, and therefore, it is important to be clear on this point.Good estate planning is, in part, about anticipating possibilities. It’s a good topic for you and your lawyer to discuss. The same rules apply to both wills and trusts. If your document doesn’t say, Michigan law assumes right of representation.
So-called “business succession planning” has always presented unique challenges to estate planners. And while there are certainly many challenges to successful business succession planning, due to the limited space available, this article will discuss only one aspect of business planning: The threshold issue of how to plan for a business to pass to the next generation when only some of the children are involved in the business operations.