Unclaimed property registries are important tools for determining whether your loved ones left undiscovered assets. Every state has an unclaimed property registry, and you should search the databases in each state in which the deceased lived, owned a home, worked, or did business. While some commercial services allow the search of multiple state registries at a time, such as http://www.missingmoney.com which searches 38 different states, there is no better source than the individual state websites.

In Michigan, the unclaimed property registry is run by the Department of Treasury. This database can be searched by going to http://www.michigan.gov/treasury/0,4679,7-121-44435—,00.html. If a deceased relative appears to come up on the registry, you can claim the property by following the instructions found here: http://www.michigan.gov/treasury/0,1607,7-121-44435_57506—,00.html. A similar process can be utilized in other states, and the different state unclaimed property registries can be found by initiating an internet search for the state followed by the words “unclaimed property.”

In addition to the unclaimed property registry, Michigan has recently implemented a system specifically for dealing with unclaimed life insurance policies. The Department of Insurance and Financial Services (“DFIS”) started the “Life Insurance and Annuity Search Service,” or “LIAS.” Information about the program can be found at: http://www.michigan.gov/difs/0,5269,7-303-12902_70492_70599-345270–,00.html.

To participate in the LIAS program, one must complete a form online that contains information about the deceased. Once submitted, the DFIS will forward the request to every life insurance and annuity company authorized to do business in Michigan on a monthly basis. Each insurance company will determine whether there is an unclaimed life insurance policy or annuity, and if one is found, the insurance company will notify the DFIS, who will in turn, notify you. The DFIS will not notify you of a result, however, unless you are legally authorized to receive information, which you would be if you are the personal representative of the person’s estate, or if you are a beneficiary of the policy or contract.

The LIAS program represents a step forward in responding to the issue of unclaimed property in Michigan. Whether the deceased party lived in Michigan or elsewhere, anyone administering an estate should check the unclaimed property registries. If you have any questions about finding unclaimed property or if you need assistance with an estate, please do not hesitate to call the Law Offices of Shifman & Carlson, P.C. today at 248.406.0620.

In the United States, all trusts are considered “foreign trusts” for tax purposes unless two requirements are met. The first requirement is known as the “court test.” This requires a United States court to have jurisdiction over the trust. Virtually every trust meets this test. To verify, one can typically just look toward the end of the document for a choice of law provision – something along the lines of “this trust shall be governed under the laws of the State of Michigan.”

The second requirement, however, is known as the “control test” and is much easier to fail. This test requires that one or more U.S. persons must always possess the authority to control all substantial decisions of the trust. In short, the person controlling the trust (the trustee) must be a United States citizen or the trust becomes a “foreign trust” under the law. Thus, if any of your successor trustees, or a trust protector in some cases, is not a United States citizen and they come to control the trust, the trust will become a foreign trust, since failing to meet either of the two tests results in the trust being deemed a foreign trust. This is true regardless of whether it was a U.S. trust upon formation – any trust can become a foreign trust as soon as one of the two tests is failed.

If your trust becomes a foreign trust upon your death, the taxes on trust assets increase dramatically. You do, however, have 12 months to correct an inadvertent trust residency change under the Internal Revenue Code Regulations, but this requires a change in control over the trust, i.e. a new trustee must be appointed, which is not always the easiest process. If your trust names a foreign citizen as a successor trustee, you should contact an estate planning attorney so appropriate changes can be made to ensure this doesn’t happen. If you would like to discuss this issue further or if you have any questions or concerns, feel free to call the Law Offices of Shifman & Carlson today at 248.406.0620.

Imagine the following scenario: you and your spouse have unexpectedly passed away, and your child has recently turned 18. Your child has just graduated high school and is packing up to move to college, having just inherited more money than he or she has ever had in his or her life. Will your child save and manage the money properly? Our experience indicates that results may vary.

While you may have made provisions in your will to ensure who will receive your estate, you may not have made sufficient restrictions on how they will receive it. Typically, when a minor receives an inheritance, those funds are managed by a conservator or other responsible party (often a parent). However, a child becomes an adult in Michigan the minute they turn 18, and absent proper estate planning, is immediately entitled to receive their full inheritance without restrictions as soon as they reach that age.

Fortunately, there are estate planning techniques to ensure that a child does not burn through his or her inheritance all at once. One of the most effective tools is known as a testamentary trust. A testamentary trust is simply a “trust” that is contained in your will, which becomes effective upon your death if circumstances call for it, that is, if a person below a specified age receives a bequest. The personal representative of your estate establishes the testamentary trust with your funds and a trustee that you designate manages the funds for the benefit of the child, per your instructions. For instance, you could provide that your trustee may only pay for the child’s health, support, education and maintenance until he or she reaches a certain age or achieves a milestone such as graduating from college. You could also provide for the trustee to pay for the support and care of the child, but give the trustee the ultimate discretion to decide when the child is mature enough to receive the full inheritance.

Testamentary trusts are cost effective when compared to other alternatives and can easily be included in a will. If you otherwise have a simple estate plan but want to place some restrictions on how and when your children or grandchildren receive their inheritance, a testamentary trust can be an excellent choice.

Contact our firm to talk about how we can help with your estate planning needs.