Employment Law Attorney, Lindsay J. Raymond Recognized as Region’s Best & Brightest

Every September, the Traverse City Business News spotlights 40 local professionals under age 40 who excel with their economic impact on the region and in the community. This year marks the 16th anniversary of the annual 40Under40 list of influencers, and the seventh year Hagerty has been the signature sponsor.

Traverse City 40 Under $0

Congratulations to our community leaders & visionaries recognized as Forty Of The Region’s Best And Brightest by the Traverse City Business News.  An extra special congratulations to DAR Law partner and co-owner, Lindsay J. Raymond, Employment Law Attorney with Danbrook Adams Raymond PLC.

The 2022 list recognizes individuals in Grand Traverse, Leelanau, Benzie and Kalkaska counties under the age of 40 whose professional and community efforts during this past year had the most impact on their community, the region and the economy.

As a small business owner and partner of her boutique law firm, Raymond assists employers in the region with their legal needs. In her personal time, serving as Member and Grant Review Chair of the Board of Directors for Impact100 Traverse City; she's thrilled about the nearly $1.8 million Impact100 TC will have awarded to 16 regional nonprofits in a period of only six years. These funds go directly to providing needed services in our community and have an amazing impact on our local economy.

Read more about Raymond's professional (and personal) highlights from this past year including her contribution to the regional economic impact.

DANBROOK ADAMS RAYMOND PLC, CELEBRATES FIVE YEAR ANNIVERSARY

THE BOUTIQUE LAW FIRM KICKS OFF YEAR FIVE WITH A NEW OFFICE LOCATION

July 27, 2022 (Traverse City, Mich.;) On August 1, 2022, Danbrook Adams Raymond PLC, DAR Law, celebrates its five-year anniversary of bringing peace of mind to individuals, families, and businesses in Northern Michigan in their practice areas of Employment and Labor Law, Employer Defense and Litigation, Liquor Licensing and Regulation, and Estate Planning and Administration.

After practicing for years in larger firms, DAR’s three attorney owners, Cortney Danbrook, Janis Adams, and Lindsay Raymond, decided their clients deserved more.

“Five years ago, we opened a boutique law firm specifically designed to offer clients the legal experience and skill they would expect from a large firm, but with a down-to-earth, authentic, and personal touch,” shared Cortney Danbrook, DAR partner who specializes in providing advice and counsel to businesses, individuals, and families in the areas of estate planning and administration, liquor licensing and regulatory compliance.

The women of DAR Law knew their approach, experience, and skill would set them apart.

“We are honored to stand out, not only because we are a women-owned law firm, but also because we have years of experience (55 years combined) in highly focused areas of the law,” said Janis Adams, employment, and labor law partner at DAR. “We’re proud and humbled to be ‘THE’ legal resource in our practice areas.”

The boutique law firm is celebrating this anniversary milestone with a new office location as well. With the goal to better serve its clients, DAR has moved to a new office located at 625 Second Street (Second and Division). The new location features ample and easily accessible private parking on-site, as well as a larger and more welcoming space to counsel and collaborate with their clients.

DAR Law location“We’re excited about our growth and look forward to serving and expanding our client-base in this new space,” said Lindsay Raymond, employment, and labor law partner at DAR.

DAR Law extends a special note of gratitude to their legal assistant, professional advisors, and service providers for all their support, and their clients who have allowed them to stand by their side, guide them with their legal issues, and advocate on their behalf for the last five years.

“As business owners, we know the importance of a great team and community. We cannot thank you all enough for embracing us and continuing to trust us to be your legal resource for peace of mind.”

Learn more at darlawyers.com or call 231.714.0157 to set up an appointment.

Starbucks Scrutiny: Employer Takeaways Regarding Employee Conduct Policies

The green double-tailed mermaid Starbucks logo beckons weary airport travelers, early morning risers, long-day workers, and virtually all parents of small children who need a little extra pep in their step throughout the day.

Customers recognize that logo and know that on the other side of those doors they will be greeted by the aroma of percolating beans and pastries.

Starbucks’ employee policies recently have been receiving a lot more attention than their coffee, however.

In December 2021, a Starbucks store in Buffalo voted in favor of organizing and a movement caught fire, spreading all across the country. More than 50 Starbucks stores have voted to unionize with Starbucks Workers United and close to 250 stores have petitioned to hold votes.

Earlier this year, the National Labor Relations Board (NLRB) issued a complaint accusing Starbucks of numerous unfair labor practice charges related to their treatment of employees who are seeking to unionize in various ways.

In addition, on May 4, 2022, the NLRB filed a lawsuit against Starbucks, alleging that the Starbucks Partner Guide (their employee handbook) imposes overly broad and discriminatory rules that systematically violate workers’ labor rights. The NLRB is taking issue with 19 different sections of the handbook, stating that each is “interfering with, restraining, and coercing employees in the exercise” of their right to engage in protected activity under the National Labor Relations Act (NLRA).

Many of the challenged policies appear to be facially neutral conduct policies for which legitimate business reasons exist. This recent action suggests that the NLRB is reverting back to the evaluation standard in place during the Obama administration. Thus, employers should monitor the developments of this matter and conduct a self-assessment to determine if their own policies are subject to challenge.

What is the NLRA?

The NLRA is a federal law that protects the right of employees to organize, bargain collectively with their employers, and engage in other protected concerted activity. For instance, Section 7 of the NLRA states that employees have the right to not only organize a union and bargain collectively, but also to discuss wages and benefits and other terms and conditions of employment, and take action with one or more co-workers to improve working conditions, among other rights.

Further, the NLRA establishes that it is an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights. The NLRB is the independent federal agency that was created to enforce the NLRA.

One key fact that often escapes employers is that the NLRA applies to most private sector employers, regardless of whether they are currently unionized. Thus, because Section 7 rights are relatively broad, private employers need to be aware of the NLRA’s protections and ensure their conduct is compliant.

What is the NLRB’s policy evaluation standard?

During the Obama Administration, the NLRB was very active in challenging facially neutral policies as infringing on employees’ Section 7 rights. At that time, the NLRB’s policy evaluation test asked whether employees would “reasonably construe” a work rule to infringe on their right to engage in protected activity. For instance, several challenges related to Social Media policies, and the NLRB highly scrutinized such policies that regulated social media communications in a way that could be used to discourage collective protected activity. Some policies restricted employees from sharing confidential financial data or disparaging the employer on social media sites. However, the NLRB felt that such policies prevented employees from using social media to discuss the terms and conditions of employment or wages. Thus, in several cases, the NLRB found that employer social media policies were overbroad and needed to be rewritten.

In 2017, during the Trump Administration, the NLRB appeared to shift its approach. In a challenge related to a “no-camera” policy, the NLRB evaluated (1) the nature and extent of the impact on NLRA rights and (2) the legitimate justifications associated with the requirements, in an attempt to “strike the proper balance between…asserted business justifications and the invasion of employee rights in light of the Act.” This approach was more favorable to employers as it recognized legitimate business interests in regulating certain conduct and did not necessarily doom a policy simply because it could possibly be applied against Section 7 rights – there generally needed to be evidence of improper application.

In this particular action against the Starbucks Partner Guide, the NLRB is not expressly alleging that Starbucks discriminately applied the facially neutral policies to single out protected activity. Instead, the fact that the policies could be applied to limit or deter protected activity is what appears to be the issue.

Thus, the NLRB may be possibly returning to the old employee-focused test.

What about Starbucks?

The NLRB has taken issue with several policies in the Starbucks Partner Guide, including, but not limited to, policies regarding corrective action rules, dress code, cell phone use while working, social media usage and confidentiality rules.

For instance, the dress code required the Starbucks employees to wear the barista apron with limited flair pieces, like only one button. The NLRB is concerned that that limitation might discourage employees from wearing buttons that would support unionizing the workplace. Another example is the prohibition on cell phone use while working, as the NLRB is concerned that employees are discouraged from taking pictures or recording videos related to the terms and conditions of employment.

The hearing for this action was scheduled for June 14, 2022.

It is possible that this particular challenge may be part of the toolkit the NLRB is using to address the other more overt allegations that Starbucks is actively engaging in conduct to surveil and punish workers for protected collective activity. However, no decision on the Partner Guide challenge has been issued as of the date of writing this article. Thus, employers should stay tuned.

Employers could also be proactive and work with legal counsel to review their current policies and determine whether any modifications could limit the risk of challenge related to infringement on Section 7 rights.

Lindsay Raymond of Danbrook Adams Raymond PLC is an experienced employment law attorney who counsels employers on workplace compliance. You can reach her at lraymond@darlawyers.com. This article was published in the July 2022 issue of the Traverse City Business News.

 

 

Labor Law Attorney, Lindsay Raymond Presents at Incompass Michigan Leadership Conference

Incompass Michigan, the statewide network of mission driven organizations promoting community access and inclusion for people with disabilities and other barriers, presented its 48th Leadership Conference June 8-10 at the Delamar Hotel in Traverse City. This was the first in-person conference since 2019 and the DAR team was pleased not only to welcome this highly anticipated, three-day conference to the Traverse City community, but honored to have partner and owner of Danbrook Adams Raymond PLC, Lindsay Raymond featured as a presenting speaker.

Experienced employment law attorney and business owner, Raymond presented the 2022 Employment Law Update. She discussed recent updates to employment laws and practices governing the workplace, including accommodations, remote and hybrid work policies and issues, workplace culture assessments, best practices for performance management, considerations for attracting and retaining workers, and more.As an experienced management-side labor and employment attorney, she represents employers in all aspects of employment litigation, arbitration, and matters governing the workplace.

Labor Law Attorney, Lindsay Raymond presents at Incompass Michigan Leadership Conference"I had such a great time today presenting the 2022 Employment Law Update at the Incompass Michigan Leadership Conference in Traverse City," shared Raymond.  "I have attended this event for many years and the crowd is always inspiring. The year's conference was filled with fun and learning! Plus I’m passionate about inclusion and empowering employers to be their best selves."

 

Additional presentations featured topics ranging from addressing internal response to the COVID-19 pandemic and how we can help ourselves and others manage their own stress-related feelings, learning and adopting emotional agility to help us become more resilient and connected leaders, a MDHHS Update, the challenges and impact of social enterprise models, and the unique features of a community facing social enterprise, and effective inclusive leadership and change management strategies to help you meet the ongoing challenges we face in continuing challenging times.

Incompass Michigan members help thousands of residents all across Michigan to live, work, and play in the community. This was the 48th Leadership Conference and the first in-person event since 2019. Attendees gathered to celebrate their drives knowledge and best practice and to gain understanding of effective strategies to support individuals and families with a broad range of barriers, as well as nurture and encourage each other.

Todd Culver, President and CEO of Incompass Michigan shared his excitement, "We have an excellent program, with great networking opportunities, and an experience we hope connects you directly with the value of being a part of our association."

Lindsay Raymond is an experienced employment law attorney and business owner. You can reach her at lraymond@darlawyers.com.

 

A “Sincerely Held” Belief Not Always Enough

Analyzing Undue Hardship In Religious Accommodation And Exemption Requests

When deciding employee religious exemption requests, many employers operate under the misconception that freedom of religion is absolute in the private workplace, completely overlooking the undue hardship analysis.

The recent implementation of COVID-19 vaccine mandates, such as the federal Centers for Medicare and Medicaid Services health care worker mandate and other non-governmental company-issued mandates, has resulted in employees filing an unprecedented number of religious exemption requests.

In October 2021, the Equal Employment Opportunity Commission (EEOC) reported statistics for fiscal year 2020, showing that religious discrimination charges made up just 3.6% of all charges filed. This is in line with historic trends over the prior 20 years during which religious discrimination charges accounted for 2.4% to 4.2% of all EEOC charges.

In contrast to these trends, hospitals across the country are reporting that around 15% to 30% of their employees seek religious exemptions to mandatory vaccination, and the majority of such requests are granted. The reasons for this are nuanced, and most certainly involve considerations of potential staffing shortages.

Other reasons include that many employers, having minimal experience with the legal issues related to religious accommodations, feel overwhelmed with the sheer number of requests, and are accustomed to deciding disability accommodation requests, which are subject to a stricter standard of review.

In fact, the legal standard that employers must meet to demonstrate that a religious exemption accommodation request poses undue hardship is much less onerous than that required in a disability accommodation request.

In recognition of the quick action that would be required by employers to comply with impending vaccine mandates, on October 25, 2021, the EEOC issued new guidance to assist employers in addressing the unique legal issues raised by implementation of COVID-19 vaccine mandates, including religious exemption requests.

Based on the current, unprecedented explosion of religious exemption requests, and in recognition of the continued confusion that many employers are experiencing with this issue, the EEOC updated its guidance again on March 1, providing employers with additional information necessary to making these accommodation decisions.

Deciding a Religious Exemption Request

When deciding an employee’s request for a religious exemption from a COVID-19 vaccine mandate, the employer must first determine whether the employee asserts “sincerely held religious beliefs, observances, or practices” that conflict with the mandate. Once established, the employer may further consider whether it can provide a reasonable accommodation that does not pose undue hardship to operations.

Has Employee Stated ‘Sincerely Held Religious Beliefs, Observances or Practices?’

The sincerity of an employee’s stated religious beliefs, practices, or observances is usually not in dispute.  The employee’s sincerity in holding a religious belief is “largely a matter of individual credibility.” The definition of “religion” under Title VII protects non-traditional religious beliefs that may be unfamiliar to employers. Thus, as a general rule, an employer should assume that a request for a religious accommodation is based on sincerely held religious beliefs even if the employer is unfamiliar with the belief. Likewise, employees should not assume that their employer knows or understands their stated religious belief, and are required to cooperate with the employer when asked to explain the religious nature of their belief. Objections to vaccination that are based on social, political or personal preferences, or on non-religious concerns about the possible effects of the vaccine, do not qualify as “religious beliefs” under Title VII.

Employer Need Only Meet a ‘de minimis’ Standard to Show Undue Hardship

Requests for exemption from mandatory vaccination may be based on religious beliefs or for medical reasons, with religious exemptions accounting for the overwhelming majority of all exemption requests. Medical exemption requests, which are limited to specific medical conditions having contraindications to the COVID-19 vaccine, are analyzed under the Americans with Disabilities Act (ADA), which requires employers to meet a strict standard of review to show that a requested accommodation poses undue hardship. When evaluating whether undue hardship exists pursuant to the ADA, an employer must demonstrate that the requested accommodation would cause the business “significant difficulty or expense.”

In comparison, the United States Supreme Court has held that an employer evaluating undue hardship for an employee seeking a religious exemption under Title VII of the Civil Rights Act need only show that it would “bear more than a de minimis, or a minimal, cost to accommodate an employee’s religious belief.”  Such “costs” are broadly defined as “not only direct monetary costs but also the burden on the conduct of the employer’s business – including, the risk of the spread of COVID-19 to other employees or to the public.” Courts have found Title VII undue hardship where “the religious accommodation would violate federal law, impair workplace safety, diminish efficiency in other jobs, or cause co-workers to carry the accommodated employee’s share of potentially hazardous or burdensome work.”

Assessing Undue Hardship

When deciding whether it can accommodate an employee’s religious exemption request, the employer should carefully analyze the employee’s specific job functions and make a case-by-case, individualized assessment, considering the particular facts of the specific situation. In so doing, the employer is required to engage in the interactive process with the employee, requesting what specific accommodation the employee is seeking, e.g. remote work, wearing an N-95 mask, required testing, etc., and asking any necessary follow-up questions.  Employers should thoroughly consider all possible reasonable accommodations, including remote work and reassignment, and may consider an alternative accommodation to the one proposed by the employee.

When assessing undue hardship, the employer should consider the particular facts of each situation and will need to demonstrate how much cost or disruption to operations the employee’s proposed accommodation would involve. “An employer cannot rely on speculative or hypothetical hardship when faced with an employee’s religious objection but, rather, should rely on objective information.”  “When an employer is assessing whether exempting employees from getting a vaccination would impair workplace safety, it may consider, for example, the type of workplace, the nature of the employees’ duties, the location in which the employees must or can perform their duties, the number of employees who are fully vaccinated, how many employees and non-employees physically enter the workplace, and the number of employees who will in fact need a particular accommodation.” With respect to this last criterion, “the employer may consider the cumulative cost or burden of granting accommodations to other employees.”  Importantly, when deciding religious requests under the health care worker vaccine mandate, CMS requires the employer to ensure that it “minimizes the risk of transmission of COVID-19 to at-risk individuals in keeping with its obligation to protect the health and safety of patients.”

Denial of Accommodation Based on Undue Hardship

When an employer denies the employee’s accommodation based on undue hardship, it should provide the employee with a detailed explanation pertaining to whether it found the employee had stated “sincerely held religious beliefs, observances, or practices,” and all of the factors it relied on when deciding that it was unable to reasonably accommodate the employee without undue hardship on its operations. Employers also have the right to discontinue a previously granted accommodation if it subsequently poses an undue hardship on the employer’s operations due to changed circumstances.

Finally, when making religious exemption decisions, an employer should consider using an exemption review committee rather than relying on individuals to make these decisions, and should confer with legal counsel when questions arise to ensure compliance with the law.

With vaccine mandates in effect for an as yet undetermined period of time, employers can best protect their business, keep their workplaces safe, and reduce potential exposure to liability by becoming knowledgeable about Title VII religious exemption legal issues.

-

Janis L. Adams of Danbrook Adams Raymond PLC is an experienced employment law attorney and business owner. You can reach her at jadams@darlawyers.com

This article was featured in the April 2022 issue of the Traverse City Business News.

Is Your Estate Plan Protecting You From Yourself?

A single tear falls from his cheek as he struggles to find the word. A missed mortgage payment, a transposed number, a forgotten appointment, silent confusion. Is it a sign of decreasing competency or typical age-related changes? We are independent and stubborn creatures by nature, born knowing what is best for us and hesitant to put someone else in control. Out of fear, we often ignore the warning signs and cover up cognitive impairments. It is that denial and
secrecy that makes it difficult to determine if and when an individual can no longer manage their daily responsibilities.

Incapacity is never black and white. It is a slippery slope fraught with emotion. We live in fear of losing our freedom, and those around us wonder if this is the new “norm,” or if they’re simply jumping to conclusions. By definition, an incapacitated individual “is impaired by reason of mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, or other cause, not including minority, to the extent of lacking sufficient understanding or capacity to make or communicate informed decisions.” MCL 700.1105(a) A well-crafted legal definition that unfortunately translates poorly into real life.

None of us are equipped to evaluate someone’s mental competency, but if we don’t, who is? Who is protecting us from ourselves? Unfortunately, it often takes a significant financial loss before a cognitive deficiency is discovered. Having the right tools in place can not only avoid court involvement, but protect us from being vulnerable to financial exploitation. As with many things in life, advance planning is key. In fact, estate planning is much more than directing distribution of your assets once you are gone. Instead, a well-crafted estate plan should also provide direction and protection while you are living.

  • Financial Durable Power of Attorney. An invaluable document that gives us the power to decide who we want acting on our behalf to make financial and business related decisions. All too often we take for granted the day-to-day transactions we are able conduct, but what happens when we are no longer able to do so? Or, who is ensuring that the transactions we conduct are in our best interest? A comprehensive Durable Power of Attorney will incorporate provisions to control how and when our incapacity is triggered, and who will step in when necessary. By defining incapacity, the steps needed to prove it, and appointing the individual to fulfill that role, the Durable Power of Attorney serves as a roadmap for determining incapacity without judicial intervention.

 

  • Durable Power of Attorney for Healthcare. Much like the Financial Durable Power of Attorney, the Durable Power of Attorney for Healthcare ensures that we not only choose who we want making decisions related to our healthcare, but that we are also able to communicate our specific wishes with respect to life-sustaining treatment and end of life care. Healthcare related decisions are not only delicate, they are extremely personal; so it is imperative that we know and trust who will be making those decisions when we are no longer able. A carefully drafted Durable Power of Attorney for Healthcare not only allows us to empower our Patient Advocate with the authority to carry out our wishes, it again avoids the complexity of court involvement.

 

  • Revocable Living Trust. If a Trust is an element of your estate plan, it is critical that your Trust document also anticipates your incapacity. By nature, estate planning documents are designed to ease the burden on your family and friends, therefore your Trust should not only address appointment of key individuals and direct administration of your assets upon your death; it needs to include a mechanism for determining and managing future cognitive issues. Particularly, it should provide provisions to elect certain individuals
    who can trigger evaluation by a licensed physician to certify incapacity, protect you from exercising certain powers upon determination of your incapacity, and give them authority to use the financial resources necessary to pay for your care.

It will always be a delicate balance between respecting an individual’s independence and protecting that individual from financial vulnerabilities. However, it is no longer about losing control, it’s about keeping it. The first step in maintaining that control is to ensure you have a properly drafted estate plan in place that clearly defines, anticipates and prepares for a cognitive impairment. Whether you executed your documents five years ago, you are appointed in a friend or family member’s documents, or you are a trusted advisor to individuals with diminishing capacity; you should frequently review those documents to ensure you understand how and when incapacity will be triggered. For some, incapacity may be a slow, gradual decline. For others, it will happen unexpectedly. While we may not have control over when we will be affected by incapacity, we can control how our personal and financial affairs will be managed and who we want managing our affairs when we are no longer able to.

_

Cortney Danbrook provides specialized counsel to individuals, families in the areas of estate planning and administration. She can be reached at (231) 714-0163 or cdanbrook@darlawyers.com.

Have You Checked Your Beneficiary Designation Lately?

Remember that first day of your new job? Sitting anxiously and nervously as that kind human resource manager patiently walked you through endless stacks of “on-boarding” paperwork. Remember the beneficiary designation form you filled out for the company’s 401(k) that day? Remember who you named as the beneficiary of your 401(k)? Probably not, and not many people do. However, the beneficiary, or lack thereof, named on your retirement account not only affects who will receive those assets, but how and when they are taxed. If not done properly, the distribution of one of your largest assets could pass contrary to your intent with unnecessary tax implications.

Retirement assets, such as individual retirement accounts (“IRAs”), 401(k)’s and other qualified plans contain pre-tax dollars. Money you put away in a specific type of savings vehicle which allows you to avoid paying tax on that money until such time as it is withdrawn in the future. These types of accounts allow you to name a beneficiary who will receive the balance of the assets in that account upon your death. Simple, right? Well, not really. Since these accounts contain pre-tax dollars, the IRS is anxiously waiting for the money to come out of the account so they can collect income tax. How and when the retirement assets are taxed depends on a number of factors. Complicating matters was the passage of the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”) on January 1 st of this year. Prior to the SECURE Act, beneficiaries of retirement assets (with certain exceptions) were able to continue deferring taxes and take required minimum distributions over their life expectancy. The SECURE Act, however, changed that. Again, with limited exceptions, non-spouse beneficiaries now must withdraw all assets within a ten (10) year period. With retirement assets beginning to make up the largest percentage of an individual’s wealth portfolio, proper planning for succession of retirement assets is critical.

  • Putting Your Spouse First. You learn this rule the day you get married, but it also holds true for your retirement assets. When named as a beneficiary, spouses are afforded the unique ability to roll over those assets into their own IRA and treat them as their own. This maximizes tax deferral and provides the greatest amount of flexibility for planning. Keep in mind however, these assets will go outright to your spouse, so special circumstances, including blended families may require additional planning.

 

  • Giving it to the Kids. Besides our spouse, our children are the next natural beneficiaries of our assets. While your estate plan may provide for a trust to hold their inheritance until a certain age, or restrict their access to the assets until specific conditions are met, a standard beneficiary designation will distribute those assets outright. This means that if you name your child as a beneficiary of your retirement account, they will receive those assets regardless of their age or life circumstances. Take Jeff’s story for example. Jeff was a widower with one son, Peter, who just turned eighteen. Jeff passed away unexpectedly with his largest asset being an IRA naming his son Peter, as the primary beneficiary. Since Peter was eighteen, the IRA paid out directly to Peter – free of restrictions. Can you guess what Peter did? He did what any young eighteen year old would do; he withdrew from college, cashed out the IRA and bought the fastest, most expensive car he could find. Not only did Peter unnecessarily accelerate the income tax on the entire amount of the IRA, his inheritance is now fully invested in a depreciating asset.Each family is unique, so careful planning and consideration should be given when naming children as a direct beneficiary of your retirement account.

 

  • Maximize Your Retirement Assets with Charitable Intent. An often overlooked use of retirement assets is to carry out your charitable intent. If you intend for a portion of your estate to go to charities, consider naming those charities as direct beneficiaries of your retirement account. Distributions which go directly to charities are not taxed, therefore the charities receive one hundred percent of every dollar distributed. If you have both individual and charitable beneficiaries, consider setting up separate IRAs or coordinating your estate plan and assets in a way that directs the charities’ portion of your estate shall first come from your retirement accounts.

 

  • Make Sure Your Estate Plan and Beneficiary Designations are Consistent. A common misconception is that your estate plan documents control distribution of all of your assets, including your retirement accounts. Unfortunately, this often leads to inconsistent distribution of assets between an individual’s estate plan and retirement accounts, as well as an acceleration of taxes. Remember that beneficiary designation form? Well, by operation of law, that document controls how your retirement account is distributed, not your Will or Trust. It is not uncommon to fill out your beneficiary designation form and never look at it again. The problem? At the time you signed it, you were single with no children so you named your parents as the beneficiaries. Now, ten years later, you are married with three kids and your estate plan leaves all of your assets to your wife and children. Since the beneficiary designation on your retirement account, not your estate plan, controls that asset, your parents stand to receive that account, not your wife and children. Another common mistake is to designate your “estate” as the beneficiary of your retirement account. Seems reasonable, right? Unfortunately, naming your “estate” as the beneficiary only makes the IRS happy. While the account will eventually get distributed in accordance with your will, it significantly accelerates the payment of income taxes. Instead of your spouse being able to continue tax deferral for their lifetime, or your children having the ten (10) year tax deferral period, your estate is subject to a mandatory five (5) year withdrawal period.

The same thought and planning that you have put into saving for retirement should be applied to the succession of those assets. Periodic review and updating of beneficiary designations is crucial to avoiding inconsistent distribution patterns, unintended omissions and unnecessary taxes. As Benjamin Franklin famously said, “By failing to prepare, you are preparing to fail.”

_

Cortney Danbrook provides specialized counsel to individuals, families in the areas of estate planning and administration. She can be reached at (231) 714-0163 or cdanbrook@darlawyers.com.