October 3, 2022 • 15 mins
Lori Anne Douglass, Co-Chair of the Diversity Committee of the Trusts and Estates Section of the New York State Bar Association. She joins the podcast to help educate us about estate planning and leaving a legacy. She covers everything from best times to start estate planning, what counts as an "Asset," the difference between a will and a trust, revocable and irrevocable trust, and so much more.
Guest Website: https://drestatecounsel.com/about
See omnystudio.com/listener for privacy information.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Lorianne Douglas is the founding partner at Douglas rottenmuck Or, LLC,
where she specializes in a state and business succession plan
LORI thank you so much for joining us today, Welcome
to Money Moves. Well, thank you so much for inviting Eachan,
(00:24):
it's a pleasure to be here. Well, it's a pleasure
to have you on here. And I'm really excited to
dive into this topic because i feel like a state
planning and understanding how we can plan for the future
is a really important part of how our communities can
really build wealth and understand and take a three sixty
view of what that means. So can we dive in
And I'd love for you to address what is a
(00:46):
state planning and when do we need to begin to
think about it? Well, Tania, Actually, a state planning, from
my perspective, is a little bit of a misnomer because
it seems to imply that you have to have a
big estate, you have to be rich to do it.
But what it really is is sitting down and constructing
a plan a whether it consists of just a will
(01:10):
or beneficiary designations how you own your real estate. But
having a plan so that if you become disabled or
when you pass, your assets go not only to who
you want, but the way you want and hopefully saving
you know, cost court costs, taxes, whatever can be saved.
(01:32):
But really to ensure that all of your belongings transfer,
you know, the way you want it, in a way
that's also not only what you want, but in a
way that's helpful and beneficial to your beneficiary. That's one
of the reasons we use trust because trust give protection
to the beneficiaries from creditors and the like. That is
(01:54):
a great point because I feel like, you know, you
started off by saying a state planning that feels like
I need to have multiple homes in different countries. But
really it's a grandiose term for saying, hey, let's take
some time and plan out how we would like our
assets to be provided or distributed through our family members,
(02:14):
loved ones, etcetera. And again, it's just about foresight and planning.
So what are the first steps that we take and
when we're considering starting the process of a state planning,
who do we turn to? Well? First, one thing. Another
thing about estate planning is people often started when they're
you know, seventy eighty. I have clients ninety years old. Thing,
(02:34):
I think it's time. I'm like, I think, but the
time to start is when you're young, really, when you
start working, or when you um have a child, or
when you have any assets. And nowadays young people are
creating assets every second of the day. Absolutely in those
(02:56):
digital assets really could have value. Think about how you
own things. Put the title, the title, whether there's a
beneficiary when you get your first job, your four one
K or life insurance through your employer, all of those things.
That's how you're starting your plan. There's a lot of
(03:16):
different things at play here. And if I back out
of it, and you know, I know our audience is
going to ask, is estate planning essentially creating a will?
Is that the same thing? Or is a trust something different?
Because now you've mentioned a lot of different players, But like,
how do is it okay if I just decide to
get a will? Well, yeah, it's okay if you just
(03:37):
decide to get a will, because that will, will, you know,
should determine how your assets will pass on your death.
That will a couple of things with just the will,
one that gives you no disability planning. So if you
become disabled, to have a stroke, you suffer from dementia,
you go into nursing home, whatever. There's no planning for
(03:57):
you or for your loved one during your disability. So
that's one reason you need more than just a will
and a will guarantee that your estate goes through the
court to What probate is is the process of authenticating
a will. Because the person has a will, it's called probate.
(04:19):
If you don't have a will, it's called administration. But
either way you have to go through the court. But
there are other plans like using revocable trust or irrevocable
trust where you don't have to go through the court process. Yeah,
so that's one of the things, especially since COVID and uh,
(04:39):
there's just the courts have been shut down and now
they're backlog and there's all kinds of problems. So one
way to plan is instead of just doing a will,
you take your assets and you put them in a
revocable trust. While you're alive, you're the grant tour of
the trust, you're the trustee of the trust, and while
you're alive, you're the benefit the area of the trust. Oh,
(05:03):
those assets are already in the trust and then they
can be administered privately by your death trustees. As they say,
it will takes its life upon your death. There are
other vehicles that can start working for you during your lifetime.
Gives you more order. You can have your kids involved
in the process. They can know more to that upon
(05:26):
your death is more structure. So you mentioned seeking counsel
from a bunch of different people, from accountants to lawyers
to this. Who's the first person that I go to
when I want to just start a basic will? So
the only the only thing that I can do, you
will a lawyers. Okay, So I I get I. I
don't promote d I Y wills because they're very complex
(05:49):
and people people do them. I review them all the time.
People come to me, they asked me to review their will,
and then after I do, have so many problems that
they weren't even aware of because they didn't have the expertise.
And you a little bit, but not enough to really
create an effective document. So the first person you have
to you see a lawyers to do your will. But
(06:10):
often times the first person in that process will be
your financial planner, your life insurance person, god a. Even
if you buy a home your mortgage broker. These are
people that see your money and see you might need help.
Those are the people that typically refer to the lawyer
and say you need to get everything organized, Lorie. We've
(06:33):
seen a lot in the media with you know, big
celebrities who have passed on prematurely and have not left
a will or proof of how they want things distributed
amongst their family members. What happens to a person's estate
if they don't have a will, it do Your estate
just goes by state law. Now that's one thing about
(06:55):
a state planning. It's state specific. So wherever a person
is domiciled when they die, it's the law of that
state that governs what happens to their assets if there's
no will or beneficiary designations, joint ownership, that kind of thing.
And in most states the despositive scheme if a person
(07:17):
is single with no children, that goes in equal shares
to their parents, And that alone is contrary to what
most single people want to do. Most single people, especially
if they have siblings, nieces and nephews. Most single people
want to leave their estates to their nieces and nephews,
(07:38):
and it never gets to them because the mom and
dad and all your brothers, they they cut them out,
so it's it goes by the state. And then not
only do you not get to say how you wanted
to go to whom, but there are always additional costs
if you don't pick the fiduciary for your estate in
a will or in some plan, and the court of
(08:00):
points someone. The court often requires a bomb to be
posted because they don't know if your brother who comes
up to administer your state is a crook or or
a good guy. The reality of it is is like
you know, losing a loved one prematurely or even if
it's expected is difficult for any family. But you know,
(08:21):
once you throw in these nuances and the complications of
dividing up in a state or assets, it is really
hard for any family to weather. So pre planning and
understanding and making your wishes clear before you pass saves
a lot of grief um for a lot of family
members in a really difficult time. Yes, and when you
(08:44):
say nuances, nuances is a very good term for messity,
And so I mean a lot of people. You know,
we are blended family. Lots of people have lots of
children in and out of wedlock and it's really quite well.
One of the messy situations you see regularly is a
(09:06):
surviving spouse who is not the mother of the surviving children,
and there is often conflict. And if a person dies
without a will, have your estate goes to your spouse,
but the other half those to your children and equal shares,
So that means you know, and who are all those children?
Some people have quite a lot. It used to be
(09:27):
back in the day if a if a if a
man died and there had not been proof of fraternity,
well there he goes out away with it. But nowadays
there is all all kind of DNA testing and you
don't need the body, You just need the other siblings,
or you just need the decedentst mother or brothers sister.
(09:48):
Now they can take the DNA test and they can
just swab family members. Just a very random question. So
what happens if someone passes away and they don't have
a will but they have all these assets, like, is
it just then a state decision on how to distribute it? Yeah?
So yeah, basically, what happens if you die without a will?
(10:08):
The first you know, first your family, if you have family,
they have to go to the court where you live
in the county where you live, and and ask to
be appointed a fiduciary. And there's a sortain certain order
as to who has priority. So a person who's single,
for example, with adult children, those adult children have priority
(10:29):
to go and become the administrator of the estate. And
then what happens is once someone is appointed, they have
to administer the estate in accordance with state statute tells
you you collect the assets, you have to pay the debts,
You have to pay the debts in certain order, you
have to do the final income tax returns, you have
to pay any estate tax, all of those things. And
(10:51):
then once you've marshaled the assets, paid all the decedents debt,
and that includes credit card debt and medical bills and
all all times of debt. Your death doesn't die with you,
so once all of those deaths have been paid, then
the estate would be distributed out in equal shares to
the next of ken. If there is no next of ken,
(11:13):
what actually happens is the money everything will eventually escheat
to the state if no family members come up to
claim it, and if no family members in New York,
for example, if there are no family members closer than
first cousin be on both sides. The public administrator that
(11:33):
is the government agency that administers the state for people
who don't have family members to do it solur. Last
question for you, how much should people expect to pay
for estate planning. Well, estate planning is gonna have The
cost is really gonna vary depending on you know where
you are in the country. Obviously, everything costs more in
(11:54):
New York to do anything than it costs in other places.
But it's the cost is not it's insignificant related to
the value. I mean it's it's it's nominal because what
what you're gonna do is take care of yourself while
you're living. If you become disabled, you're going to have
(12:16):
documents for that, as well as really going to protect
your family, make sure that they're protected from creditors in
the future, make sure that your your states bills can
all be paid, make sure that there are trust or
that there's the guardians for children. All of those things
are gonna be in that plan. And so even if
(12:40):
they cost you a few thousand dollars, it is worth
the money that is going to be saved in the
administration of your state be much easier. It is always
easier and more cost effective across the board one a
hundred percent. You know, I really appreciate you coming here
today and joining us because I know this is a
(13:01):
topic that's obviously incredibly sensitive for many of us. We
don't like to think about, you know, the tough times,
the bad times, and especially grief topics can be incredibly painful.
But you know, I'm grateful to you for sharing this
and opening up this conversation because it will really help
many of us as we look towards planning for the
future and estate planning and keeping our wealth in our families.
(13:25):
So LORI thank you so much for being here today,
and can you please tell us UM on our Money
Moves audience where they can find you if they would
like to follow up or ask more questions. Sure, well,
the best way to reach me is actually to email
me right at the office. My email addresses LORI L
O R I at d R A State Council d
(13:48):
R E S P A P E C O U
N s C L dot com. We also are on LinkedIn,
and I think we have a firm Facebook page, but
I am often do busy to check my social media.
I can imagine Laurie, thank you so much. I know
we've only begun to scratch the service on this, but
(14:09):
don't worry, Money Mover friends, Lauren Douglas will be back
with us later on to really give us a deeper
dive and that advanced course on estate planning. Stay tuned
tomorrow and every day this week for more from our expert.
Can you give us some other outlying ideas on things
that we should actually consider when we're creating our wills
and estates, So you have to look at everything and
(14:33):
very special money versus moves At this point, I believe
she's starting to lose the capacity to make sound decisions
about her life, health and finances. What everyone wants in
the lifetime is to be validated. They want to feel
them heard and understood. And a celebrity guest you won't
want to miss. Drummer Boy, is so great to have
you here. Like the tramp was a location, this is
(14:54):
what we call out trap. This is where we hustle
make our money. This is our form of ex change.
Money Moves is an I Heart Radio podcast powered by
Greenwood Executive produced by Sunwise Media, Inc. For more podcasts
on I Heart Radio, visit the i heart Radio, app,
Apple Podcasts, or wherever you get your podcasts from.
Lorianne Douglas is the founding partner at Douglas rottenmuck Or, LLC,
where she specializes in a state and business succession plan
LORI thank you so much for joining us today, Welcome
to Money Moves. Well, thank you so much for inviting Eachan,
(00:24):
it's a pleasure to be here. Well, it's a pleasure
to have you on here. And I'm really excited to
dive into this topic because i feel like a state
planning and understanding how we can plan for the future
is a really important part of how our communities can
really build wealth and understand and take a three sixty
view of what that means. So can we dive in
And I'd love for you to address what is a
(00:46):
state planning and when do we need to begin to
think about it? Well, Tania, Actually, a state planning, from
my perspective, is a little bit of a misnomer because
it seems to imply that you have to have a
big estate, you have to be rich to do it.
But what it really is is sitting down and constructing
a plan a whether it consists of just a will
(01:10):
or beneficiary designations how you own your real estate. But
having a plan so that if you become disabled or
when you pass, your assets go not only to who
you want, but the way you want and hopefully saving
you know, cost court costs, taxes, whatever can be saved.
(01:32):
But really to ensure that all of your belongings transfer,
you know, the way you want it, in a way
that's also not only what you want, but in a
way that's helpful and beneficial to your beneficiary. That's one
of the reasons we use trust because trust give protection
to the beneficiaries from creditors and the like. That is
(01:54):
a great point because I feel like, you know, you
started off by saying a state planning that feels like
I need to have multiple homes in different countries. But
really it's a grandiose term for saying, hey, let's take
some time and plan out how we would like our
assets to be provided or distributed through our family members,
(02:14):
loved ones, etcetera. And again, it's just about foresight and planning.
So what are the first steps that we take and
when we're considering starting the process of a state planning,
who do we turn to? Well? First, one thing. Another
thing about estate planning is people often started when they're
you know, seventy eighty. I have clients ninety years old. Thing,
(02:34):
I think it's time. I'm like, I think, but the
time to start is when you're young, really, when you
start working, or when you um have a child, or
when you have any assets. And nowadays young people are
creating assets every second of the day. Absolutely in those
(02:56):
digital assets really could have value. Think about how you
own things. Put the title, the title, whether there's a
beneficiary when you get your first job, your four one
K or life insurance through your employer, all of those things.
That's how you're starting your plan. There's a lot of
(03:16):
different things at play here. And if I back out
of it, and you know, I know our audience is
going to ask, is estate planning essentially creating a will?
Is that the same thing? Or is a trust something different?
Because now you've mentioned a lot of different players, But like,
how do is it okay if I just decide to
get a will? Well, yeah, it's okay if you just
(03:37):
decide to get a will, because that will, will, you know,
should determine how your assets will pass on your death.
That will a couple of things with just the will,
one that gives you no disability planning. So if you
become disabled, to have a stroke, you suffer from dementia,
you go into nursing home, whatever. There's no planning for
(03:57):
you or for your loved one during your disability. So
that's one reason you need more than just a will
and a will guarantee that your estate goes through the
court to What probate is is the process of authenticating
a will. Because the person has a will, it's called probate.
(04:19):
If you don't have a will, it's called administration. But
either way you have to go through the court. But
there are other plans like using revocable trust or irrevocable
trust where you don't have to go through the court process. Yeah,
so that's one of the things, especially since COVID and uh,
(04:39):
there's just the courts have been shut down and now
they're backlog and there's all kinds of problems. So one
way to plan is instead of just doing a will,
you take your assets and you put them in a
revocable trust. While you're alive, you're the grant tour of
the trust, you're the trustee of the trust, and while
you're alive, you're the benefit the area of the trust. Oh,
(05:03):
those assets are already in the trust and then they
can be administered privately by your death trustees. As they say,
it will takes its life upon your death. There are
other vehicles that can start working for you during your lifetime.
Gives you more order. You can have your kids involved
in the process. They can know more to that upon
(05:26):
your death is more structure. So you mentioned seeking counsel
from a bunch of different people, from accountants to lawyers
to this. Who's the first person that I go to
when I want to just start a basic will? So
the only the only thing that I can do, you
will a lawyers. Okay, So I I get I. I
don't promote d I Y wills because they're very complex
(05:49):
and people people do them. I review them all the time.
People come to me, they asked me to review their will,
and then after I do, have so many problems that
they weren't even aware of because they didn't have the expertise.
And you a little bit, but not enough to really
create an effective document. So the first person you have
to you see a lawyers to do your will. But
(06:10):
often times the first person in that process will be
your financial planner, your life insurance person, god a. Even
if you buy a home your mortgage broker. These are
people that see your money and see you might need help.
Those are the people that typically refer to the lawyer
and say you need to get everything organized, Lorie. We've
(06:33):
seen a lot in the media with you know, big
celebrities who have passed on prematurely and have not left
a will or proof of how they want things distributed
amongst their family members. What happens to a person's estate
if they don't have a will, it do Your estate
just goes by state law. Now that's one thing about
(06:55):
a state planning. It's state specific. So wherever a person
is domiciled when they die, it's the law of that
state that governs what happens to their assets if there's
no will or beneficiary designations, joint ownership, that kind of thing.
And in most states the despositive scheme if a person
(07:17):
is single with no children, that goes in equal shares
to their parents, And that alone is contrary to what
most single people want to do. Most single people, especially
if they have siblings, nieces and nephews. Most single people
want to leave their estates to their nieces and nephews,
(07:38):
and it never gets to them because the mom and
dad and all your brothers, they they cut them out,
so it's it goes by the state. And then not
only do you not get to say how you wanted
to go to whom, but there are always additional costs
if you don't pick the fiduciary for your estate in
a will or in some plan, and the court of
(08:00):
points someone. The court often requires a bomb to be
posted because they don't know if your brother who comes
up to administer your state is a crook or or
a good guy. The reality of it is is like
you know, losing a loved one prematurely or even if
it's expected is difficult for any family. But you know,
(08:21):
once you throw in these nuances and the complications of
dividing up in a state or assets, it is really
hard for any family to weather. So pre planning and
understanding and making your wishes clear before you pass saves
a lot of grief um for a lot of family
members in a really difficult time. Yes, and when you
(08:44):
say nuances, nuances is a very good term for messity,
And so I mean a lot of people. You know,
we are blended family. Lots of people have lots of
children in and out of wedlock and it's really quite well.
One of the messy situations you see regularly is a
(09:06):
surviving spouse who is not the mother of the surviving children,
and there is often conflict. And if a person dies
without a will, have your estate goes to your spouse,
but the other half those to your children and equal shares,
So that means you know, and who are all those children?
Some people have quite a lot. It used to be
(09:27):
back in the day if a if a if a
man died and there had not been proof of fraternity,
well there he goes out away with it. But nowadays
there is all all kind of DNA testing and you
don't need the body, You just need the other siblings,
or you just need the decedentst mother or brothers sister.
(09:48):
Now they can take the DNA test and they can
just swab family members. Just a very random question. So
what happens if someone passes away and they don't have
a will but they have all these assets, like, is
it just then a state decision on how to distribute it? Yeah?
So yeah, basically, what happens if you die without a will?
(10:08):
The first you know, first your family, if you have family,
they have to go to the court where you live
in the county where you live, and and ask to
be appointed a fiduciary. And there's a sortain certain order
as to who has priority. So a person who's single,
for example, with adult children, those adult children have priority
(10:29):
to go and become the administrator of the estate. And
then what happens is once someone is appointed, they have
to administer the estate in accordance with state statute tells
you you collect the assets, you have to pay the debts,
You have to pay the debts in certain order, you
have to do the final income tax returns, you have
to pay any estate tax, all of those things. And
(10:51):
then once you've marshaled the assets, paid all the decedents debt,
and that includes credit card debt and medical bills and
all all times of debt. Your death doesn't die with you,
so once all of those deaths have been paid, then
the estate would be distributed out in equal shares to
the next of ken. If there is no next of ken,
(11:13):
what actually happens is the money everything will eventually escheat
to the state if no family members come up to
claim it, and if no family members in New York,
for example, if there are no family members closer than
first cousin be on both sides. The public administrator that
(11:33):
is the government agency that administers the state for people
who don't have family members to do it solur. Last
question for you, how much should people expect to pay
for estate planning. Well, estate planning is gonna have The
cost is really gonna vary depending on you know where
you are in the country. Obviously, everything costs more in
(11:54):
New York to do anything than it costs in other places.
But it's the cost is not it's insignificant related to
the value. I mean it's it's it's nominal because what
what you're gonna do is take care of yourself while
you're living. If you become disabled, you're going to have
(12:16):
documents for that, as well as really going to protect
your family, make sure that they're protected from creditors in
the future, make sure that your your states bills can
all be paid, make sure that there are trust or
that there's the guardians for children. All of those things
are gonna be in that plan. And so even if
(12:40):
they cost you a few thousand dollars, it is worth
the money that is going to be saved in the
administration of your state be much easier. It is always
easier and more cost effective across the board one a
hundred percent. You know, I really appreciate you coming here
today and joining us because I know this is a
(13:01):
topic that's obviously incredibly sensitive for many of us. We
don't like to think about, you know, the tough times,
the bad times, and especially grief topics can be incredibly painful.
But you know, I'm grateful to you for sharing this
and opening up this conversation because it will really help
many of us as we look towards planning for the
future and estate planning and keeping our wealth in our families.
(13:25):
So LORI thank you so much for being here today,
and can you please tell us UM on our Money
Moves audience where they can find you if they would
like to follow up or ask more questions. Sure, well,
the best way to reach me is actually to email
me right at the office. My email addresses LORI L
O R I at d R A State Council d
(13:48):
R E S P A P E C O U
N s C L dot com. We also are on LinkedIn,
and I think we have a firm Facebook page, but
I am often do busy to check my social media.
I can imagine Laurie, thank you so much. I know
we've only begun to scratch the service on this, but
(14:09):
don't worry, Money Mover friends, Lauren Douglas will be back
with us later on to really give us a deeper
dive and that advanced course on estate planning. Stay tuned
tomorrow and every day this week for more from our expert.
Can you give us some other outlying ideas on things
that we should actually consider when we're creating our wills
and estates, So you have to look at everything and
(14:33):
very special money versus moves At this point, I believe
she's starting to lose the capacity to make sound decisions
about her life, health and finances. What everyone wants in
the lifetime is to be validated. They want to feel
them heard and understood. And a celebrity guest you won't
want to miss. Drummer Boy, is so great to have
you here. Like the tramp was a location, this is
(14:54):
what we call out trap. This is where we hustle
make our money. This is our form of ex change.
Money Moves is an I Heart Radio podcast powered by
Greenwood Executive produced by Sunwise Media, Inc. For more podcasts
on I Heart Radio, visit the i heart Radio, app,
Apple Podcasts, or wherever you get your podcasts from.
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