Roth, Bacon, Moon, Attorneys, llc Podcast: What Pitfalls Can Happen in Estate Planning

Jessica Moon of Roth Bacon Moon Attourneys explains what pitfalls can come up when planning your estate.

Episode Transcript

(00:02):
Join us today from Roth Bacon MoonAttorneys, Jessica Moon. Hi, Jessica.
Beautiful day out today, isn't itis? Thank you so much for
having me today, Eric, Iknow this was shoved upon you. It
was. It was a little bitof a surprise, But well, I
shouldn't say surprised, because anytime Iget a chance to speak with you,
I get excited. It's always fun. But I also know you bring in

(00:24):
a lot of information that people canbuild from and they can use in many
different ways, and that's always yourgoal. And I think today we talked
about the topic a little bit beforehand. Not something that anybody anticipates, but
something that happens all the time whenpeople are dealing with family members estates and

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what to do and how things shouldbe set up. Yeah. Absolutely,
And I love that you use theword build because it's just going to build
off of everything that I'm saying.The things. When I was inspired to
write this particular overview for our audience, I was thinking of all of the
frustrations that I was having, Soit was kind of coming out of a
bad place, but with families thatseem to be breaking apart over things that

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if I had approached in a differentway or with a common foundation a frame
of mind. It's just needless argumentthat can be avoided. And arguments are
costly. They're not just expensive,but they're also stressful and they can last
generationally if they're not nipped in thebud and if there isn't a little bit

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of pride swallowing right from the outset. And as we were discussing, I
approach this as a person of faith. I am a Christian. I try
to take that into everything that Ido. It really frames what I want
to put out in this world.And I believe that it's true. And
I understand that everybody has their ownright to come to whatever, But for

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me, it is a foundation thatwhen I see it in other clients that
they're building on a common foundation offaith, of family, of love.
If they have that common foundation,they are going to approach They're going to
approach their resolutions, their decisions,their commitments differently than when it's always about

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me, or how can I figureout how to efficiently get the most of
this situation if you're planning together,and I just if you'll permit me,
came across this scripture that I thinkis so on point, and it's from
Psalm one twenty seven and it's Solomon'sinheritance built in Vain. A lament on

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arguments that can come up, butstarting out at one twenty seven one.
Unless the lord builds the house,the builder's labor in vain, unless the
lord watches over the city, theguards stand watch in vain. In vain,
you rise early and stay up late, toiling for food to eat.
For he grants sleep to those heloves. So when we're talking about what

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people are, when I'm doing astate planning, it's about passing your stuff
right, It's about picking those peoplein the next generation that are going to
carry this on. And what thisscripture is pointing us to is that you
can amass great wealth, but ifyou're not putting in its proper place,

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if you're not framing that up witha proper foundation, then it doesn't matter
how nobody's taken it with you,you're not going to carry it with you
after this life. So what haveyou done to set up your plans in
a way that is going to telleverybody who you are, what you want
to have happen, and how it'sgoing to pass there? And if you

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fail to do that, if youfail to even take the initial step of
planning, then it's all going tobe for not because you're not taking with
you. And so I really thethings that I've come across family breakdowns.
There are things even the best offamilies, even the best of foundations,
cannot prevent all arguments because we're youknow, we all fall short. We're

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human. We're human. Yeah,thank you. And and I think also
you talk about those those uh buildbuilding those those foundations, and whether you
you know, are religious or whatever, there's something you mentioned your faith,
but you also mentioned family and youmentioned love, so you know, maybe
your foundations are family and love.Those are still strong places to build.

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And and that's a way to whenyou when you're planning your estate, and
let's face it, when people cometo you, they're coming to do that,
right, So you want to makesure there is a strong foundation there.
Yeah, And we can we canlove each other and still recognize that
we all will have faults. There'salways going to be an imperfection because we're

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human, so it's going to exist. But the things that I've come across
that I just want others to bemindful of when they're thinking about their own
planning issues that have come up recentlyfor me, a lack of leadership,
all right, So choosing the rightpeople that are going to act on your
behalf because you're not there. Soat some point you're not there, whether

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you are incapacitated or whether you're passedaway. Who is that person that you
love and trust enough to be ableto pick up those reins and administer it
in the way that you would haveif you were there. And nobody's going
to do it exactly like you,But who's going to do it in the
way that you like? And thatmay be a style completely different than your

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own, or maybe it's not.But in cases of family businesses, you
definitely need to spell that out.You need to say, this is who's
going to receive this, and thisis the cost to them, And I
don't care what everybody else thinks,this is what I would do if I
were here. And that's true foreverybody outside family businesses, but it's also

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true of family assets, sentimental assets, the family farm, the vacation home,
the personality. And when I saythat, I'm talking about the tangible
goods, the automobiles, the motorvehicles, in general, the boat,
all of those things. You don'thave to mention everything piece by piece in

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every plan. But if there's gonnabe fights about something, you know where
those are and you better have aplan for it. You better have an
answer in case somebody's asking you fresh. You don't have to know what it's
going to look like twenty years fromnow, but if you know where you
want that asset to go and thenspell it out or say blanketly, all
of that stuff is going to besold because I just don't want to go

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down that road of figuring out who'sgoing to get what? Would you say
that one of the things that maybe drives the decision not to do estate
planning early is because those parents orgrandparents whoever, are feeling like, if
I make these decisions now and thenwe start talking about it, it's going

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to cause a fight. Do youthink that might be one of the things
that drives people not to do it? Absolutely, But they also have to
know that a good plan to dayis better than the best plan that never
happens. And everything that we do, of course is private. You know,
I told my clients this before.When I'm naming people to care for
my children. I don't necessarily goout and say, hey, I asked

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you to do this, and that'sby design. I think the gravity of
that moment will hopefully make people riseand fault of the occasion. They're either
going to say, oh my gosh, I've been blessed with this honor,
or they're going to say I can'tdo it. But that's not going to
get better or worse by me disclosingall that information under a hypothetical that may
or may never occur. So thereare things that you can pick and choose

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what to talk about, but youbetter talk about it with somebody. Somebody
better understand what's going on inside thathead, because we lose that opportunity if
you haven't laid it out beforehand.And that's always it's a hard conversation to
have, but it is comforting kindof to know that, Okay, I
can set the person up with myattorney ahead of time, and then I

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can find the time if I wantto to when I'm going to talk about
that. And maybe that's one ofthose things that people they just think,
well, I have to let themknow right away, and that could be
a very stressful thing for them.Yeah. Absolutely, and it's all.
You know. People come to thetable with their own values, with their
own judgments, and that's not goingto change when they come in. So

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I just leave you with that asit is. But there is no guilty,
there is no shaming. This isjust a discussion about what you want
to have happen in the way thatyou want it to happen, however that
looks. So some of the commonwarnings that I have for people are when
you cannot decide. Sometimes choosing morethan one person may seem like it is

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a compromise, but it's actually acall to arms. So be careful and
wary about having two people that cannotstand each other being asked to serve on
your behalf. It doesn't go well, and I'll just leave it at that.
Another thing is trying to take simplemeasures for complicated questions. So transfer

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on death is a wonderful tool thatthe state of Ohio and other estates permit
us to use in order to avoidcourt processes, which I love. There's
nothing awful about the court system,but it's a default system, and it
takes time, and it takes publicnotice, and it takes sending out notices
to all of the family members,whether or not they're receiving anything. So

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I just think it is a timewaste in that regard. If you know
how you want your stuff to go, you can do it directly, and
simple means like transfer on death workvery well in a lot of situations.
But they weren't necessarily designed for securities. They weren't designed for real estate,
at least not where there's more thanone player involved. And I've seen an

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awful lot of estates that we haveeither assisted with or we haven't, and
we're just now seeing the repercussions ofthat where siblings are all on the real
estate, they all own it.And great, you avoided that hassle of
having to set up an executor tosell the real estate and notify all the

(10:39):
creditors and go through the court processes. Okay, but you've traded off now
for a whole other can of worms, which is everybody is in charge.
Everybody has to agree to any actionthat is taken with respect to that real
estate, or any one disgruntled siblingcan force sale of the whole property,
regardless of whether or not it's undercontract to farm, regardless of whether or

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not there's a renter, regardless ofwhether or not one of the children is
actually living in the home. Allof those things will come into play when
you have joint ownership of real estate, and not only that, with particular
respect to real estate, you haveto have the surviving spouses all agree to
that disposition of the real estate.So they just get the right to sign,

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and it may not translate to anactual equity percentage of the proceeds,
but them withholding their hand on thatdeed until they get until their husband get
what was owed them from twenty yearsago some agreement that went south. Those
are really difficult things to navigate,and more so than even just having defaulted

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into probate. So really, ifyou don't have a foundation that you're going
back to that says we're not goingto do this because this is not the
way that mom and Dad would havedone it, and they would not have
let us argue like this. Ifyou don't have that common thread holding the
whole family together, which is soeasy to break anyway, If you don't

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have that, then you better haveplanned accordingly so that you can still benefit
those loved ones without creating It's notjust the money loss, it's the I
can't tell you how many families carrythese grudges for twenty or more years.

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Oh, I haven't talked to myaunt since Grandma passed away. I mean,
what a waste. Yeah, thepoint of an estate and the point
of passing things down is to passdown the memories and the things that are
worth it, and not pass downthe hate and the you know, all

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the things that could be trouble andI imagine in the process. That's obviously
one of the things that you tryto explain to your clients. Yes.
Absolutely, And I don't care howhow broken we are as human beings.
If it came from the person thatis giving it to you in the way
that they laid out, you maynot like it, but you're not going

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to necessarily take it out on allof those other people who are getting theirs
or whatever is going on that isseemingly unfair. And it's just it's about
remembering that inheritance at its root isa gift. They didn't have to give
it to you at all. Yougot it because somebody was thinking of you,
and somebody purposefully awarded you this sectionof their life that they can't carry

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with them to the beyond. Andthey could have given it anywhere else,
but they chose to give it toyou, And now you're going to honor
their memory by fighting about it,by picking old wounds that should have been
forgotten about long ago. So,you know, not trying to not trying
to be bitter or cynical, butjust I wish that people could approach with

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gratitude always. And I'm telling thisto myself as well, because I know
there's sometimes where I just act likean ungrateful brat and it's just a part
of life. You know, you'regoing to go through that, But I'm
counseling you from my profession. Ifyou can avoid doing that, do it.
If you can make it easier forsomebody, do it. It's going

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to be you're You're never going toregret glossing over the things that should have
been given to you in furtherance ofpeace for the family and peace for yourself.
That's my soapbox. Well, you'reallowed to have the soapbox, that's
for sure. What are some ofthe other pitfalls that people need to try

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to avoid. So there's I puta section in here just noting cutting corners
when you're trying not to go outand do extra because it's not necessary.
All right, as long as everybody'sprojected right now to be at or below
twelve point seven million, or aftertwenty twenty six if they're below six million,

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you don't have to file an estatetax. You don't necessarily even have
to get appraisals on real estate oron businesses, but you should, and
people are regretful of this, andit's usually kicks in about five years after
somebody's passed away and they were goingto sell that same piece of property that
they inherited and they didn't have toget an appraisal on it. They could

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have relied on the auditors values,or they didn't have to report it to
the IRS because they weren't above taxablelevels. But without an appraisal that's timely,
that's fresh, you're going to losethe ability to demonstrate what that true
value was at that moment to theIRS. And so it could go way
up in value, it could goway down in value, but if you
don't have a snapshot of that valuein your back pocket, you're going to

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notice it when you go to sell, and you're going to be paying excessive
capital gains taxes potentially, or you'regoing to be leaving losses on the table
just because you can't demonstrate what it'strue value was at that time. And
again, it's another one of thosethings that it's not immediate. You're you're
probably not going to see it rightaway, and if you're not aware of

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it going into it then down theroad, and that probably falls just as
much on the people who are gettingthe inheritance as it does or the property
as it does the person that's actuallysetting it up. No, actually,
this is that's a message to thepeople that come after, okay, because
you will set up all of thosedevices for them, but you can't make

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them go out and do the work. They have to pick it up and
do it. So this is toeverybody else the generation after, but make
sure that you're doing it. Andalso, less importantly, but maybe more
so, if you are a couplethat has real estate to any large degree,

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and I only pick on real estatebecause it is so capable of swinging
in value one way or the other, and you might be over six million
between the two of you, thenyou should file an a state tax return.
You're not going to pay any tax, but the filing of that return
is going to capture that available shelteramount for the surviving spouse. When the
first spouse passes away, you unnecessarilyin your mind file and a state tax,

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but it does you a benefit ofbeing able to carry forward all of
that exemption amount so that when thesurviving spouse passes away and now they have
six point one million dollars in realestate and it's on and after twenty twenty
six, they're not going to bepaying forty thousand dollars in estate tax unnecessarily
because they have that entire shelter amountavailable to them. It's a little bit

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in the weeds, but for thoseof you that this may have hit home,
please reach out and happy to discussthat in further detail about the need
for doing that. Other areas arejust structures. This is geared toward people
that have gone they've gone one withus, but maybe they haven't gone too.

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If you've got business entities set up, make sure that you've got the
proper authority documents. And if you'reoperating in a limited partnership, something that
sometimes goes by the wayside is thatthe general partner is still on the hook
for liability purposes. In a limitedpartnership, and so you really should have

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the general partnership incorporated. There shouldbe an extra level there. But a
lot of limited partnerships are set upjust to pass interest to limited partners and
it's still business. It's still managingassets that general partner is hanging out.
So if you individually are a generalpartner of any company, any partnership,

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you really should be incorporated, allright, And that's not going to hit
everybody in the audience, but forthose that it does, circle back,
reach out and I'll follow up withyou on why that may be necessary.
And also in families in general,if there's a special needs scenario, setting
it up so that it goes toa child in the manner that is going

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to best fit that child, sonot just outright sometimes because they can't handle
it, or they can handle it, but it's going to knock them off
of the state driven benefits that aregiven to them. You can manage those
things, but you have to bedeliberate about it, and you have to
name those people who are going tobe watching over again in your absence,

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and it might not be somebody whois quote unquote special needs as determined under
the law. But maybe it's somebodywith different needs, like they've got spendthrift
issues, they've got creditor concerns,or they've got divorce eight times written all
over their forehead. These are justthings that can come up in family,
and you can anticipate and pivot.You can make things available to them without

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being overly restrictive. You just haveto know who the parties are that you
want in place at every line,all right, who's going to be managing
it, who's benefiting from it?What happens if the person that's managing it
can't manage it anymore? What happensif that person that was benefiting passes away.
Are they going to be able toappoint where their share goes or is
it going to go back to otherfamily members or is it going to go
to charity or what's going to bethe endgame? And those are all avenues

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that I like to explore with youthat I think the sad part is that
most people have an answer to allof these questions, but they take for
granted that that answer is completely lostand unknown if they're no longer at the
table. So it's just about beingdeliberate about writing things down about telling somebody,
not necessarily everybody, but somebody what'sgoing to happen with this stuff when

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you're not here, because you're nottaking it with you. Yeah, and
that's the thing I think we've alldon't well, we don't want to think
about what that end is. Andwhat I think some people need to understand,
and you can correct me if I'mwrong, is that nobody's telling you
you have to think about what theend is physically or anything like that.

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You're just planning what is going tohappen for your future, for your family's
future, for your legacy. Whatis it? You know? I think
the all encompassing thing in this conversationtoday is how do you want your family's
legacy to move forward after you're gone? Yeah. I totally agree that it

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is what you want it to be, but you actually have to do it.
And so just to kind of,you know, wrap things up,
you know, I see, youknow you have here that you know,
there's a very simple way to justkind of resolve everything. And it may
seem oversimplistic, but it is,I mean, it really is. This

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is all it really has to comedown to exactly, and every it doesn't
just because you've talked about. Itdoesn't make it anymore or less complicated.
We can make things that we canmake plans that are very simple, we
can make plans that are very complex, and you can have a little bit
of both somewhere along the line.It's just about actually doing it. It's
about taking the time writing it down, thinking about it, and putting it

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to paper. That's it and electronically, Yeah, which is where we're going.
Well, And I think really thehardest part is just getting the paperwork
going. There's a lot of questions, there's a lot of work to be
done, but what doesn't have tobe hard is sitting down with your family
and saying, Okay, we're startingto plan this. This is kind of

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the outline of what we want todo, but this is where we want
to be. We want to worktogether, we want to be a family.
We want Yeah, just the commonfoundation. And again sounds real easy,
not always easy, but it's reallyas easy as you want to make
it. Yeah, agreed, Jessica. Always, I think I learned every

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time I've ever sat down and talkedwith you, I learned so much.
And not that I'm ever going tobe an attorney or should have ever been
an attorney, but I feel likefor my own future, I at least
know the right questions to ask,and I just love when you come in
and talk about that stuff. Hey, well ditto, And I know that
you know the right questions to askbecause you are on the radio and doing

(23:15):
Next Sun job every day. Well, I appreciate that, Jessica. Tell
everybody how they can get a holdof you guys at Rothbacon Moon. Yeah.
So, we have offices in Marion, Upper Sandusky, in Port Clinton,
Ohio, and in Fort Myers,Florida, although I practice online there,
but you can always reach out toour office at four one nine two
nine four two two three two orfind us online at www dot Rothbacon Law

(23:36):
dot com. All right, Jessica, thanks for coming in and we'll look
forward to next month. Absolutely.Thanks Eric,