September 27, 2024 • 14 mins
Do you have trouble getting people to hire you to amend their trust done by another attorney? Are you creating trusts with terms that are not in your client's best interest? Unlock the secrets to effective trust management and protect your clients' interests with insights from Todd Whatley, a veteran in elder law. Discover why Todd advocates for creating new trusts over amending old ones and learn how this approach can safeguard assets from bankruptcy, divorce, lawsuits, substance abuse, and in-laws. Gain practical tips on the benefits of testamentary trusts and the strategic appointment of trustees with limited powers. Our conversation will equip you with the tools to enhance your trust management practices and attract new clients by offering superior protection for their assets.
Navigate the complex terrain of transitioning power from an initial trustee to a successor trustee, especially in sensitive cases involving incapacitation due to dementia. Traditional methods often lead to family conflicts and legal battles, but Todd introduces an innovative procedure to ensure smoother transitions. This episode provides a step-by-step guide on incorporating provisions within trusts to allow for medical evaluations prompted by the successor trustee, preventing unnecessary complications and safeguarding the interests of all parties involved. Don’t miss this opportunity to refine your approach to trust management and offer exceptional service to your clients.
Check out our new website www.TheElderLawCoach.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:19):
Thank you.
Specialized experience, Whetheryou're an established attorney
looking to refine your expertiseor an emerging lawyer seeking a
successful foray into elder law, this is your masterclass.
Now let's get started with theluminary in the field.
Here's Todd Whatley.
Speaker 2 (00:38):
That's right.
This is the Elder Law Coach.
My name is Todd Whatley, and Iappreciate you joining me.
It's been a little while.
I've been busy summer vacation,august, was a big push for
coaching but now I'm back, andtoday I want to help you figure
(00:58):
out.
You know, how many times haveyou had someone come in with the
trust and you're like you knowit's OK, but you know and you
might have a hard timeconvincing someone that they
need to to have you redo theirtrust.
Ok, and I'm not a huge fan ofamendments I can draft a brand
new trust typically quicker thanI can do amendments, and so I
(01:24):
also think it's better for theclient.
I think it's better for you tohave a document that you've
created start to finish, ratherthan jump in on someone else's
document, but I know sometimesthere's just very minor changes
and amendments make sense.
Today, though, I'm going togive you two specific issues
that will help you be able tohelp clients more and get
(01:49):
clients to sometimes leave theirother attorney and come to you
as their attorney, because youbring up some things that their
attorney missed, and I hopeyou're not the attorney that I'm
talking to, but if so, I don'tknow who you are.
That's fine, but if you'redoing these two things, I really
encourage you to change.
(02:10):
And if you are doing these twothings correctly, today's
podcast is going to give yousome pointers on how to present
this to the clients and say look, these are major issues and you
need to let me redo your trust,which, to correct these two
issues, is almost a completeamendment and restatement, so
(02:32):
you get to redo everything.
Okay, those two issues are one,how the client leaves the money
to their beneficiaries, andnumber two, the transfer of
power from initial trustee tosuccessor trustee.
Okay, those are the two pointsI want to cover.
So let's talk about leavingmoney to the kids.
(02:55):
Okay, in today's world, thereis I cannot think of a good
reason that you would not leavemoney to a child in a
testamentary trust.
All right, with today'ssoftware you know I use ILS, but
wealth docs, elder docs they doa fantastic job of making sure
(03:18):
that when you leave money to thechildren, you are leaving it in
testamentary trust.
There is no good reason not todo that.
Okay, I want to be clear onthat and that's the first thing
that I see.
In a lot of trust that I review,people bring in trust from
other attorneys and that's oneof the first things I go to is
(03:39):
to say, oh, you're leaving yourassets outright to your children
and they're like, well, yeah,that's what I want to do.
It's like, not exactly you wantthem to benefit from this money
, but do you want them to be intotal, absolute free control
because of the big three, whichis technically the big five.
So the big three we're allfamiliar with is bankruptcy,
(04:01):
divorce and lawsuits.
All familiar with is bankruptcy, divorce and lawsuits.
If you leave money outright toa child at the date of death of
your client, the money now goesoutright to that child and if
they're going through bankruptcy, divorce or lawsuit, the money
could be lost.
A testamentary trust fixes that.
You leave it in a trust namethe trustee with the very
(04:22):
limited powers of health,education, maintenance and
support, and it gives them theprotections to not have to write
the checks for bankruptcy,divorce and lawsuits.
The other two that I seesometimes come into play is
substance abuse and in-laws.
(04:44):
Okay, so in those twosituations, okay, you may want
to not have the child as thetrustee, particularly in
substance abuse.
Sometimes you don't like thein-laws or the in-laws have
tremendous power over the child,you may really want to not let
(05:08):
that child be the trustee ofthose trusts and let someone
else be the trustee those trustsand let someone else be the
trustee, so the money will onlybe used for the benefit of your
child and not be subject to drugabuse or the influence of the
in-law, son-in-law,daughter-in-law.
Okay, that situation rightthere has gotten me more trust
(05:31):
revisions and brought moreclients over to me.
Because once you explain, hey,what your attorney did was
basically what you told them todo.
But that's not what you reallywant to do is to leave the money
outright to this child.
You want it to go into trust.
There is no reason not to dothat.
There is no additional expense,particularly if they're the
(05:52):
trustee of the trust, but you'vejust given them those
protective powers of a trust sothat it will not be lost to
those five issues.
Okay, so that's number one.
Number two issue that I see.
And if you've not done elderlaw much and if you're just in a
state planner, I can kind ofsee how you would do this and
(06:14):
it's what we were taught to doin law school and it's what all
the forums do.
But the concern is, how is thetransfer of power between the
initial trustee and thesuccessor trustee.
How does that happen?
Typically three things.
Number one the trustee canresign.
That never happens.
Number two it rarely happens.
Number two a judge deems theperson to be incapacitated.
(06:40):
Well, that's guardianship.
We're going to court and thewhole purpose of the trust is to
try to avoid court.
And then number three is aphysician must write a letter
saying that the person isincapacitated and, god forbid,
two physicians have to writethat letter.
So in each of those situationsit could get ugly, and
(07:01):
particularly if you've not dealtwith dementia much.
Here's how this works theperson is early stages, no one
knows it, but the family andthings are fine, they're still
functioning.
They just forgot what they atefor breakfast, but everything's
pretty much okay.
As that disease progresses, theperson becomes paranoid and
(07:22):
they're an accusatory of thepeople who are typically closest
to them, who may actually benamed as the successor trustee.
And so now this person hasmoderate to advanced dementia.
They're making terribledecisions, they're being unduly
influenced by outside partiesand this person does not need to
(07:43):
be the trustee anymore.
And we need to get thatsuccessor trustee in to stop the
abuse, the money you knowsplurging, whatever.
Okay, we need this successor.
And so, with those three thingseither, hey, mom, you need to
go to the doctor, well, I'm notgoing to the doctor because
(08:03):
you're stealing all my money andyou're trying to throw me into
a nursing home and it's theperson they don't like most
trying to get them to go to thedoctor so they can get them
deemed to be incapacitated, sothey can now really take over.
The person's not going, theyrefuse to go to the doctor, so
therefore we end up with court.
And the whole purpose of thisis to not go to court.
(08:24):
And if there was a way to fixthis without going to court,
wouldn't that be in the client'sbest interest?
And the answer is yes.
So how do you fix this?
You do it with the followingprocedure In the trust allow the
successor trustee.
Once they deem the currenttrustee to be incapacitated,
(08:47):
they simply issue a letter, andmany times that letter goes to
the attorney you who drafted thetrust to say, hey, I think
mom's incapacitated, I need totake over.
Then that letter is presentedto the trustee and they are told
the trust says you are to goget evaluated and deemed not
(09:11):
incapacitated within 30 daysfrom the date of this letter.
So one of three things happens.
Number one the kid dies,overreacted, jumped in too early
, mom's really not incapacitated, but they're just wanting to
take control or steal money ordo whatever.
Well, if mom goes to the doctorand is deemed to not be
(09:32):
incapacitated, then thesuccessor trustee does not come
into power.
They are pushed back and momcontinues to be the trustee.
Okay, that rarely happensbecause in most situations the
child doesn't overreact.
They don't jump in too early,they do it when it's needed.
So therefore, option number twois mom goes to the doctor.
(09:57):
She truly is incapacitated.
The doctor writes the letterand so now the trustee comes
into power based on the letterfrom the physician.
But you see, here we flip therequirement from the originally
the successor trustee has to getmom to the doctor and if she
(10:19):
refuses to go, we're stuck here.
Mom has to go, and if she doesgo and is deemed incapacitated,
the successor takes over.
What typically happens isbecause with dementia you have
short-term memory and nothing inthe trust says you have to make
sure mom gets to the doctor.
You just say hey.
Once you're given notice byletter, typically from the
(10:42):
attorney, to say hey, ms Jones,your child thinks you're
incapacitated.
They just sent me a letter and,if you remember, in your trust,
you have to go be seen by thedoctor within 30 days to prove
that you're not incapacitated.
She's like hi and you know, shethrows a fit and says all this
stuff, but basically she eithergoes or she forgets about the
(11:03):
phone call, which is typicallywhat happens, and mom doesn't go
to the doctor.
And so now, 30 days later, thesuccessor trustee is in control
and I have had very good successfrom banks and different people
recognizing this process.
You have to have a letter datedon day one and you write an
(11:25):
affidavit or something to say.
I presented this to my clientand here we are, 30 days later,
we do not have a letter from thedoctor.
So therefore, the successortrustee takes over.
Okay, or we do have a letterfrom the doctor and it says
she's not, and so everythingcontinues the same.
Or we have a letter that saysshe is and the successor trustee
(11:48):
takes over.
So any one of those optionsdoes not involve court.
It's what I call a bloodlesscoup.
It just works Okay, and clientslove this Once you bring it up
to say, look, you don't wantyour kid dragging you into court
or dragging you to the doctor.
(12:11):
This has protections for you ifyou're truly not incapacitated
and you remember to go to thedoctor and we get a letter from
your doctor saying that you'renot incapacitated, things carry
on the same.
Okay, you might want to changethe successor trustees, and you
can, since your doctor said andthat you truly can change that
you may want to, but the othertwo options work.
(12:34):
Also, she goes and is deemedincapacitated or she's she
forgets to go.
All right.
So those two issues right.
There are two big issues thatwhen you're, when you've been
asked to review someone's trust,jump to those sections and, to
be honest, I don't think I'veever seen a trust from someone
(12:55):
that I didn't know who does good, trust Other SEALAs, other
estate planning attorneys who Iknow and trust they do this,
estate planning attorneys who Iknow and trust they do this, but
almost always from your generalpractice attorney who does a
trust, and even from some estateplanning attorneys who do this.
I just don't see good reason tonot address those two issues
(13:19):
and do it the way that I said.
Okay, so I hope this helps, Ihope it gives you the
opportunity to look at trust andI would market this.
Okay, I would talk about thisin meetings, I would do a blog
post, I would do a video and sayhey, if you have a trust, look
(13:39):
at these two sections and itwill get people in the door and
it will get people to actuallyleave their attorney and come to
you and let you do the work forthem.
All right, I love questions.
I love comments.
Please email me, todd, atTheElderLawCoachcom, and, as
always, if you want to work withme directly and you want me to
(14:01):
coach you into estate planningand elder law and have hours and
hours of this, I would love todo it.
Please email us.
Also, email Tricia T-R-I-S-H-Aat the elderlawcoachcom.
She checks her email way morethan I do, but please email us,
let us know and thank you forsubscribing and I will see you
(14:23):
next time.
Speaker 1 (14:30):
Thank you for joining this episode of the Elder Law
Coach podcast.
For those eager to take theirelder law practice to new
heights and are interested inTodd's acclaimed coaching
program, visitwwwtheelderlawcoachcom.
With Todd Watley by your side,the journey to becoming an elder
law authority has never beenmore achievable.
Until next time, keep learning,keep growing and stay
passionate about elder law.
Thank you.
Specialized experience, Whetheryou're an established attorney
looking to refine your expertiseor an emerging lawyer seeking a
successful foray into elder law, this is your masterclass.
Now let's get started with theluminary in the field.
Here's Todd Whatley.
Speaker 2 (00:38):
That's right.
This is the Elder Law Coach.
My name is Todd Whatley, and Iappreciate you joining me.
It's been a little while.
I've been busy summer vacation,august, was a big push for
coaching but now I'm back, andtoday I want to help you figure
(00:58):
out.
You know, how many times haveyou had someone come in with the
trust and you're like you knowit's OK, but you know and you
might have a hard timeconvincing someone that they
need to to have you redo theirtrust.
Ok, and I'm not a huge fan ofamendments I can draft a brand
new trust typically quicker thanI can do amendments, and so I
(01:24):
also think it's better for theclient.
I think it's better for you tohave a document that you've
created start to finish, ratherthan jump in on someone else's
document, but I know sometimesthere's just very minor changes
and amendments make sense.
Today, though, I'm going togive you two specific issues
that will help you be able tohelp clients more and get
(01:49):
clients to sometimes leave theirother attorney and come to you
as their attorney, because youbring up some things that their
attorney missed, and I hopeyou're not the attorney that I'm
talking to, but if so, I don'tknow who you are.
That's fine, but if you'redoing these two things, I really
encourage you to change.
(02:10):
And if you are doing these twothings correctly, today's
podcast is going to give yousome pointers on how to present
this to the clients and say look, these are major issues and you
need to let me redo your trust,which, to correct these two
issues, is almost a completeamendment and restatement, so
(02:32):
you get to redo everything.
Okay, those two issues are one,how the client leaves the money
to their beneficiaries, andnumber two, the transfer of
power from initial trustee tosuccessor trustee.
Okay, those are the two pointsI want to cover.
So let's talk about leavingmoney to the kids.
(02:55):
Okay, in today's world, thereis I cannot think of a good
reason that you would not leavemoney to a child in a
testamentary trust.
All right, with today'ssoftware you know I use ILS, but
wealth docs, elder docs they doa fantastic job of making sure
(03:18):
that when you leave money to thechildren, you are leaving it in
testamentary trust.
There is no good reason not todo that.
Okay, I want to be clear onthat and that's the first thing
that I see.
In a lot of trust that I review,people bring in trust from
other attorneys and that's oneof the first things I go to is
(03:39):
to say, oh, you're leaving yourassets outright to your children
and they're like, well, yeah,that's what I want to do.
It's like, not exactly you wantthem to benefit from this money
, but do you want them to be intotal, absolute free control
because of the big three, whichis technically the big five.
So the big three we're allfamiliar with is bankruptcy,
(04:01):
divorce and lawsuits.
All familiar with is bankruptcy, divorce and lawsuits.
If you leave money outright toa child at the date of death of
your client, the money now goesoutright to that child and if
they're going through bankruptcy, divorce or lawsuit, the money
could be lost.
A testamentary trust fixes that.
You leave it in a trust namethe trustee with the very
(04:22):
limited powers of health,education, maintenance and
support, and it gives them theprotections to not have to write
the checks for bankruptcy,divorce and lawsuits.
The other two that I seesometimes come into play is
substance abuse and in-laws.
(04:44):
Okay, so in those twosituations, okay, you may want
to not have the child as thetrustee, particularly in
substance abuse.
Sometimes you don't like thein-laws or the in-laws have
tremendous power over the child,you may really want to not let
(05:08):
that child be the trustee ofthose trusts and let someone
else be the trustee those trustsand let someone else be the
trustee, so the money will onlybe used for the benefit of your
child and not be subject to drugabuse or the influence of the
in-law, son-in-law,daughter-in-law.
Okay, that situation rightthere has gotten me more trust
(05:31):
revisions and brought moreclients over to me.
Because once you explain, hey,what your attorney did was
basically what you told them todo.
But that's not what you reallywant to do is to leave the money
outright to this child.
You want it to go into trust.
There is no reason not to dothat.
There is no additional expense,particularly if they're the
(05:52):
trustee of the trust, but you'vejust given them those
protective powers of a trust sothat it will not be lost to
those five issues.
Okay, so that's number one.
Number two issue that I see.
And if you've not done elderlaw much and if you're just in a
state planner, I can kind ofsee how you would do this and
(06:14):
it's what we were taught to doin law school and it's what all
the forums do.
But the concern is, how is thetransfer of power between the
initial trustee and thesuccessor trustee.
How does that happen?
Typically three things.
Number one the trustee canresign.
That never happens.
Number two it rarely happens.
Number two a judge deems theperson to be incapacitated.
(06:40):
Well, that's guardianship.
We're going to court and thewhole purpose of the trust is to
try to avoid court.
And then number three is aphysician must write a letter
saying that the person isincapacitated and, god forbid,
two physicians have to writethat letter.
So in each of those situationsit could get ugly, and
(07:01):
particularly if you've not dealtwith dementia much.
Here's how this works theperson is early stages, no one
knows it, but the family andthings are fine, they're still
functioning.
They just forgot what they atefor breakfast, but everything's
pretty much okay.
As that disease progresses, theperson becomes paranoid and
(07:22):
they're an accusatory of thepeople who are typically closest
to them, who may actually benamed as the successor trustee.
And so now this person hasmoderate to advanced dementia.
They're making terribledecisions, they're being unduly
influenced by outside partiesand this person does not need to
(07:43):
be the trustee anymore.
And we need to get thatsuccessor trustee in to stop the
abuse, the money you knowsplurging, whatever.
Okay, we need this successor.
And so, with those three thingseither, hey, mom, you need to
go to the doctor, well, I'm notgoing to the doctor because
(08:03):
you're stealing all my money andyou're trying to throw me into
a nursing home and it's theperson they don't like most
trying to get them to go to thedoctor so they can get them
deemed to be incapacitated, sothey can now really take over.
The person's not going, theyrefuse to go to the doctor, so
therefore we end up with court.
And the whole purpose of thisis to not go to court.
(08:24):
And if there was a way to fixthis without going to court,
wouldn't that be in the client'sbest interest?
And the answer is yes.
So how do you fix this?
You do it with the followingprocedure In the trust allow the
successor trustee.
Once they deem the currenttrustee to be incapacitated,
(08:47):
they simply issue a letter, andmany times that letter goes to
the attorney you who drafted thetrust to say, hey, I think
mom's incapacitated, I need totake over.
Then that letter is presentedto the trustee and they are told
the trust says you are to goget evaluated and deemed not
(09:11):
incapacitated within 30 daysfrom the date of this letter.
So one of three things happens.
Number one the kid dies,overreacted, jumped in too early
, mom's really not incapacitated, but they're just wanting to
take control or steal money ordo whatever.
Well, if mom goes to the doctorand is deemed to not be
(09:32):
incapacitated, then thesuccessor trustee does not come
into power.
They are pushed back and momcontinues to be the trustee.
Okay, that rarely happensbecause in most situations the
child doesn't overreact.
They don't jump in too early,they do it when it's needed.
So therefore, option number twois mom goes to the doctor.
(09:57):
She truly is incapacitated.
The doctor writes the letterand so now the trustee comes
into power based on the letterfrom the physician.
But you see, here we flip therequirement from the originally
the successor trustee has to getmom to the doctor and if she
(10:19):
refuses to go, we're stuck here.
Mom has to go, and if she doesgo and is deemed incapacitated,
the successor takes over.
What typically happens isbecause with dementia you have
short-term memory and nothing inthe trust says you have to make
sure mom gets to the doctor.
You just say hey.
Once you're given notice byletter, typically from the
(10:42):
attorney, to say hey, ms Jones,your child thinks you're
incapacitated.
They just sent me a letter and,if you remember, in your trust,
you have to go be seen by thedoctor within 30 days to prove
that you're not incapacitated.
She's like hi and you know, shethrows a fit and says all this
stuff, but basically she eithergoes or she forgets about the
(11:03):
phone call, which is typicallywhat happens, and mom doesn't go
to the doctor.
And so now, 30 days later, thesuccessor trustee is in control
and I have had very good successfrom banks and different people
recognizing this process.
You have to have a letter datedon day one and you write an
(11:25):
affidavit or something to say.
I presented this to my clientand here we are, 30 days later,
we do not have a letter from thedoctor.
So therefore, the successortrustee takes over.
Okay, or we do have a letterfrom the doctor and it says
she's not, and so everythingcontinues the same.
Or we have a letter that saysshe is and the successor trustee
(11:48):
takes over.
So any one of those optionsdoes not involve court.
It's what I call a bloodlesscoup.
It just works Okay, and clientslove this Once you bring it up
to say, look, you don't wantyour kid dragging you into court
or dragging you to the doctor.
(12:11):
This has protections for you ifyou're truly not incapacitated
and you remember to go to thedoctor and we get a letter from
your doctor saying that you'renot incapacitated, things carry
on the same.
Okay, you might want to changethe successor trustees, and you
can, since your doctor said andthat you truly can change that
you may want to, but the othertwo options work.
(12:34):
Also, she goes and is deemedincapacitated or she's she
forgets to go.
All right.
So those two issues right.
There are two big issues thatwhen you're, when you've been
asked to review someone's trust,jump to those sections and, to
be honest, I don't think I'veever seen a trust from someone
(12:55):
that I didn't know who does good, trust Other SEALAs, other
estate planning attorneys who Iknow and trust they do this,
estate planning attorneys who Iknow and trust they do this, but
almost always from your generalpractice attorney who does a
trust, and even from some estateplanning attorneys who do this.
I just don't see good reason tonot address those two issues
(13:19):
and do it the way that I said.
Okay, so I hope this helps, Ihope it gives you the
opportunity to look at trust andI would market this.
Okay, I would talk about thisin meetings, I would do a blog
post, I would do a video and sayhey, if you have a trust, look
(13:39):
at these two sections and itwill get people in the door and
it will get people to actuallyleave their attorney and come to
you and let you do the work forthem.
All right, I love questions.
I love comments.
Please email me, todd, atTheElderLawCoachcom, and, as
always, if you want to work withme directly and you want me to
(14:01):
coach you into estate planningand elder law and have hours and
hours of this, I would love todo it.
Please email us.
Also, email Tricia T-R-I-S-H-Aat the elderlawcoachcom.
She checks her email way morethan I do, but please email us,
let us know and thank you forsubscribing and I will see you
(14:23):
next time.
Speaker 1 (14:30):
Thank you for joining this episode of the Elder Law
Coach podcast.
For those eager to take theirelder law practice to new
heights and are interested inTodd's acclaimed coaching
program, visitwwwtheelderlawcoachcom.
With Todd Watley by your side,the journey to becoming an elder
law authority has never beenmore achievable.
Until next time, keep learning,keep growing and stay
passionate about elder law.
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