Life Happens 06-21

Episode Transcript

Speaker 1 (00:00):
Good morning and welcome to Life Happens Radio. Are you prepared?
This is our weekly radio program where we address the
challenges we all face an agent. We talk about aging
as a lifestyle and the issues that must be confronted,
and the careful planning that's required to avoid crisis in
the future. Life Happens will provide you with the tools
to educate and prepare yourself for events like preparing for retirement,
protecting your income and assets, planning to pay for nursing

(00:20):
home and other long term care needs, special needs, establishing
wills and trusts, planning for untimely debts, and all the
other necessities for planning and care as they continue to
evolve over the course of our life, so that we
make smart decisions and ensure that those goals are reached
and your needs are met for you and your family.
We have a great show this morning. I'm accompanied here
by my friend and colleague, Anthony Kachewe.

Speaker 2 (00:41):
Good morning, Anthony, Good morning Tommy, and good morning to
everyone out there in radio land.

Speaker 1 (00:46):
Thank you for joining us.

Speaker 2 (00:47):
Bud.

Speaker 1 (00:48):
We're going to be talking today about what not to
do after we've set up a plan. Right. We don't
want to just set it and forget it. What the
important thing is is not just establishing a plan, but
making sure that we're performing the routine maintenance on that
plan to make sure that it remains as effective as
the first day that we created it. So we're going
to break it down into two parts. The first portion

(01:10):
of the show is going to be based on making
sure we have a plan. What does a good plan
look like? What are the foundations of a good plan?
And then the second is going to be how do
we maintain and making sure that our plan is always
kept up to date and serving our needs that we
need to satisfy. So one other thing, I'd like to
just have a quick little shout out for anybody who

(01:32):
is in the area. We invite you to attend a
community event that we are going to be co hosting
with other businesses this upcoming Thursday, June twenty sixth. It
is a barbecue bash. It's going to be held at
our office building at forty three British American Boulevard and
Latham to benefit two local charities, Living Resources and the
Veterans Miracle Center. Ticket proceeds of thirty dollars per person

(01:52):
will get you a chicken dinner to eat under the
tent or to take home, plus music and games including
Dunk the Soldier and Raffles, face painting and bels for kids.
So sign up to attend the barbecue Bashlal on June
twenty six by calling our office during the work week
at five pine eight four five nine two to one
zero zero or send an email to info at pierolaw
dot com and we hope that you'll be able to

(02:12):
join us. So getting started any building requires a good foundation,
and likewise, in planning, it's not just what happens when
we are no longer here and when we die, but
also while we are alive. There is a true importance
of making sure that we have the right documents in
place to assist this. So, Anthony, why don't you tell

(02:33):
our listeners some of the most important documents that we
use as a foundation to any estate plan.

Speaker 2 (02:38):
Sure we often recommend the clients that they start off
with the core core, which is which includes a healthcare proxy,
a power attorney, a disposition of remains appointment, and a
last moal investment. Healthcare proxy is a document that you
appoint an agent to make healthcare decisions on your behalf.
Any event you're incapacitated and you can't make decisions for yourself.
The healthcare proxy is different than power attorney in the
sense that the healthcare proxy you can only have one

(03:00):
agent serve at a time. You can have coagents. New
York State doesn't want you to appoint your spouse and
a child, and your spouse says to do one procedure
and then your child says no that or mom would
never want that procedure. So to eliminate that sort of confusion,
you cannot have co agents act in concert, but you
could have as many agents as you want act in succession.

(03:21):
We also recommend in the healthcare proxs you have a
living will component, and that says typically that what's going
to happen to you if you have some sort of injury, illness,
disease and you cannot or if there's a small chance
of a recovery to having a cognitive or sentient life,
what do you want to have done? Do you want
to be kept on artificial life support or not. Most

(03:43):
people will say that if they have some sort of
disease or injury, there is no chance or very remote
chance of a sentient life, or no reasonable chance that
they don't want to be kept on life supporting, definitely.
They don't want to be just hooked up to a
machine and not really enjoying life. And I feel like
when clients the time to put those decisions in a
document like a healthcare proxy, Tommy, it makes the decision

(04:05):
easier for their family members. So that's a heavy decision
to make. Your God forbid, you had some sort of
injury happen to you. Do you want to put that
burden on a family member? Do you want to put
that responsibility or owness to possibly pull the plug?

Speaker 1 (04:20):
And just to piggyback off of that, Anthony, a couple
of things is that sometimes people think, well, I have
a immediate family member, I have a spouse, I have
a child, Like, wouldn't they just be able to step
in and make medical decisions for me? And the law
has some exceptions that could allow that, but sometimes we
don't all have traditional families or even close relationships with
those family members who have the exception under the law.

(04:40):
So if it's somebody that's a close friend or maybe
it's a life partner that yes, you never got married,
but they're the person, they are your person. The only
way that you're going to allow for them to be
able to step in that position is by designating them
in this document. And just the further one of the
points that Anthony made about the living will and the
end of life decisions, I mean, I've had families get

(05:01):
torn apart just from that basic decision. So it could
be something that perhaps the person who is in need
of that decision making may have made an expression during
their lifetime of something that they want to happen, but
they never formalized it, they never put it on paper.
And that's a very difficult situation to step into and
the burden to put on that person to make that
decision on their own. There's a lot of guilt that's

(05:22):
associated with that, on top of the fact that it's
already so difficult of a decision to make. And I
personally have had a brother and sister whose dad was
on life support and the son was the healthcare proxy,
and dad had expressed his wishes that he did not
want to be kept in that type of situation, but
the daughter had very strong beliefs the opposite way. I

(05:43):
believe that there was a religious component that was part
of it, but she was just saying, hey, you're killing
him that and to this day, from my understanding is
they still don't have relationships. So very important to make
sure that these things are spelled out.

Speaker 2 (05:55):
And New York does have the family Healthcare Decisions back
and that applies when someone's in a hospital or nursing
home for receiving hostese care, and it says who would
make the decision if you don't have a health care proxy,
a legal guardian, a spouse, and an adult child. But
what if you want someone else right? What if you
don't want that order, or what if you have multiple
adult children and you just want wanted them to make
that decision right? So I always think it's best to

(06:17):
be proactive, to do things ahead of time, to have
a plan. It's something as important as a living will component.
It's critical for clients. Something also to consider is we
often have clients come into the tough a consult and
they'll say, well, I want to I want a dn R.
And DNR is something that if you have a heart
attack and your heart stops right, but you're going to

(06:38):
have a normal life. Someone gets a defibrillator, they put
it to your chest, your back, you continue eating dinner
at your table, that is something that most people would want.
So there's a confusion between the DNR and the healthcare
proxy and the living will. Most people want a DNR.
If someone could do CPR to you, someone could do
a defibrillator and you're going to have a normal life,
you want that. You don't want people to say, oh
my god, it's heartstop. Let's just continue our meal and

(07:01):
let the person die. So just wrapping up healthcare proxy,
if you're incapacitated, can't make decisions for yourself, you appoint
an agent to make those decisions for you. Tommy, why
don't you go over the next document, which is the
power of attorney.

Speaker 1 (07:15):
I believe that the power of attorney is probably one
of the most powerful tools that anybody could have in
their arsenal when it comes to a state planning. And
the purpose of a power of attorney is to designate
an agent who is permitted to step in on your
behalf to be able to make financial and legal decisions
in place of view. Now, why is this so important?
We don't know when things are going to happen to us.

(07:36):
We don't know if and when we may become incapacitated,
And what's so important is that in the event that
should happen, we need to have a mechanism in place
that somebody could step in and to be able to
make the decisions that we would need to make to
put us in the best position possible. So I'll give
you another example, because I find that's how I like

(07:57):
to learn and seeing things and how they play out
in actuality rather than just these theories and things that
we're talking about put them into play. I had a
couple who weren't married. They were together for forty years,
and they did have some separate financing, and they never
did a power of attorney. They just never knew that
it was something that they needed. They just figured, oh,

(08:19):
this is my partner, I should be able to step in.
We've been together for forty years. I've also heard that from spouses. Right,
I've been we were married. What do you mean I
can't go in and just make decisions. Well, if you
have separate accounts, and unless they're authorized or you have
a power of attorney, guess what, you do not have
the right to just step in. It's not the same
as with the healthcare proxy, where there's specific special carve

(08:40):
outs that allow you to be able to step in
with a power attorney. That doesn't exist without a power
of attorney. Actually, you have to go to court and
get what's called a guardianship in order to be able
to start making those decisions on behalf of this individual.
So in the example that I'm giving, it was a
couple who weren't married. They did have separate finances for
one other reason, they didn't have the authority on the account,
and they never had a power of attorney. Fast forward,

(09:01):
I'll call her the wife. In this situation, she ended
up suffering from stroke and never recovered. She was incapacitated. Now,
they had money saved that put them beyond the Medicaid
limit for eligibility purposes, but they did not have that
kind of money that they could afford to pay a
long term care facility on a monthly basis, which could
be anywhere between fifteen to twenty thousand dollars. Now had

(09:25):
had the power of attorney, I could have been able
to set up a trust, move money around, implement some
spend downs, implement a strategy to get her Medicaid eligible,
to get her the care that she needed, while also
preserving their assets to the best of our ability. And
in that situation, I had to get a guardianship and
that took months, it was expensive, and meanwhile she's in

(09:49):
this facility incurring a private bill of several tens of
thousands of dollars that they're basically they're just giving away
that they could have used for let's just say the
health the health partner that was still in the community,
who could use that to live off of right they
end up losing it. So the power attorney is vital. Now,
unlike the healthcare proxy, you can have more than one
agent at a time, So if you have a spouse,

(10:12):
they can always be the first. And in any of
these documents that we're talking about, there's always a mechanism
of including successors. We'd ever know if something's going to
happen to someone or if they're not or if they're
able or capable to be in the position of serving
in that role when the time comes, So you can
name backups. But let's just say, after my spouse, I
have two children, I would like them for both to
act as agents with the power of attorney. You do

(10:32):
have the ability, but the most important thing is having
it and making sure it's filled out correctly. Anthony, tell
me a couple of When I say that, tell tell
our listeners what I mean by that.

Speaker 2 (10:42):
Well, for first of all, the power attorney, you're gonna
want it to have gifting provisions. Sometimes going to say, oh,
I have a power attorney, but you're going to be
severely limited if the power attorney does not allow you
to do gifting. To transfer assets out of your state.
Like Tommy mentioned, you may be incapacitated or loved one
may be incapacitated. You want to do additional estate planning
for that person. You want to create a trust, you

(11:03):
want to get assets out of their state right now,
currently New York, for home health Aids, there is no
look back period. So you would be able to form
a trust, which we will discuss in further detail later
on the show, and transfer assets out of your state,
and by doing so, you could become eligible for Medicaid.
A lot of kinds of people will say, oh, I
hear the five year look back, but the five year

(11:23):
lookback period is specifically for nursing home care. It's not
applicable for home health AIDS at this time. One of
the pushback that I get from clients sometimes with a
power attorney is that they are concerned about giving up control.
But I would say that if you're first of all,
you keep control, you're still the principle you can act
on your beat. And second of all, if you're concerned
that your agent won't do the right thing by you,

(11:43):
then I would say you're picking the wrong agent. Don't
not have the document. Don't say to yourself, well, I'm
not going to have a power attorney because I don't
need it. You never know when you're going to need
the power attorney. Pick the right people, pick the people
that you trust.

Speaker 1 (11:55):
Yeah. I couldn't agree more with that, And that's absolutely
true and essential. So those ancillary documents, again, those are
during our lifetime to be used in the event of
our incapacity, and they're always amendable. So between now and
five ten years from now, things can change. You always
have the freedom to go back in and change the
decisions that you've made. And again, while you have that autonomy,

(12:17):
you are still the primary person who are calling the shots.
So we're going to take a quick break. When we
get back, we're going to be talking about testamentary provisions,
wills and trusts, and we'll go into that when we return.
Stay tuned and we're back. Welcome again on this Saturday morning.
Thank you for tuning in. I'm here with my colleague
Anthony Kachuwi, and we are talking about not only just

(12:39):
the essentials and basics of a good foundation of estate planning,
but also what we need to do to make sure
that planning stays up to date. So far, we review
the power of attorney and healthcare proxy and the last
ancillary document we're going to discuss is what's called a
disposition of remains appointment. Now, this allows you to designate
an agent to be in charge of your after your death,

(13:00):
your burial, and your funeral arrangements. And this the document
just allows you to further expand upon what those wishes are,
especially if they're really important to you. Again, and also
who you want to make those decisions. It's not just
implied that any given person is going to be able
to do that. So if it's not necessarily a family
member or a spouse, but it's a partner, a close friend,
or someone else that's more remote, and you know that

(13:21):
they are the ones that you'd want to make those decisions,
this document is very important to make sure you appoint
the right people, the right backups to that person, and
then also to be able to spell out your wishes
on what it is you want, whether that's cremation, a burial,
or if there's a specific kind of ceremony. I had
a really nice one out of client said they wanted
a cocktail party, which was I hadn't heard that one before.
But be creative. The whole idea behind these documents is

(13:43):
to preserve your autonomy when you are no longer here.
It's picking the people who can act as your voice,
that can carry out what it is that you always intended.
So besides those three documents, anything but before I think quickly.

Speaker 2 (13:56):
About this position of remains appoinment, I often ask clients
if they ever thought about what they want for their
sort of final remains final wishes, and often clients will
say no. But then if I ask you want to
be buried or cremate it, almost everyone then has an answer.
So sometimes you think you don't know what you want,
but if you give it a little thought, then you
find out that you actually do have a preference. And
this is a way to make it easy for your
loved ones. When people die. It's a challenging time, and

(14:19):
the whole purpose of having an estate plan in place
is to make it a little bit easier for them. Right,
they have grief, they're going through a lot of emotions.
You don't want people arguing over if someone wanted to
be cremated or buried, and these are the sort of
things that I feel like in a sad or stressful
time could make things even worse. So I think when
you do an estate plan, not only is it a
service to yourself, but it's a service to your family
members because you're eliminating potential conflict in in disagreement.

Speaker 1 (14:41):
Yeah, I couldn't agree more with that. I always tell
my clients when we're doing our plan that the purpose
of the plan is to control the chaos, right because
when you're in that situation, when that event happens, when
that stroke happens, that fall, or whatever that case might be,
we're not always going to be able to think straight.
We're going to be emotional. Reason is not really going
to find its way to the equation. So by having
the roadmap, by having everything laid out, it makes it
easier on the people who have to perform those actions

(15:03):
because they're getting the direction. They're not going to be
forced to have to really think or have to insert
their own opinion, which could, as Anthony was saying, conflict
with maybe what someone else is thinking in an already
high stress, chaotic environment, something that you might think is
so inconsequential could be the reason why relationships fall apart
in the future. So it's extremely vital and bearing on

(15:26):
that same note, going on to well, now what happens
when we die? Okay, the fourth component, right, we discussed
power of attorney, healthcare producty, disposition of remains. So the
core for the fourth document is the last will and testament. Anthony,
why don't you tell our listeners exactly how that's used,
what it's used, or what the implications.

Speaker 2 (15:42):
Of Sure, thanks Tommy. So last one in testaments a
legal document. It's in an outline. When you're deceased, who
is going to inherit your property? People don't realize, you know,
sometimes people don't like to think about dying, and they say, hey,
it's really stressful. I don't want complete a plan. But
if you don't have a plan, the New York State
gives your plan. So everyone has a plan. It's just
a matter of do you want to be the one
making those decisions on your spoop, on your own behalf,
or do you want the state to dictate who's to

(16:03):
inherit those assets? Right, So, if you don't have a will,
then the laws of intestacy will kick in, and if
you have a spouse, your spouse will inherit everything. If
you have a spouse and children, then your spouse will
inherit the first fifty thousand dollars and half of your
remaining assets, and your children will inherit the other half.
But hopefully if you learn anything from this segment is
that we want to empower our clients and our listeners

(16:24):
to be the masters of their own destiny and to
come up with their own plan and to decide who
gets what and how much. So a last whole in
testament is a document that you dictate who will be
the beneficiaries of your state and who will be the
executor of your state. Who's the person who is going
to sort of gather your assets, be in charge of
filing your will with the surrogance court along with the
petition and the death certificate, and being in power to

(16:46):
be named as the executor, to get all your assets,
pay off all your debts, and give your assets to
your beneficiaries. There's many ways that people can inherit through
a will. They can inherit outright, which is just they
get a check for a certain sum of money for
they can inherit things that are in us and the
trust has many benefits that an outright disposition does not have.
If you get something outright, it's part of your state.

(17:07):
God forbid. If your beneficiary then get sued or they
have a lot of assets and now they're inheriting even
more assets, that could cause an a state tax issue
for them. So to circumvent that, they can inherit assets
through a trust which is credit or protected and not
includable in their estate. And that trust could be formed
in their will. That's called the testamentarity trust. But Tommy,
a will is a public document, and a lot of

(17:30):
the clients come to me and they say, I hear
bad things about a will. And one of the things
that people will always mention, especially in New York, is probate.
People always say, and even just layman, if you say
do you know anything about the probate process, I'll say, Oh,
a family member died and I had to go through
probate and people say it's expensive and it's time consuming.

(17:50):
Whyting you give the listeners just a little bit more
of a background. What is this probate and how them
we're able to find out about some very well known
celebrities and their state plans. They always here, Oh there
was a so and so and so Jimmy Buffett, I
believe is a recent one in the news. Everyone knows
they're a state plan. Why is that?

Speaker 1 (18:08):
Yeah, so that's it's a good point to make. Now,
the wills are very important, as you know, for all
the things you've mentioned. Uh, it gives us the opportunity
to be able to make sure we have our wishes
spelled out, because, as Anthony said, otherwise, New York State's
going to make the determination for us. But when we
do pass with assets in our name alone, it requires
us to go through probate and probate processes, filing a

(18:29):
petition with the court to present them with the will
for them to approve it, and also prove the appointment
of the fiduciary that you appointed or fiduciaries to be
able to take the action on behalf of the estate. Now,
what does that entail? First, it requires filing a petition
and also serving notice on all of the beneficiaries next
of ken and other people named in the will. And

(18:51):
that means that even if it's someone that you would
have been able to, who would have been able to
inherit from you under the laws of intesticy, even if
you didn't provide for them in the will, you're still
a require to provide them notice. And not only do
I just have to give them notice, I either have
to get what's called a waiver and consent, and if
they don't want to sign that, then I have to
cite them. I have to actually issue them a citation
and give them the opportunity to show up. And if

(19:11):
they want to contest the will, they can and it
costs them nothing. Okay. That means that all they need
to do is make that appearance, and that will cause
a severe delay in the actual administration of your estate.
On top of the fact that it's a long process
to begin with. I mean in New York, depending on
where you are upstate, downstate, I mean anywhere between six
nine twelve months at a minimum, it's going to take

(19:32):
to be able to go through this process. And while
that's going on, you have to keep in mind that
whatever assets are tied to your estate are frozen and
inaccessible until the executor's appointed. So a lot of people
their biggest assets in real estate the real property taxes,
or if you have a condo or co op, the
maintenance fees, if there's a mortgage that's still outstanding. All

(19:52):
of these costs are accruing and I don't have any
access to an account that, let's say, to be able
to pay that money, and I don't have anything to
the property itself to maybe to sell it or do
anything to try and unload that liability. So there's a
lot of different components of why someone would want to
avoid provid and thankfully there are quite a few methods

(20:13):
to do that. But like just to recap, you have
to file it, go through court serve. Notice, there's the
waiting game, okay, and then you have the other complications
that could arise if someone wants to bring up a contest.
And so what we tell our clients when we're also
preparing this plan is I need to be prepared with it,
no matter what. I need to have a will. And

(20:34):
we'll explain why when we talk about trusts in the future,
because we're gonna say, well, I took all these steps
to try and avoid having to go to probate. Why
would I still need a will. Well, because there's still
ways that money could come to us after we die.
Assets can still come to us when we're no longer here.
And it doesn't matter whether you have a trust, doesn't
matter whether you're married, didn't matter if you had a
bank account that had a beneficiary or a joint owner
on it. If it's payable to you after death, that

(20:55):
means that it's payable to you only, and so it
would be required to go through your estate. I have
one example where a client was tied in litigation prior
to dying. It's been three years and now we finally
reach the settlement. That settlement money is going to have
to go through his estate, even though he did have
a trust to set up during his lifetime. But thankfully
we have a will. The will spells out clearly what

(21:16):
it is that he needs, So for that particular asset
that came into his estate after death, that's the only
asset that will require probate. But again, it acts as
a safety net, and that is why it's one of
the core documents why we always need it.

Speaker 2 (21:26):
Just to sort of reemphasize something that you said, is
during the probate process, the accounts are frozen. If they're
not beneficiary designations on those accounts, all the assets are frozen.
So if you're in a probate for six, nine, twelve months,
that's a heavy burden on the estate. How are people
getting access to this money? And maybe he have preliminary
letters that'll take several months as well. So probate is
one option. Having a will that's wanted delay to an

(21:48):
expense because you're hiring a law firm during that time.
Three the will becomes a public document, and some people
want to have privacy. They don't want everyone to know. Right,
That's how we're able to see what all these celebrities
give their money to because will public. So what's another
approach to me? We don't want to have a will.
We don't want to be stuck in the probate. We
don't want to have to pay law firms and wait
for several months or a year and have accounts frozen

(22:10):
and be responsible to have our states responsible for paying
maintenance or real estate taxes. What's another approach that people
could do? What's this revocable living trust that I hear
so much about.

Speaker 1 (22:18):
Well, we're going to talk about trus, but I want
to touch upon one other one. That's the one of
the easier ways of implementing, but also some of the
caution tales behind that as well. One of them is
by naming beneficiaries on accounts. Now, we can't do that
with every single asset we own, but that is one
of the easiest ways of avoiding provate. So what does
that look like. I have a checking account in my name,
I might have one that's joint with my spouse, so

(22:38):
joint ownership, that's another way. Upon the death of the
first the second joint owner that's surviving will automatically come
into possession. But then what happens when that person dies,
or what happens if I was the only name on
the account. Well, I have the ability to name a
beneficiary on that account, So upon my passing or upon
the passing of the second survivor in a joint case,
the beneficiary would automatically become entitled to that account. But
there's a problem with that we may be not able

(23:00):
to foresee right now, and that is what is the
position of that individual and their circumstances in life at
the time that they are going to inherit it. That's
the one thing that naming a beneficiary does not contemplate.
And then what if I have multiple beneficiaries? Right, let's
just say I had two kids and I have grandkids. Now,
if one of my children predecease me when I die,
it's not that that person that sees child's children are

(23:23):
automatically going to get their share. It's not set up
like that. So if I had two children, both their
named one past, well, the one who's surviving is the
one who's going to end up with that account. Okay,
let's take it a step further. What happens if that
person's disabled at the time. They could be healthy now,
but that doesn't mean that they remain that way unfortunately. Right,
there's accidents happen all the time. What if they're in
a position, what if they're in a bad financial struggle,

(23:43):
what if they're in the process of being suitor or
in litigation, or any other imaginable situation that you can
think of. Naming a beneficiary is definitely a good quick
fix for short term but the more absolute and concrete
way is by making sure we have more flexibility and
control over our planning, and that's where trusts really come
into play. It gives you the same abilities that a

(24:05):
will does, except it's a private document, does not require probate,
and it allows you to account for all that contingency
planning that you cannot necessarily account for with simply naming
a beneficiary on an account. So what we're going to
do is we're going to take another break and when
we return, we're going to dive into trusts, different kinds
of trusts, and the different options that are available to

(24:26):
you by pursuing that type of plan. So stay tuned
and we'll be back shortly. And we're back. Thanks again
for joining us this Saturday morning. Again, it's myself, Tom
Morasco and my colleague Anthony Kachewi. We are talking about
the basics and fundamentals of a good estate plan and
how to maintain it. So far, we've discussed certain documents

(24:49):
that are important during our lifetime in the event of
our incapacity. We've also talked about wills, and we've talked
about the probate process. We talked a little bit about
how we can avoid the probate process and what we
will and Anthony i'm sure agrees with me that the
most useful tool that we can utilize in avoiding probate
and maintaining the flexibility that we want in estate planning

(25:10):
is through a trust. Now, there are several kinds of trusts.
Categorically we can break them down to revocable and irrevocable trusts.
I'm going to pass this off to Anthony to give
us a little bit more information about revocable trusts, how
they're set up, how they're used, and what they can
do for us.

Speaker 2 (25:30):
So, revocable living trust is a legal document in which
you are going to be outlining who is going to
inherit your assets, just like a will, except there as
many benefits to it. Like Tom already mentioned, you don't
have to go through probate, and it's not a public document,
so you avoid the expense and delays of probate, and

(25:51):
you avoid having the neighbors and everyone you know knowing
who got your assets. So what is a revocable living trust.
It's an agreement. And in this trust agreement, the client
is creating the trust. It's called the grant floor, and
there is a trustee and the trustees job is to

(26:12):
manage the assets of the trust. The trustee is the
one that holds legal title to the assets, and that
is also typically the client. And then there's a beneficiary,
and the beneficiary is who the trust assets are held
for the benefit of, and that is also the client.
So the client is the grants or the trustee and
the beneficiary. And a revocable living trust, just like it

(26:36):
has in the name, could be amended, restate it, revote
all the income and principle of the assets that are
transferred to the trust are held for the client's benefits.
So you prepare a revocable living trust and during your lifetime,
the client has complete control of the principal and the income,

(26:56):
just like they have with the bank account. They take
money in, they take money out. The answer to absolutely
no one. And it has provisions in that document that
says who will inherit those assets upon the grants tour's death,
but at any time before that, as long as the
Grantsweur has capacity, they could change that trust. They could
amend it, restated, relocated. If a family member bothers you,

(27:17):
they don't call you for your birthday, they don't show
up and call you for Father's Day, you write them
now immedia, you have complete control at all times. There's
also an incapacity management system built into the document, so
in the event you're incapacitated you can't make decisions on
your own. There are successor trustees adu sharies that have

(27:41):
to act on your behalf and in your best interests.
This is similar to what a power attorney does, but
the revocable living trust is a much more comprehensive document
and often have What we find with clients is that
even if the power of attorney is valid you signed
it at a law firm, the clients typically won't have

(28:01):
a problem that requires the power attorney. Even though the
power attorney is effective immediately, the principle is not giving
up control, and the principle is doing everything on their own,
and really the agent's only going to be asked to
step in if something happens to the principles. That may
be ten or fifteen years later from when that document
was signed. And it's not uncommon to hear that the

(28:23):
back office of a bank doesn't want to accept that
power attorney. They may say that document is scale, get
us a new one, even though that's legally inaccurate. Now
you're in a situation where the bank isn't going to
adhere to your wishes, to your agent's wishes, and now
you're editing pass. So with the revtable living trust, all

(28:44):
the assets that are within that trust that you have
transferred to your trust are now under the control and
authority of yourself, when your trustee, and if something happens
to you, to your success or trustees so they can
immediately step in and act on your behalf. Tommy was
mentioning before that when clients are incapacitated, sometimes they need

(29:07):
to have a guardianship because the other staff may not
have access to their bank accounts. This is another technique
that would not require having a guardian. When you have
all the documents working together as a comprehensive plan. You
have the power attorney for assets that are not included
in their revocable trust, certain assets can't be transferred, such

(29:29):
as retirement accounts, and then for all your other assets
you have in the revocable trust where you have complete control.
So you have the revocable trust, the power attorney, the
healthcare proxy, all these documents, when they're together, start forming
a comprehensive plan so that no matter what happens to you.
You're protected.

Speaker 1 (29:50):
That's really good and very insightful because the other thing
is that with those certain assets, like such as real estate,
for instance, you can go to the kind of co
owning it with somebody, but then when you're the last
person in line, where does it go? Now? There are
other methodologies that could be implemented, such as life estate,
but there are certain downsides to even utilizing that. But

(30:13):
with the trust, if I transfer that piece of real
property into the trust, it allows me to avoid that
probate and it allows me the opportunity to name and
address what happens to that property, and I don't have
to do the weight game that I have to do
with the probate, like in the situation of a will.
So it's very important for that.

Speaker 2 (30:35):
Also the revotable living trust, you identify who your beneficiaries are,
but then you also identify or state the method in
which you're going to inherit those assets. Am I going
to inherit the ass or my beneficiars going to inherit
the assets out right or are they going to have
it in a continuing trust for them? So you could

(30:56):
almost do a state planning for your beneficiaries. By having
these continuing trusts, what we like to call a beneficiary
control trust, you could have assets remain in trust for
their benefit rather than having the assets go out right.

Speaker 1 (31:13):
Yeah, and that goes back to exactly what I was
saying before with the issue with naming a beneficiary on
an account where we can't account for future circumstances. In
a trust, we can't, so we can say right off
the bat again, how do I want them to get
it outright or in trust? There's several benefits of having
it provided to them in further trust, because now it

(31:33):
becomes an asset protected asset for them in the future
that they can continue to access on but nobody can
can touch that or have access to it, whether it's
a judgment, credit or divorce, bankruptcy, or even if you
need some type of government benefit or aid. So it's

(31:53):
extremely important. So now in the event that someone who's
going to inherit as a minor or if they have
special needs, we have that contingency planning built into the trust,
so no matter what situation occurs, it would just trigger
something different in the trust and then that would get
activated and it would be able to just both not
only the needs of that individual, but also making sure

(32:16):
that that asset is acquired in the right way.

Speaker 2 (32:21):
I often hear from clients when I say about the
benefits of having these sort of continuing trusts built within
the trust. See, when you have a comprehensive plan, you
have a plan for yourself, you have the revocable trust,
and then upon your debt that you could do the
planning like we said for your beneficiars. And now you
have these continuing trusts which are asset protected. And clients
will often say, what do I need assid protection. I

(32:41):
kind doesn't have any creditors, and they don't realize that
the number one predator is a divorcing spouse. Now, an
inheritance is technically separate property. But when you get an inheritance,
and typically when you're married after you know, in the
beginning everyone has separate accounts, but after years of marriage,

(33:01):
the accounts become one deer's joint account. And now you
take that inheritance and you throw it in a joint account,
and several years later there's a divorce. Now that asset
may be subject caquitable distribution. By having the continuing trust
for the benefit of your children, or your loved ones
you can ask to protect it or provide another layer
of protection that they wouldn't have if it just went

(33:22):
out right.

Speaker 1 (33:24):
Yeah, So obviously these are invaluable, and that to most
clients is a complete game changer. The fact that what
we try to do, or what we've worked so hard
to establish during our lifetimes, we have a means of
being able to pass it down in the right way,
but in a way that's going to be protected and
basically a security for our loved ones when you're longer

(33:45):
here and barring it from some kind of circumstances that
we don't have the control over and we don't know
what's going to happen, right, it's in the name of
our radio show. Life happens. We need to be prepared
and having this kind of a document gives you that
type of flexibility to be able to mold and morph
depending on the situations. Now, we spend some times talking

(34:05):
about the revocable trust and I want to spend a
little bit of time talking about irrevocable trusts. And I
know a lot of people have heard about it, and
some nerd are unclear about the differences. So the irrevocable
trust has all of the same benefits and components that
we just describe with the revocable trust, with some key

(34:26):
differences and when they're used, why they're used, and how
they're used. Right, So, within irrevocable trust, that's really more
for asset protection. This is when you're contemplating some kind
of long term care. Maybe I need Medicaid, I'm going
to need help having to pay for my health care
in the future. I might need AIDS at home, or

(34:47):
I might need a facility that I'm going to have
to have round the clock care for, and how am
I going to pay for that? And do I want
to spend all the money that I've accumulated during my
lifetime to not pass it on to my loved ones
and only use it to pair for my long term care.
So the irrevocable trust is different in a few different
ways because the purpose of this trust is to create

(35:07):
some kind of distance between you and the asset, so
that for purposes of Medicaid, when they're looking at this trust,
they view it as not belonging to you per se.
Now that doesn't mean like against contrary notions of people
thinking like, oh, it's an irrevocable trust. I can never
touch it. I've lost access to everything. No, so let's
go over the key differences. With an irrevocable trust. You

(35:29):
are not allowed to be your own trustee, but you
always reserve the power to change and determine who those
trustees are. So, if you believe that a trustee is
not acting in your best interests, or for any other reason,
let's say maybe you don't believe they're the right person
to be able to take on that situation, or they're
just simply not doing what you need them to do,

(35:50):
you can replace them at any given time. You can
continue to still have access to income, but you do
not have unfittered access to the principle. Now, does that
mean it completely cut off that you can never use it. No.
What we do is we adpoint lifetime beneficiaries who are
able to access principle, and then they could indirectly use
that to pay for things that you need it for.

Speaker 2 (36:13):
Okay, So, just so the listeners understand, if you put
a million dollars into a trust that's going to be
considered the principle, you would not have direct access to
that million dollars. Now that million dollars is invested in
the cost dividends, and that's going to be the income.
That's what you would have direct access to. So in

(36:33):
the document it would say that the grants work can
have access to the income, but not the principle. But
it doesn't mean, like Tommy was saying, that you don't
have access to the principle at all. There are indirect
methods where there could be distributions to your beneficiaries, typically
your children, who would then have those assets and could
pay things on your behalf. Never give the money directly

(36:56):
back to you, but to take that money and then
out of the generosity of their heart, pay your expenses
or whatever you may need.

Speaker 1 (37:03):
Yeah, and that's and that's the very is the key
difference there. And like I said, that's really more for
long term care. We have a great resources on our website,
pure law dot com. We have Medicaid Mondays where we
go in and explore deeply into medicaid and how Medicaid

(37:24):
asset protection trusts interplay with actual medicaid. We're not going
to have the time to go into medicaid specifically, but
just as far as the trust and how it operates.
But the most important thing that I want you to
take away from is that the trust has the flexibility
and the ability to not only pass on our assets
in a private way, a protected way, but in a

(37:46):
manner that can suit all needs and changes in life
that we can necessarily anticipate. Right now, stay tuned because
when we get back, we're going to be talking about
what you should be doing and what is the best
way to maintain your state plan. Stay tuned and welcome
back for our last segment of today's show. Thank you
for those who've been able to join us. Thank you

(38:08):
Anthony for joining us today. I appreciate your time and
your expertise. So today we've talked about establishing a solid
plan and a good foundation. We talked about the documents
that we need during our lifetime are power of Attorney
and healthcare proxy and then those when we die, our
disposition of remains appointment, as well as a last well

(38:31):
and testament. We talked about trust planning and approbate and
certain challenges that they pose and how we can get
around it. And so now let's fast forward. You did
what you had to do, you put your plan in place,
you sign your documents. What now now? One of the
biggest pitfalls that I see clients fall into. And this
is usually people who've come to us after they've been

(38:51):
somewhere else. Is they said, yeah, I have all these documents,
I went through the trouble, I signed them all, I
did everything I was supposed to do, and then looking
at their plan and there are some crucial elements that
they've left out and it's not always necessarily how the
documents are drafted, which of course are extremely important. But
the one thing to keep in mind with the trust
is that the mere creation of a trust doesn't mean

(39:14):
that all of my assets are now magically in my
trust and that if anything happens to me, oh it's
belonged by my trust. That is a misconception. You need
to actually fund your trust. That means you need to
deposit assets into the trust for the trust to own.
And that is the only way we actually get a
benefit from having that trust. So what does that look like.
That looks like retitling accounts or naming a trust as

(39:38):
a beneficiary. So upon passing it eventually funnels through an account.
If it's real estate, it's doing a d transfer. If
it's a co op, it's getting a stock certificate transfer.
So the most important thing is not only do you
have to create the plan, you have to set it up,
you have to follow through. So that is one of
the biggest things that I've noticed, Anthony. I mean, you

(39:58):
tell me. I get people all the time. I asked them,
I'm like, great, so what's in the trust? And they're saying, well,
is in everything in the trust already? I mean, what
have you seen.

Speaker 2 (40:10):
I often have clients come up to come to us
from other law firms and they have wonderful trusts Picasso
trusts everything that they need and then I say what's
in there? And they say what do you mean? And say, well,
what assets did you put in here? You listed all
these accounts, you have all these assets, did you actually
transfer to the trust? And they didn't take that critical

(40:30):
step like you're saying, Tommy. They usually keep the assets joint.
If you have joint assets, they're not in the trust.
And in fact, if you're doing state tax planning, that
will inhibit your plan because instead of utilizing the trusts
that are developed or created in your trust agreement right
as a sub trust, it'll never go there. It'll just

(40:54):
go directly to your spouse, which prevents your plan from
having the full benefit of what was intended. So when
we have clients come to the firm, we always say
that signing the trust is like halftime. Right now you
have to go and fund your trust, like Tommy was saying,
transferring those accounts, signing those assignments, doing the deeds, having

(41:17):
it in there. Your trust is only as good as
it is funded. Another mistake that I see with clients
is that, and this sounds minor, but on every trust
there is something called the schedule A, and typically there's
just a placeholder. It'll say ten dollars cash. But if
your beneficiaries don't know what's in that trust, it's not

(41:37):
very helpful for them. They're going to have to go
on a wild goose chase. Now they have to start
opening up your mouth trying to figure out where your
accounts are. How many people know where you have your
bank accounts or all the real estate that you may own,
or every interest that you may have. Usually clients have
bank accounts in several different locations. So if you don't

(41:59):
transfer those account and if you then don't update it
on the schedule ay, how is someone going to be
able to determine that? It makes it very difficult and
It's important to remember that this is already during a
difficult time. The only reason really is someone's going to
be looking at your trust is because most likely you're
incapacitated or your decease. So now you don't want to
give them the additional burden or the additional breeze of

(42:20):
now checking through your mail or going on a scavenger
hunt to figure out what assets were actually put in
that trust. So transferring assets to your trust, updating your
schedule a and like we mentioned before, for certain assets
that maybe can't go into the revoricable trust, like retirement
accounts or if you have Sometimes clinic will say to me,

(42:41):
oh my god, I have all these directed pauses or
automatic withdrawals bill pay, I have all these automatic transactions happening.
I don't want to transfer the accounts to my trust
that that may give me different account numbers. I got
to set everything all up. So you could just put
a beneficiary on that. There are ways that you could

(43:01):
work with your lifestyle to make it the least and
truth of this possible, and you could put a beneficiary
on it. But often clients don't have beneficiaries on bank accounts,
or they formed their bank accounts twenty five years ago.
Maybe they put their parents and now their parents are diseased. Right,
Many of us open up bank accounts long before we
met our spouses. And I often tell clients, I'll say

(43:23):
how much do you have in this account? And they'll
know it's depending and then they say, who's the beneficiary?
I don't know. So it's important to know your assets,
but your work, your whole life for these assets. You
want to make sure that these assets are then given
to the loved ones that you want to benefit with
these assets.

Speaker 1 (43:43):
Yeah, that's a great point. And this goes into the
portion that we're talking about with regards to maintenance. So
if you're in this, if you're this type, if you're
this person, right, well, I always recommend my clients is
and what we actually asked them to do prior to
even coming into a consultation is make a list of
all your assets and it, trust me, it pays to

(44:03):
be forthcoming. Sometimes you get a little cagy when it
comes to finances, like, oh, I don't know if I
feel comfortable, you know, But the point of what we
serve and when we're trying to set up this plan
for you is we want to make things as easy
as possible. And I was laughing before when Anthony said,
you're going through mail. I've literally have had clients come
to me with garbage bags full of unopened mail from
statements from god knows how many institutions not knowing where

(44:27):
anything is. And it's very vital. And so we actually
have a program within our firm that we offer to
our clients which is purposefully meant to track assets. So
we have a running list of everything and where it is,
so that way in the event that someone's stepping in, right,
And I agree with the whole idea, like I'm not
really comfortable like wanting to share all my personal information
with people who, yeah, I trust them to be my trustee,

(44:47):
but I only want you to know what's going on
and able to act when that time comes. That doesn't
necessarily mean that I want you to know all of
my business right now, but as long as I have
it someplace, it's recorded, and I have it that when
that person has to step in, they can basically take
hold of this booklet and they have all the instructions
right there. They know where things are supposed to go,
they know where they are, and they know how to

(45:09):
get to them and what to do with them. So
funding is crucial, but then the maintenance, and this is
where again we have those people who said, oh, I
signed everything, I'm good to go, and they didn't follow
through on the funding. That's a huge fail. Then we
get the people, oh, I did the funding and I
spent a lot of time I remember with my lawyer
at the time, and we did it. I'm like, oh,

(45:30):
that's great. How long ago was that. Oh, I don't
maybe it was like five years ago. I'm like, okay, well,
has there been any changes. Well, yeah, you know, I've
gotten married since then, I bought a house, or I
got divorced, or I had another child, or I acquired
a few other assets, I acquired a business interest, or
I was bought out of as all of those things

(45:50):
have an impact on your plan. And what the what
people do is they think they get this relief once
everything is set, and trust me, it is a relief
when you know everything is accounted for, but then it
requires that maintenance. You need to revisit it. And that's
one of the biggest takeaways we want you to from today,
aside from setting up a plan. Right, So, if you're
in the position where you have nothing act today. You

(46:12):
need a plan. We reviewed the foundation. We talked about
what the specifics are that you should have in any
given plan, and that means for anybody over the age
of eighteen, doesn't matter how many assets you have, how
little if you're an adult, you need to have certain
documents in place so that people can step in to
help you when you need to be helped, and making
sure that we have set up for our loved ones

(46:34):
when we're no longer here. So if you're in that position,
you're in that bucket where I never got started, that's okay,
you get started today. If you're in the bucket where, hey,
I did planning, I don't really know what I did
or I can't really recall it, well, now's the time
to revisit it. We have to review, Well, what did
you do? Who are the people you appointed? Are they
still around? Are they still the people you would want

(46:56):
today to be able to make those decisions? What about
people that we left a beneficiaris are they around? What
are the circumstances in their life? Did we do the
proper contingency planning? What if one of them had become
disabled or any other number of situations. Do we need
to change now how we're going to provide for them.
Then you're in that category where I did the fund,

(47:16):
I put up this plan, we have to revisit it
and then making sure that it was funded properly.

Speaker 2 (47:21):
Yeah. I've had clients tell me, oh, Anthony, I have
a plan and it was ten years ago, and these
are all the people that I want to serve. But
often they have signed those documents five, ten, fifteen years
and the minor children that they have are now adults.
And even if you have a good relationship with your
brother or your sibling, most people once their kids have
reached a certain age, Now you want your kids to

(47:43):
sort of step up and be in that sort of
piduciary capacity. So, just like you go to the doctor
every year for a checkup, we strongly recommend that you
review your state planning documents, your assets. I've had lots
of clients who had a revocable living trust. They've transferred
their home, they did the deep everything is great, and
then they call me up and they say, Anthony, I

(48:05):
have this house in my name. When does it go
to the trust? And I say, what do you mean?
They said, oh, well, so we did a detransfer, We
transferred your assets. It was part of your plan and said, oh, well,
I sold that property and I bought a new one
and it's in my name with my wife. And okay,
it's a joint asset. Upon the death of the first
client of the first person there, it won't be a

(48:26):
probate asset. But what about upon the death of the
surviving stuffs right now it's a probate asset. What about
when you open up new bank accounts is it in
the name of the trust? Did you put it in
your own name? If you put in your own name,
do you have a beneficiary? So it's important to review
your documents, not just to have them because, like I said,
like Tommy mentioned, your produciaries may move. They make it sick.

(48:49):
You may not think that they're the right person for
that position. You may have named someone as as an
agent under your healthcare proxy. Well maybe that person right
now is experiencing their own health issues, or maybe they
have their own issues in life that don't give them
the flexibility or the attention that's required to serve in

(49:12):
that capacity.

Speaker 1 (49:14):
So and those are all great points and really should
be mindful of. So what we would suggest is get organized.
If you do have documents, get them together, look at them,
take notes as far as your assets. Take an inventory,
create a spreadsheet, write them down, Schedule an appointment to
come to see an attorney and to state planning attorney
and go over. Make sure, hey, did I follow all

(49:36):
the steps I was supposed to or you might really
able to readily identify changes. You know that, Oh yeah,
I know this needs to get changed. So the point
is get organized. Do a pulse check. See when the
last time you touched it, see things that consider things
that have done that have taken place since then. Just
make sure you stay on top of your plan. It's
great to have a plan. I commend you if you do.

(49:57):
There's a lot of people who don't. But you also
now need to take steps to maintain it, just like
anything else in life. So we hope that you found
today very useful. You had a lot of good information.
We thank you for spending your Saturday mornings with us.
Just like to again repeat, if you'd like to join
us for our barbecue bash this upcoming Thursday at June
twenty sixth, Please feel free to register by calling our

(50:18):
office at five point eight four five nine twenty one hundred,
or you can send an email to info atperrolaw dot com.
Thank you all, have a beautiful weekend and join us
next time.