back to indexBogleheads® Chapter Series – Estate Planning Basics – Setting Up Your Estate Plans
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This episode was jointly hosted by the Starting Out in the Pre and Early Retirement Life Stage 00:00:15.080 |
The presentation and discussion topic was Estate Planning with Attorney Summerfield 00:00:20.740 |
BogleHedge are investors who follow John Bogle's philosophy for attaining financial independence. 00:00:26.220 |
This recording is for informational purposes only and should not be construed as personalized 00:00:39.100 |
I'll elaborate on that a little just so folks know a bit more about Summerfield's background. 00:00:47.220 |
He has a BA from Johns Hopkins and his law degree from Brooklyn Law. 00:00:54.340 |
He's licensed in New York, so his comments will largely be based on his knowledge of 00:01:01.440 |
He started that practice in 1993 specializing in estates and guardianships. 00:01:08.480 |
In his practice, he's served as a trustee of various trusts and as a guardian, guardian 00:01:16.860 |
He served as a court evaluator and attorney for alleged incapacitated persons in a variety 00:01:28.380 |
Summerfield and his wife and his cat live in New York, just north of New York City, 00:01:32.620 |
but will be moving back to Brooklyn to be closer with family. 00:01:36.500 |
And in full disclosure, I have retained Summerfield for his services, and I also consider Summerfield 00:01:45.000 |
So with that, we'll begin what will largely, hopefully, be conversational. 00:01:53.120 |
As Miriam mentioned, we'll have two sessions with Summerfield. 00:01:56.220 |
This first will largely be the building blocks for legal understanding, and the second session, 00:02:01.900 |
which will be scheduled within, it'll be a few months from now, likely, will be more 00:02:08.280 |
of the people side of things like elder care and implementing care and guardianship and 00:02:13.980 |
custody and moving residents and the complicated people side of things. 00:02:18.740 |
So we understand how sprawling this topic is and how relatable and how inevitable and 00:02:25.260 |
how there's general interest, whether you're experiencing it or not right now. 00:02:29.060 |
But when I say inevitable, almost everyone is encountering these issues. 00:02:33.100 |
So with that, there's a near infinite amount of questions. 00:02:41.140 |
We want to turn it over to the questions from the chat. 00:02:44.980 |
So I will sometimes, unfortunately, cut off Summerfield. 00:02:50.420 |
We're going to want to move on to different categories of questions. 00:02:54.700 |
So if folks can, again, submit questions in the chat, and, you know, we hope everyone 00:03:03.220 |
Summerfield, did you have anything you wanted to add before we start? 00:03:11.500 |
I've been an admirer of Vanguard and their philosophy and, of course, John Vogel. 00:03:18.580 |
And I appreciated our working together and friendship, Gorrie, so glad to be here. 00:03:27.740 |
It is such a topic of interest for such a wide group of people. 00:03:37.940 |
And so the Vogel Heads span, this audience is certainly national, and sometimes we have 00:03:44.980 |
So with that, it's an important point, I'll reiterate, folks will have very state-specific 00:03:51.340 |
And there are questions relating to internationally held assets or beneficiaries located elsewhere. 00:03:59.260 |
We are aware that that's a topic of interest, but we're also going to curtail some of those 00:04:06.020 |
so that we can focus on what's most relatable for the broadest audience. 00:04:14.180 |
And again, for context, as you know, there's a wide range of, not just geographically, 00:04:23.380 |
So with that, why don't we get started with the most basic of questions. 00:04:27.700 |
Can you walk us through what a will is, what goes on in the absence of a will, and why 00:04:37.660 |
A will is a legal document whereby when you've passed away, the will controls how your property 00:04:49.340 |
is going to pass, and it also nominates, and it was called an executor, someone to control 00:05:09.820 |
I've never encountered anything different, although in law school, I know there was a 00:05:13.820 |
case in England centuries ago, where some farmer had written his will on the back of 00:05:22.980 |
And that was actually held up by the English court at that time. 00:05:31.540 |
One of the requirements of a will is that it be published by the person making out the 00:05:37.260 |
So when I supervise a will signing, I always ask my client two questions. 00:05:46.620 |
And then I ask, are you asking the three of us to witness the signing of your will and 00:05:59.420 |
The will in New York, as it would be in other states, needs to be witnessed by at least 00:06:10.020 |
And for my will signings, I generally have the witnesses do what's called a self-proving 00:06:16.540 |
affidavit where they basically attest to the fact that the testator was of sound mind, 00:06:23.300 |
that they were not being unduly forced into signing their will, that they had understanding, 00:06:29.700 |
they could read English, knew the English language, they had no physical defect, vision 00:06:36.820 |
or hearing problem that would affect their capacity to make a will. 00:06:41.120 |
So Summerfield, sorry, I'll interrupt from time to time just for clarity. 00:06:45.260 |
One is when you said two witnesses, I assume, but you'll clarify, these have to be disinterested 00:06:52.700 |
It wouldn't be a beneficiary or relative or could it be? 00:06:57.060 |
As a practical matter, the answer is yes, although technically it can be an interested 00:07:04.220 |
The catch, though, is if a beneficiary is a witness, they have a choice or the estate 00:07:15.100 |
They can either withdraw as a witness or they can withdraw as being a beneficiary. 00:07:22.580 |
So yes, you would never like I would never want my client to have as his or her witness 00:07:30.540 |
someone that he's included in his will as a beneficiary. 00:07:35.680 |
So I want to follow up on what it means to be published for folks outside of the legal 00:07:42.100 |
Can you elaborate on how these witnesses are sourced? 00:07:46.520 |
If the average person doesn't know how to find a disinterested person, does the attorney 00:07:55.820 |
How I do it, most of most of my will signings are done in my office and I on my floor, there's 00:08:04.900 |
a receptionist, sort of a receptionist who serves a whole number of offices. 00:08:14.740 |
And then she, in turn, because she's sort of the property manager for the building, 00:08:19.420 |
she will usually call in another staff person at the building and the two of them are my 00:08:24.940 |
witnesses and I serve as sort of a third witness. 00:08:29.300 |
If I do a home visit to a person for their will signing, then I make arrangements beforehand. 00:08:37.880 |
I'll say to them, look, are there some neighbors or do you have friends who could come by and 00:08:43.540 |
and serve as the as the witnesses and usually that that works out well. 00:08:51.420 |
You said it must be published for folks, again, without the the legal knowledge. 00:08:57.580 |
What is what does that mean to the average person? 00:09:00.960 |
How how what defines published as it satisfies you? 00:09:04.940 |
Yeah, just like a declaration to the to the witnesses that the person intends this document 00:09:13.840 |
to be their last will and testament to dispose of their assets at their death and set up 00:09:23.540 |
And it goes partly into this whole thing of does the person know what they're doing? 00:09:28.820 |
You know, one of the big concerns about a will, you know, oftentimes you have older 00:09:34.420 |
And of course, with age can come some form of mental decline. 00:09:40.380 |
And and so you want your witnesses to feel confident that, in fact, the person signing 00:09:49.420 |
the will before them knows what they're doing, knows what's going on. 00:09:53.940 |
And so the publication requirement sort of goes towards establishing that that confidence 00:10:02.340 |
OK, so I wanted to hit on this later, but it's timely, given what you just said. 00:10:08.000 |
If someone contests the will and says those witnesses were not qualified to make a determination 00:10:17.100 |
that the decedent was of sound mind, how would that be handled? 00:10:22.620 |
Let's say someone went in and out, had had some early history of being in and out of 00:10:29.300 |
lucidity, wasn't clearly suffering from, you know, full dementia or Alzheimer's. 00:10:36.460 |
But in this hypothetical, some beneficiary or potential beneficiary or excluded otherwise 00:10:43.080 |
beneficiary could say not of sound mind, those witnesses were not qualified to make 00:10:56.140 |
The thing I mean, the best argument for a will object and regarding the witnesses would 00:11:01.720 |
be, in my opinion, would be on the one hand, all the witnesses were under age, you know, 00:11:08.500 |
because legally the witness has to be an adult, 18 or older. 00:11:12.140 |
So if if you can establish that a witness was 16 or something, then that, you know, 00:11:19.980 |
I think a second strong object and argument to a witness would be the witness was was, 00:11:29.100 |
you know, not not an independent, true witness. 00:11:36.020 |
They were maybe maybe they received some money. 00:11:39.300 |
Maybe they were paid by the testator or the attorney or something. 00:11:43.060 |
There was there was some kind of fraud going on. 00:11:45.740 |
There was this plan to defraud a vulnerable person. 00:11:52.160 |
And the witnesses were part of a scheme to do that. 00:11:55.620 |
So I mean, I suppose you could argue that a witness is not doesn't have a particular 00:12:01.820 |
qualification to determine whether someone has capacity or not. 00:12:06.980 |
And I mean, if you could establish that a witness themselves had some kind of disability 00:12:11.100 |
that would limit their ability to understand, that might be successful. 00:12:15.180 |
But generally, courts are used to witnesses being just sort of regular folks that aren't 00:12:19.820 |
expected to have any particular knowledge or, you know, great qualifications. 00:12:26.060 |
So it's a low bar to make that determination. 00:12:29.260 |
OK, so let's say you've described what a will is, what it does, what happens in the absence 00:12:37.340 |
Someone intended to do will started it, never finished it. 00:12:41.900 |
Does it need to be officially complete or let's say there's no will. 00:12:48.500 |
In those cases, I mean, in some case, in the ideally, if you haven't done a will, you've 00:12:53.580 |
done other things, you've made beneficiary designations on your life insurance, on your 00:12:59.700 |
bank accounts, on your pension or annuity that you may have such that. 00:13:13.060 |
Nothing will really come into your estate or if things do come into your estate, they're 00:13:17.380 |
so small, some kind of refunds or a very small account that it just it doesn't make sense 00:13:23.380 |
to hire an attorney to take the time and effort to go and and probate or handle the estate. 00:13:29.620 |
So that would be the ideal situation for someone who doesn't do a will. 00:13:35.060 |
If if you don't do a will and you don't do the beneficiary designation or a trust or 00:13:41.020 |
whatnot and property legally passes to your estate, then what has to happen is a. 00:13:53.220 |
Distributee, which is a legal term for someone who's a close family member who, by virtue 00:14:00.700 |
of their kinship, would inherit under the state intestacy law, a distributee needs to 00:14:07.460 |
come forward and file a petition for letters of administration to be appointed as the it's 00:14:15.460 |
If there's no will be appointed as the administrator of the estate with the authority to marshal 00:14:21.220 |
the assets, pay the estate expenses and then distribute the estate assets to those closest 00:14:35.540 |
So building on what you just said, I want to pick up on two things. 00:14:38.820 |
One is you mentioned if someone has relatively minimal assets or however subjective that 00:14:46.340 |
is, but in what situations is it OK to do a will yourself or hire an attorney versus 00:14:58.300 |
Why don't we segue after you address those if you can elaborate on the role of an executor, 00:15:05.820 |
how to choose a good one, how to inform them what it means to be an executor. 00:15:12.980 |
So they're agreeing to something in an informed way. 00:15:17.620 |
Great questions that before I get to those questions, and I may have to nudge you to 00:15:22.500 |
remind me of them, but there is one point I should make that could be helpful to people 00:15:27.260 |
with it in these small estate situations in New York. 00:15:32.380 |
And again, most states, although laws vary, do have similar type arrangements. 00:15:37.420 |
But in New York, if you have a very small estate, I think it's up to 20,000, 30,000, 00:15:46.980 |
even without a will and without doing a court proceeding at the surrogates court, there 00:15:53.140 |
are provisions under the New York law where you can go to your bank or whoever is holding 00:15:57.860 |
the small assets and you can fill out an affidavit. 00:16:02.340 |
And just by virtue of that affidavit and a particular section of the New York law, the 00:16:07.220 |
bank, the financial institutions are required to turn over those small assets, so just something 00:16:21.540 |
Oh, well, so to finish up, let's say, so people have, they've definitely seen online they 00:16:27.740 |
can do their own will versus they get comfort with an attorney versus someone has a friend 00:16:38.140 |
When is it okay and when should someone absolutely hire an attorney? 00:16:51.020 |
My best advice, I think, would be just to go to an attorney. 00:16:53.620 |
And you can check with an attorney about their fees ahead of time and all of that. 00:17:00.020 |
Now, but that being said, if you feel comfortable, like maybe you have some experience with the 00:17:11.580 |
If you want to draft your own will, I think that's just by yourself or with one of these 00:17:18.340 |
I don't particularly have a problem with that. 00:17:22.800 |
You should be careful about, in terms of, you want to make sure you select all the people 00:17:30.400 |
that should be selected, executors, backup executors. 00:17:34.560 |
If you have children, you want to have guardians, backup guardians. 00:17:38.880 |
You want to make sure you cover all the bases, but drafting your own will, I don't particularly 00:17:45.900 |
But if you do that, I would recommend that you do have an attorney, at least supervise 00:17:55.320 |
And that, in terms of fees, that should be, I would estimate like a third or a fourth 00:18:03.960 |
of what an attorney would charge for the entire process, because most of the attorney time 00:18:12.680 |
If you come with a will to an attorney, and I've had a couple of clients do this, and 00:18:18.480 |
I as the attorney, I'm just there to supervise the signing, that's not a big deal, and my 00:18:27.480 |
And the reason for that is that, like I mentioned earlier, the New York statute has very specific 00:18:38.400 |
laws about what constitutes a valid will signing. 00:18:45.160 |
And the self-proving affidavits that the witnesses have to sign, ideally they're done at the 00:18:54.540 |
They don't have to be, but it's much easier to get the witnesses to do these required 00:19:00.080 |
affidavits at the will signing than it is to track them down 20, 30 years later, and 00:19:08.360 |
then have them sign affidavits at that point. 00:19:12.600 |
So yeah, that, and then a final thing, like if someone's going to object to a will, just 00:19:19.560 |
the fact that you've had an attorney supervise the will signing, that gives the surrogate 00:19:24.480 |
judges a lot more confidence that it was done properly, as opposed to you went before a 00:19:33.200 |
So just for the purpose of having the will hold up, I'd have an attorney supervise it, 00:19:42.820 |
There's a lot there that I think is worth following up on, so I'm going to focus on 00:19:48.240 |
a few things, but we'll move into sort of speed dating round. 00:19:53.880 |
I'll ask questions and we'll do like high level, concise answers. 00:20:01.080 |
Coming to an attorney with a self-drafted will would be helpful. 00:20:04.560 |
How does one, I think we know referrals are a great source for choosing an attorney, but 00:20:09.760 |
absent that is the bar association, or how would you recommend someone find a good attorney 00:20:15.080 |
outside of casting a wide Google search and then bringing the draft? 00:20:23.440 |
So if one is going to self-draft, should they follow an online template? 00:20:28.320 |
How do they know that they have good guidance for the draft they're using? 00:20:32.440 |
- Right, that's kind of tricky, yeah, because I really don't have experience with working 00:20:41.400 |
I mean, I had one person come to me, and this was a well-educated person, a friend, and 00:20:47.040 |
he had gotten a hold of a program that was really quite complex and involved. 00:20:54.840 |
And I suppose it could have been good, but, and he did what sort of what I had recommended 00:21:00.040 |
in that he had me look it over and I was going to supervise the signing. 00:21:07.760 |
I would favor a simpler program, or even, maybe even more so than a program. 00:21:15.640 |
If you have like your grandfather's will or your parents' will that a lawyer drafted, 00:21:21.680 |
maybe just take that as your template and just kind of copy it and change it to pertain 00:21:33.000 |
You wouldn't have to pay for, I would prefer something simpler, because if you go have 00:21:39.360 |
too much complexity, you're going to confuse yourself, confuse the court. 00:21:46.840 |
So ultimately, it should not, it need not be a highly technical document and someone 00:21:51.960 |
can intuitively draft it, and that might be a great foundation. 00:21:58.640 |
If it needs to be complex and all this, then your wisdom, go to an attorney, because if 00:22:08.360 |
it's really, you know, you just, you know, so. 00:22:12.720 |
So quick thoughts on how to find or select an attorney. 00:22:17.720 |
Word of mouth, some, I know some companies have legal plans where for a discount, and, 00:22:27.160 |
you know, I think that's worth exploring, you know, I think those guys could very well 00:22:33.360 |
And then, yeah, bar associations, county bar associations have legal referral services 00:22:38.960 |
where they have qualifications and everything for attorneys to register with them and they 00:22:52.040 |
I definitely want to jump to executor, but to close out the physical will process, does 00:23:04.960 |
In New York, you can file it with your, the surrogates court in the county in which you 00:23:10.240 |
live, but there's a catch to that, which in my opinion, and every client I've spoken with, 00:23:19.720 |
it's a deal killer for them, and what the deal is, is that you file it at the local 00:23:24.840 |
county surrogates court, you pay like a $35 filing fee. 00:23:29.760 |
The catch is though, if you ever want to change your will, you yourself have to physically 00:23:35.380 |
go to the court and withdraw that original will. 00:23:38.600 |
You can't send your spouse, you can't send a power of attorney. 00:23:42.080 |
Even if you're on death's door, it has to be you who goes to the court to pull it out. 00:23:47.480 |
So for that reason, it's not my top recommendation, so. 00:23:54.920 |
So building on that, who should keep, let's say the will is finalized and there are no 00:23:59.640 |
changes being made, who should have a copy of the will? 00:24:03.720 |
How many copies should be distributed and how do you know that the latest, how does 00:24:11.100 |
the judge or the executor or the post-passing, how do parties know what the latest will is? 00:24:26.160 |
Yeah, well, a standard clause in any will is that it revokes any prior wills. 00:24:34.840 |
And so then you're, so you see that in virtually every will. 00:24:38.960 |
- But if you don't know that there's a later one, any document saying it revokes preceding 00:24:48.680 |
So basically, yeah, I mean, you would have to, right, yeah, I mean, there is a default 00:24:58.600 |
paragraph in the standard court petition asking for the probate of the will, where you say 00:25:06.700 |
that you've done a thorough search and that this is the latest will kind of thing. 00:25:13.200 |
And I guess you just have to, whether it's from the attorney who drafted the will or 00:25:20.240 |
kept it or from your search of the decedent's home, you just have to, I guess, yeah, to 00:25:29.680 |
the extent you can, be sure that it's the most recent will. 00:25:35.760 |
What some people will do is they'll, if they redo a will, they'll make sure they get their 00:25:42.660 |
prior originals and just tear them up physically, just so that kind of a situation can't be. 00:25:50.660 |
And so in your experience is, how often have you seen a surprise later version surface 00:26:00.380 |
- Right, to be honest, I have not actually seen that. 00:26:04.260 |
I remember I assisted a gentleman, a colleague who had drafted a will for an older client 00:26:18.700 |
and there was a contest and the specific issue you mentioned about not knowing if there was 00:26:28.320 |
a more recent will didn't come up, but there were several prior wills and that came into 00:26:38.560 |
So we dealt with a different number of wills, but specifically, no, I haven't seen what 00:26:44.680 |
- Okay, so that could be comforting for folks just knowing it's a low probability, low frequency 00:26:52.240 |
- Yes, and one thing, if I could just jump in, one thing that'll help prevent what you've 00:27:01.040 |
Whenever you submit a will to be probated in New York, and again, this should apply 00:27:05.720 |
to all states, there's a requirement that the closest blood can be notified, be provided 00:27:13.160 |
a copy of that will, and they have the opportunity to object to that will. 00:27:19.880 |
So the fact that you're alerting spouse, kids, siblings, parents, or whatever, of the will, 00:27:28.720 |
they're the kind of people who would know or potentially would know if there's a more 00:27:35.080 |
So if they see something that seems too old, doesn't seem right, then they just go to the 00:27:40.240 |
court and say, "There's something wrong here," and so that it could come to light that way. 00:27:47.760 |
So let's jump over to executor demystification. 00:27:52.320 |
So have you seen someone asked to be an executor, accept the role, but doesn't really have an 00:28:03.760 |
How does one empower a potential executor to make an informed decision? 00:28:08.960 |
So if you can walk us through what it means to be an executor, what they typically do 00:28:13.720 |
deal with, can they decline midstream and find a successor executor? 00:28:21.080 |
How does that- - Yeah, I'll answer that one first. 00:28:24.860 |
You can decline midstream and sometimes it's unavoidable. 00:28:29.880 |
If you have a health issue or you have to move, or sometimes there can be some kind 00:28:36.040 |
of problems with the estate where just in order to get the estate resolved, you need 00:28:41.180 |
to step aside and let someone else take over because of family issues or something. 00:28:48.880 |
It's generally better not to sign up to be the executor at the beginning, because if 00:28:59.140 |
you feel, if you've been nominated as the executor and you're questioning whether you 00:29:04.400 |
want to do it or not, or can do it, if you go ahead and accept, then to get yourself 00:29:14.380 |
You can't just sign a letter or something and send it to the court and that's it. 00:29:18.980 |
You basically have to reapply to the court for permission to withdraw. 00:29:24.480 |
And if it's gotten to the stage where you've taken hold of property, if you've administered 00:29:30.760 |
money, access money, put it in a state account, then you need to provide an accounting of 00:29:37.200 |
how you've handled that money before the court will release you. 00:29:46.560 |
When you say a state account, who sets that up? 00:29:51.680 |
Yeah, because an executor, I mean, another way of looking at the executor role is it's 00:29:57.560 |
basically the person who steps in the shoes of the decedent and can and does do what the 00:30:06.040 |
decedent would be doing if they were still alive. 00:30:10.760 |
So they're gone, so someone needs to be able to act for them for the purposes of carrying 00:30:19.520 |
And so more specifically to demystify for folks who are zero familiarity, what are typical 00:30:27.600 |
And if you can build on that, what makes for a great executor and what are some unanticipated 00:30:33.640 |
pitfalls, some things that executors aren't really foresightful to, things that an executor 00:30:49.120 |
To me, I think there's kind of two things that make a great executor. 00:30:55.740 |
Probably the most important, I'd say, is just having that connection, that loyalty to the 00:31:00.940 |
person that passed away, such that you really want to honor and fulfill their own wishes. 00:31:08.420 |
And whether it be to paying their last bills, making sure that the doctor, the home care 00:31:16.260 |
worker, the cleaner, people that were important to them in their lives, those people get properly 00:31:23.460 |
paid for the services that they did, but that the decedent wasn't able to pay during his 00:31:33.660 |
Honoring the decedent's wishes to leave gifts to charity, to cherished friends and family 00:31:40.700 |
members, having a real devotion to the person means that you're going to, that kind of an 00:31:46.420 |
executor is going to go the extra mile to, in a timely and caring way, carry out those 00:31:59.740 |
And then the second aspect I would say is just kind of maybe a general good sort of 00:32:07.540 |
organizational business affairs kind of sense, because the executor really is the person 00:32:17.580 |
And you don't have to necessarily have specialized knowledge or abilities, like either for investing 00:32:24.340 |
or legally or that kind of thing, because as long as the estate is not really small, 00:32:34.340 |
it's customary and fine to hire an attorney to help you with the legal aspects, hire an 00:32:40.100 |
accountant to help you with tax aspects to the extent they exist, hire an investment 00:32:47.300 |
person to make some investment decisions if the estate is going to go on for a little 00:32:54.340 |
And it's, it sounds worth mentioning the executor can be compensated. 00:33:10.380 |
It's in the, it's in the, the person making the will, it's in their control. 00:33:16.500 |
They can specify in their will, I want my executor to be compensated with X amount of 00:33:23.260 |
dollars or X percentage of the estate, or sometimes they'll say, I direct my executor 00:33:32.940 |
That's it's, it's rare for people doing their wills to make that kind of a specification. 00:33:40.740 |
The 99% of the time, the executor simply takes as his or her commission, the percentage that's 00:33:53.060 |
And to give an example, like in New York state for the first $100,000, and in the state, 00:34:02.660 |
For the next $200,000 after that first $100,000, it's 4% of that, then it's 3% of every dollar 00:34:18.660 |
And then I think at a higher level, it even goes down to like 2%. 00:34:28.380 |
When let's define the denominator there, as we segue to what is probate. 00:34:33.380 |
So I'm conscious of our time, we're already near 840. 00:34:37.620 |
And we've covered a fraction of, you know, what we'd like to, when, let's say, a lot 00:34:44.460 |
of folks in the Boglehead crowd know that financial institutions often require naming 00:34:52.300 |
And so that will bypass, even if a will directed otherwise, the financial institution will 00:35:00.220 |
follow what's on their records as the beneficiary. 00:35:04.100 |
So when you say the first $100,000, and then the next $200,000, et cetera, can you clarify 00:35:10.580 |
for folks, does this include financial assets excluded if went to a beneficiary already? 00:35:22.100 |
So, so it would be these percentages only apply to assets that come into the estate. 00:35:28.180 |
So so like, yeah, if you have an account at Vanguard, let's say you have two accounts 00:35:35.540 |
Let's say one account for $500,000, you leave to your, your spouse. 00:35:43.220 |
Then when you pass away, leave to your spouse via the financial institutions form, right? 00:35:48.900 |
We have the form, yeah, the spouse is the designated beneficiary with Vanguard. 00:35:53.420 |
Then yeah, when you pass away, by operation of law at death, that $500,000 goes directly 00:36:00.700 |
to your spouse, it doesn't come into your estate. 00:36:04.140 |
And so it's not part of your estate, and the executor's commission doesn't apply to that. 00:36:09.540 |
If you had a second account at Vanguard for $250,000, and let's say you designated the 00:36:16.860 |
beneficiary on the Vanguard form as your estate, then in that case, that $250,000 would come 00:36:26.000 |
into the estate, and the executor would get a commission based on the percentage amount. 00:36:32.420 |
And that would be the equivalent of having no beneficiary named also, the outcome would 00:36:43.860 |
Most people want it to go out of the estate directly to the family person or an individual. 00:36:50.140 |
But yeah, but for for some planning purposes, you may want to have the assets actually come 00:36:56.740 |
And in that case, yeah, it would the $250,000 would come into the estate and be administered 00:37:08.220 |
So with that, again, this, this audience, a lot of Bogleheads are super educated on 00:37:14.540 |
But we also have folks who don't have such a deep foundation. 00:37:19.620 |
Can you walk us through intro to probate, nuances, intricacies? 00:37:32.420 |
Well, one thing, one thing that's, that's very important. 00:37:37.500 |
And I, we touched on this a little bit earlier. 00:37:40.500 |
But this whole idea of knowing your closest blood can, you know, because, again, you can 00:37:46.980 |
leave your property to anyone you want, you can disinherit, well, you can disinherit 00:37:53.380 |
your spouse, although in New York, and again, in most states, they have a legal right to 00:38:00.380 |
file a right of election for at least one third of your estate. 00:38:04.020 |
So that way, you can't totally lock out a spouse. 00:38:07.860 |
But legally, you can disinherit children, parents, siblings, family, anybody. 00:38:15.180 |
And is there a specific language that holds up really well, assuming it can be contested? 00:38:22.300 |
Well, what some people do is they'll, like, if, if they want to, if they're concerned 00:38:30.060 |
that a, say, a disaffected child may contest a will that leaves most of the property to 00:38:36.940 |
other children or someone else, they'll say, okay, I'll, I'll leave my child $30,000. 00:38:45.740 |
But on the condition that they don't contest my will, if they do contest the will, then 00:38:51.380 |
Another, another recommended step is if you are disinheriting someone that you naturally 00:38:58.540 |
would be expected to include in your will, you just do out an affidavit, just giving 00:39:03.180 |
the reasons, you know, why you're doing that. 00:39:09.580 |
And then of course, I mean, sometimes if some attorneys will do a video tape of a will execution 00:39:17.380 |
signing, if, if they fear there'll be, might be a contest or something, just to have a 00:39:24.180 |
little evidence, a little more evidence that the testator was of sound mind at the time, 00:39:30.580 |
You're probably seeing more and more of that. 00:39:32.260 |
In your example of conditionally disaffected child will inherit $30,000 if they don't contest. 00:39:42.660 |
But let's say they have a strong case to contest and could be entitled or awarded to a lot 00:39:53.340 |
In your example, if they win the contest, but the will said excluded, if they contest, 00:40:02.700 |
So if they win the contest, then the will is thrown out totally. 00:40:08.580 |
And then it goes, it's as if they, the person had no will, and then you look to the default 00:40:20.860 |
And in New York, it's the first 50,000 goes to the spouse. 00:40:27.640 |
And then the other half of the remainder would be divided equally amongst the children. 00:40:32.620 |
So in that scenario, I mean, if the child was an only child and his or her father had 00:40:41.180 |
no spouse, then they would inherit everything. 00:40:44.380 |
But depending on the family situation, it could vary. 00:40:47.200 |
And that's the reason why when I do a will intake, I always try to get the names and 00:40:53.300 |
addresses of closest blood can, even if they're not in the will, because these people have 00:40:58.220 |
to be notified at death and given an opportunity to object to a will. 00:41:04.200 |
And if they can't be found or unknown, the court is going to hold up probate until there's 00:41:12.540 |
like a due diligence search to either locate these people, give them the opportunity to 00:41:17.620 |
object or else satisfy the court that a thorough search has been done. 00:41:22.980 |
And then even after a thorough search has been done, the court's going to want a publication 00:41:30.940 |
of the official notice of the opportunity to object to the estate to be put in a newspaper 00:41:40.780 |
So I want to follow up briefly on two things you mentioned, and then we still will revisit 00:41:45.420 |
probate what it is exactly, what it means to go through it. 00:41:50.220 |
So two things, when you said, if the person wins the contest, the whole will is thrown 00:41:56.100 |
Is that the case for any contest or can a will be challenged in part and the rest of 00:42:04.060 |
And then I want to plant the second and I'll hold you to it so that we don't forget. 00:42:13.580 |
No, a step, I mean, if a child, yeah, that wouldn't, the only way that would apply is 00:42:31.900 |
A step-like sibling wouldn't be considered a legal sibling unless there was an adoption. 00:42:40.140 |
So a stepson would not have legal entitlement the way a blood son would, or daughter, but 00:42:51.100 |
adoption makes them the equivalent of a blood relative? 00:42:59.820 |
And then contesting a will in part versus in full. 00:43:04.460 |
I mean, it's not only the will that a contestant can object to. 00:43:09.140 |
They can also object to the appointment of the executor. 00:43:13.100 |
So yes, in theory, a disgruntled family member could say, I'm contesting the part of the 00:43:23.940 |
And in my mind, that's not necessarily attacking the will in that the contest could say, well, 00:43:31.980 |
now the person has a drug problem, so they're not drug or alcohol or substance abuse. 00:43:40.300 |
So they're not, because of that, what's become a disability, they're not qualified to serve 00:43:47.060 |
It's not that there's anything wrong with the will per se, it's just this person can't 00:43:52.780 |
The only other thing I'm aware of along those lines, like a partial contest of a will is 00:43:59.540 |
if you say a certain beneficiary shouldn't inherit or legally can inherit because they 00:44:04.500 |
committed some kind of a crime, like you do have situations where a spouse will kill another 00:44:10.620 |
spouse and you're not allowed to benefit from an intentional wrong act or murder like that. 00:44:24.540 |
But I've never seen or heard of a will contest where someone comes in and says, we're attacking, 00:44:33.180 |
we want to knock out these gifts here, but allow the other gifts in the will. 00:44:39.340 |
It's either the person had capacity and the will was valid or it's not. 00:44:48.220 |
And then can you walk us through probate, high level, and then just heads up for other 00:44:57.140 |
Summerfield and I will try to wrap by nine Eastern and turn it over to the chat questions. 00:45:02.380 |
So Summerfield following your probate response, let's transition to trust one on one. 00:45:09.300 |
What is a trust, et cetera, but after probate. 00:45:13.780 |
So for probate, okay, you have your original will and touching on issues you raised earlier 00:45:24.940 |
If you have duplicate original wills, you have to produce all of them. 00:45:30.300 |
If you can't produce all of them, the will is dead. 00:45:34.680 |
And that's part of the affidavit, the self-proving affidavit that the will witnesses have to 00:45:40.700 |
sign for probate to go through is their statement that there was only one original will sign. 00:45:47.260 |
So you want to, you have to produce that original will, you have to produce a death certificate 00:45:56.140 |
So really quick, is it preferable, so is it best to have only one original? 00:46:04.020 |
Let's say the person wants one in a safety deposit box, one with the spouse, one with 00:46:12.820 |
Because again, if something happens to one of those originals, whether it's lost or maybe 00:46:20.100 |
someone puts a line through the fifth page of one of those originals, that can knock 00:46:28.260 |
So you really don't, that's, yeah, highly recommend against that. 00:46:34.460 |
That being said, when I'm having a testator sign his or her original will, I always do 00:46:42.220 |
a conformed copy of the will, which is basically a duplicate that the attorney fills out that 00:46:49.140 |
can be used as a substitute in case something happens to that original will, lost or destroyed. 00:46:58.100 |
There's nothing wrong with making photocopies of wills and sharing with the family and all 00:47:03.460 |
But yeah, it's recommended not to have more than one original will. 00:47:08.260 |
Would you recommend generally speaking, I know situations vary, that the will be shared 00:47:16.020 |
That's really up to the family or the person doing their will. 00:47:23.340 |
I mean, in terms of avoiding will contests and avoiding family angst and upset, to the 00:47:33.460 |
extent that you can treat everyone the same, you know, and just try to promote peace, you 00:47:41.220 |
I mean, obviously that can't be done every single time, but you want to try to do your 00:47:46.940 |
will and share or don't share the will with the family, with the mind towards promoting 00:47:54.380 |
people working together and continuity and peace once you're gone. 00:47:59.420 |
Because if you start springing things on people, that's just a recipe for legal battles. 00:48:06.100 |
I'm going to try to accelerate this because time is going super quick. 00:48:09.860 |
So any other key points for probate, what the process means, what it accomplishes, how 00:48:18.420 |
It's basically the court looking at the will, the witnesses affidavit, the death certificate, 00:48:27.500 |
just the general picture of the estate and just satisfying itself that there was no kind 00:48:33.140 |
of fraud, that no one took advantage of the testator such that his or her wishes are not 00:48:38.620 |
going to be honored and, you know, making sure the right person's appointed executor 00:48:43.860 |
and just kind of loose supervision over the estate. 00:48:48.020 |
Are there situations where you want to avoid probate? 00:48:54.700 |
For one situation, the situation we addressed earlier in terms of if you have a family member 00:49:03.420 |
whose whereabouts you don't know or they're disaffected, in that kind of situation, to 00:49:12.660 |
avoid a lengthy due diligence search, potentially to avoid a will contest, it makes sense to 00:49:21.860 |
think about doing a trust or having all your big assets be with designated beneficiaries 00:49:29.700 |
so you don't have a lot of money being held up in a lengthy estate probate process. 00:49:36.980 |
And in terms of paying for these things, it's one thing to inherit as a beneficiary. 00:49:41.800 |
Have you seen folks who write, you know, the person whose will it is, are they setting 00:49:58.820 |
I mean, you have to be a person doing their will wants to or should be attuned to their 00:50:06.460 |
benefit to their beneficiary designations to the extent that they you want to be able 00:50:13.220 |
to if you're planning for an estate to be up and running and you have specific gifts, 00:50:19.400 |
you only want to have done in your will, then you need to make sure that you're not giving 00:50:24.220 |
every single asset to your daughter by beneficiary designations. 00:50:30.000 |
You want to leave some money that's just going to come into your estate for that purpose, 00:50:34.620 |
for the purpose of making those specific gifts and for having a sum on hand to pay the executor 00:50:44.780 |
So let's transition to what is a trust high level? 00:50:56.600 |
What are the main what are the most common trust folks should be thinking about and learning 00:51:08.920 |
Trust is a legal document relationship where property is legal title is held with the trustee. 00:51:20.340 |
The trustee has possession of the financial assets, but they're not for the benefit of 00:51:27.580 |
They're for the benefit of a third party where it could even be partially for the benefit 00:51:37.540 |
So there's what's called a fiduciary relationship where the trustee, the person holding the 00:51:42.600 |
property is not just free to do whatever they want because it's their money. 00:51:48.000 |
They have a legal obligation to use the money, apply the money as directed by the trust to 00:51:57.860 |
the extent the trust sets that forth and for the best interests of the beneficiaries. 00:52:04.120 |
And so these kind of relationships, the trust relationships, typically where you see this 00:52:10.780 |
is for for children, you know, for parents leaving money in their will or grandparents 00:52:18.460 |
for children, people under 18 or for disabled people, you know, people who are at some kind 00:52:27.520 |
of disadvantage such that, you know, if you just handed a 10 year old a hundred thousand 00:52:32.880 |
dollars, you know, that that's a recipe for for disaster, much the same if you handed 00:52:39.060 |
a person with severe physical or mental disabilities, that kind of money, you know, it's fraught 00:52:47.100 |
And the whole aspect, too, of if you're receiving government benefits as a person with a disability 00:52:55.540 |
and inherit straight inheritance can be those assets can be seized by the government for 00:53:02.380 |
reimbursement for the government benefits or they can disqualify a person from receiving 00:53:10.340 |
So in that kind of scenario, it's beneficial often to set up some kind of a trust where 00:53:15.980 |
assets can be applied to help the child, the disabled person, but you don't face the perils 00:53:23.480 |
of just turning the money over to those individuals. 00:53:28.780 |
So for folks, broadly speaking, what situations do you think? 00:53:36.540 |
Have you seen that a trust was overlooked but would have been hugely advantageous? 00:53:41.460 |
Oh, well, actually, I can I can think of an estate that I'm working on right now. 00:53:48.020 |
And I had actually recommended that this person, the testator, do a trust. 00:53:56.000 |
But and the person was right, the person declined because they said it would have been a lot 00:54:02.920 |
And they were in terms of retitling all their assets, because it's not a matter of just 00:54:07.240 |
signing a trust document and boom, that's it. 00:54:10.620 |
To do a real trust that's going to bypass probate, you have to retitle all your assets 00:54:19.180 |
But in this scenario, this this testator, she had a family situation where she basically 00:54:30.800 |
And so we had her had her do, you know, affidavits of her family tree, get documents together 00:54:38.740 |
to try to help for the due diligence search that was to come. 00:54:47.940 |
I had to start the due diligence and try to find family members. 00:54:53.320 |
And it reached a point, you know, I'm not an expert genealogist or anything. 00:54:58.440 |
And ultimately, we had to the executor had to pay for his ancestry dot com. 00:55:03.700 |
They have a service where they will do thorough searches. 00:55:07.300 |
So and it's not the end of the world, but it is time and it is money. 00:55:12.020 |
And if this individual had done a trust and gone through the then laborious steps of retitling 00:55:17.740 |
her assets into the trust, her estate process would have been much, much smoother and quicker. 00:55:26.360 |
So in closing, as we're hitting nine Eastern, can you do high level power of attorney? 00:55:37.900 |
What terminates a power of attorney or different options to terminate it? 00:55:44.740 |
And then my last question, as broadly as it could help the audience, what do you think 00:55:50.620 |
people are least aware of that they should be more aware of in this under this estate 00:56:05.620 |
The general kind that most people think of when they hear power of attorney is what's 00:56:10.820 |
called a durable power of attorney, which means it survives incapacity. 00:56:15.720 |
And that's what most people want and really should have. 00:56:19.980 |
Because it basically says, you know, you're you've appointed someone a trusted family 00:56:25.260 |
member or friend to step into your shoes to basically do anything that you could do for 00:56:39.260 |
And so you want the document to hold up, you know, should you have some kind of accident 00:56:46.140 |
or illness where you can't handle your financial affairs? 00:56:51.340 |
There are non durable power of attorneys, which are more limited and specific. 00:56:56.460 |
Like let's say you are going to purchase a home, and you're about to the closing is a 00:57:02.580 |
week away, but you're you're called off on business, or you have a family tragedy, you 00:57:09.420 |
can't make the closing, then what you can do, you can sign a non durable power of attorney, 00:57:18.740 |
But it appoints a your attorney or your friend, your cousin, to be able to go to the closing 00:57:25.320 |
in a week's time and sign the documents necessary to close on the purchase of your home. 00:57:32.940 |
But for our purposes of state planning, you want most people, it's important to have a 00:57:40.420 |
Because if you don't, and God forbid something happens to you where you're not able to pay 00:57:44.140 |
your bills, sign documents, handle your affairs, then chances are, you're going to have to 00:57:55.380 |
Because there's no if you're disabled, to the extent that you can't then make out your 00:57:59.980 |
power of attorney, there's no way for anyone to get legal authority to act on your behalf 00:58:05.880 |
absent a court proceeding, which is time and money and invasion of privacy. 00:58:11.420 |
So so power of attorney is important that way. 00:58:17.220 |
And so then as in closing for this portion of tonight's, and then we'll, we'll go to 00:58:22.100 |
the audience for both pre submitted questions integrated with the chat. 00:58:26.140 |
What do you think is so often overlooked that folks should really be more aware of? 00:58:35.220 |
And one of them I mentioned before, and that's the thing about knowing who your closest blood 00:58:42.660 |
Because so many people, when I asked them for their closest blood can they'll say, well, 00:58:47.700 |
I'm not leaving this person anything in my will, what does this person have to? 00:58:56.580 |
But unfortunately, the fact is, that the court is going to require that that person be a 00:59:01.780 |
part of the process at least get notice, and your will is not going to be probated until 00:59:06.580 |
that person is found, and either signs a waiver or is cited and and you know, doesn't file 00:59:13.940 |
So having your family tree squared away, that that's something that's often overlooked and 00:59:21.180 |
The other two things for a trust, some, let's say you want to do a living trust to avoid 00:59:29.340 |
probate because you have a family situation or something where probate is problematic. 00:59:36.260 |
A lot of people feel incorrectly that if they sign their living trust document, that's it, 00:59:46.020 |
When in fact, for that living trust document to be operative, you have to retitle your 00:59:51.140 |
assets in the name of that trust, you have to go to your bank, you have to go to Vanguard, 00:59:55.780 |
you have to go to your life insurance, whatever and put the asset in the trust name, or else 01:00:01.940 |
the asset won't be administered by the trust. 01:00:05.300 |
And the only way you're going to administer that asset, have it go to who you want it 01:00:08.860 |
to go to, is for a probate of your will, which you ostensibly are trying to avoid. 01:00:16.020 |
The third thing, mistake I see sometimes, is for powers of attorney. 01:00:23.100 |
People will sign their power of attorney, but then their agent, that person needs to 01:00:33.140 |
And ideally, they'll sign it within a week or so of the principal signing it. 01:00:38.660 |
And sometimes I will give the power of attorney to the person that's just signed it and they 01:00:43.700 |
say, "Okay, I'm going to have my daughter sign it or my husband sign it, and then I'll 01:00:51.060 |
And then something happens, they don't follow through. 01:00:54.140 |
And unfortunately, at that point, the power of attorney can just be invalid. 01:01:01.240 |
Can you clarify, you use the term agent and you said the daughter or the, are these the 01:01:10.420 |
Like, let's say a mother appoints her daughter as her agent on her power of attorney, and 01:01:17.060 |
the mother signs the power of attorney, giving the daughter the authority. 01:01:21.700 |
But for the New York State power of attorney form, the daughter has to sign the form as 01:01:26.300 |
well, and banks and financial institutions, they want the daughter to have signed on as 01:01:33.340 |
agent within, say, a week of her mother signing on. 01:01:38.820 |
If much more time goes by, often they will balk at honoring the power of attorney because 01:01:44.140 |
they'll say, "Why is there this big time lag? 01:01:48.700 |
And is it simply the date that the signer dates? 01:01:56.500 |
Because they could post, they could put an earlier date, right? 01:02:04.740 |
With that, I know we have many questions from the audience. 01:02:10.660 |
One of the questions that came in on the RSVP, many of them involved spendthrift trusts, 01:02:18.140 |
and also just the difference between a trust and a will, and also special needs trusts. 01:02:27.220 |
And first, on the difference between a trust and a will, Summerfield, is it correct that 01:02:32.500 |
one of the main differences is that a will is public record, and a trust is private? 01:02:40.220 |
So for example, if you are somebody important, I've heard that Robin Williams kept everything 01:02:48.720 |
Nobody knows anything about his, very little about the passing of his estate, because it 01:02:54.860 |
was all in trust, whereas we know other people have not done that, and they are in wills 01:03:02.700 |
So that would seem to me to be one consideration in going a trust versus a will. 01:03:09.840 |
And then another one that I heard is that a trust moves along quicker. 01:03:15.940 |
If you want your beneficiaries to have their, what you've left for them, smoothly and quickly, 01:03:25.020 |
you put it in a trust, a living trust, or a revocable trust, just to get it there right 01:03:30.900 |
The trustee just hands it over, whereas a will, most of these, everything is distributed 01:03:39.460 |
It takes a while for the will to progress through the system. 01:03:43.060 |
And it could take months and months for the beneficiaries to get there, what they have 01:03:56.380 |
And yes, because the will has to be probated, approved by the court, and that takes time. 01:04:04.900 |
And then even after that, once the executor is appointed, in New York, there's a statutory 01:04:11.420 |
period of seven months over which creditors have the right to submit claims on the estate. 01:04:18.460 |
And so while the executor technically, right when he or she is appointed, can make distributions 01:04:24.740 |
to beneficiaries, it's generally unwise to do that because if expenses come in, if claims 01:04:33.860 |
come in, and the executor is given out money such that he or she can't meet the burden 01:04:43.340 |
of the expenses that come into the estate, then he or she is personally liable to the 01:04:49.100 |
extent that he gave that money out, liable on those legitimate claims. 01:04:55.320 |
So as a practical matter, executors typically wait the seven-month period, even after they've 01:05:01.820 |
gone through probate, before they'll make the beneficiary designations. 01:05:09.020 |
Now it's a little bit of a catch-22 in that you're going to have to go through some paperwork 01:05:18.460 |
and hassles with either a living trust or a will. 01:05:25.280 |
The good thing about a trust is that you handle the hassles ahead of time. 01:05:33.480 |
You deal with your own financial institutions and banks. 01:05:41.240 |
It's not like a traumatic experience or anything, but the financial institutions, this isn't 01:05:51.320 |
They're not getting new money or new customers. 01:05:54.320 |
They're just having to do bureaucratic change of ownership forms. 01:05:58.440 |
So they're not particularly motivated to be helpful or quick. 01:06:01.920 |
So it is a little bit of a frustrating process. 01:06:06.120 |
But if you go through it and you complete it, then the benefit is, yes, when you pass 01:06:17.240 |
The assets will transfer by trust when you go to the financial institution and show them 01:06:24.280 |
I mean, you have to fill out some forms, but it's a much smoother, easier process than 01:06:32.760 |
And also another thing, a trust can provide for periodic distributions to a beneficiary, 01:06:39.840 |
for example, children, elderly people, and even if, and this gets into some of the other 01:06:45.280 |
questions on the RSVP, about leaving funds, leaving your estate to children who may burn 01:06:58.280 |
If you leave it in a trust, it's true, isn't it, that you can distribute it over time, 01:07:10.120 |
And that's a good, you're bringing up an excellent point. 01:07:13.760 |
And because we've, so far we've looked at trusts and wills as two separate things and 01:07:20.200 |
not being intermingled and not working together, when in fact they can and do work together 01:07:27.000 |
oftentimes, and in this sense that oftentimes in a will, people will set up a trust and 01:07:36.400 |
So it's not a living trust where you've gone through all the rigmarole before you pass 01:07:41.040 |
away of retitling your assets into the name of the living trust. 01:07:45.880 |
Rather in planning your will, you've written the trust into your will. 01:07:51.680 |
And like with the example with children, you can say in your will, if I pass away before, 01:08:00.160 |
you know, while my child is a minor, then my gift to my child doesn't go directly to 01:08:08.640 |
And yes, and I direct that one third of the trust be distributed to my child when she's 01:08:15.440 |
25, the second third gets distributed to her when she's 30, and the final third gets distributed 01:08:28.520 |
But then that's a trust in a will, not a living trust, but a trust in a will. 01:08:32.680 |
And those actually are, you know, are fairly, fairly common, generally, a little more common 01:08:41.920 |
Well, before the next question, I want to just mention that I did read somewhere, there 01:08:47.240 |
are only two things we should never do ourself. 01:08:58.440 |
But I don't know about the second one so much because Vogel heads are pretty, they're very 01:09:09.880 |
The other question had to do with spendthrift trust, we had two questions on spendthrift 01:09:16.760 |
Well, spendthrift trust is basically a provision or a type of trust where you're saying that 01:09:25.320 |
the assets in the trust cannot go to creditors of the beneficiary, or cannot go to reimburse, 01:09:35.380 |
say the government for public assistance that may have gone to the beneficiaries. 01:09:41.080 |
So it's basically seeking to streamline the funds in the trust to go directly to the beneficiary 01:09:52.600 |
for the beneficiaries enjoyment or be applied for the beneficiary for education, support, 01:09:58.880 |
maintenance, something like that, just to prevent some kind of leakage where a creditor 01:10:11.360 |
And that's a benefit of that kind of a trust. 01:10:15.120 |
As opposed to if you simply handed the money over via a will or via a gift, if you give 01:10:21.980 |
it unfettered to a person, then yes, if they get sued, if they have creditors, if they 01:10:28.160 |
get divorced, if they apply for public benefits, their assets are subject to being lost. 01:10:36.320 |
And it is a catch 22 though, because you do see situations where trust for people are 01:10:43.680 |
helpful for the beneficiaries, but you also see situations where beneficiaries are resentful 01:10:53.440 |
Sometimes they feel slighted, like what you don't trust me to manage my own money. 01:10:57.080 |
Like I'm not an adult, I can't handle things. 01:11:01.060 |
Sometimes they can feel resentful of the trustee. 01:11:04.440 |
The person can say, I have needs, I need to buy a car, I have a health issue. 01:11:13.000 |
They're not releasing the funds for my wishes or my needs. 01:11:19.620 |
So it cuts both ways, but obviously you have to evaluate your own situation and make the 01:11:29.940 |
Carol, do we have any questions from the chat? 01:11:32.960 |
Yes, we do have one that is in Florida, but I do believe it should have some general applicability. 01:11:40.020 |
First of all, are you aware of any special treatment of a primary residence in Florida 01:11:46.420 |
And if so, assuming you have beneficiary designations on all of your other assets, so you don't 01:11:51.160 |
otherwise need to go through probate, how would you direct who your house goes to? 01:11:58.280 |
And just for this question, there is no wife or children. 01:12:03.300 |
If I were a Florida attorney, hopefully I could answer that. 01:12:07.380 |
But unfortunately, in New York, we don't have those kinds of things. 01:12:11.240 |
So I really, unfortunately, I'm not able to answer that. 01:12:28.180 |
What are your thoughts on checking and verifying a will with chat, chat, GPT, or other similar 01:12:34.680 |
To be honest, I'm unfamiliar with with those programs. 01:12:41.980 |
I mean, I know about the wheel kits and those kind of things. 01:12:49.180 |
Yeah, I guess, yeah, I really, again, I have to plead ignorance. 01:12:54.940 |
I mean, to the extent I mentioned earlier that I think that, to the extent you can keep 01:13:00.100 |
things simpler, and maybe a simpler program or just following the will of an attorney 01:13:06.940 |
is done for a family member, I personally would recommend that a little more than trusting 01:13:13.500 |
yourself or specific programs that because the will of your grandfather that you have, 01:13:24.860 |
I think the odds are pretty high that that's gone through probate, and, and held up to 01:13:30.780 |
the court review, whereas something that comes from the computer, you know, probably hasn't 01:13:43.220 |
The question regarding the Lady Bird deed in Florida, we can push that question, perhaps 01:13:52.820 |
And because there are Florida, there are Florida people here, and we do know a little bit about 01:14:04.860 |
And by the way, the states that have Lady Bird deeds are Florida, Texas, Michigan, West 01:14:21.020 |
But it's called an enhanced life estate deed. 01:14:28.060 |
But why don't we put that question at the end of the meeting, so that we can discuss 01:14:33.780 |
Now, let me see, Lucas, are there any other chat questions? 01:14:45.940 |
Um, so one, uh, one question was, if a will is created in one state, and you have moved 01:14:54.100 |
to another state, is a new will suggested or required? 01:14:58.860 |
Um, what I recommend to people is I say, take your will that we've done in New York and 01:15:07.980 |
show it to your attorney in Michigan, or a new attorney in Michigan and ask that individual. 01:15:14.220 |
Because the state laws are generally similar in terms of the requirements for, you know, 01:15:24.300 |
But like, my main concern with that is, I could see where, say, in Michigan, the specific 01:15:34.300 |
statute setting forth what the witness affidavits have to recite, it could be slightly different. 01:15:43.340 |
So that while the will that we did in New York is still valid, the Michigan court, when 01:15:49.980 |
the person passes away, may want their specific will witness affidavits to be signed by the 01:15:59.900 |
And in 20 or 30 years, for the people in Michigan to try and locate these New York witnesses 01:16:05.320 |
and get them to re-sign affidavits, that's, that's enough of a challenge where in that 01:16:10.980 |
situation, I would recommend, and I imagine the Michigan attorney would recommend, let's 01:16:17.940 |
But the short answer is, take it to an attorney in the new state to be best guided. 01:16:34.140 |
Would there be a circumstance under which it would be a good idea to videotape the signing 01:16:38.140 |
of the will to demonstrate sound mind and intent? 01:16:43.340 |
And, and I've, I've never done this and I've never been involved in a case where it has 01:16:51.660 |
There are attorneys who say, and it makes sense that in certain situations you would 01:16:56.020 |
want to videotape, you know, if a person has some kind of illness or disability, or they're 01:17:01.860 |
really quite old or something, and you sense that there could be a challenge, then it makes 01:17:07.820 |
sense that a videotape could be very valuable. 01:17:13.020 |
But I've also read and heard where it could backfire as well. 01:17:17.020 |
I mean, you could have a person who really has capacity, but they could look somewhat 01:17:24.540 |
And just that appearance could raise an inference that they don't have capacity. 01:17:28.860 |
So the answer is yes, but I think you need to be a little bit careful with that, so. 01:17:41.620 |
Can a will be modified by strikeouts, initials, et cetera, or do you have to redraft the company 01:17:50.380 |
Well, it can be modified at the time of the will signing. 01:17:56.460 |
Like, I mean, it happens with some frequency that, like a will I've prepared, maybe I've 01:18:03.900 |
made a typo, or a person's address has changed, or the testator themselves, they'll want to 01:18:13.980 |
And so it is fine at that point, when you're having the person sign their will, to do a 01:18:19.540 |
line through that kind of thing, and you have the witness's initial and all that. 01:18:27.460 |
As a practical matter, that's not-- well, it's not a big deal. 01:18:30.180 |
The courts down the road, when you go to probate the will, they will want an affidavit just 01:18:34.900 |
about that little change, which is not a big deal, but something to keep in mind. 01:18:40.940 |
Where you can't do a cross out is after the will has been signed and witnessed. 01:18:46.420 |
Like if the testator takes the will home, and a week or three years later, they want 01:18:50.620 |
to make a small adjustment, doing a line through, that can invalidate the entire will. 01:18:55.660 |
So you'd want to go back to the attorney and redo it. 01:19:01.380 |
How would one know, Summerfield, whether it was done for your post? 01:19:08.860 |
I suppose you'd have to look at the documents. 01:19:15.020 |
If I've had a typo, or the testator's changed something at the last minute, I think whether 01:19:24.020 |
I have the will initialed, and then-- I was going to say I put the date on, but I don't 01:19:35.180 |
I think you just have to look at the totality of the-- probably looking at the-- because 01:19:43.700 |
the change should be initialed by the witnesses. 01:19:47.060 |
And you've got the-- if the handwriting for the initials doesn't match the handwriting 01:19:51.660 |
of the witnesses at the end of the will, then that's a red flag that the testator or someone 01:20:03.060 |
The strikeout would be initialed, and perhaps dated, at the time of the signing. 01:20:14.220 |
And this says, how do you handle firearms in an estate? 01:20:20.580 |
None are NFA items, those requiring the ATF approval and tax stamp. 01:20:38.940 |
And I read years ago not to list individual serial numbers in a will. 01:20:48.420 |
My recommendation for that would be that you say in your will, I leave my personal property 01:21:03.460 |
or my household effects or items in my home, items in my garage, I leave them to my executor 01:21:10.500 |
to distribute as I have made known to him or her in a separate writing. 01:21:17.100 |
So you're not actually mentioning, you're not putting down in your will that you have 01:21:23.460 |
That's something that people do a lot of times for jewelry and that kind of thing. 01:21:27.740 |
Because again, like we mentioned earlier, wills are a public record. 01:21:31.460 |
And I think to the extent that you can not reveal every specific property that you own, 01:21:42.500 |
Now, just so you know, like in New York State, within nine months of being appointed as executor, 01:21:51.580 |
an executor or the attorney for the estate is required to submit an inventory to the 01:21:57.740 |
And that inventory, one of the questions asks about firearms. 01:22:03.200 |
And if there are firearms, you have to indicate that there are in the estate. 01:22:08.860 |
And then there's a separate page you have to submit about the type and all that sort 01:22:18.740 |
I mean, if you could leave the firearms, gift them prior to passing away, I mean, that's 01:22:26.860 |
A trust could be an option, but I'm not sure that that would actually work. 01:22:33.300 |
I guess you'd have to check with the licensing authority in the state. 01:22:39.900 |
And if the licensing authority will allow a trust, like if you can register the trust 01:22:49.940 |
The trust can hold the title to the guns and that would pass separately from your estate. 01:22:57.380 |
But I'm a little bit doubtful that the gun licensing authorities in the state are going 01:23:02.520 |
to allow a trust as opposed to an individual to be the registered owner, because then the 01:23:12.260 |
Summerfield, are there other things that you should not put into a will? 01:23:18.380 |
For example, in the chat, they talked about funeral arrangements, organ donations. 01:23:26.300 |
What I understand is that if you put those in the will, usually you're going to be long 01:23:30.580 |
gone and buried before will is even found, perhaps. 01:23:36.580 |
I mean, it's not so much, I mean, putting it in the will, that's, I mean, that's, yeah, 01:23:42.660 |
it's not going to help, but it's not the end of the world. 01:23:44.860 |
The problem is if you rely, if you haven't done it elsewhere, if you're relying on the 01:23:49.700 |
will to, for the organ donation and for the funeral, handling the funeral, yeah, it's 01:23:57.220 |
You should, you know, have it in a separate letter to your executor about your, or your 01:24:01.580 |
family, about your funeral arrangements and last service. 01:24:05.180 |
And you should have on your driver's license or on something with your doctor, you know, 01:24:10.220 |
the, the organ donation form, you know, have that done before. 01:24:14.900 |
If you want to put it in your will also, that's fine, but don't rely on the will because like 01:24:29.500 |
One of them was, you know, what are the pros and cons of designating beneficiaries in a 01:24:36.940 |
For example, like a TOD designation versus designating beneficiaries specifically in 01:24:43.900 |
Well, the pro, I think we've talked some about the pros. 01:24:48.500 |
The pros are that the money is, if you designate someone on your account, as opposed to in 01:24:55.300 |
your will, the money is 99% of the time going to go to the beneficiary much quicker because 01:25:03.700 |
you just have to show a death certificate to the financial institution. 01:25:08.420 |
You don't have to wait for the probate process, the estate process to go through. 01:25:14.340 |
I mean, I suppose there, you know, strange circumstances where it could be a negative, 01:25:23.380 |
like I remember I had one case, I think, where someone had left a beneficiary designation 01:25:30.060 |
on their bank account to a family member, but they spelled the person's name wrong and 01:25:34.820 |
the bank was very difficult about turning over the funds because the name didn't match 01:25:42.780 |
And in theory, if you did that by will, probably you wouldn't have, the court wouldn't give 01:25:51.180 |
I mean, another sort of, just to play devil's advocate, you could leave beneficiary designations 01:26:04.980 |
And then when you go to set up your will, you could have your whole estate plan put 01:26:09.780 |
forth in your will, and the fact that you've done the beneficiary designation is going 01:26:18.740 |
So, but if you integrate, if you know all your assets and your beneficiary designations 01:26:23.500 |
in your will, you're going to avoid that pitfall. 01:26:29.020 |
Bob, I'd like to open it up for raised hand questions. 01:26:33.020 |
Do any of the, does anybody have a question they would like to raise their hand and ask? 01:26:56.820 |
I have a question that I, I had a question that I submitted via RSVP, it applies to at 01:27:03.300 |
least nine states of the union and in parts, five or six others, and that deals with the 01:27:09.940 |
difference between estate documents drafted in a state that does not have community property 01:27:17.980 |
laws versus then moving into the state that does. 01:27:23.740 |
So that was my question, and I wonder if Summerfield has anything to comment about things to watch 01:27:33.060 |
I really, unfortunately, I really can't say much to that because I've only practiced in 01:27:38.820 |
New York, you know, which is not a community property state. 01:27:42.340 |
I haven't had, I mean, I've had some experience with people who leave the state and come into 01:27:47.140 |
the state, but I've never been involved in the community property issue. 01:27:52.340 |
I think the only, my only advice would be if you do change states to speak to an attorney 01:27:58.260 |
in the state in which your new state, just to try to figure, yeah, figure all this out. 01:28:05.220 |
And Summerfield, for folks not familiar, can you clarify what it means to be a community 01:28:13.780 |
Community property, if I remember my history, I think the, well, there's part, I think, 01:28:21.180 |
with just laws in terms of divorce and spousal property, I think that's different. 01:28:29.900 |
And it may even be tied in, and you guys may know this better than I do, some of you, but 01:28:34.820 |
I think that, you know, when we set up our legal system in America, most of the legal 01:28:42.860 |
system was modeled, most of the states modeled things on the old English system, the common 01:28:52.180 |
But the influence of the French and Napoleon, like Louisiana was in the Napoleonic code. 01:28:57.420 |
And so that was a whole different, you know, just legal history background precedent. 01:29:09.100 |
The community property states are, they're out west usually, Alaska, Arizona, California, 01:29:16.980 |
Idaho, Nevada, New Mexico, Texas, Washington State, also Tennessee, Wisconsin, and Louisiana 01:29:36.660 |
Yeah, I mean, generally, I think states are, look to do the similar, you know, very similar 01:29:52.940 |
I mean, I'm sure there are differences in terms of rules and regulations, but like with 01:29:58.500 |
spouses being disinherited, it would surprise me greatly that there were certain, if there 01:30:04.660 |
were certain states where you could completely disinherit a spouse, you know, that. 01:30:11.100 |
For example, Florida is not a community property state. 01:30:14.620 |
But as you mentioned earlier, you cannot disinherit your spouse in your will, you do have to provide 01:30:21.940 |
for them, I think it's 30% and for your minor children. 01:30:26.360 |
So it's not a community property state, but it does still, the goal of it is to provide 01:30:33.340 |
for, you know, your family so that they're not out on the streets. 01:30:39.820 |
Yeah, the question didn't arise from an intent to disinherit, it arose from the context of 01:30:47.220 |
just making sure that the estate plan wasn't screwed up by, you know, the new laws in the 01:30:55.740 |
So I am an attorney, but I'm not an estate lawyer. 01:30:58.780 |
So since I am an attorney, I'm trying to find out the answer to the question before I ask 01:31:03.860 |
So I thank you, Summerfield, for your advice, but I am going to hire a lawyer, I just kind 01:31:08.580 |
of wanted to know what the answer was before I did. 01:31:12.020 |
I mean, to me, the thing that always pops into my mind in terms of different states 01:31:18.020 |
is not so much the will per se, but estate taxes. 01:31:22.220 |
Because, you know, some states have an estate tax, and others don't. 01:31:28.620 |
And there's always the federal estate tax, but that's at a very high threshold. 01:31:36.140 |
But some states have, yeah, the state taxes that do to apply to a lot of folks. 01:31:43.420 |
But for example, on ours, we did one thing with a house in our primary, in our former 01:31:53.300 |
And then now in the community property state, we bought a house. 01:31:56.020 |
So it's going to get treated differently in the estate. 01:31:59.500 |
So but I have a special needs trust to deal with. 01:32:03.340 |
So I'm well on my way, but I just was looking for your perspective. 01:32:15.660 |
Does anybody else have a raised hand question? 01:32:19.060 |
Miriam, in the absence of other raised hands, I'll, I'll ask two more of Summerfield that 01:32:26.060 |
we ran out of time, which is Summerfield, can you give folks high level summary of healthcare 01:32:32.260 |
proxy and medical directive slash living will? 01:32:38.700 |
Just like the power of attorney was for your financial matters, the healthcare proxy is 01:32:46.020 |
for your healthcare matters, where you're appointing someone to make the decisions that 01:32:51.380 |
you would make if you had capacity, if you could communicate them. 01:32:58.020 |
So I mean, in my experience, doing the financial power of attorney is is more important than 01:33:07.500 |
Because if you fall ill and go into a hospital, the doctors are going to speak and take direction 01:33:15.440 |
from your closest blood kin, even without a healthcare proxy. 01:33:21.740 |
But if you go to a bank without a financial power of attorney, you're you're you're, yeah, 01:33:27.220 |
the bank's not going to honor the requests of your close family, they're going to insist 01:33:32.940 |
So and but and to go along with the healthcare proxy, you can also do a medical directive, 01:33:39.300 |
which is basically your statement of what kind of treatment you'd like to accept or 01:33:44.940 |
refuse at sort of an end of life situation, you know, whether you accept artificial respiration, 01:33:55.500 |
cardiopulmonary resuscitation, you know, all that sort of thing. 01:34:01.100 |
And in New York, at least there, there's no specific statutes that say, as with the power 01:34:07.620 |
of financial power of attorney, that doctors and hospitals have to honor a medical directive. 01:34:13.560 |
But in cases that have gone before judges, if someone has a statement in writing that's 01:34:19.020 |
witness that says, I want the plug to be pulled, if I'm in a coma, the writing holds up is 01:34:25.980 |
given more weight by judges than testimony of friends or family saying, Oh, Susan always 01:34:32.820 |
said if she was unconscious, she you know, she wanted the plug pulled. 01:34:38.980 |
Carol, do you have any more Alice from the chat? 01:34:48.300 |
But there are two questions that were basically the same thing. 01:34:51.080 |
If all of your assets are passing, you know, directly to beneficiaries via beneficiary 01:34:58.900 |
What happens if you don't have any money to pay in this, there's no state to pay those 01:35:04.060 |
And the other question is, like, should you leave part of your money to make an estate 01:35:17.020 |
I haven't personally encountered that situation. 01:35:23.520 |
I mean, I suppose it's possible that certain Yeah, I mean, yeah, it's possible what you 01:35:30.620 |
know, whether it's taxes, or I don't know, child support or something. 01:35:36.980 |
Or a lawsuit, I suppose it's conceivable that those entities, those creditors could somehow 01:35:45.500 |
reach into assets that are left to D or directly to a beneficiary. 01:35:55.060 |
But but that this is just based on hunch as opposed to knowledge. 01:36:02.220 |
So ultimately, I don't know, I've never encountered that. 01:36:05.620 |
But I mean, as a practical matter, though, I think it'd be very difficult for any creditor 01:36:11.060 |
to get at those assets if they don't come into an estate, if they've waited till the 01:36:17.060 |
So as to the second question, should you leave something to pay those final expenses? 01:36:27.060 |
I would probably say, yes, you should do that unless you've made some other kind of arrangement. 01:36:34.780 |
Like if you've made a prepaid funeral, set up a prepaid funeral, unless you've maybe 01:36:40.460 |
asked your if you have life insurance, you've asked your life insurance beneficiary to make 01:36:46.740 |
sure that certain obligations were taken care of out of that life insurance money, you know, 01:36:52.860 |
or maybe, yeah, have a have a joint account with a trusted person so that and have them 01:36:59.900 |
use the the joint account funds to pay off certain expenses. 01:37:07.980 |
I was just curious if you had any recommended books on this subject. 01:37:16.780 |
It's so complicated and it's kind of hard to get a big picture view. 01:37:20.340 |
I almost feel like a flowchart would be super helpful or like this thing supersedes the 01:37:28.300 |
And like, I don't know, I just write myself like, well, I just found myself like looking 01:37:33.540 |
on Amazon and I found like the top 10 estate planning books, but I was wondering if you 01:37:39.940 |
You know, to be honest, it's it's it's interesting. 01:37:42.060 |
I have never the only book I've read about like a state and estate planning was the book. 01:37:50.060 |
Well, I forget it was about the Johnson and Johnson estate contest in the New York County 01:37:57.180 |
Surrogates Court with that that older fellow who married his much younger maid. 01:38:03.920 |
So I and that was more of an entertainment type thing as opposed to the nitty gritty 01:38:09.120 |
So I honestly I don't have a book recommendation. 01:38:12.940 |
One thing you might consider is, you know, sometimes local libraries or a university 01:38:20.560 |
or even a bar association or and like Schwab or Vanguard, they may have programs where 01:38:31.920 |
they would maybe something like this or something, but where they would have written materials 01:38:47.880 |
There is one thing about beneficiaries, Summerfield, and that is and this came up in the chat. 01:38:53.720 |
Also, the power of attorney, a general power of attorney that that is created and it covers 01:39:01.680 |
You know, I mean, we have family members who have powers of attorney that are like twenty 01:39:06.120 |
five pages long and it covers everything, every every aspect of your life, the power 01:39:11.720 |
of attorney, the banks, the this, the that, the doctors, the everything. 01:39:16.640 |
But really, when you go to when you have Vanguard, Chase Bank, Fidelity, Wells Fargo Bank, those 01:39:25.480 |
institutions, the financial institutions want their own power of attorney because it specifically 01:39:32.480 |
addresses what that institution does and they have your money and they have sometimes millions 01:39:40.800 |
of dollars of your money and they want to make sure that the beneficiary, the power 01:39:47.360 |
of attorney, everything is correct and accurate. 01:39:52.200 |
And so they, for example, at Vanguard, we're at Vanguard. 01:39:56.960 |
We made sure that we use their powers of power of attorney, which is called the full agent 01:40:08.400 |
But once you set it up, it's at Vanguard there. 01:40:10.960 |
You don't have to worry about bringing your own and, you know, emailing it to them or 01:40:18.560 |
First of all, I'm not going to it's just so thick. 01:40:23.240 |
And we have on the forum posts where people go to Chase Bank, they go to Wells Fargo Bank 01:40:29.000 |
with their power of attorney and it's worthless. 01:40:39.440 |
Yeah, I mean, in New York, they recently changed the law where they've made it now where banks 01:40:45.240 |
have to provide a specific reason for why they are rejecting a power of attorney. 01:40:51.400 |
And if it turns out that that rejection is unreasonable, then banks can be liable for 01:40:58.440 |
a limited amount of money damages for not honoring a power of attorney. 01:41:03.120 |
And I think banks run a little bit of a risk when they when they do that, you know, just 01:41:11.940 |
But yeah, nine times out of 10, they're going to get away with it. 01:41:14.800 |
So it makes sense to be proactive and try to make sure that you have the power of attorney 01:41:21.400 |
that the institution is going to honor ahead of time. 01:41:36.040 |
One is from Mark saying, do you even need a will if all your assets have beneficiaries? 01:41:42.320 |
And Uzma says, if I only have assets and accounts that have designated beneficiaries, I have 01:41:48.120 |
no property, just an old car, nothing expensive in my home, do I need a trust? 01:41:54.240 |
Will I have to go through probate for these meager assets? 01:41:58.520 |
In terms of the trust, yeah, I would say probably not unless you have one of those scenarios 01:42:05.360 |
where you have someone that you want to benefit who's disabled or if it has to go through 01:42:13.280 |
If you have a situation where someone in your family may contest the will or you don't quite 01:42:19.080 |
know your family tree, that kind of thing, which is going to complicate the probate process. 01:42:30.240 |
It's just, if you don't have a will, it's harder for your family, the person who's going 01:42:42.440 |
And one example is if you have a will and you submit it to probate, and let's say you 01:42:49.040 |
do have a problem with someone objecting to your will or you don't know where a family 01:42:56.120 |
member is, you have to do a due diligence search and that draws out the process. 01:43:01.300 |
You can still apply for what's called preliminary letters where the court will give you a preliminary 01:43:13.000 |
Let's say the decedent has a portfolio that's in a risky stock and the stock is going down 01:43:21.360 |
and you need to sell that stock before it just bottoms out. 01:43:25.140 |
You can get the preliminary letters, sell the stock before it's plummeted, sell the 01:43:35.740 |
So having a will in those situations really saves the day, even though you have to wait 01:43:43.800 |
time to ultimately finish the process of turning over the assets to the beneficiaries. 01:43:50.660 |
Flip side, you don't do a will, you still have the assets that are tanking. 01:44:01.100 |
If you don't have a will and you submit in your application to be appointed as the estate 01:44:07.300 |
administrator, it's going to take time and the court, because there's no will, they can't 01:44:15.340 |
They can't give you the advanced authority to sell assets to protect the estate. 01:44:21.700 |
The chances of it happening are not that great, but there are scenarios where if you don't 01:44:26.780 |
have a will, you're kind of stuck just waiting for the court process to go through, and meanwhile, 01:44:39.760 |
So while you don't have to have a will, even if your assets are with beneficiary designations 01:44:49.260 |
or you don't have a lot of assets, I'd recommend getting a will, even if it's a basic simple 01:44:55.500 |
will, plus until you die, you never know exactly what's going to be in your estate. 01:45:02.020 |
In theory, at the last minute, you could inherit a lot of money. 01:45:06.100 |
You could be a victim of medical malpractice, or you could get hit by a FedEx truck where 01:45:12.760 |
You never know at the end of the day how much money could be coming into your estate. 01:45:17.340 |
And money that's from a lawsuit or something or an inheritance, it can't go into the trust 01:45:25.140 |
So for that, better to just have a basic will in place. 01:45:43.220 |
I think you just answered a lot of the questions I just had about wills and needing an actual 01:45:52.740 |
I know that Miriam, we're going to stay on a little after to discuss a primary residence 01:45:59.260 |
in the state of Florida, which is homesteaded, and my understanding, avoids probate. 01:46:04.260 |
The question we can discuss later, Miriam, I guess is, is a ladybird even necessary if 01:46:10.300 |
you just have a will that designates where the home goes? 01:46:13.580 |
And I know some of you, I know you can't really answer that being in New York, but my general 01:46:18.900 |
question to you is, if you do establish a will, then a trust should be added if you 01:46:26.500 |
You just don't do a trust without a will, is that correct? 01:46:30.340 |
Yeah, that's what, yes, and that's sort of the standard practice that I've seen in New 01:46:35.040 |
York is, yeah, you always, I mean, you, some people do wills and don't do trust, but you 01:46:41.060 |
never sort of do a trust and don't do a will. 01:46:51.900 |
I actually have, so, Summerfield, this is phenomenal. 01:46:56.980 |
If you have a few more minutes, I have two more questions and any closing comments. 01:47:08.460 |
So one is throughout your comments, I think folks can gather some best practices, but 01:47:14.180 |
I wanted to see in your, you know, years of experience, if you would elevate certain things 01:47:19.540 |
that have been exceptionally helpful in the planning stages. 01:47:23.540 |
So one example is a list of accounts, contacts, where things are located, you know, things 01:47:31.220 |
So that to me seems probably intuitive, but maybe a lot of people don't get to it. 01:47:35.580 |
So if you have other things like that, that's one. 01:47:39.100 |
And then what would you, what guidance would you offer folks who were procrastinating for 01:47:45.940 |
whatever reason, started a will, didn't finish it. 01:47:52.500 |
What do you say to folks like to simplify the process and have them move further? 01:47:59.500 |
Well, one thing that I think helps psychologically with that is to know that you can always change 01:48:07.020 |
your will, and in fact, you probably will change your will at some point, but just to 01:48:12.980 |
have something and particularly, and, you know, like if you have children that are minors, 01:48:21.740 |
just the fact, just, if you just did a will that did nothing, but simply named the guardians, 01:48:28.260 |
that would be incredibly meaningful because like, if you have kids and God forbid you 01:48:33.940 |
and your spouse, assuming you have a spouse, both pass away while the kids are still minors, 01:48:40.840 |
it's basically a free for all as to who's going to raise your children and who's going 01:48:45.100 |
to have control over where they go to school, their medical care and their money. 01:48:49.140 |
I mean, the court would, the court and hopefully your family would try to come to the best 01:48:54.460 |
solution, but it's so much better if you can pick, pick the family member or the friend 01:49:02.660 |
that you want to raise your children ahead of time and have that, have that, you know, 01:49:09.160 |
set up and, and of course, and, you know, the next, the day after you sign your will, 01:49:13.980 |
if you feel like you've made a mistake, you just call the attorney and say, you know, 01:49:20.660 |
So maybe thinking a little bit less of all or nothing and more in terms of let's make 01:49:26.920 |
things a little bit better than what they were, I think that can help overcome that, 01:49:38.780 |
Uh, finalizing a preliminary version and then making updates whenever you need to. 01:49:46.140 |
And also, and it used to be, you know, they used to have codicils and yeah, like my mother 01:49:50.940 |
had an aunt who had like 20 codicils to her will, and she was always leaving people out 01:49:58.580 |
Can you explain what a codicil is for folks who don't know? 01:50:02.520 |
Codicil is like a brief addendum to a will where you make a, well, I say brief, typically 01:50:10.420 |
They can be any length, but yeah, typically it's, it's just sort of like an amendment. 01:50:14.860 |
Like people, we were talking earlier about, can you just write in a change to your will, 01:50:19.300 |
hand write it on your will after you've signed your will? 01:50:22.300 |
And the answer is no, but, but so what people have done over the years is they've done codicils, 01:50:28.220 |
which are brief kind of mini wills as addendum to the main will. 01:50:37.100 |
And the reason is because if you do a codicil, it's a second will execution ceremony and 01:50:47.940 |
And so any objectant now to your will, they can attack either the codicil or the will 01:50:54.100 |
itself and the witnesses, the will executions. 01:50:57.480 |
So it's giving two, an additional opportunity to try and knock the will out. 01:51:04.020 |
And in the days of word processing, it's so much simpler and easier just to, you know, 01:51:10.020 |
type in the change on your will, print it out and sign again before witnesses, as opposed 01:51:17.620 |
So it's not, I mean, attorneys will charge for redoing a will, but it's not as much as 01:51:24.140 |
So it's not that big a deal to, to update, change your will. 01:51:29.980 |
And perhaps you could, you could couple it with a fun event the way you said ceremony. 01:51:33.540 |
Sometimes people have a house painting party, get a bunch of friends, you get a few pizzas, 01:51:38.920 |
you could have a codicil re-signing party or, you know, the new will party. 01:51:51.860 |
Alex, Alice, Carol, Lucas, Miriam, any raised hands in the audience before we sign off with 01:52:04.220 |
What happens if the survivors can't find the original will and only have a copy? 01:52:09.940 |
If that's the case, well, this is a very good question. 01:52:14.580 |
It, a copy can be used as a substitute, but it's easier to have a copy used as a substitute 01:52:24.580 |
If the original wasn't held by the testator, the person who did their will, and the reason 01:52:31.300 |
for that is there's a legal presumption that if a will is lost or destroyed while it's 01:52:36.580 |
in the custody of the testator, there's a legal presumption that he or she intentionally 01:52:43.300 |
revoked the will or tore it up intending to revoke its terms. 01:52:48.200 |
So it's harder to have a copy admitted as the replacement than if you have the attorney 01:52:55.500 |
or if a friend or a family member has the will and it gets lost or destroyed. 01:53:00.860 |
So the short answer is, yes, you can have a substitute copy be probated, but it's more 01:53:07.420 |
likely that's more likely to work if you're not holding on to your own original will. 01:53:14.220 |
What if like there's a fire and it burns with your house? 01:53:17.460 |
I mean, I suppose if you can document, well, yeah, I suppose, well, yeah, I mean, I suppose 01:53:23.940 |
there are scenarios where, you know, the testator has their own own will and you can somehow 01:53:30.100 |
there's proof that they didn't destroy it or whatever. 01:53:34.580 |
But all things being equal, you're better off having someone else hold it regardless 01:53:48.220 |
We have a question, Gorrie, and Kyle, I'm going to try to ask your question. 01:53:56.140 |
It would involve a corporate trustee, I would imagine Kyle's question is whether to use 01:54:03.980 |
a corporate trustee for your trust versus a family member as a trustee. 01:54:10.620 |
But I thought in a living trust or normally a regular trust, a revocable trust, the person 01:54:20.940 |
And then you have a co-trustee, which would be the corporation or your spouse or a child 01:54:29.460 |
Right, or successor trustee, usually a lot of times for trust, you name yourself. 01:54:36.380 |
And then but if you're disabled or incapacitated or pass away, it's a family member or a corporate 01:54:45.880 |
I mean, in my experience, and you hear that they're generally only willing to take on 01:54:52.440 |
a trust or an executive position if there's like a million dollars or something. 01:54:58.680 |
But you know, typically you it's good if you can have a family member be an executive or 01:55:06.560 |
trustee so they can benefit from the commission. 01:55:10.400 |
And also they can always they can have control and they can hire attorneys, accountants, 01:55:19.620 |
But certainly there are institutions that have served very well as executors, co-executors, 01:55:29.280 |
So it's really just sort of a particular person's preference and where their loyalty, where 01:55:38.920 |
The person answered and says on the corporate trustee, we have minor children. 01:55:46.280 |
If we die, while they're minors, our family would take the children and be excellent family 01:56:01.040 |
So therefore, we are considering a corporate trustee to manage some form of trust for life 01:56:06.720 |
insurance policies, as well as our other financial assets, and this would be for the minor children. 01:56:14.240 |
Can you discuss the pros and cons of a corporate trustee in a scenario where they're being 01:56:23.560 |
Well, yeah, I would say the pros would be what you've described in terms of the corporate 01:56:32.160 |
trustee having more savvy for financial management, investing, that kind of thing. 01:56:40.400 |
And also there can be a benefit too in having an outsider hold the funds, the family funds, 01:56:48.960 |
because sometimes if you have a family member hold the funds, it can affect the relationship 01:56:54.740 |
between the young people and the individuals holding the money. 01:57:00.560 |
Whereas if you have an outsider, you kind of can avoid some of that. 01:57:07.220 |
The potential downside, it's not a huge thing, but the corporate trustee is entitled to fees, 01:57:19.920 |
So to the extent that an outsider is getting the fees as opposed to a family or friend, 01:57:32.000 |
The second thing, a potential disadvantage, and I think this goes to what we spoke of 01:57:38.400 |
a little bit earlier in terms of having the right mindset for being an executor or being 01:57:47.280 |
I mean, you do hear about situations, see situations at times. 01:57:53.520 |
If the money situation changes, if God forbid, a lot of the funds in the trust need to be 01:58:01.920 |
spent for medical or something unforeseen, and the trust balance goes down, does an institutional 01:58:12.080 |
trustee necessarily have the loyalty and attachment to stay with the trust in lean times? 01:58:22.120 |
I mean, a family member or a friend may not have that stick-to-itiveness either, but that's 01:58:30.960 |
And then aside, I remember reading an article years ago in the New York Times about a corporate 01:58:41.720 |
Well, I think he was an attorney, might've been an accountant who handled the trust of 01:58:48.440 |
a family when the parents had been killed, and he basically raised the children from 01:58:59.240 |
And the article pointed out that there are actual people, trustees, corporate trustees 01:59:04.720 |
who specialize in that, or whose practice is geared towards children and also special 01:59:17.560 |
So you might have to search around to find one, but I think they're around. 01:59:25.720 |
There are attorneys who will be guardians, be trustees for private trusts. 01:59:33.640 |
You're not necessarily limited to either a big bank or a family member. 01:59:40.640 |
Summerfield, I noticed a question in the chat that I think is interesting. 01:59:46.440 |
So we've evolved where electronic documents that are signed serve as bona fide legal documents, 01:59:54.680 |
the equivalent of paper, original signatures. 02:00:07.980 |
To my knowledge, yeah, I've never heard about a contemporary will being done on anything 02:00:21.540 |
I mean, I don't think the statute specifies paper, but I think as a practical matter, 02:00:29.420 |
unless it's some kind of an emergency where you're literally sort of passing away or something, 02:00:35.120 |
I don't think you would want to take that risk and be sort of the test case by doing 02:00:45.020 |
I think you'd want to, for no other reason either than just having your will go through 02:00:52.660 |
in a timely and standard manner as opposed to the novelty of having the court try to 02:01:00.260 |
figure out what you've done, kind of as an alternative. 02:01:05.700 |
So I would encourage just going with the tried and true, but yeah, the way I know for notarization 02:01:12.900 |
with COVID, they changed the rules on notarization. 02:01:16.780 |
And I personally haven't done any of the remote video notarizing because the rules and regulations 02:01:23.820 |
are so cumbersome and convoluted, it's just not worth it for me to try to figure it all 02:01:31.980 |
But as technology changes and stuff going forward, I guess we have to keep an eye on 02:01:39.180 |
It goes back to the written on the hide of a cow alternative.