Discover the secrets to crafting a legacy that withstands the test of time, as we sit down with Todd Whatley, a certified elder law attorney, and Ian Weiner, a certified financial planner, who unveil the intricate layers of trust planning. It's not just about creating a trust; it's about sculpting an estate plan that genuinely matches your personal narrative. Todd challenges the cookie-cutter mentality and shares why a trust isn't always the silver bullet for everyone. We dissect the myths and reveal how a well-structured trust can serve as a fortress, protecting your beneficiaries from life's unpredictable trials, such as bankruptcy, divorce, and litigation.
Navigating the delicate transition of power in estate planning can be treacherous waters, but with the guidance of our experts, you'll learn to steer clear of conflict by selecting the right successor trustees. We delve into the dynamics between revocable and irrevocable trusts, giving couples the insight they need to fortify their assets posthumously. Todd and Ian also address the legal nuances of interstate trust validity, ensuring your trust isn't lost in translation when crossing borders. Tune in for a masterclass in securing your legacy with precision and foresight, tailored to your unique life story.
Discover the secrets to crafting a legacy that withstands the test of time, as we sit down with Todd Whatley, a certified elder law attorney, and Ian Weiner, a certified financial planner, who unveil the intricate layers of trust planning. It's not just about creating a trust; it's about sculpting an estate plan that genuinely matches your personal narrative. Todd challenges the cookie-cutter mentality and shares why a trust isn't always the silver bullet for everyone. We dissect the myths and reveal how a well-structured trust can serve as a fortress, protecting your beneficiaries from life's unpredictable trials, such as bankruptcy, divorce, and litigation.
Navigating the delicate transition of power in estate planning can be treacherous waters, but with the guidance of our experts, you'll learn to steer clear of conflict by selecting the right successor trustees. We delve into the dynamics between revocable and irrevocable trusts, giving couples the insight they need to fortify their assets posthumously. Todd and Ian also address the legal nuances of interstate trust validity, ensuring your trust isn't lost in translation when crossing borders. Tune in for a masterclass in securing your legacy with precision and foresight, tailored to your unique life story.
Welcome to Wealth for Generations, the podcast where you learn to grow, protect and preserve your wealth for generations. Our hosts on today's show are Todd Wattley, a certified elder law attorney, and Ian Weiner, a certified financial planner. Join us and our expert guests as we uncover the mindsets, tools and strategies to help you maximize your wealth and impact. Let's embark on this journey to secure your legacy. Please note this podcast is for informational purposes only and is not intended as financial or legal advice. Always consult with a professional regarding your specific situation.
Speaker 2:Welcome to Wealth for Generations. I am your co-host, ian Weiner, and I am here with the other co-host, todd Wattley, now this one. I had to really talk Todd into doing this, doing this show, because, as you'll come to find out, if you haven't already, todd kills more trust than he creates. This is the way that we talk about it in the office, but I said, todd, we do need to talk about this because there are people that a trust is 110% the right thing. They've got to have it, and so I want to talk about whether you have an existing trust or whether you're thinking about getting a trust. What are the things that you would want to know and answered by someone who's created and killed thousands of them over his career?
Speaker 3:I am not antitrust. Hey, ian, good to see you, good to be here today. I am not antitrust. A lot of people hear me talk bad about trust. I don't talk bad about trust. I talk bad about the attorneys who have people do trust that don't need a trust. Okay.
Speaker 3:That's more than fair. Yeah, that is my anti. I love trust. Trust are fantastic tools and I do a bunch of trust because they're needed, but everyone who comes into my office saying that they need a trust, a lot of those people leave my office without doing a trust and that's probably a different show. We can talk about probate avoidance and why someone should or should not do a trust, but let's just talk about particularly if you have one. That's where I want to spend a lot of time today. But if you're thinking about getting a trust, we can definitely talk about it. Speak with someone who doesn't make their living doing trust, because if you walk into most lawyers' offices saying I think I need a trust, you're probably going to walk out with a trust. Okay, again, different conversation, but I would love to have that conversation with you. Okay, so let's talk about trust and yeah.
Speaker 2:So it's like okay, so you've got a trust. Now what? Now what? That's what I want to talk about.
Speaker 3:You fully understand what it does today and do you fully understand what it will do at the time of your death? And one of the big points I want to cover is what, if you become incapacitated, then what happens within this trust and I think your attorney probably never talked to you about that transition and what may be required to happen may surprise you greatly.
Speaker 2:From my perspective, one of the reasons that I'm here sitting in this room is because I have seen what you talk about, where everyone you get a trust, you get a trust. You get a trust whether you need it or not, and that is not the standard of care that I expect from my clients. The standard of care that I expect is you get exactly what you need. If that happens to be a trust, it's going to be exceedingly well drafted and it's going to think through some of the stuff that we're going to talk about today.
Speaker 3:So let's talk about those three things. Number one does it do exactly what you want it to do today? Okay, and so typically, when you create a trust, a revocable living trust, either done by an individual or a couple and it could be a non-married couple we do those and that's pretty easy because typically, when you create the trust, you are the trustee, you're the one in control of it and you're the beneficiary, you're the one who benefits. So if you have control and benefit, you can do what you want to with it. That's not a big deal. And then you think about at your death does it go to your kids? Probably so. So let's address that point first.
Speaker 3:That is one thing that I have seen and I encourage you. If you have a trust, you need to sit down and go through it. It's not that complicated. There's a lot of language in there that you probably don't understand. That probably is just there because it needs to be there. But go to the part that says after the second of us die, or if you're single once I pass away, how does the money go to your kids? If it does go to your kids and one of the benefits of a trust is we're able to create these things called Testamentary Trust with a trust. So it's your trust creating trust. So at the time of your death, your trust very likely says this will go to my children outright. Or if it doesn't say outright, it just goes to my children. What happens there is it goes to them free and clear of the trust and it's a check to the child is their money.
Speaker 2:This is where I start to get a little irritated and I know you do too. There's probably no need for this trust in the first place if that's going to happen.
Speaker 3:If it's going to go outright, you might as well do payable and death, and so so, todd, yeah, that's what I want. I want the money to go to my child yes, you do, but you don't want it to go outright, if you can help it. When I say outright, it's a check to your child becomes their property who, if junior, is going through a bankruptcy, a divorce or a lawsuit?
Speaker 3:the money you just left them is now gone, because it's their money and they're the ones in the bankruptcy, they're the ones in the lawsuit, they're the ones going through divorce. That money will come into play in those legal actions.
Speaker 2:Could they in that case? Could they leave it in the trust or it's can't stay in?
Speaker 3:the trust. It can't stay in your trust, but your trust can create what is known as a testimony trust. All of my trust every time I do this. Even if the kid is absolutely the perfect model system would never go through divorce, never filed bankruptcy hopefully, would never be in a lawsuit, we still leave it to that child in trust because if you, it's your money and if you leave it in a trust for the benefit of your child, it's protected from bankruptcy, divorce and lawsuits that's huge I see trust all the time that the distribution is to the child outright and I'm like, why?
Speaker 3:why would you do that when you could, when the attorney could have created a testimony trust and the? The reason being is they're using a form that they've probably used from 1984 and they've not updated it with updated language, new legal principles, and I honestly think it's almost malpractice to leave it not in a trust, but they avoided probate unless they didn't fund the trust and then they didn't avoid, like this stuff happens.
Speaker 2:Okay, you know the reason I say that it's like okay, but why do we have this thing? If that's the, if that's really the distribution plan, they probably shouldn't have a trust. Exactly, and that's really when you kill trust.
Speaker 3:That's when I kill trust is people come to me and they want to make changes, like 20 years ago. Their trust had all this fancy language because their kid was 18, not good with money, could have been a drug addict, was dating someone they couldn't stand, or whatever. And so they're like, oh, we need a trust to protect this money, okay, great. Well, now, 20 years later, the kid thankfully married someone different, is a model citizen, working fine, and they want to make all these changes to the trust, which could cost you know a thousand two thousand bucks to make all these changes. And I'm like, if you're okay, just leaving it to them outright. That's what you did in this trust anyway, maybe, or the distribution is different. Just, if you're okay, leaving it to them outside of a trust, let's just kill the trust and do payable on death, and now you avoid probate.
Speaker 3:The money goes to the kids and we're done, and you, and that's free. You just go change the name of your bank account from the trust back to you, but make it payable on death to your kids. It just goes to them outright and you don't need to pay me to update your trust. Okay, simple. So that's one thing that I see a lot. So look at your trust, go get through all the stuff, get to the part of the trust where both of you have died and then there'll be paying bills and there'll be personal property and then it'll say the residue of the trust, that's what's leftover from this trust. How does it go? And if it goes outright and you still want to keep your trust, you need to come see me. We can make one quick amendment to say we're going to leave it in trust for the child so that it's protected from bankruptcy, divorce and lawsuits that's, like my big concern and I'm looking at, okay, assets transferring from one generation to the next.
Speaker 2:Okay, how do we make sure that this stuff is protected? This is risk management 101 and something we didn't talk about this type of trust. Your property is not protected from those things inside the trust, right, and I don't know that people understand that.
Speaker 3:Okay, yeah, when you do a trust, yes, you do change ownership from your name to the trust. But the problem is you're the beneficiary, you're the trustee, you're in control of it, you benefit from it. So really nothing has changed. And in fact the IRS does not recognize revocable living trust because to them nothing's different. You were in control of it and you benefited from your house and bank accounts before the trust. We created this thing and now you are in control of it and you benefit from it. So the IRS is like, hey, nothing's changed.
Speaker 2:So that may not necessarily be a bad thing. There's other trust structures that can be helpful to do that, which we'll talk about in later episodes. But for most people, if you have a trust and you're able to make changes and you benefit from it, those are the two tests who's in charge and who gets the stuff? It's essentially the same as you owning it. So there's not those protections. So just want people to understand that Good.
Speaker 3:So here's one thing that sneaks up on people, and even good attorneys that I've worked with who are not elder law attorneys put this language in there, because this is typically what most of the software does. But I tell my software no, no, no, we don't want this option. We want this option. This is. And what I'm talking about is how does power transfer? Okay, we just said you're the trustee, you're the beneficiary, you will be the beneficiary up until your death.
Speaker 3:But there's this thing prior to death that people tend to not think about and it's called incapacity. I'm watching this is us. It's a long series, but the mama of the show develops Alzheimer's and they do a really good job of going through this process of her early stages and then going through and things happen okay. Something slow like that can happen. Something quick can happen If you lose incapacity quickly car wreck, stroke, heart attack and you have brain damage, whatever. Yeah, we can get a doctor to say this person can no longer manage their affairs. So the successor trustee, the person that you named as backup trustee, comes into play. That's an easy transfer of power. What is not easy, and where I spend a whole lot of my time as an elder law attorney is working with people with dementia. Dementia's not on or off, it's a little. It's a little bit more. It's a little little bit more and it just gets progressive and progressive over a matter of years. As you get about halfway to two thirds of the way through this progression, the person becomes very paranoid and very accusatory of the people closest to them, and so typically the people closest to them are who they have named as their successor trustee. When I can't manage this trust anymore, I want you to step in and do this trust, and a lot of times, accompanying this loss of capacity is you're being financially abused by someone either close a caregiver, a family member or someone on the internet or some phone call. You're sending away thousands of dollars at a time to scammers, and so we need to jump in and take you out of this Rollers trustee, of this trust. And so go to your trust right now and see. You know, somewhere in there it'll talk about trustees and then successor trustees, and how do they come into play?
Speaker 3:Typically in most trusts that I see that transfer of power is by a written document or written documentation by at least one physician and God forbid, sometimes two physicians. And as you're reading this and most attorneys think well, this just makes sense, once you're incapacitated, we'll just take you to the doctor, the doctor will run some tests and you'll be deemed incapacitated and that's a very easy transfer of power. It sounds easy on paper and in perception. If you've never dealt with this situation, you're like that just makes sense, until you realize this person is paranoid and accusatory of the person closest to them, typically the trustees. So this person starts thinking you know, they can't find their earrings, you stole my earrings. You took my earrings to the pawn shop where she just misplaced them, but they're gone and so the person who comes to visit them most stole them. Or I can't find my checking account or my checkbook, and when they do find it, there's money that's been spent and they're like you stole money on my checkbook or you're in. You know it's like mom, you need to be careful. Once you come, stay with us, you're just trying to throw me into the nursing home, okay? So they become very accusatory and very paranoid. And so now you're sending a thousand bucks a month extra to the caregiver or the person from you know Africa has called you saying that you've won $20 million in the lottery and you're writing checks just with no disregard, and we need to stop you from doing that. And now the person that you think is trying to steal your money and throw you into the nursing home is the one trying to take you to the doctor to get you deemed to be incapacitated, so they can really take over and steal your money and throw you into the nursing home. What a nightmare scenario. You're not going to the doctor. No, you're not going. And so if we can't trigger this transfer of power from you as trustee to someone else who needs to be trustee, we have to go to court. And the whole purpose of the trust and power of attorney is to keep you out of court. And this one sentence that requires a doctor's written letter or evaluation to deem you to be incapacitated so that you can no longer be trustee, that sentence can force us into court.
Speaker 3:Mine, what happens is, once the successor trustee thinks you're incapacitated, they can then send you a letter, which you won't do anything with it. And typically, what happens? As the attorney on the trust, the family calls me and says Todd, this is what's going on. Mom's spending all this money, mom's, you know, they tell me what's going on. I'm like she sounds like she's incapacitated. Send me a letter stating that, okay. And so the kid's like okay, what An email. Send me an email saying, todd, I think mom's incapacitated. Boom In my trust.
Speaker 3:When the successor trustee makes that accusation, the current trustee, the parent, has 30 days to prove otherwise. Okay, so now, if they refuse to go to the doctor, okay, you lose power as trustee. It's a bloodless transfer of power or courtless transfer of power. So mom's like I'm not in. Or, and mom calls me, my kid thinks I'm incapacitated. Yeah, he sent me an email. But remember, the trust says you can go to your doctor and prove otherwise. Well, I don't need to do that. Yeah, you do, you do. You agreed in this trust that you would go to. So, ms Jones, I'm pretty sure you're, you're not incapacitated, okay, I know it's your money, you can do it, I'm sure you're fine. But let's just go, let Dr Smith figure out, let him run the test and just make everybody happy that you're not incapacitated. Well, sure enough, she goes and she is incapacitated, okay, or she refuses to go Now.
Speaker 2:The doctor is the bad guy, not the court. Exactly, I love it.
Speaker 3:Not the kid, not anybody or she refuses to go and I'm like, if you don't go in 30 days, he's going to be trustee, and so it's a way to transfer power that people never think about until you've been through it a few times.
Speaker 2:I love it. So it's so simple but so effective, and it just goes to the point of the way that we approach planning, whether that's the financial stuff or the legal stuff, or where those mix is how would we want it to be done for us? And this just makes sense. It's simple, but you've got to see it enough to know what you would want to happen and what you'd want to not happen, right.
Speaker 3:So another thing Transfer of power. That's a big one. Yeah, transfer of power Again. Okay, let's talk about success or trustees. Did your attorney do what you asked him to do and name your three sweet angels as co-trustees? Oh my gosh, okay.
Speaker 2:Because everyone who's listening to this their kids are perfect, they get along perfect, and two million bucks wouldn't make them fight.
Speaker 3:But that was 20 years ago. Today, do your three children still get along perfectly? Did you trust them all coming together and all three agreeing on every decision that needs to be made?
Speaker 2:And if that's the case, there may not even be a need for a trust anyway. Sure, yeah, yeah.
Speaker 3:Just name them all as they just under a power of attorney. But if that has changed a little, if there's been. You know, as we grow older in loss, no-transcript make us different people, and sometimes that different person may not be good to work with the other people. Some people may not can stand your son's wife. She's evil and she's trying to steal all the money and so now if he's a co-trustee, she's going to be in his ear all the time, and so you need to look at that. Go to your trust and look at who are the successor trustees. Hopefully it's one person, and then another person, and then another person. I am very, you know, I try my best to talk people out of co-trustees. I don't always win, but it's. I'll do it, but it's only after a very long conversation and me begging them not to name co trustees.
Speaker 2:You know a weird one that I saw recently. Maybe you see this more is one spouse passed away and at the time that that happened, the daughter became co-trustee.
Speaker 3:That's fun. Yeah, that, yeah, and there are reasons to do that, but yes, it's like wait a second. I've got to run this by my kid. You know, just because my spouse died doesn't mean I should have to ask my kid for everything.
Speaker 3:Well, yeah, the trust says you, you do now, and so yes and so the the cool thing about a revocable revocable living trust is it can almost always be changed, and when I say almost revocable does mean yes, it can be changed. But if you created it as two people and one of those people passes away, then it could become irrevocable. And that's a discussion we have when you're creating a trust is between spouses. If one of you dies, do you want this to remain revocable so that the surviving spouse can do what they want to, or do you want it to lock down, so that you know, at your death, your money's going to go to your kids and that's just I'm trying not to crack up here, because I know exactly the situations it's funny because typically the men are like, yeah, keep it revocable, you know that'd be fine.
Speaker 3:And the wives are like, okay, if it remains revocable and he remarries, can he change it? And I'm like, yeah, she's like, nope, no, not doing that. The guys are quiet. Yeah, almost always the guys are like, yeah, let's keep it revocable. The wives are like, nope, I want it to lock down. And so I'm like y'all need to have this discussion, because for me to represent both of you, we've got to agree on this, and so that's one of the pieces of homework a lot of our clients talk about. And did your attorney talk to you about that? Do you remember having that conversation? If not, go look at your trust, go to the section that says at the death of the first spouse and see does this stay revocable or does it become irrevocable? If you don't know that, bring it to me and I'll tell you it could be a big deal. Could be a huge deal because and I've seen it go both ways I mean, I've seen older women be approached by younger men and they're go.
Speaker 1:Diggers is what we called it in when I was doing my, my CFP. Okay, if your name is spinning.
Speaker 2:You're listening to this. I'm sorry, it's not about you personally.
Speaker 3:Yeah, don't send me an email but yeah, and probably for the wives it's Bambi or yeah, your local stripper comes up and yeah, but and it does happen. I will say it does happen. It does cause some inconvenience if you make it irrevocable.
Speaker 2:I'm a fan of of preenups in almost any situation, absolutely especially as a, as a second, second, third or fourth time another podcast.
Speaker 3:But yes, we could go for hours on that yes so, um, I think that's the biggest things that I'm seeing with trust, and I would, in I do a whole lot of trust reviews, let's. Let's talk about moving real quick. Yeah, someone's moved here from another state. Is your trust valid? Yes, it is valid, but trust are based on state laws not or very specific to state laws. There was an attempt back in 2005 2006 to uniform all of the trust laws across the country. It kind of works, but there's still some substantial differences, and so it is my recommendation that, if you have moved to Arkansas from another state, you really should have your trust looked at by a local attorney. And while we're at it, let's look at all these things we just talked about today make sure the trust that you have works the way that you want it to work.
Speaker 2:It sounds so simple and it's like, of course, you know you did it, but most of the time this is what I find that happens by the time you get around to doing your estate planning stuff, you're just happy to get it over with. You know, understand all the details in it, and we've got all these whereas and hitherto fours, and you know they get put in there by the really nice attorneys that you know have done these exact the exact same one five thousand times, and sometimes they forget to take your name or the last person's name out of it, and so I've seen that before.
Speaker 2:That's fine well, this isn't your trust, but that's it. Yeah, I mean, it's real life, but you know, these are. These are things that we want to be thoughtful about, but it goes back to this idea of the things that you have, whether it's your assets, your portfolio, your, your investments, your trust, the important documents and assets in your world. Do you know what you have? Do you know what you have? Do you know how they work and is that doing what you want it to do? In a lot of cases, what we find, even folks that have had numerous planners, numerous attorneys they have numerous people not every single one of those boxes can be checked Don't always know what they have, don't always know how it works and, most of the time, doesn't do what they really want it to do Absolutely.
Speaker 3:Yeah, and just to answer that question real quick about how I'm at Curry Trust, I do it with software. I think any attorney worth their salt buys good software and there's two main software companies out there. But their brain trust behind the software. The one I use are some of the best tax attorneys, estate planning attorneys I mean these are guys who teach other attorneys how to do it. They're typically law professors, just people that I really trust. They do all the hard work of making sure my software is up today and it updates almost weekly with new laws, new court cases, new language. I mean it is absolutely.
Speaker 2:Because this whole is changing. It is always changing. There's a new type of trust that we're gonna talk about soon. This is a whole different thing. Changes all these rules, which is really great for a lot of folks, right? So stick around.
Speaker 3:You don't have to worry about someone else's names being in your documents with us, because we start and it's not just I just plug in your name and I hit create. We have to go in and tell it certain things. Everything we just talked about today is an option in the software and the software adapts to my answers and it is very specifically to you. The software does all the background stuff but yes, even though I do use software, it's very much your trust. It is exactly what you want and we spend a good amount of time in the software, making it, then print out this document that is beautiful and perfect for you.
Speaker 2:But that's what's so important is there is a ton of backing there, and when you're paying to have a trust done, there's always somebody that'll do it cheaper. Right, it's like having a dental procedure or getting your tires replant there's always somebody that'll do it cheaper.
Speaker 3:Cheaper isn't always better, but do you get what you want?
Speaker 2:And the most expensive whether it's financial advisor or attorney to hire is when you have to hire two of them because you hired the wrong one the first time.
Speaker 1:Yeah, exactly.
Speaker 2:We're all about doing it right the first time, and if you didn't have the ability to, we'll help you fix it and we'll be kind to you along the way. But let's get it right. It's. The thing that I love about the way that we work is, if we make a recommendation, it's absolutely in your best interest and it's the cheapest way to do it.
Speaker 3:It just makes our job so easy Always.
Speaker 3:So I would love to work with you. I would love to look at what you've done. If you have not done it and you want to create it, I would definitely help you do that, and you may be surprised. You may come in here thinking that you want to trust and you leave without a trust. Okay, whole different podcasts. But, just like Ian said, I promise that you're going to walk out of here with what you need and you're going to avoid probate. That's huge. You will avoid probate, but how you do that is very specific up to you, and we will do exactly what you need done.
Speaker 2:Beautiful. Call the office 479-6014119. And we'll see you next time.
Speaker 1:Thank you for joining us on Wealth for Generations. We hope today's insights inspire and guide you in your financial journey. Remember, the path to wealth and legacy is unique for each of us and we're here to help illuminate your way. Before we part, a quick reminder this podcast does not provide financial or legal advice. The content discussed is for informational purposes only. Please consult a financial planner or legal advisor for advice specific to your situation. Visit us at wwwwealth the number four, generationscom for more resources and don't forget to subscribe to Wealth for Generations. Until next time, keep building your legacy, one decision at a time.