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What is Estate Planning and do we need it? · Rock My Finances

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Unless specifically indicated otherwise. The content expressed or my views only, and not
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necessarily those of Life Coo Asset Management LLC. The content presented is in no
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way an investment advice, solicination, or an offer to sell securities or investment
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advisory services. The material is provided for general information and educational purposes based upon
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publicly available information from sources believe to be reliable. I cannot assure the accuracy
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or completeness of these materials. As such, the information these materials may change
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at any time without notice. Reference to these discussions about eyeballs and annuities are
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fixed insurance products. Investments on fixed insurance products are different from the investments of
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the stock market. Any guarantees provided by a fixed insurance product cannot be assumed
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to be guaranteed for any other investment. Welcome to to Rock my Finances show
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on k for HD radio and Talk for TV, where we put the fund
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in finance joint Powerhouse Jaffer Jose CDFA CMC and Private Wealth Advisor as she collaborates
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with you to create clarity, control and confidence with your money, your way.
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It's not about the zeros, So what is it all about? Let's
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find out. Now. Here's your host and weekly friend, Jennifer Josh.
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Hey there, how is everybody today? I'm so excited? Now, Okay,
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let me be honest with you. This is not the most exciting topic.
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My guest, however, is Abazeballs. You are absolutely gonna love Lulina.
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She's awesome. However, our topic is not like, oh, I
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can't wait to dive into this. Our topic today is actually a must need
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conversation, especially for everyone that works with me on the financial planning side of
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things, because we have to get things in order. So ladies, put
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on your big girl panties, gentlemen, put on your whatever you want to
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put on, and let's literally step into making your life better for the inevitable.
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And this is one more step closer for you to have financial freedom so
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that you know everything's set. So without wasting any more time, let's bring
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on Miss Lulina Miles, attorney at law specializing in estate planning. Hi,
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Miss Lulina, Hello, happy to be here. I'm so glad you're here.
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I'm so glad you're here. So Lulina and I've worked together for a
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while and I have referred my clients for sure, and they love her.
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They love her because this is again not the best topic in the world.
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Nobody wants to talk about all this stuff, and we don't know anything about
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it. Like we hear these big words, and we hear what's probate?
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And what is an estate plan? Do I need a trust? What's a
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revocable? What's a living trust? Why do I need it? Who gives
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a crap about everybody else? When I die? Like you hear everything,
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I'm sure I do. I hear it all. And at first I want
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to say that I really also I am a client yours, Jennifer, and
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want to say that to everyone. And and I've really like I've learned a
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lot from you, and not only from you, but being a client of
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yours also brought me into your community of empowered women, and so I've learned
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from other women as well who have been on this journey of you know,
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developing their growth mindset, positive energy, like a deep sense of security around
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their finances and just confidence in the world financially, financial literacy and all of
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that. So I just wanted to put that out there that you know,
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it's it's really quite an incredible service that you offer. Oh my god,
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y'all. All they did is asked her say, hey, tell people you're
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my client, and I literally should pay you for that commercial. That was
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amazing. I love you, You're awesome. We're gonna have to get that
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on video and put it on my testimonial sheet because you are. You are
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great and I love it. Thank you so much. And it's hard to
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say, kind of like my topic as well, right, it's hard to
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say how I help people when they think that it's going to be one thing
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and it's literally not that at all. It's completely different than what you think
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it's going to be, and so kind of like the same for you.
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We think like it's going to be like pulling teeth and all this horrible stuff,
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and really you make it very simple and easy, and there's just a
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few tough decisions that we need to make, and we need to make them
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anyways, but you make the process so much easier. So let's just dive
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right in and start with what is estate planning? Yeah? So's it can
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mean a lot of different things, and when people decide that they're going to
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go see an attorney, they're often not sure what they're what to expect.
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I mean, one thing is like who gets what when I die? And
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that is a part of it, but also maybe even a bigger part of
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it sometimes is what would happen if I was incapacitated? Who is going to
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who are my people? Who do I appoint in contractual writing that's notarized and
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you know, official, who do I appoint? Who's going to stand in
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my shoes and speak for me if I cannot speak from myself? You know,
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if I have cognitive decline, if I have temporary incapacity, if I
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have long term in capacity, who's going to make the medical decisions? Who
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knows my values and who's going to really carry them out and honor what my
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wishes are? Oh my god, I so have chills. I love how
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you put everything in such poetic terms. I totally had chills. Because I
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am taking care of my mother. I do have power of attorney over her.
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She doesn't have any assets, so there was no need for a trust,
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but we do have her will and her and I have her power of
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attorney and healthcare directive and I am that person for her so and I was
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for my daughter as well when she was going to college, because she didn't
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know anything about anything really and she just needed to put her head down and
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focus for four years. So she gave me power of attorney so that I
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could you know, do things on you know, loans and medical and things
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like that. And because they're not quite an adult yet, but they're they're
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trying, right, and you know, our children often we don't think of
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them as needing estate planning. But not only is it sometimes helpful to have
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power of attorney, but it's like necessary to have the advanced healthcare directive,
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you know, the medical power of attorney essentially, so that you would be
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able to talk to their doctors if they were in a car accident. You
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know that you'd be able to get access to their medical records. There's very
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strict privacy laws around these things. And so when our children become adults,
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once they're eighteen, adults, right then has access except for them. And
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you know, it's possible that you might end up having to go to court
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to get a court order to speak on their behalf. So just get it
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in writing, get your kids to sit down, and like you know,
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you for an advanced healthcare directive, you can often just get them done with
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your doctor's office. You don't even necessarily need to see an attorney. Also,
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I've heard that, like sometimes college offices even offer like advice on how
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to get that done. But if you don't have it, it could be
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horrible. So it's just better to do it. And then, you know,
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if they get into a great long term relationship, they can change it
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over to their new partner, but until then, it should be who they
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trust the most, which is often their parents, somebody sensible, you know.
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So, um, she doesn't going to pay the bill, right to
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imagine you're you're paying for their insurance and you don't, yeah, for their
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medical care. Oh yeah. And and my daughter when she was going to
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call it, she didn't want to know anything about any of that, Like
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she's like, I don't even like she wouldn't even go to the doctor,
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Like like, help me go to the doctor, find a doctor for me,
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find out you know, all of this stuff. And it's like I
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can't, Like I can find the doctor, but you have to give them,
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give me permission. Um, otherwise they're not going to listen to me
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and talk to me. Because she didn't know what a lot of things meant.
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And my son as well, so he um, I was great before
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he was eighteen, but over eighteen he has to give permission for everything,
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and it's it's this would be so much easier, So don't forget about the
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kids, Yes, the elderly, yes, just anyone. So I had
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a client. I had a client who got into a ski accident, could
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not write with his hands and could not speak. I, as an investment
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advisor, have to have a written form and their voice to make any changes
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to their financial world. So he literally could not make any changes for nine
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months because that nothing was set up for to take care of him. That
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would be considered incapacitated, right, right, And and so if the family
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was like, absolutely, I need to be able to sign documents on your
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behalf. Often you have to go to court and get an appointment, official
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appointment in order to have that access if you haven't put it down in writing
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in advance, and sometimes the court doesn't appoint. Who you choose if you
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can't speak for yourself, they don't know, right, And so you know
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you might choose a specific sibling or a close friend that that might not be
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the person that the court would choose because they don't know you and they don't
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know your wishes. If you didn't write them down. Oh I love what
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you're saying. Okay, So here's our tips. First of all, first
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and foremost, any age needs an estate plan. It's going to look different
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the ages that you are better. They all are going to include a healthcare
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directive. And if you become incapacitated, somebody could speak on your behalf and
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pay your bills and help you out for your wishes and you get to pick
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them if you do it. Now, Okay, that's good. I love
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that. Okay. Ah, So then we have the good old you know,
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when I die, so and so gets this or that or whatever.
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Who who makes sure that happens inside the estate plan. So if you only
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have a will, then it's the executor that would make sure that you know.
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If you've written a will, then it's the executor who you've named in
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your will, who would be your personal administrator, who could go to the
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bank and close accounts in any account that isn't in a trust, the executor
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would have the authority over to close the account because you've died. The will
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only has effect if you've actually passed away, So once you've died, then
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the executor can step in with your death certificate and go and like manage your
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accounts, close them, you know, distribute your assets. And in the
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will is who you say who you want your beneficiaries to be unless you have
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a trust, and then it would be your trustee who would be that person
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who would manage and distribute all the assets that are in the trust. Now
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why would you get a trust instead of a will? Great question. Yeah,
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So if you have assets that are over the probate limit in California,
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which currently is a hunt is this audience only California, But we've in California,
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attorney, I know California law the best. But you know, if
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you whatever your state is, like, there's varying levels of probate that are
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required, right, some seats are much more streamlined, some are way more
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onerous. In California it's pretty onerous. And so the limit in California is
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one hundred and eighty four thousand, five hundreds. So if your assets are
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over that amount, then you if you have an account that's over that amount,
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you can designate a beneficiary on the account and then that would avoid probate.
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But if you have a house, you can't really designate a beneficiary on
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a house. Right, the title of the property on your house is with
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the county. That's not just in California but everywhere, right, And so
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if you want to be able to say who gets your house when you pass
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away, it's usually going to have to go through a probate process unless it's
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in a trust. And the trust is where you name the trustee who would
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then have the access to transfer your house to your beneficiaries without going to court.
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Awesome, now probate because everyone's like, why do I need to trust?
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It only is to bypass probate, and we want to bypass probate because
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of the expense, right, Well, there are other reasons to need a
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trust me, but let me first respond to that, Yes, the expense
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and what is probate? And so in California anyway, probate is like a
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process that takes at least a year, sometimes two years plus. It can
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easily take two years even for fairly straightforward probates. It's where you have to
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like file officially in court. There's usually more than when hearing involved during that
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time period. There's a lot of paperwork and it's kind of expensive. So,
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like if you have a house and maybe an account that goes through probate
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and it adds up to say one million dollars in value. Then you're the
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fees are usually about fifty thousand dollars for probate. And it's just something that
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if you had a trust in place, you wouldn't have to go through that
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at all. So it's something that you know your loved ones, you know
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are gonna thank you. It's like almost a love letter to your loved ones
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to create the trust so that they don't have to do that court process,
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because not only is it time consuming and expensive, but it also can be
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stressful. It's a public process. You know, anybody can weigh in pretty
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practically anyone can get involved if they want to try to cause problems in the
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process. It's just something you don't want to put people through if you can
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avoid it. Wow. Okay, So then let's say if because a lot
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of houses in California a million dollars and let's say that's all they had was
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the house, what does that house do for two years while we're going through
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court, Like who gets to live there, who pays the PGNI, what
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happens more probate essentially? So ah, yeah, it's right, it's a
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lot it is. It's a lot. It's a lot, and that's very
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depending. In every county has their own probate too, and so the counties
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vary a lot. And how cumbersome it is in like San Francisco where I
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am, it's just like extreme, so something that you really should try to
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plan a plan to not put your family through that if you can help it.
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Yeah, for sure. I mean I know that I know of landlords
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now they're getting out of landlording, if that's the term in California because of
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squatters. And so I could just imagine if parents passed and we have a
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few siblings that want this house, it could be a total nightmare. They
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could just move right in and like the biggest, strongest one wins, Like
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that's crazy. Well yeah, I mean if you're if you're the administrator in
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approbate, it's kind of on you liability wise to protect that house and make
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sure that there's like good insurance on it and the you know it's it's secure,
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because I've certainly seen that where I had a pass away and you know,
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within one week her house got broken into. Luckily, her nephew had
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gone in and put a security system an alarm in in the intervening period,
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like right away he was on it and so the alarm went off and the
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police came and they didn't lose anything. She actually had a lot of valuables.
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It was in Alameda, California. Wow. Yeah, but there is
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there is one time when I would recommend probate. One time especially is if
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there's more debts than assets in the estate, because probate can give you finality
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and cut off the ability of credit creditors to go after an estate, and
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so the court can just sort of decide who has priority in getting in the
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debts and just like farm that out and then you don't have to worry about
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it anymore. So sometimes there are situations where probate is advised. That's okay.
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So that would be a single person passing away for debts because if you're
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married, you assume the other person's debts right right in California, unless you
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have a separate property agreement that deals with debt and that kind sometimes there are
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ways around it. But yes, okay, and normally okay, awesome,
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okay, good, So that's probe. It sucks, don't want to do
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it. So we want an estate plan to not go through probate. So
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if we have I always said from way back when, if you had like
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fifty thousand or more in equity, you should put your house in a trust.
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Is that? I mean? Really, it's like it doesn't even matter.
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You can have almost no equity and you're still going to be dealing with
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probate. I mean, I guess you could just let the house go into
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foreclosure if you really didn't care about it, but you know, it would
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still be like a mess. I don't even know how that would work actually,
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So generally, have a house, you should put it in a trust.
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If you own a house, put it in a trust. Okay,
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I love it. If you own a house, put it in the trust.
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Another reason people often want a trust is if they have small children,
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because a trust can manage asset, like if something happened to both parents,
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or even if you're a single parent and there is another living parent that they
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are not, you don't want them to manage the assets. If you pass
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away, like if you're divorced, for example, or never married, you
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don't want the other parents to manage the assets. If you pass away,
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you can create a trust, and then that trust would you manage assets for
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your child if something happened to you. And so it's really like a great
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way to protect assets for a minor. It gives the minor protection against litigation
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future marriage. Like the money would be separate, essentially cordoned off until you
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want them to inherit outright. And you know, a lot of times people
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say they their child's probably not going to be fully ready to really assume the
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responsibilities of having a lot of money until they're much older, right, not
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eighteen, that's for sure. So it's better if you can put it in
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a trust if you have a home or you know, significant assets at all,
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And like, let the trustees, say someone you trust very much,
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who's a fully mature adult to manage the assets for your child until they're the
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age you choose to inherit outright. Am I fully mature? Yet? I
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know? Right? We all have our days, don't we. I love
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it. Okay, that's great. So oh let's go back to if let's
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say, okay, we have a house, We're going to put it in
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the trust. Can I still control that while I'm alive? Yes? So
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the trust? So the trust that there are different kinds of trust, but
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the standard trust that people need is a revocable trust or a revocable living trust
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is what it's known as. And that means that you can change it throughout
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the course of your life. If you want to change who the trust he
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is, you want to take property out of it, put property into it.
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It's a container and you get to control it. And while you're alive,
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the i RS does not consider it a separate entity. So you know,
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even though your house is now titled in the trust, it's not going
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to be taxed differently. It's still going to be taxed to you as if
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the trust doesn't exist. And that's true for any of the accounts you might
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put in the trust as well. It's not to be like tax differently.
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But when you pass away, then it becomes irrevocable. Then it has its
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own tax ID number that would be you know, gotten by the trustee.
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And and that's when you know it's just managed as a separate entity and that's
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when it's tax different But when I'm alive, if somebody, if I get
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in a car accident and get hurt or hurt someone or something, can they
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go after my house if it is in the trust. The trust does not
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provide protection liability protection, like for your property while you're alive and it's your
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trust. It would for your child, like if your child inherited through the
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trust, then it would provide protection while it's in the trust. But while
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it's not a separate entity, then it doesn't really provide protection from liability.
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You have to have liability insurance, you know, you have to have like
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maybe umbrella insurance things like that. Okay, good, okay, So then
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it's really just a safety net until I pass and then it turns on and
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does everything. It's still all mine. It pays tax all Okay, that
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was good. The other thing a trust does though, while you're alive is
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that it's a good incapacity planning tool. So, for example, if you
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have assets in your trust and then you're incapacitated, your successor trustee who you
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named, would be able to step in and manage everything in your trust for
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your benefit. And so it really does make that much more seamless if you
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need someone temporarily or long term to manage your assets. Banks like to deal
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with successor trustees about they prefer that above working with a durable power of attorney
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agent. Oh okay, good, Yeah, and that happens a lot,
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y'all. Like, like I'm caring for my mom right now, right,
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so we all like there's like two out of three people are going to need
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help and before they pass away, and so if they have assets, first
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of all, we want to buy their wishes and then they're going to live
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two to four to ten years depending Like my girlfriend's dad had a stroke.
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You live for oh my god, wait, I think it was even over
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ten years, but it was incapacitated. So we need to have someone taking
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care of our payments, our bills, our healthcare, are all of our
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stuff while we're incapacitated. And if we're counting on our spouse, and what
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happens if something happens to our spouse because normally we're similar ages, which I
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recommend of our spouses. We don't need to be twenty years younger, y'all.
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And then you are putting the burden on your spouse who's already upset because
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you're incapacitated. To put the financial burden on them as well is tough because
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then if you have both of you happen, who's going to take care of
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you? Then? Yes? Okay, right, I love it, right,
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and then the other thing is you know, what are your wishes around
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end of life care? Because, like you just brought up, sometimes people
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live ten years incapacitated, Like, think about that. Do you want that
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for yourself? You know? Because there are ways to extend your life while
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you're incapacitated or not, you know, And so there are a lot of
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interventions, medical interventions that can be done to extend your life that you might
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not want, and your family might want to do them because they feel like
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they should because they don't know your wishes. Right, So that's one example.
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Or you might actually want those interventions, you might, you know.
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I mean, as we get older, we get to see more people around
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us who have gone through this, and we get more life experience around what
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we would be comfortable with and not. Right, So if you can start
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to distill what your wishes are, we can make sure the documents reflect that.
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Yeah, I love that, And then we can change those documents at
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anytime while we're alive. Yes, yes, because that we might change as
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well. I mean, I just people's might stay topics a lot, and
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that's why I have a job. No, I'm kidding, Okay, that's
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good, So I know we have lots of trust. Now, what about
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when you're married, you have two point five children, you have a house
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and maybe a rental house, and maybe even a business and all that,
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and then you get divorced. What happens to that trust? That's a great
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question. So usually that trust is going to be unwound, revoked, and
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you're going to each get your own trust at that point. And so that's
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actually a PSA for maybe even having your own trust up front, because divorce
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is so common in our society and it never hurts to just create two A
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married couple can each have their own trust and does not mean you don't trust
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each other. You can still name each other as your trustee. You know.
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It's like if something happens to me, I'm going to have my spouse,
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but I saw my own trust, and then if I get divorced,
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I get to keep that trust. I don't have to unwind it. I
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would change it a bit, right, like maybe change who the success of
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trustee is and who gets what my stuff, But you still get to keep
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your container. So if you have a joint revocable trust, then you are
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going to probably be revoking that document and creating your own own estate plan at
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that point. So then if we did two separate trust then I'd put fifty
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percent of ABCC Street is mine and he puts fifty yes in the trust.
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Okay, And then we make these other trustees and executors and all that stuff
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because they have all the control and beneficiaries. Can you be a trustee and
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a beneficiary or an executor and a trust okay? So the trustees when you're
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alive, the executors when they pass. Well, the trustee is a trustee
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like so usually when you create a trust, you are the initial trustee.
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The person creating the trust is the initial trustee. And then you name who
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your successors are. So when you become incapacitated or if you die, that's
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when your successor would step in. And with regard to the will, that's
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when an executor would come into office. There is no connecutor until you die
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in a will, okay, okay, And a lot of terminology. Well,
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a lot of people ask all the time, why don't I just get
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a will? Right right? And the problem with the will is that it
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only has effect if you die, so it's not value. It doesn't have
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any value for incapacity planning, and if I put my wishes in it,
25:18
right, it doesn't It really is like of no effect until you die,
25:22
okay. And the will is not going to avoid probate because it's not a
25:26
container. A will is just a set of instructions. And so the will
25:33
is how you name who your beneficiaries are. But it doesn't like give someone
25:37
the authority to manage your assets over time. The will is really just who
25:44
you want to inherit. That's the instructions you put in there, who you
25:48
want to be your executor, and who you want to inherit. And the
25:52
will is part of a trust when you do a living trust, right,
25:56
so usually almost always when you have a trust, you also have a will.
26:00
And the will is like this catch all that just says anything that happens
26:03
to not be in my trust when I die, I will get put into
26:07
my trust after I die. So it's just like a yeah, it's like
26:11
a catch all. It's called a poor over will, poor over will,
26:15
okay, because yeah, I mean I did my trust. I've done it
26:19
like five times, but I think I just did it again when I started
26:26
working with you a few years ago. So it mine now is you know
26:29
a couple years old. But I have no property at this point. I
26:30
sold everything, so I just have accounts, which, like you said,
26:34
my brokerage accounts already have my beneficiaries on them. My bank accounts already have
26:40
my joint bank accounts, so they already have my beneficiaries on the my business
26:44
accounts. I'm not the only signer, so everyone can get to everything.
26:49
And here's the biggest tip of all. Someone has to have your passwords.
26:55
Yes, things going, Yes, that's so so important. I can't.
27:00
I don't. I'm so glad you said that. And I can't emphasize it
27:03
enough with clients, because no matter how good your estate plan is, like,
27:07
it's gonna be a real scary moment for the people who need to step
27:11
in and manage things if they don't have access to your passwords. So much
27:15
of our lives are online now, our financial life, our personal life.
27:18
It's like online, right, And so you're not getting probably a lot of
27:22
statements in the mail anymore. The old advice used to be just monitor the
27:26
mail and you'll find out what the accounts are. Well, that's not really
27:30
valid advice anymore. Now it's like monitor the email, go into the email,
27:33
well, if people don't have access to your email, you know it's
27:38
not easy, believe me, and having the estate plan itself doesn't solve that
27:42
problem either, because although you can designate who your digital asset manager is in
27:48
your estate plan, that still my record. What really dictates who has access
27:52
to your email is the company that owns it has your email accounts, so
27:57
Gmail for example, you know Microsoft, whoever has your email account is the
28:03
one who's going to say whether someone gets access or not, and they usually
28:06
say no. And let you know, even if you have an estate plan,
28:10
it's not easy to get access, and so really there are other ways
28:14
to do it like a email, Like password managers, for example, there
28:19
are ways to set them up so that if you're go inactive, someone can
28:22
request access that you've named and then if you don't deny it within a certain
28:27
amount of time, they automatically get access. So it still preserves your privacy.
28:32
So that like people don't right now have access to your email, but
28:36
that that way they can have access no matter how many times you're a password
28:41
changes over the years. That's great. So when you're looking for a password
28:44
company, make sure that you can designate someone to pick it up. Oh
28:48
that's great. Great, Okay, so we have what time is it?
28:51
Oh? Good? Okay, good, So we have twenty minutes left a
28:56
couple a couple. Oh, I mean we could spend a whole day on
29:03
divorce and the trusts and all of that, right, but just so we
29:07
know that we will have to get a separate one when we divorce and put
29:10
your stuff in there during the divorce. Though, does that one, the
29:15
married joint trust stay in effect during the separation and the mar until they're finally
29:19
divorced? Right? Yes? Right, So like once you're actually once someone
29:25
actually files for a divorce, then these temporary automatic restraining orders go into place
29:30
where you're not allowed to change the beneficiaries, like on your accounts, you're
29:34
not allowed to change your trust beneficiaries. You can write a new will that
29:41
would say whoever ends up inheriting from me, you know, when I die,
29:45
I want it to be this person. So you are allowed to create
29:48
a new will, but you cannot like actually change the ownership the container of
29:52
the trust until the divorce is final. And then when the divorce is final,
29:56
then you can just directly fund into your new trust. Okay, that's
30:03
kind of sucks right there because there's some divorces at gue forever. Okay,
30:07
So that is one reason to maybe have two trusts so that that stressful time
30:12
doesn't have to happen. Okay U. What is the California's new right to
30:21
die law? So well, we are allowed to Yeah, it's pretty limited.
30:26
And when we're allowed to say we want to go right when we're we're
30:33
going to take medication, for example, to actually bring about our demise.
30:37
So now I had to say I never knew that was okay. And my
30:41
dad passed away and I did not know that we could do that, and
30:47
he definitely wanted to go. And it took me probably two to three weeks
30:52
to figure out that, and we finally called the doctor in to give give
30:56
him an assessment, and then the doctor was coming back in one week to
31:00
see if he still felt the same way right, and then he would have
31:03
helped him medically. But my dad stopped eating because he wanted to die,
31:08
So he died that way before the doctor. Doctor was coming like the next
31:14
day, and he died the day before. So I didn't even know that
31:17
was a thing. I don't even know having that right to decide can be
31:22
really empowering, like it can be so comforting for some people even if they
31:27
never would use it, just having that and so yeah, but people don't
31:32
know about it first of all, and even when they do know about it,
31:34
there is very strict criteria for when it can be used. So you
31:37
have to have a terminal diagnosis, you know that you're going to die fairly
31:42
soon, and you have to get doctors to sign off, like you know,
31:47
like you said, there has to be multiple visits with medical practitioner and
31:51
you have to like admit self administer. I mean, a doctor is not
31:56
going to administer the cocktail essentially that you would use in order to die,
32:00
So you have to be able to drink it yourself and actually put it together
32:06
yourself too, which is not really that possible for a lot of people.
32:09
So although I think like dula's like death dulas could do it for you,
32:15
but a medical practitioner is not going to be allowed to do it for you.
32:17
Believe it or not, I've never heard of the word death dulas,
32:20
So thank you. Okay, Yeah, it's a it's it's growing in Awa.
32:25
We have a growing awareness in California that like end of life care could
32:30
be improved, I think and like that there are actual specialists who are getting
32:36
trained in how to help families navigate those last days and individuals navigate those last
32:43
days because often, you know, our doctors don't have the time or even
32:47
the training or the knowledge to really let you know what all of your options
32:52
are for end of life care. And sometimes they just don't even have the
32:57
political desire with end you know. And so there's a lot of values at
33:02
play here. Yeah, So to have someone like a death duela come in
33:07
and give you advice and counsel on how to do it and how you want
33:10
it done, you, you know, in terms of what you want the
33:15
environment to feel like in your last days, Like they can advocate for you
33:21
and help your family advocate for you and really get let you know what your
33:24
options are. So it can be a super valuable service that most people don't
33:30
know about. Yeah for sure. Okay, So with uh, let's say
33:38
I want to make changes inside my trust. I get a terminal illness.
33:43
I can make changes until I die unless I am assuming I'm mentally inconvened,
33:50
mentally incascitated. So what happens if I had like a slight onset of dementia,
33:55
could I still make changes to my trust. So dementia, a diagnosis
34:01
of dementia does not is not the equivalent of being incapacitated. Yeah so,
34:08
I mean yeah. So. The thing is, you really have to not
34:12
be able to manage your own affairs to be incapacitated. But how you are
34:16
deemed to be incapacitated, which I call the incapacity trigger, is different.
34:22
In most of the state planning documents. It is not set by statute.
34:24
Is really whatever the dictates of your trust. You know what your documents say
34:30
a durable power of attorney. You have to look at the language in them
34:35
to see what will be the incapacity trigger. And it could be one doctor,
34:38
it could be two doctors. It could be your children unanimously, it
34:43
could be I've even seen it written where it was a specifically named doctor and
34:47
that doctor was no longer practicing. So I would recommend against that absolutely,
34:52
But you want it to be something or you feel kind of protected, if
34:55
you know, but at the same time as not such a high burden that
35:00
it's nearly impossible to me. Yeah, I like that. Okay, good,
35:04
good, okay, Um, what else do we have here? Oh?
35:10
We might differ disagree on this, but that's okay because that's what we
35:14
do um traditional iras and estate planning. A few golden rules to guide you
35:19
in naming beneficiaries. Okay, give me your thoughts around that. So in
35:25
general, we usually recommend to not name your trust as the beneficiary, but
35:30
to name an individual thank you, any kind of like a tax deferred you
35:38
know, vehicle that your money is in. So because usually if it goes
35:42
directly to an individual, then they're going to be able to reap some of
35:45
the tax deferral benefits. And we do put language in our trusts that try
35:51
to set it up so that it could still reap those tax deferred benefits.
35:54
But it's a bit of a like threading and a few a needle, you
35:59
know, to to get it right, or landing a plane maybe, And
36:02
so it's not always so easy for the financial professionals to make that happen,
36:07
even with a well written trust, and you know, the company has to
36:12
cooperate, for example, And so that's why we say, you know,
36:15
unless there's a really strong reason not to name your beneficiary directly, then you
36:21
can name the trust if there's a really strong reason. But otherwise name the
36:23
individuals. I love that. Okay, So what's your thoughts on life insurance
36:29
as well? Generally for life insurance, UM, it depends. Um,
36:35
there's there's some There are times when, um, you would not want to
36:39
name the trust, like if you have a taxable estate for example, Like
36:43
and when I say taxable estate, I'm talking about federal estate tax or state.
36:47
In California, the state a state tax limit matches the federal and in
36:52
that case, probably your life insurance policy. You don't want to be a
36:54
part of your state. You want it to go directly to your beneficiaries.
36:59
And the state tax level right now for a couple is very very high,
37:06
twenty six million, and in a few years that might come down by half,
37:10
so it could go down to thirteen million for a couple, and for
37:14
an individual it's half that. So it's but still, you know, there
37:17
aren't that many people who fall in that category of a tail of state.
37:22
So in those situations, you definitely don't want to name your trust as the
37:24
beneficiary. But I don't know of other reasons why you wouldn't name the trust
37:30
as a beneficiary of life insurance. I think it can go either way,
37:32
and I just kind of talk through it with the clients as to why they
37:36
might name an individual versus the trust. But as long as there's a beneficiary
37:42
named, it is going to avoid probate. And and if you have a
37:45
minor child, it's really good to name the trust because that life insurance policy
37:51
will just fund the trust for that child and then it'll be managed by the
37:54
trustee. So you wouldn't want to name a child as a beneficiary if you
37:58
have a trust. Let's have a taxable estate, yeah, because they literally
38:01
can't access it until they're an adult. So here's what twenty six million is
38:12
very high. It probably will go back down to thirteen. But what was
38:15
it years Wasn't it like three million three point five or something? It has
38:22
and when it was one million when I came into the industry, it was
38:24
like one million, and not that that long ago. Although I don't think
38:29
that there's really much chance with our current Congress that it's ever going to go
38:32
down to that level. I do think it might get cut in half,
38:35
but I don't think it's going to go back down to something like one million.
38:38
Okay, So if you think you're going to be in the double digits,
38:43
and the double digit millions. Because the reason the biggest, one of
38:49
the big benefits is tax is it is tax free. A life insurance benefit
38:54
is a tax free event. So that's why I always have a go to
38:58
a human because it's simple and easy and you get the check and you're done.
39:04
When it goes into the trusty, I guess they still have to file
39:08
a tax return in everything, even though I don't know about the limit of
39:13
the estate tax, but they still have to pay taxes inside the trust,
39:16
right, I mean, I know you're not a tax attorney, but well
39:20
great, I mean if you for the trust, if it distributes out all
39:23
of its income in the year it's received, then usually the beneficiaries who are
39:27
getting that income, it would go to their tax return. But if income
39:31
is generated in the trust in the year it's received, then the trust could
39:36
get taxed. And trust tax rates are different than individual tax rates, so
39:42
the trust actually hits the highest tax rate in a very low number compared to
39:45
an individual. So it is definitely in your interest to not have income get
39:50
stuck in the trust in any given year. Now, a life insurance death
39:53
benefit is not income correct, correct, correct, But if that made money
39:58
inside that trust, then that would be taxed right, right, and so
40:01
like for a couple, if if I have clans who are a couple,
40:05
I always say, name your spouse first is the primary beneficiary on the life
40:08
insurance, and then name the trust is the alternate. Yep, that's exactly
40:13
what I do. Oh my gosh, we're totally aligned. Literally, we're
40:16
totally aligned with that. I love that. Okay, good um, Okay,
40:22
tell me a story, maybe like something that like surprised you. Maybe
40:30
a client that was this one. Okay, well this just popped into my
40:34
head. It just happened on Well, hear, my angels are with us,
40:36
and then help things pop into your head. My my, I have
40:39
clients who so some of my clients they don't want to spend a lot on
40:44
estate planning, right, and so no one does. We can reduce the
40:47
price a little bit if you go and do your own advanced healthcare directors,
40:52
because that's not something that an attorney needs to prepare. I mean, it
40:55
is nice having like someone like me who looks over it. Make sure that
41:00
you did it right, and make sure that you know because what we put
41:05
in our advanced healthcare directors for our clients is more thorough than what usually people
41:08
who do it themselves right down. But nevertheless, it is something you can
41:13
do that's going to be valid on your own and with your doctor's office.
41:16
Quite often they can give you a pre filled form to fill out where you
41:21
actually just name who you're the person is who's going to speak on your behalf
41:24
if you're incapacity, and then you can write down if you want to be
41:28
an organ doner, if you have like end of life wishes that are you
41:31
know, like I do or don't want certain kinds of interventions, and then
41:36
what would happen to you know, your remains if you die. So but
41:39
the most important thing is naming who's going to speak and make decisions on your
41:44
behalf. So, but I had clients who, you know, they were
41:47
like they were my neighbors. I care about them very much, and they
41:51
just did They didn't want to spend a lot on estate planning, so they
41:53
did they said, we're going to do they advanced healthcare directives on our own.
41:57
Well, they just called me and they were like, oh, we
42:00
can't find them. I think we did them with you, right, And
42:04
I'm like, no, it's really clear on our contract that we didn't do
42:06
that, and they're like, well, it turned out that she, like
42:09
the wife like lost capacity and Kaiser locked them out of her online access and
42:16
so they can't get her records or information and they don't have advanced healthcare directed
42:22
to now get re established that and she's not really able to mentally give them
42:27
that authority anymore. So it's just really sad and they're gonna probably have to
42:31
go to court. Oh my gosh, that's even more reason to have it
42:36
all done professionally. Because we can be cheap at times, frugal, cheap
42:38
whatever. We obviously want to save money when we can, but we don't
42:44
under first of all, we don't know these things happen because that's not in
42:46
our world, right, that's not in our preferable, preferable vision. We
42:51
don't even want to see that, so we don't think of that. We
42:54
don't know the things that could happen. And that's horrible, right, because
42:59
once they I had a client who actually a prospect, actually kind of a
43:05
client, but they came. She came to me after she went through all
43:08
of her irase, her irase, his iras, caring for her husband million
43:14
dollars sitting in the house. She could not do a reverse mortgage because he
43:17
was on the title and incapacitated. She could not do anything else. She
43:22
was stuck, and she was broke, and she couldn't even sell the house
43:25
because he was incapacitated. All of this because they weren't in the trust.
43:29
She had to go get how she had to go get a conservatorship which was
43:35
like fifteen twenty grand or something in court in order to continue on caring for
43:39
her husband, which was her main concern. So house, and that's what
43:45
I see now, Like I'll be in sixty this year, and I know
43:50
right I can't even say those words yet. Anyways, at this age,
43:54
a lot of my clients have a lot of money in their homes and they're
44:00
they're not They're not using it. It's just sitting there, like the equity
44:05
is just sitting there. But some of them do need it eventually. So
44:08
you have to set that information up now before anything happens mentally or stroke or
44:15
anything at all to where it impairs your cognitive ability to make decisions to use
44:20
the equity in that house for whatever reason. I think that's probably the biggest
44:23
misconception around marriage is people think when I get married, I'm just going to
44:28
automatically have access to sign documents for us, you know, and make medical
44:32
decisions and all of that. Like you think you're married, so that's good,
44:36
You're you've got that taken care of. But no, you still have
44:39
to go and get these documents prepared that that give that access an authority.
44:45
Yeah. Yeah, I felt so bad for them. I it was it
44:50
was because she had to go, because she didn't have it to go spend
44:52
it. So then you know, you got to ask the family and all
44:54
this stuff. And she really shouldn't have been caring for him alone at home
45:00
by herself all those years anyways, because it really deteriorated her health. And
45:05
I know should and could have would have. Like she has to do her
45:07
everybody has to do their own, but it definitely deteriorated her health for sure.
45:12
Ah Okay, a lot of times caregivers passed away before the person they're
45:15
caring for. For sure. I have another client that had a special needs
45:20
son, and she has a trust, special needs trust for her son,
45:25
and now she needs care and so now the whole family's trying to you know,
45:31
who's gonna figure out how to do the sun because she's still in the
45:35
house and this asset, the house is his money to fund him for the
45:39
rest of his life, and she's still in the house. So it's like
45:43
a whole thing. Like equity inside a house is not a plan, y'all.
45:47
It is not a plan. Like you just can't sell it when you
45:52
want to sell it, and you can't just refinance, or you just can't
45:55
do it when you want to do it. You have to pre plan for
45:58
that. Oh my god, this okay? And actually I had another point
46:04
about something. A way that a trust can be useful is if you are
46:08
taking the Sandwich generation. You know, like you have children and you have
46:12
parents that you're caring for a lot of times, like you if something happened
46:16
to you Jennifer for example, it up so that you know, you don't
46:22
have to give an outright gift to your mother to you know, keep her
46:25
going. You can actually like set up so your trustee has the authority to
46:30
provide some level of gift or need you know, security for your mom without
46:35
ever giving an outright gift that would threaten her benefits if she's on any but
46:38
regardless, like you know, it just you wouldn't have to rely on her
46:43
estate plan to eventually get the money that you are protecting her with back to
46:47
your own errors if something happened to her, right like, your trust would
46:52
continue to make any distributions that need to be made if you're incapacitated or you
46:57
pass away, and then you know it would also like protect your errors,
47:02
your children right to continue to be your heirs and in the long run.
47:08
Right, yes, I love that. That's a great, great, great
47:12
point. So let me ask you, let's how often if you let's say
47:15
you did want a long time ago, or somebody did one somewhere and you
47:19
have no idea what it says or anything, how often should you review your
47:22
trust? I know pretty much like ninety percent of the people who come to
47:27
me with the state plans are not really sure what they say anymore. So
47:31
it's a very very common feeling. Um, And so I okay, that's
47:36
at least every five years review it because like certain things, is legalis and
47:42
you're going to review it and eyes are going to glaze over. But when
47:44
you see people's names, for example, you're gonna go, oh, is
47:46
that the person that I really want in that role anymore? Right? So,
47:51
like at least review for the names and then you know haven't read it
47:54
by an attorney. Your attorney, you can just call them and say,
47:58
have there been any changes in the law that I should be aware of since
48:01
I created my trust that might affect my situation. But certainly the thing that
48:07
you have to always keep updated is what are the assets in your trust?
48:10
So as you get new accounts, new life insurance policy, new house,
48:15
whatever, new property investment, you know, you do have to make sure
48:19
those things are in your trust. And so that's another thing an attorney can
48:23
help you with is looking at the schedule. Hopefully your trust has a schedule
48:28
of assets and that you can look at that and make sure that it's accurate
48:30
and up to date. That's a great tool for your success or trustee if
48:35
you're incapacity to immediately get up to speed on what are the assets they're managing,
48:39
you know, and what to be looking for, which banks to contact,
48:45
you know, or institutions to call. So that's a great starting point
48:50
for them. And it's also like where the thing that you need to keep
48:52
updated over time, and and it also it can be your gut check too,
48:58
like you just skim it and go, oh, I noticed that that
49:00
investment property is not on there or whatever. You know. So, whenever
49:04
you fund a trust, there are two parts to funding for each particular asset.
49:08
So if you have a bank account that you're putting in your trust,
49:12
first you put right it on the schedule, and secondly you would go to
49:15
the bank and say, I have a trust. Please make sure that the
49:17
account is titled as the owner of the trust is titled as the owner of
49:22
the account. Or make sure that the trust is the beneficiary on the account.
49:28
Oh okay, either or? And do you have to have those changes
49:30
notarized inside your trust? So the schedule itself does not need to be notarized
49:36
when it's updated, that's okay. You just want to make sure you have
49:39
it. You want to make sure that you have it with your trust,
49:43
your original trust. So if you're updating it on your computer, printed out
49:45
and have that page with your original trust. Okay. You are so awesome,
49:51
Lelina, Thank you so much for coming on the show today. Hey
49:53
y'all go check her out. Miles Torres Law right, Yes, Miles dot
50:00
com dot com, milestaurs Law dot com. Check her out. She's amazing.
50:06
Endorse and fully trust this woman. Thank you absolutely. Oh year,
50:12
such a great time. If I get a bunch of questions, you'll have
50:14
to come back. Okay, bye, y'all, rock your finances, do
50:20
your trusts. We appreciate you joining us today, and don't forget to subscribe
50:27
to the rock my Finances YouTube channel for more engagement and bonus content. Tell
50:31
me what is your money story? Let's find out with Jennifer four pm Eastern
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50:47
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50:52
let's all say I rock my Finances.