Latest / CattleUSA Daily / 63: Wills vs. Trusts in Estate Planning for Ag Operations with Paige Harding

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63: Wills vs. Trusts in Estate Planning for Ag Operations with Paige Harding · CattleUSA Daily

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  Welcome to the Cattle USA Daily podcast, your go to source for
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  the latest livestock markets, industry insights and the update
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  shaping agriculture today. I'm your host, Lauren Moylan, a
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  passionate advocate for agriculture, here to keep you
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  informed and connected. Now let's dive into today's
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  episode. Paige, welcome back to the
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  podcast on another episode. We just we can't get rid of you
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  around here. And I honestly, I do think that
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  the two podcasts, like the podcast we just recorded like 30
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  seconds before this, it's probably going to be the podcast
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  that airs the day before this one.
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  And we're just we're going to get 2 page podcasts in a row.
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  And you know what, if it doesn't end up being that way, then
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  you'll see this one next week. But anywho, we I'm so excited to
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  keep this series going and talking more about estate
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  planning, what that looks like for ranchers, people in AG, and
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  all of that jazz. But today we are specifically
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  talking about wills and trust and the difference between them.
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  So can you, for all the listeners out there and even
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  maybe a refresher for myself, explain the difference between a
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  will and a trust for me? Absolutely.
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  So a will, a legal document that says who gets your property
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  after you pass away. But a will has to go through
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  something called a probate, which is a court process that is
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  typically expensive, public and slow.
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  A trust, on the other hand, is like a private contract that you
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  make during your lifetime. You move your assets into the
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  trust and when you pass away, everything transfers out to the
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  beneficiaries and anyone who receives that without going
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  through probate. So typically trust help to wrap
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  that up a little bit faster. It's not public, it's not
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  expensive. Some people will have a trust
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  administrator that they will hire to distribute those assets,
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  but it's different. It's different than probate and
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  having a will go through probate because the government and the
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  court system is controlling that in a way, whereas it's not like
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  that with a trust. So I remember when I was
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  interning at a law firm in Dodge City when I was in college and I
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  was working on this probate case and I was doing all of the
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  expenses and the inventory. And I walked into the attorney's
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  office and I said, Oh my gosh, it is so expensive to die.
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  And I was probably only 20 at the time.
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  And the attorney just laughed. And I was like, no, I'm serious.
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  This is it's expensive to die and it was the cost of probate.
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  So typically a trust will cost a little bit more upfront to have
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  an attorney draft a trust for you, but that you're paying for
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  it upfront rather than paying for it during probate like you
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  would if you're getting a will probated.
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  So that's a brief overview of of some of the differences between
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  a will and the trust. The biggest is the probate
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  process. Absolutely.
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  Are there any situations where you would recommend one over the
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  other? Yes.
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  So if someone only has a few simple assets, they don't have
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  everything, you know, scattered all over the place as farmers
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  and ranchers typically do, like a truck, a house, a savings
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  account, a will might be the best way to go.
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  However, if you own land, cattle, a business, if your
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  assets are kind of scattered all over the place, or if you really
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  want to be very detailed and specific in the distribution of
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  your assets, trust might be a better, a better way to go.
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  It's really about control, you know, so if you if you know if
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  if you are young and you might not even have kids yet and
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  you're making a will, you probably just want your assets
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  to go back to your parents. You know, you don't have a lot
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  of stuff scattered all over the place.
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  However, if you want to be very specific and have this piece of
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  property go to your brother and this go to your sister and these
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  go to your mom or dad, then you might want to trust.
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  So it really is about control more than it is about the amount
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  of assets that you have. Like, you know, going along with
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  that, I hear a myth all the time that trusts are only for rich
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  people, which is not true. I've mentioned it before, but if
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  you own anything that requires management like that land
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  cattle, then a trust is usually a better fit.
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  Even aside from running AG operations, in some
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  circumstances a trust is a better fit.
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  For example, I have one family where each parent has children
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  from a previous marriage and then they both have children
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  together. So blended families are very
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  common these days. And so they both wanted their
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  assets to be distributed to their own children and then some
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  to be distributed to the children that they have
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  together. So basically I said, you know,
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  trust is better in this situation because of the complex
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  distribution and the control for a blended family.
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  So it really just depends on your specific situation which is
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  the best tool to use. So like with the differences
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  between a will and trust, let's say that someone's listening to
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  this and they're like, well, I only have one kid, everything's
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  going to them, but I still have this very large ranching
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  operation. Why do you still sometimes
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  recommend a trust over a will for that?
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  Because like, so for instance, my husband and I just got
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  married. So we, we did a will.
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  Like we're doing a will. We're working on all of those
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  things right now and it's, we only have to deal with a will
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  right now because it's just going to the other person.
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  But in that situation, it's just going to one person, but you're
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  still probably going to recommend a trust.
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  Why would that be? First of all, a trust would make
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  that not public. So some people, you know,
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  they'll put land in their own name in LLC names, you know, to
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  protect the land. So if you don't want that to be
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  public, then definitely do a trust #2 all of that land is
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  very expensive, very valuable. As we all know right now, land
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  prices are skyrocketing. So probate is expensive and it
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  will just eat some of that up. Another thing to do that, that
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  might be a smart thing to do in that situation with a lot of
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  land, but only one air as you can set it up in the trust so
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  that, you know, the trust might be able to help that air pay
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  property taxes or pay any expenses it that come along with
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  the land. So you can set it up in a way
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  that is not only, you know, passing it on, but it's helping
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  your child to create a plan and helping them to get ahead.
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  In a sense, you kind of have your hand in it even after
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  you're gone. Yeah, absolutely.
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  So on the cost side of things, a lot of people are turned away
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  from trust because they cost more, way significantly more
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  than a will. Like we're talking a few $100
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  for a will and we're talking a few $1000 for a trust, right?
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  So people are very turned away. They see the sticker shock and
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  they're like, Nope, I don't want to deal with that or things like
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  that. What is your response to that?
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  What are as far as cost goes? Can we explain that a little bit
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  more to people? Yeah, so you are either you're
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  going to pay that much at some point.
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  I hate to tell it to you and I hate you know, I hate to admit
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  it, but trust do you're exactly right.
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  Cost more money to draft upfront.
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  They're a lot of work. Not only do we have to round up
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  all your assets, we need to transfer the title into the
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  trust, assign the the name to the trust name, change the
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  beneficiaries. You know, trusts are a lot of
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  work to draft and we're also doing very meticulous drafting,
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  getting very detailed about, you know, your directives after
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  you're gone. However, with the will you are
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  going to end up paying that much money in probate if not.
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  More. If not more so.
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  I'm currently working on a probate.
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  It was a single woman. Her husband passed away about 20
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  years ago and she's been managing everything.
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  She owns 36 parcels of land and I don't even know how many
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  investment accounts. This is a huge, huge estate and
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  unfortunately it has it's drug on forever.
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  It's been almost a year that I've been working on it now and
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  I don't really see an end insight to be honest, because
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  it's just taken so long to round up all of her property, round up
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  all of the heirs. You know, it's just a long drawn
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  out process. And had she had a trust, you
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  know, this would have been wrapped up within six months.
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  But unfortunately it's going to continue going.
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  So there's how the costs breakdown a little bit between a
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  will and a trust. So to do people ever combine the
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  two? Do we see people having a will
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  and a trust? What?
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  What does that situation look like?
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  Yes, absolutely. So even if you have a trust, you
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  still need something called a pour over will.
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  And the pour over will is basically like a backup hope you
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  don't have to use it, but if we do, it's there if we need it.
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  So it's like a safety net and it catches anything that you might
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  forget to title to the trust while you are alive.
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  So let me back up, make sure I've explained this clearly
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  enough. When you make a trust, let's say
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  that you create the Lauren Moylan Trust, we are going to
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  transfer all of your assets into the trust.
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  It's kind of like an LLC, like how an LLC holds assets, That's
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  kind of how a trust is. So all of your bank accounts,
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  your retirement accounts, any property that you own, we're
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  going to transfer it to the Lauren Moylan Trust.
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  And then after we do that, you will still have total control
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  over all of those assets. You will be able, you know, you
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  won't recognize it in your daily life that things are titled to
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  the Lauren Moylan Trust. But let's say that you, you
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  know, buy a new parcel of land here in a couple years and you
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  deed it to yourself instead of the Lauren Moylan Trust.
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  And then you were to pass away. So everything will be
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  distributed out of the trust. And then we'll say, Oh no,
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  there's this one piece of land and that pour over will will
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  come in and it will basically say, hey, court, let's make this
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  as simple as possible. She had the Lauren Moylan Trust.
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  This was a mistake. Here's all these documents and
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  hopefully a judge will just say, OK, easy, you know, let us off
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  easy. Won't have to go through the
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  whole process. So a pour over will is basically
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  like a safety net for the trust in that way it catches anything
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  that we might have missed. We don't want to use it if we
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  don't have to, but it's there in case we need it.
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  Absolutely. So a question on the
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  transferring of everything into a trust.
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  So if you're running an LLC right now and you transfer that
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  into the trust, you're still operating it as an LLC.
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  It's just deeded differently, right?
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  So instead of being in my name or the LLC is owned and operated
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  by Lauren Moylan, it would be the Lauren Moylan Trust, is that
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  correct? Yes.
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  Absolutely. So LLC's are another good estate
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  planning tool. We'll get to that in a little
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  bit. But you can either, you know,
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  have have those transferred to the trust in a way that they can
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  be distributed to your heirs or you can keep an LLC separate.
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  But you're exactly right. You don't notice it in your
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  day-to-day life. Nothing changes for you.
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  It's just the title. It's a little bit different.
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  Absolutely. OK, so for the folks listening
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  today, what how do you recommend guiding them along, what the
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  first right step is for them or what Path and Ave. might be best
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  for them? Yeah.
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  So the first right step is a conversation.
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  So, so sit down with someone who understands AG operations and
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  talk about the assets that you own, your goals, your family
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  situation and remember to plan as if something might happen
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  tomorrow. Every ranch, every farm, every
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  family is different. There's no one-size-fits-all
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  approach. And a good estate plan will
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  really show your specific values of your operation and your goals
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  of your operation. So I've explained this before,
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  but often times when a young couple comes in, we'll start
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  with a will as they don't have many assets and they probably
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  won't have a complex distribution.
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  And then when they come back later, we'll go, we'll go with a
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  trust because they typically have their hands in a lot of
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  things later on in life. Yes, absolutely.
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  So as we start to close out today, are there any other
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  tidbits of advice, Anything that you want to close with before we
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  head out? I would just say start the
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  conversation. Whether you have an attorney or
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  an AG consultant, both of both of those types of people can
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  help ask you some guiding questions to get you thinking
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  about what you might want to do and what might be best for your
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  family. So just start by having the
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  conversation. Yes, absolutely.
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  And for all of you listeners out there, make sure that you check
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  out the show notes. We will have all of Paige's
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  links. Link down below If you want to
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  start that conversation with her or if you just need some more
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  advice, Paige has an amazing blog where she talks about
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  things like this. We've got the Cattle USA Daily
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  newsletter where Paige has a weekly feature where she talks
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  about this. We've just got her on all the
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  platforms, y'all, So make sure you check out those show notes.
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  Hit up all of Paige's links, make sure you go check all of
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  that stuff out. And as always, thank you for
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  listening to another episode. I hope that you guys were able
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  to come on and learn something new today because we have an
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  amazing person here who I am very grateful to call a friend
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  and a great resource that we have here for all of your
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  ranchers and producers out there.
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  So as always, make sure you like subscribe rate review.
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  We really appreciate it here at the team.
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  And if that first step in your conversation is maybe sharing
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  this podcast, that'd be a cool first step too.
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  And we would appreciate it here at the team as well.
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  And I hope that you guys have a great rest of your day, great
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  rest of your week, and we will see you all next time on another
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  episode of the Cattle USA Daily Podcast.
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  Have a good one y'all.