Wealthy & Wise: Provide For Your Family, Not Your Attorney

About the Video

Developing an estate plan will help preserve your legacy and ensure that your most valuable assets transfer to your loved ones. Watch Cort Christie, CEO of NCH, and our in-house attorney, Kurt Harris, as they discuss the importance of protecting your assets and your family with estate planning.

Prefer to read? A full transcript is provided below.

CORT:

Hello and welcome to Wealthy and Wise. I’m your host Cort Christie, founder and CEO of NCH. Now, today, we’re going to be talking about leaving your legacy and what does that mean? Well, it means a lot of things and it means some planning and intentional thinking about the future. You know, there’s an old saying that there’s two certainties in life, death and taxes. And we’re going to be talking about death but it’s a whole lot more when you’re planning your legacy than just thinking about the eventuality of death. And we have an expert with us today, attorney, Kurt Harris, is with us who’s been practicing law for over 25 years and specializes in the area of asset protection and estate planning. And so welcome to our wealthy and wise program today, Kurt.

KURT:

Thanks so much. My pleasure being here today.

CORT:

Absolutely. You know, when we start talking about estate planning, sometimes it’s called or legacy planning you know, there’s really a lot to it. And the question that I have is, you know, why would someone that is my age, I still think of myself as young, want to be thinking about, you know, the eventuality of death and estate planning and intentionally planning their legacy at an age where they’re younger or an age where they’re healthy and there’s really no need to be thinking ahead. Why would we want to do that?

KURT:

Well, it’s a good question, and I appreciate you posing in that way. I get a lot of calls from a lot of elderly people who are really of that mindset. They’re starting to think that I’m getting close or I’m getting closer. As we know, every day, we get a little closer to that time. But nobody really wants to think about their demise or the ending. And it’s a difficult thing to think of as particularly when you’re younger, you really don’t. You think maybe you joke about it, but you’re not really that serious about it. You know, you have a lot of time left. We all do. We’re all under that expectation that I have a lot of time left.

CORT:

I’m not going anywhere.

KURT:

And not at all. And that’s somebody else. That’s never me. And, but in reality, there’s so much more to estate and legacy planning that a lot of people neglect or that they think it all has to do with, I have to die. But that’s not necessarily the case with a lot of situations that come up. There are many situations that come up when someone may become incapacitated or there may be some other issue or some of the problem that befalls them that isn’t necessarily their dying and it’s not necessarily they’re dying in their old age. Sometimes these things happen at a much earlier age or a much more advanced stage of our lives, and that’s why it’s best to think about it right now. In addition to that. Believe it or not, you’re in a much better frame of mind now while you’re younger to make those kinds of plans and those types of contingencies than somebody else who might be a little more advanced in their life. They’re not really thinking quite as detailed about their estate, what they have and what they want to do with that. And they may not be thinking as clearly as you might right now, at a younger age.

CORT:

Yeah, that makes a good point. It’s like, you know, if you are ill or if something happens to you, that’s the last thing you want to be doing is working on your estate and making sure that your possessions, you know, get to the people that you want them to go to. And it’s like, why not do it when you’re healthy and well and can really think about it? And isn’t there so much more than just the, you know, the potential well, the eventuality of death that we’re all going to go through, whether we pretend to avoid it or not, it’s going to come our way, all of us that’s involved in legacy planning and estate planning, too?

KURT:

Yeah, it’s really a super good point because there is that old adage you know, you shouldn’t write a letter while you’re angry. You shouldn’t type that email, or maybe you should type the email and then wait and check on it in the morning and see if you really still want to push send. I find that all the time. Sometimes when I’m drafting motions and things like that, I’m punching away at the keyboard I’m getting it’s not the time. You know, sometimes you need to think about this. And so when you’re a little younger, and a little more clear with what your assets are and where you want things to go and how you want your estate to play out, that is really the best time. Another thing that I often bring up with couples and people who are younger is that in your estate plan, many times you will have some dispositions or things that you want done with your children. And we’re not even talking about assets right now. We’re talking about your most valuable assets, as it were, your kids. And so there really is never a bad time to asset plan or estate plan, particularly when you’re talking about your legacy in the context of your children and who you might want to be their guardians or who you might want to be your guardian in the case of an accident. I know that I have a guy that I know who is a surgeon, and he was a very well-respected surgeon that had a bicycle accident, hit his head on a rock, and he’s not a surgeon anymore. And as a matter of fact, many of the decisions that he used to make Day-To-Day decisions need to be made by others. Nobody ever saw this coming from a bicycle accident. You just didn’t ever think that that was possible. Had a helmet on, had everything, every precaution, whatever. But things like that can potentially happen to anyone. And then you’re in the situation where now I’m relying on somebody else, and they are making the decisions that quite possibly I could have made already for them.

CORT:

Right. If they had just done a little bit of planning ahead of time. Now, you hear in the news all the time about celebrities and high-profile people, some super wealthy people that, you know, didn’t do any planning. And now the kids are fighting over their estate or, you know, there’s somebody that pops up out of the blue and said they promised me this or they said they were going to give me something. What you know, what goes on in the minds of these people? And what are some of these cases that are out there that, you know, people have heard about?

KURT:

One of the most recent cases that I often talk about is the case. And the reason why I say reason is it was just like a few weeks ago settled and that was Prince’s Estate there in Minneapolis.

CORT:

And that’s been going on for a very long time.

KURT:

Several years since he’s passed away. And I believe he passed away around seven years ago, six years ago. That’s six years.

CORT:

So just got resolved. Just results years later.

KURT:

Just now. Finally, the evaluation of the estate was determined. Apparently, it wasn’t worth as much as they had estimated. I don’t know why anybody cares about that, but it took years to establish the fact that he had six heirs. They had to go through DNA tests to eliminate some claimants to be heirs of his. Apparently, they were not the heirs of Prince and they were just the heirs of some other guy. But anyway, they finally had to ferret out the 29 additional claimants. They narrowed it down to his six step siblings and then they finally made a final adjudication of what the value of the estate was. It was still in the 100 million range, which is they’ll be okay, but the point there being the accountants, the attorneys and anybody else that was an administrator, they really made the money off Prince’s estate And at that point, when it finally gets distributed, his heirs were going to receive a fraction of what they could have received on top of the fact that he paid a pretty healthy amount, his estate paid a pretty healthy amount of taxes. I believe was estimated somewhere around 20 million to the federal government and maybe 10 million to the state of Minnesota and I’m sure that all those people are very pleased that they paid that. But that’s Prince’s estate. We have another example of James Gandolfini, who took some minimal efforts, but he did make some efforts in planning his estate for his children.

CORT:

Now he’s from The Sopranos, is that right?

KURT:

And The Sopranos right. James Gandolfini, I don’t know the character he played there, but apparently he was a very nice person in real life, but not the character that he played on the movie. But he also passed away with an estate that had a value somewhere around $70 million. And but he had two children. And I only bring that up because he had the two kids, one was 14 and the other was seven-ish. And that was a lot of years ago also as well. His estate has been resolved, but it took a long time to get figured out exactly what his intentions were. And he left a sizable amount, $7 million insurance policy to his 14-year-old son, who will inherit that on his 18th birthday. And I hope that he knows, wow, I hope he knew how or knows how to handle that when he comes in all that money.

CORT:

That’s a big deal. And you don’t want to dump that much money on an 18-year-old kid who just enters into adulthood that has serious complications with it. Kurt, it makes no sense to me. You’ve got two high profile celebrities in this case, very wealthy individuals. How is it that they didn’t have a plan? How is it that it got to this point that they didn’t have instructions and they didn’t have clarity? You know, it’s shocking to me.

KURT:

Yeah, I think in both cases, they may be a little bit different because James Gandolfini, in his mind, he made efforts, but he just never got around to putting it all together into a comprehensive plan. Prince, on the other hand, I just don’t believe that he believed that it was his time, that he was still very young and he had a lot of life to live. And both highly intelligent individuals with entertainment individuals, I guess, but also very intelligent. I mean, you can’t really question their intelligence level and that they were wise enough to know that something should have been done, but nothing ever was done. We have another case of Aretha Franklin, who was also very talented, as we all know, and very rich, had four children, one had special needs. And she had an attorney that continually was badgering on her, you’ve got to get this done. You’ve got to get this done. And she just could never really deal with her own demise. Never could get to that point and never made any estate plan for her children. There was no dispute about who they were, the heirs, and how it was going to be distributed. Really, the dispute was we’re going to pay an awful lot of taxes now and a lot of administrative fees that could have been taken care of if she did just listen to the attorney that was badgering her about, you’ve got to get this done. You’ve just got to get it done. He made several drafts. She just never signed off on them and never signed it. Shame.

CORT:

Interesting. Yeah, that’s dangerous because it’s so you know, what you’re taking in what these celebrities’ cases and even in our own cases, is it taking possessions. You’re taking savings, you’re taking investments that you’ve worked so hard for and that you would hope would go to those people that you know, you love and care for or a foundation or a church or whoever it is that you want to end up with your assets. And, your end by not planning its ending up in other people’s pockets, not the people that you want. How many ways does it get carved up at the end of the day, if you haven’t done planning?

KURT:

Well, that’s unfortunate. Yeah. Because you have taxes, which you’ve already brought up, that’s inevitable. And so there will be taxes and those go to the state and the federal. You’re probably going to have accountants on even some of the smallest estates because it requires an accounting. If you go through the probate process. And I, as an attorney, can’t just etch something out on a piece of paper. I got to go get a CPA or somebody to be able to do that, and I’ve got to pay them out of the estate. Generally, it’s going to take at least an attorney or maybe two, and there are going to be substantial costs that are associated with that. And you may have other individuals. Sometimes they require administrators to administrate. And so it can go several different ways. And then if you have multiple heirs, they may have multiple attorneys. And now we’re dividing it up. Multiple different attorneys are taking parts of the estate which are super unfortunate. And so you hate to see that happen. You get carved up like that. But that is the nature of that beast.

CORT:

And that could probably be a substantial amount of one’s wealth is going to go to, not your heirs, not those that you want it to if you haven’t done any planning.

KURT:

It’s incredible. And sometimes when I have been down to the probate commission and seeing the carving up some of these estates and seeing the amounts of attorney’s fees, just attorney’s fees, my people see what is approved for their administration in the estate. It’s shocking. It’s shocking to me that that could have been eliminated with sometimes some very simple estate planning could have eliminated that expense.

CORT:

And so for some people, you know, we’ve talking about a few hours of planning ahead of time and you avoid the pain, the misery. You don’t have the courts involved in your affairs. Things get to the people that you want them to go to, and there’s no fighting. And the other thing that I think about is children, and the people that you want to have the things that you own today, if something happens to you and you eventually die, by not planning on how you really leave those folks a mess. And what’s shocking is I know of several personal stories of people that are not in my immediate family, but people that are friends that have had to fight with other siblings over the estate. And most of the time, it’s somebody that, you know, really had their sights set on something or one person that became the trustee of a trust or the executor. And they’re not looking out for the benefit of the rest of the family. And this is just surprising to me. And in one case, it was a, you know, the family had a few million dollars of real estate investments. And one of the children that was involved really made it difficult for the other one. They’re fighting over these assets and they all have done well in their professional careers. This was Mom’s assets that was ending up with the kids and here they are. They’re fighting over it. And these two brothers don’t talk anymore. And these are brothers that did talk prior to their mother’s death. But don’t talk anymore, having gone through this process of basically distributing the assets. And that just seems really sad. But as a parent, this happens. And as a parent, which I am, I’m thinking about my own children. I don’t want to leave stuff to them to just sort out, you know, why wouldn’t you want to just make it simple and button it up and not leave a mess? And I think that’s really what happens in many cases. It’s like Prince left a mess. You know, Aretha Franklin left a mess. It’s like, why do that to your kids? Why do that to the people you love, whether it’s the church or whoever else you want to get your things. And so that seems really, really unfortunate. You know Kurt, how and what is the main legal document that most people use that benefits them and kind of organizing their affairs in the event and when they do die?

KURT:

Super critical points you raised there. And so true. A simple, revocable living trust will pretty much eliminate a lot of what you’ve brought up. It will eliminate some taxes to the federal government it can potentially eliminate more of those taxes if used properly or if the estate is valued at a certain amount. And it can very much eliminate a lot of the infighting that you’ve brought up. And that is the most tragic part of a lot of estate planning, is that, you do have siblings turning on siblings, and it’s terrible. And sometimes, you know, that particular item or that particular car, you know, if I want that to go to me, you know, I’m going to pay $7,000 for it but if you want it, it’s 14,000, you know, because it was really worth that, you know that, right? But I’m not going to pay that, but I really don’t want you to have it. And that creeps in on our family. A simple trust generally will outline what a lot of those desires are of the testator was we call them or you or the person who wants to plan your estate plan. That simple amount of listing the people and me knowing your wish, knowing what you wanted usually will put me at ease and usually will stop me from pursuing any more of that. I know where I raised a lot of the celebrity type examples because a lot of people know about them. But Robin Williams on one hand was very well planned out and he had a very comprehensive estate plan. And his ex-wife actually challenged his estate plan. And it was so comprehensive and it was so clean and it was so tight that her challenge did not last very long in the California courts. And she got shot down very quickly because his intentions were very clear and there was no way really to challenge them. And fortunately, you can eliminate a lot of that infighting by just being very specific, very clear, very precise in what you want done. And a lot of that can be established with a simple revocable living trust, believe it or not.

CORT:

So, a revocable living trust is this legal document, right?

KURT:

I call it a contract, a legal document contract with myself and my future heirs.

CORT:

And it’s something that an individual would come to you as an attorney to put together and organize and kind of help them through the process of, you know, identifying what goes where and who gets what and all of the things that, you know, you’d think about when, you know, I’ve got a house, I’ve got some investments, I’ve got vehicles, and who knows what other things that people have that they’ve accumulated over life that they want to get to the right person. So, what is the process that they go through?

KURT:

Well, generally, when someone would call our office and they’ll call in and we want to get some general information from them to do a draft and we try to get their specific distributions, what they want in that. Then we try to incorporate that into a first draft of a revocable living trust, and we’ll send that back to them for their approval or for any changes they want to make at that time. When we get everything settled out and we do a final copy and we send that to them. This is a contract it is a stack of paperwork. It is something that makes a lot of people uncomfortable. There are a lot of contingencies that are in the paperwork for things that may or may not happen to you, but it’s great to have all your bases covered to make sure that all those contingencies are clearly covered in the documentation. So, hopefully the revocable a living trust acts as a roadmap should something ever happen to you, should you become incapacitated or should you pass away. And the heirs or my representatives can go there and get the roadmap about what to do and just start reading and follow the map? Well, this doesn’t apply. This doesn’t apply or this applies, and this is what we want to do. And just to follow the roadmap as to what the desires are, and that’s generally pretty explicit in the paperwork there. And these are legally binding and enforceable documents that don’t need to go to court. All you need to do is sit down and read it. Everybody can sit down at the same table and have a read and then we’ll all know what to do.

CORT:

Okay. So and it keeps the attorneys and the accountants and the judges out. Hopefully.

KURT:

Hopefully. Sorry to my people. But yeah, so long as there really aren’t any challenges and so long as everybody reads the paperwork and as long as it is clear and not confusing, or contradictory, generally, everybody can follow the roadmap.

CORT:

Okay. And, and there’s more in a plan that you organize than just the part about the things that you own, getting to the people that you want. What else is involved in a package that you’d put together for a revocable living trust that is important while you’re living? That might be something that people might want to know about today.

KURT:

Along with any revocable living trust, there should be what they call the ancillary documents or the other documents that can affect a person during their lifetime. The trust is the cornerstone, and we build off of that. We love and really think that everyone should have a durable power of attorney for health care decisions. A durable power of attorney will enable my agent to make my medical decisions for me when I am unable to make those decisions. There’s another document called The Living Will Document. A lot of people think that’s a will, it isn’t. All that is, is me making medical directives that I am making directly to my doctor. So that’s where it’s misunderstood. I have a durable power of attorney who can be my agent and tell my doctor what medicine I need or, and, I can have a living will that when my agent is unsure about what to do, I might have a living that tells my doctor, I’m speaking to you. I’m unable to speak to you, but I’m telling you and the living will do this. And so I have that ability to talk directly to my doctor, despite the fact I may not be able to speak. For every contingency I didn’t cover in my living, well, I’ve got an agent there to make those decisions with my durable power of attorney for health care. We also recommend the durable power of attorney for the financial decision making. I intend to go home. I want to go home someday. So I want my agent to continue to pay my bills, pay my electricity, pay my water bill, pay my mortgage If you need to, invade my accounts and make sure that you keep things running in my household, don’t let my car get repossessed. Don’t let these things happen. I intend to come back to it someday. So, make those payments. The durable power of attorney for financial decisions will cover that. I will have agents that will be able to do that. We also should have a will. Everybody should have a will. Our will is a pour over will. Essentially in that will, anything on the date of my death that I haven’t already conveyed to my trust, I’m leaving that by way of my pour over will into my trust. It pours over into my trust, essentially all of my assets or anything that I didn’t cover. And that’s the idea of the pour over will. We think all those documents are very necessary to a more comprehensive estate plan that will cover you during your lifetime should you become incapacitated rather than just at the time of death. And so that’s all there. And the trusts can begin working immediately and you can start buying property in the trust and selling property out of the trust during your lifetime, if you want to. And so all those documents we think are very critical to any comprehensive estate plan.

CORT:

And they come, you know, sent to a client that you’d be working with simple instructions for how to complete and fill it out. Do they have support if they have a call or question, is there somebody to talk to?

KURT:

Yeah. Obviously, you can always email my office and get information. You can call my office and get information when you get your completed binder that you’ve already approved via email. It always has the sign here, notarize here. It tells everybody exactly what to do on every page and where to sign and where their notary should sign or where their witnesses should sign. We try to do a multi-state estate plan, something that you can take from state to state that is multi-jurisdictional so that it’s pretty comprehensive. And so that it covers every contingency and hopefully it covers every state where you might possibly move. We do recommend that you have your estate plan reviewed every few years, but we try to cover all the bases so that hopefully you are at peace and have peace of mind.

CORT:

And really get ahead of it, you know, and it isn’t just about, you know, your wishes, your stuff, getting to the people that you want or the institution, the church, the university, like some people like to give things away to. But it’s about not giving it to the judges, not giving it to the court system, not giving it to the accountants and sorry, the attorneys and it’s making sure it gets to the people that are most important to you. And then also, it’s about not leaving a mess. It’s about organizing things. You know, the worst thing you can do is just dump it on your family. Personally, having gone through my father’s passing ten years ago and seeing what was involved in that, you talk about the durable power of attorney. My mother had power of attorney over his life and had to make some tough decisions at the end of life. But he had a living well, which he had laid out what he wanted. He had a DNR, do not resuscitate. That was very important for him. He did not want to be stuck in a nursing home, you know, in whatever state he would have been he wanted to pass on. And that was very important to my Mom had the direction, she had the power of attorney, wasn’t some doctor or some hospital making the decision. It was her making the decision for his affairs. And boy was that important, you know, because that was a really stressful time. I remember sitting there with my mother and she had her stuff together. She had instructions, and it made it so much easier. And looking back on it, you know, what could have been a much more difficult time was, there was an ease to it because it was planned out. We knew my Dad’s wishes and they were in writing, you know, my mother knew and she had the power to make those decisions and it changed everything. And, you know, I would never want anyone, especially my children, to have to go through, you know, a lot of uncertainty or kids that, you know, one can’t let go. And they fight for you know, doing anything to keep somebody alive. And somebody else is, you know, maybe knew your wishes and said, no, you know, Mom or Dad really want to move on. So I think it’s just so important. And it’s a little bit of time. It’s a little bit of work. I know having gone through it myself. But it’s so important that everybody starts thinking about their legacy, what they want to leave, and having a revocable living trust, which everyone needs. You know, is there is there a size of estate like if somebody said, hey, Kurt, I only have a car and a house, you know, that’s it. I don’t have investments. I don’t have a lot of money around, you know, at what point do you tell somebody, no, you don’t need this?

KURT:

You know, I never have told anybody at any point that was over 18 that they didn’t. You know, sometimes I’ll ask them, do you have kids? Do you have this or do you have that? Or, do you want these medical directives? You’re young, you’re single, but you’re a little crazy. You know, you might want to be able to have some say over these types of things. Or, you own a house. The transfer of a house is a pain in the neck through the probate process. You just can’t have an agent sell the house when you pass away without a trust. And so they’re going to get hung up. The realtor is going to say, you got to get an order from the court. Now we’re back in the probate, and now they’re taking a piece of that equity of the home to pay the probate court, to pay the attorney, to pay the potential CPA, to do the accounting and the estate, when it’s just one small piece of real estate. So I can think of every contingency when anyone over 18, I think it is appropriate for them to have a revocable living trust. Since they are revocable, you can always amend them also. So down the road, any changes, I got married, I got some changes, I’m making changes all along the way. That’s what you’re supposed to do. That’s the way that these documents are drafted. You can amend them and you can make those changes as your life changes come along.

CORT:

So it’s really flexible.

KURT:

Very flexible.

CORT:

All right. So we’ve determined that every adult needs to have a revocable living trust for so many different reasons. And we could go on and on here, Kurt. And unfortunately, our program is coming to an end. And I want to say thank you for enlightening me and our audience today all about the need for a revocable living trust and the need to plan your legacy and plan your estate and organize your affairs for so many reasons, for both your health, your family, your kids. You know, all these important things in life. So thank you for being on our program today.

KURT:

Thank you very much. Thanks for having me.

CORT:

Absolutely. And for all of you today. Thank you for joining us for another edition of Wealthy and Wise. I’m your host, Cort Christie. And if you have any questions or are looking to do your own estate planning and want to know more about revocable living trusts and how to get a hold of Kurt Harris, just simply call NCH and we’ll be glad to work with you and get you right over to Kurt’s office. Thank you.

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DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.