Wealthy & Wise: Who Gets Your Stuff When You’re Gone?

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About the Video

Your legacy is the greatest gift you can give to your family and loved ones. Watch Cort Christie, founder of NCH, and Heather Peters, our Legal Manager at NCH discuss how you can develop a plan that puts all your assets in a trust so you can have control and peace of mind knowing your most valuable assets will go to your intended beneficiaries.

Prefer to read? A full transcript is provided below.

CORT:

Hello and welcome to another edition of Wealthy and Wise. I’m your host, Cort Christie. And this program is sponsored by NCH, an organization that’s here to support your startup and investment needs for any type of new business or any type of real estate investing. We’re here to help you. Today, we’re going to be talking about revocable living trusts, but more importantly, not why you need a revocable living trust, but we’re going to get into a lot of the questions that we have day in and day out at NCH with people that we’re supporting, setting up their estate plan for themselves. And this is very, very important. Everyone who’s listening today needs to understand the benefits of a revocable living trust and what some of the ins and outs are and what’s better than just learning from our clients that are asking us these questions every day? And what’s better than having an expert to join us? We have Heather Peters. Heather Peters is in charge of our legal department. She is our manager there. And she’s dealing with many clients day in and day out and all their needs for a revocable living trust. So, welcome to the program, Heather. Thank you for joining us.

HEATHER:

Thank you for having me.

CORT:

Absolutely. So, Heather, you’re dealing with a lot of people every month. How many folks are you talking to on a monthly basis that we are helping to set up revocable living trusts for?

HEATHER:

Hundreds, on a monthly basis.

CORT:

Awesome. So, we have a lot of people coming through the door.

HEATHER:

We sure do.

CORT:

And you’re at the tip of the spear. You’re talking to a lot of these folks and they have lots of questions about understanding how to do things right. So, I’m going to open it up to you kind of to open. Tell us about like what’s kind of the most common question that you get from people that you’re on the phone with?

HEATHER:

You know, and I think that this is, this is kind of a neat question. In my opinion, is a lot of people think that if they don’t have a lot of assets, they don’t need a revocable living trust. Maybe people are just starting out investing in real estate properties or just purchased their new home. Their new home is the one thing that you want to make sure that you get into that revocable living trust. Nobody deserves to take a piece of your estate. You want to be able to direct all of that yourself.

CORT:

Mm-hmm. Absolutely. I think it’s so interesting that, you know, people think, well, I just have a will. Like, why would I need a revocable living trust? Shouldn’t my will make sure that my house now gets to my kids or whoever is going to get it? What do you tell them?

HEATHER:

If only it was that easy. Right? A will does not avoid probate. A will is just simply a directive for your beneficiaries, for your executor. It still has to be probated. A will is not a holding instrument. It can’t house a trust, it can’t house your bank accounts. It just, it can’t, it just provides your wishes. And the hope is that those wishes get into the hands of the court system and that they’re overseen by the courts the way that you wish them to be. But that’s not always the case. Anyone and everyone has the ability to put a claim against your estate as soon as that becomes public knowledge. A revocable living trust, on the other hand, does. It avoids all of that. You put those assets into the trust and everything is passed to your beneficiaries as you wish it to be.

CORT:

As you wish. Which I think is so important. You know, a will is kind of like a, I don’t know, sort of a placeholder. I kind of look at it like everybody should have a will. But really, a will is a part of a full package that comes with having a trust put into place. And so, you know, do you want the state involved? Do you want attorneys involved? Do you want a judge involved in your affairs? Or if your preference is to make sure that your kids in most people’s cases where it ends up, that the assets that you do have today, starting with your house and other things that you might own, get to your kids without having intermediaries like judges and attorneys who are going to take a cut of it. And not only are they going to take a cut of it because they all get paid, but they’re also going to maybe decide differently than the way that you wanted those assets to be handled. So, you know, the wills are nice and they’re important, but that’s just one piece of properly setting up your kids. Now, I’ve gone through this process, and unfortunately, I’ve lost both of my parents. I’ve gone through this process twice. And, you know, it’s really interesting when you have a parent that has passed on, the difference between, you know, someone that hasn’t organized things and prepared versus one that has and the burden that you leave your children with. There were a few loose ends in my mother’s estate and that loose end, or a couple of those loose ends, created a bit of conflict between me and my siblings. And it would have been something very easy to have my mother addressed ahead of time. But she did what so many parents do and say, oh, they’re going to all work it out. They’re all, it’s going to happen. And I’m telling every one of our listeners here today that don’t leave loose ends for your kids to deal with even when you think they’re adults and even when you think they’re intelligent because they all look at things very differently. And so it’s best to leave stuff very organized neat and clarified prior to ever, you know, passing on. And, you know, nobody knows when they’re going to die, but having things organized and prepared ahead of time and dealing with the little pieces of things where you think your kids are just going to be fine, they can work it all out. Better to deal with that ahead of time, because you save a lot of people grief and misery. And I look back at it and think, my mom could have spent just a little more time. She had all the support of us just to do a few extra little steps here. And she would have saved us all a little pain from, you know, a few issues that we had along the way. And I won’t go into all the details because it’s very personal, but I think you’re dealing with the front end of it are the questions that people have about, you know, how do they, how do the assets get to the kids or what percentage should I get for the kids? Or, a big one I know that comes up is, what if my kids are underage and something happens to me, you know, what do you do in that case and how do you answer their questions?

HEATHER:

I think that might be one of my favorite questions that clients ask. I have four children and you know, some of our children are more financially responsible than others. And my husband and I were in a position that we decided it was best to break up their distributions several times throughout the course of their lifetime. And I’ll tell you what, I think as parents were in such great positions because we can see our kids are financially responsible or maybe they’re not going to be ready, maybe by the time they’re 25 or 30, God forbid, something were to happen to us. So, as parents, we see that and we’re in the driver’s seat of this document. So, it makes it really nice that we can put those provisions around their distributions. Maybe break them up until they’re 35 or 40, or whatever the parent thinks is going to be the best thing for them to do.

CORT:

Yeah, I think that’s important. And like you said, you know, you have kids with different focuses or skill sets or, you know, some spend some save. And similarly, I have two of my own and two stepchildren and I went through recently a revamp of our, our/my estate, and this would be my community assets with my wife and I and I. And, it was a very interesting process. But we got into those same things about like what’s the right age to release things? And because we have the savers and the spenders we thought, well you can’t go and say, well, the savers, we can let them have the stuff earlier. The spenders are going to put the brakes on and make them wait later. So, it was basically at age 30. And like you were saying, we’re going to release a percentage. I think it was like 30% of the estate. And then it was at age 40, it was the rest of the estate. So, it was a big gap. But we recognized, you know, for myself at those ages, thinking back, it’s like by the time you’re 40, you kind of have your stuff figured out. And at that point that’s a good time to kind of try to help supplement their kids or come into a point where they’re going to be probably off to college, if not at that point or a bit later, but at least you’ve got this nest egg, then that can come to you. So, you know, those are such important questions because people don’t think about it. And I’ve had clients in the past that have talked to me and they’re like, when my kids are 18, you know, if something happens to me, I just want it all to go to them. It’s like Oh my God, that’s the worst mistake ever. Give an 18-year-old a bunch of cash? Guess what? It’s going to disappear overnight. Some of them.

HEATHER:

I was going to say, I don’t know how you were at 18, but I know I was not the most financially responsible person at 18. In my forties. I feel like I’m doing OK.

CORT:

Right, like so many 18, like so many 18-year-olds. How about other questions that come along? Like you’re on the phone and there’s just, you know, they’re going through the questionnaire that you send out and there’s just always all these little pieces of questions. Like, I don’t know how to handle that, or you know, I don’t know if it’s about trustees or who takes over, you know, what are some of the other most common questions?

HEATHER:

I like to have our clients work in steps, right? And a lot of people are very worried about where those pieces are going to go. How do I get those pieces into the trust? Well, you can’t get them anywhere if you don’t have the trust, right? So, the most important thing for them to do is to get that questionnaire and get that trust drafted. And then we can help them with that process. Funding the trust, I think, is sometimes very intimidating to the clients because it seems like there’s so many moving parts, but it’s a very simple process. Anything that has a deed, any of those personal assets should be going back into your trust.

CORT:

Absolutely. And when you think about it, you know, like we said earlier, there’s a percentage of that, that does get taken by the court system if you don’t have it in the trust. So, you want to make sure that whether it’s a brokerage account or a bank account, your top, your favorite car, maybe it’s a vacation property that you have that you forgot about, all those things you want to get into the trust so that they can get to the people that you want them to. So, one of the things that comes into building your trust and doing it properly when you have kids, it’s the most common scenario where they become the beneficiaries, which means they end up with the proceeds based on the direction that you put into the trust. And when we just got done talking about that, but then you bring in these this third party called trustees. Right? And these trustees are the ones that oversee the trust after you die. What are the most common questions about select being a trustee that you get?

HEATHER:

Should it be an attorney? And it does not. It really, in my opinion, it shouldn’t be an attorney. You’re in a position right now where you can name a successor trustee. So, a family friend, a brother, a sister, cousin, someone that you know would be up for that job. And that does come with managing not only the assets for your beneficiary but also managing those beneficiaries as well and making sure that they understand these are the distributions that you’re being left. And this is how we’re going to be getting them to you. That person does have to have some strength. I’m sure it’s not always going to be an easy job, but they do have the ability to do it. And with the grantors of the trust putting assets into the trust, they make it a very seamless and easy process for that successor trustee to just distribute those assets to the children.

CORT:

Awesome. You know, I think, I have two sisters, right? And so there was a process that I went through of making a decision for my own estate to decide who is going to be my primary trustee. Right? And if something happens to her, then who’s the backup trustee? But I didn’t make them co-trustees because that gets more complicated to put two people in a role of having to decide how we’re going to distribute assets and you know, my kids haven’t hit those ages yet. Or, I said there’s going to be, you know, all of it’s going to get distributed ultimately. So, they have to make the call on how that gets handled. And so, you know, it was interesting going through the selection process and trying to decide, OK, which sister first of all, who’s going to be accessible? Who’s going to kind of follow my wishes the best, who’s got you know, who’s got time on their hands? That’s the other thing because there can be, you know, time involved in sending checks out to children or making sure your stuff moves on or gets sold. Sometimes, you know, you got to sell the house. Well, your kids might be the one saying, oh, no, no, I want the house. No, the trustee gets to decide what happens to the house. And oftentimes it’s best to sell it. Let the proceeds then get distributed based on the time frame when they should to the children in this case. And so, you know, there’s a lot of decisions about who’s going to serve those important roles. You know, like you said, a friend, you know, is it an attorney? Because you got to have to pay an attorney, a friend, you don’t necessarily have to pay, even though I’ve heard of people putting provisions in to allow some kind of fees for the trustee. So, these are really, really big decisions and how you go about it. The other thing that I think so important is, you know, you set the trust up. And as we work with people to go through that process, there’s some work to do after the trust is set up. And I’m guilty of this myself, where I have about half of… I have the most valuable portion of my estate in my revocable living trust. But I have a bunch of what I call loose ends that I haven’t actually titled properly or put them into the trust. How do you go about explaining that process of what to do? Now your trust has arrived, here you are Mr. Client, Mrs. Client. Now, what?

HEATHER:

That schedule of assets that we provide. So, it’s a living document. It’s something that you have the ability to keep up with throughout the course of your lifetime. You figure you’re going to continue to add and delete as you continue to grow your business or your estate. Right? And I like to use that as a checklist. Make sure that you’re listing all of those assets, even look over annually and put those things in there. And if you know that you haven’t retitled or redeeded them, that’s going to be a really great point of reference for you, is a checklist. The more work that you do on that schedule of assets, I think ultimately at the end, everything tends to be a lot easier for that successor trustee.

CORT:

That makes sense. And I think looking at, you know, which spouse should be in charge of the follow-up process of getting things moved into the trust. And really, it’s just like, go to the bank and you let the bank know here’s your trust and you bring a document for the bank and you now, your bank account is no longer Mr. and Mrs. Smith. It’s, you know, the trust for Mr. and Mrs. Smith. And that’s now your new bank and checking account. And it’s on there, you know, and the same thing with your properties and the same thing with a brokerage account and other assets that you have. But, you know, make sure that it’s the one spouse that actually doesn’t procrastinate, that actually does follow-through that’s responsible for that.

HEATHER:

You know, we all have our strengths in our marriage.

CORT:

Absolutely. It’s super important.

HEATHER:

That’s right. So yeah, it does. And it is, there is some oversight. There are some additional steps, but it is so worth it at the end because then you, as the parents or the people that are leaving your estate behind, you know that you’ve done everything that you possibly can to make sure that all those loose ends are tied up.

CORT:

Yeah, absolutely.

HEATHER:

And make it as easy for the people that you love and you’ve worked so hard to build this legacy, build this estate, so that you can pass it on to the people that you love, and you know are going to cherish it and nurture it as much as you have.

CORT:

As I said, I’ve gone through this with my parents and I look at it, you know, as the ultimate final gift. You know, not only, yes, your things get to who you want them to, but they get to them in a very organized manner. So, you can either leave them with a mess your kids, or you can leave them with everything with a giant bow on it, so they don’t have to do any real work with it. And that is the final blessing or final gift that any parent can leave. And you really don’t want to leave your kids with a mess. They’re going to remember that. They’re going to remember that final gift where you had it organized and laid out and prepared ahead of time. And for everyone watching today, you know, don’t leave your kids with a mess. Don’t leave your estate for a mess if you don’t have children to a sibling or to a parent that may be still living, organize it, prepare it. It doesn’t take a lot of work and actually, once you do it now, today, you know, it can last you for decades. You know, and of course, you want to make sure that if you sold an asset or, you know, added something new, that you make sure that gets into your trust also and gets properly registered or documented. But don’t leave a mess. I think that’s kind of my parting words. Do you have parting words for our audience here today?

HEATHER:

I think that’s the greatest gift that you can leave your past, your family.

CORT:

Absolutely, it’s huge. Well, thank you so much, Heather, for talking about some of the things that come up with our clients at NCH.

HEATHER:

Absolutely. Thank you so much for having me.

CORT:

Absolutely. And thank you for tuning in today to another edition of Wealthy and Wise. Hopefully, you’ve got some more insight into what actually happens with your revocable living trust and some of the questions that you’re going to have along the way once you complete a questionnaire. Get the information and talk to somebody as amazing as Heather on what you need to do, and the attorney that she works with day in and day out. But I hope you gained some insights today. So, once again, thanks for tuning in. I’m Cort Christie, your host. Have a great day!

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