The Plain English Legal Podcast

$50k/Month in Support Ordered… And They Weren’t Married!

A Canadian businessman recently had a $50,000 per month "cohabitation support" order upheld by an appeals court. The Internet, particularly among men, is in uproar because they weren't married, kept separate accounts, and even had their own residences. How can this be?!

After reviewing the facts of the case... I'm not sympathetic to this guy at all. He acted very much like this woman was his wife whom he was supporting. If he didn't mean to fall under the "Cohabitation Laws" in his jurisdiction, then he utterly failed to plan ahead and keep his affairs in order, and instead he relied on a few, superficial things (really "folk remedies") instead of getting good legal advice and following it. Check out the reasoning in this episode.

 

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The Importance of Trust Funding

The Importance of Trust Funding

Many of our estate planning clients have chosen to use a Revocable Living Trust as a way to avoid probate of their estate as much as possible when they pass on. Unfortunately, just having the documents set up is not enough to avoid probate. The process of “trust funding,” meaning retitling assets or changing beneficiaries to make sure they work in conjunction with the trust and overall plan, has to be an ongoing process. As assets change, the new assets have to also be titled properly and/or have the correct beneficiaries.

In order to make sure the trusts are and remain properly funded, our office takes several steps. In some cases, our clients are already working with experienced financial advisors trained in trust planning when we put together their legal documents, and those advisors are taking the lead in making sure those trusts are properly funded. In those cases, please contact your financial advisor about the status of your accounts. In those cases when there isn’t a financial advisor who has been specifically trained in trusts and therefore not taking the lead in trust funding (which is most of our cases), our office takes several steps to make sure that our clients know and understand proper trust funding on an ongoing basis so they can properly fund their own trust:

• Trust Funding Recommendations: As a standard part of our estate planning process for trust clients, our office requests a fully filled out Confidential Financial Analysis Form. (Sometimes when our clients are working with a financial advisor, they wish for their advisor to send us the relevant information, but sometimes the financial list only covers the assets that the financial advisor is controlling and investing; we need to have ALL of the assets listed.) We then conduct a specific, separate meeting with the clients to review that Analysis and make sure that there are no missing accounts, real estate, or other assets with a title or named beneficiary. After that meeting, our office prepares and mails a complete list of recommendations based on that Analysis and additional information provided in the meeting. This is the “homework” list that our clients use to complete the trust funding process on their own. The only assets that really REQUIRE an attorney to assist with are real estate deeds. Our office can handle deeds for property in North Carolina, but property outside of North Carolina requires an attorney in that particular state to create the deed.

 

• Trust Funding Services: Our office offers trust funding services, but it is not a standard part of our fees for setting up the trust and other estate planning documents. The reason why it is not a standard part of our work is because it takes considerably longer for our office to make changes to a client’s accounts because banks and other financial institutions do not want to work with us. Our clients are their clients, and they would prefer to deal with them directly. This means that the authorization process and actual paperwork takes about 5 to 6 times longer for us to do the paperwork than it would for our clients to do it themselves by working directly with their investment institutions and advisors. Because of this considerable time increase, our office currently offers these initial trust funding services at a price that nearly doubles the initial estate planning legal fees. Since our office supplies the trust funding recommendations, and we can always be engaged later to assist if needed, the vast majority of our clients decline to hire us for trust funding services. Because of this, our engagement agreements specifically state that our office is not responsible for funding the trust unless specifically engaged to do so, and we review that section of the agreement when our clients are first signing up for any kind of trust plan.

 

• Annual Meetings: It is highly recommended that our clients meet with us annually, or more often if needed. During this Annual Meeting, the majority of the time is usually spent reviewing the accounts and assets from the last Annual Meeting, or if it is the first meeting since the Funding Meeting, then the initial set of recommendations. We then review the assets, note any deletions and additions, and update the list of recommendations. In addition in this meeting, we review any potential changes in financial agents, health care agents, beneficiaries, or guardians for children as well as describing any relevant tax or estate law changes. Our office regularly calls our trust clients to schedule this annual meeting. Unfortunately, many of our clients decline to have this meeting until they actually want to make some large changes to their legal documents. Because of this, there may be 7 years or more between meetings with these clients, and they may have completely changed their assets during that time. If these clients don’t come in before there is a death or incapacity and their assets have completely changed, they may have very few assets that are set up to work properly with their trust. That means more than likely those assets will have to go through probate. This often comes as a shock to the families of our trust clients when we notify them that extensive probate will be needed when they were under the impression that “the trust was supposed to avoid probate.” Because of the importance of this meeting, we often offer a greatly discounted rate for our clients to hold this annual meeting.

 

• Peace of Mind Plan: Another option that our clients can take advantage of is enrolling in our Peace of Mind Plan. For an additional annual amount, our clients can receive

 

• A once annual, complete update of all documents, as needed or desired;
• Unlimited scheduled phone consultations regarding Estate Planning, Probate, or Care Assistance Planning;
• Annual asset and document review meeting;
• Updated, written trust funding recommendations;
• Any North Carolina quitclaim deeds related to your Trust drafted for free (with the applicable Register of Deeds filing fee per deed, currently $26, to be paid by client); and,
• One-time Simple Will documents for children and grandchildren ages 18-25 (who are North Carolina residents)

This program is probably the best way to ensure that the investment our clients have already made in a revocable trust plan will continue to be effective over the years. By having their annual meeting, changes and updates, and current trust funding recommendations included in their Peace of Mind Plan, it is much more likely that their plan will be current. (For more information on the Peace of Mind Plan, please contact our Client Services Director Felicia Watlington at 919-844-7993).

Unfortunately, despite all of our efforts, some of our clients do not follow up and reject our annual offers to meet. After a passing this can lead to some extremely unhappy trustees and beneficiaries when more than a minimal amount of assets has to go through probate. (Vehicles, some refund checks, and a few odds and ends are common, but if there is a properly funded trust then the large accounts, real estate, and other “big” assets are avoiding the probate process.) Our office wants to make sure that our clients’ plans remain as effective as possible over the years after the initial plan was set up, but we can only do so much. We can’t force our clients to meet with us.

For more information on the importance of trust funding, please take advantage of a free download if the chapter on trust funding from my book Estate Planning Basics available by clicking here. (Since 2012, Estate Planning Basics, a previous version of the book, or another book of Mr. Marsocci’s has included the same or similar chapter and is required reading before their initial Estate Strategy Session with our office.)

To stress the importance of ongoing work to make sure that trusts are fully funded, our office sends this type of article to our clients through our e-newsletter every six months. If any of our clients wish to have an Annual Meeting, then we do encourage them to contact our office to schedule one so we can review these items in detail. If you have questions about whether or not an account is set up to work in conjunction with your revocable living trust, then we recommend your contact the financial professional working with that account. If you do not have a regular financial advisor, then please let us know and we would be happy to provide a recommendation. You can reach our office at 919-844-7993 with any questions you may have.

Leveraged Generational Planning

Leveraged Generational Planning

One of the biggest missed opportunities is families doing estate, financial, and retirement planning together and leveraging their strengths while shoring up weaknesses. It used to be commonplace that parents would work with their children in planning to pass on their wealth mainly because it was usually the family farm or family business that was the main asset being transferred. Sometime after the Great Depression, which also came with more industrialization, families stopped planning together and individuals and couples were now on their own.

This podcast runs through three things that can exponentially help a family build wealth together while avoiding some downsides, particularly in the form of taxes and risk. The three items I discuss are 1) gifts from parents to children, 2) the "tax spread" and ways to minimize income taxes with retirement accounts within the extended family, and 3) one of the best growth, non-risk assets that is extremely tax-leveraged.

There is a lot of potential leverage when families take the time to plan together in a coordinated fashion. These three techniques are only the beginning of the discussion, but many of our clients are having this very talk with us and the professionals we work with to save massive amounts in taxes and risk. To learn more about this, please contact our Asset Coordinator Mike Brooks through The Care Assistance Center at 919-518-8237 and ask to speak to him and Jeff about leveraged generational planning.

For more information on the SECURE Act, please check out my blog at: https://livingtrustlawfirm.com/post-secure-act-generational-planning/).

For more information and access to a free webinar, please go to www.linktr.ee/plainenglishattorney and click on the button “Securing Against the SECURE Act and the Five Supervillains of Investing Webinar Materials.”

The Big Probate Lie

There is a pervasive lie about probate that many financial institutions tell their clients, and it is causing the beneficiaries and family members a lot of grief. And that lie is your stock account/bank account/mutual fund avoids probate because it is "beneficiary driven."

What most people consider the hassles of probate are NOT avoided by naming beneficiaries on these types of account, because 1) the account still needs to be listed on probate inventories, 2) often paperwork is still needed by the court from the financial institution to prove the account isn't part of probate, and 3) the same financial institutions that insist the account with their company avoids probate will often insist on paperwork from the probate court just to get the account transferred or paid out. 

What is making this lie worse is that our clients who use revocable living trusts to avoid probate are being told by their financial advisors and bankers "don't transfer the account into the trust like your attorney said; just change the beneficiaries on the account." This is actually the Unauthorized Practice of Law because this non-attorney has gone beyond explaining how the beneficiary designation feature on the account works and went into telling their client how to do their estate planning, in direct contravention to the attorney's legal advice. This could get the professional into a lot of trouble and cause big problems for their client's family and loved ones down the road.

 

To learn more about revocable living trusts and avoiding probate, please check out my free e-book Estate Planning Basics available at www.RaleighTrusts.com, and find other information, please check out the Linktree account at linktr.ee/plainenglishattorney 

The Natural Born Citizen Requirement

With Democratic presidential candidate and former U.S. Vice President Joe Biden naming U.S. Senator Kamala Harris (D-CA) as his running mate, a new round of "birtherism" is rearing its ugly head. The theory being floated by only a few people at this point is that she is ineligible to be Vice President because she is not a "natural born citizen." This is completely untrue, but it's worth examining the U.S. Supreme Court case of U.S. v . Wong Kim Ark.

The one inescapable conclusion is there are very few instances of someone being born on U.S. soil who are not allowed to claim citizenship as envisioned and codified in the U.S. Constitution and its Fourteenth Amendment. In addition, there is also natural born citizenship conferred on the children of U.S. Citizens born outside the country. In this podcast, I'll review the case findings as well as apply it to the cases of Kamala Harris, Barack Obama, Ted Cruz, and John McCain. 

The Elusive Trust Certification Form

I often see clients buying, selling, or refinancing a home within their revocable living trust, and some real estate professional ends up asking them for a Trust Certification Form. "Oh, you can just get that from your attorney." Unfortunately, just asking your estate planning attorney for a Trust Certification Form is like going to a hardware store and asking someone who works there to get you a box of screws. How long? What metal does it need to be made out of? Flat head or round head? Regular or Phillips head screws? How many to a box?

The real estate process is confusing enough, and being asked to generically get a Trust Certification Form can be very confusing and frustrating. This podcast reviews what trust certification forms are, the few items that are frequently included in them, and some of the stranger requests we've had to include in the past. For the free trust certification form we send, please go to our Linktree account at https://linktr.ee/plainenglishattorney in the Forms section. We also have included a copy of the standard letter we send to real estate professionals who have not been specific in their requests for what should be included in the Trust Certification Form their company wants. 

Dealing with Real Estate in Revocable Living Trusts

As part of executing an estate strategy that helps avoid probate, real estate should be owned by your revocable living trust. But what difficulties might come up? In this episode, I'll explore why real estate should be in a revocable living trust and then what issues may come up around 1) buying real estate in a trust, 2) selling real estate in a trust, and 3) refinancing a mortgage on property in a trust.

For more information on Revocable Living Trusts, please read Estate Planning Basics: A Simple Guide to Estate Planning Concepts, available on Amazon.com.

Free Educational Programs and Other Information:

https://linktr.ee/plainenglishattorney

8406 Six Forks Road, Suite 102
Raleigh, NC 27615
(919) 844-7993