Podcast 105: Legacy Matters: Making Wills and Trusts Work for You

Estate planning can be a complex topic, but it’s crucial for anyone looking to protect their financial legacy. In this episode, Gregory Ricks and Wes Blanchard simplify the process of wills, trusts, and probate, making it easier to understand and act upon for your financial future.

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Gregory Ricks  00:00

I want to talk about a will, that wishes or instructions. And the second part, then we’re going to go to is trusts. And how are they utilized? And I read a good explanation of a will is a set of instructions, kind of your wishes. In the case of your death, would that be accurate? Yeah. Okay. And you’re doing that, then it’s going to move through a probate succession process. So if we’re doing that, how should we properly set that up? What kind of things need to be in it? And then what, and then we’ll talk about that probate or succession process what that looks like.

Wes Blanchard  00:55

Yeah. So when you’re looking at a will, as you said, it’s a basic set of instructions about what you want your assets to do at the time you pass away who you want to get them. When you want that person or people to get those items, you can place a lot of instructions on those particular assets, right, and a trust is going to give you a few more tools to use. But from a basic principle, yes, that’s what a will is going to do, it’s going to set out the instructions for your executor to follow, and for the judge to stamp to move those assets into new ownership at a very basic level. So, you know, getting getting those provisions put together is not usually something that takes very long we, we’ve talked about this before, but we prefer to paint with a broad brush when possible, so we’re leaving everything to our spouse, right, and then next, we’re leaving everything to our three kids evenly. Right? Those are the kinds of steps we like to take, if possible. Now, when we’re starting to plan for grandchildren, or if you have a special needs child that needs to be considered, when when leaving inheritance, you know, you have to put some trust work in there for the grandkids, another trust work in there for the special needs considerations. Maybe you have a child who’s still kind of working his or her way through through life a little bit, right, they’re struggling a little bit maybe with money, maybe with other issues, and you kind of want to attach some incentives to to that inheritance. So you’re using trusts all that’s done kind of within your will. All right. That that is kind of a high level overview of what you’re doing to pass on your assets. I think one of the most important provisions in a will that gets overlooked and I see this on a lot of the wills that I’ve reviewed, not so recently, are not ones that have been drafted very recently, but ones that are drafted, you know, maybe in the early 2000s, or 90s, and things like that is independent administration for your executor. Okay. As someone who does a lot of succession work for clients.

Gregory Ricks  03:06

interrupt you there explain independent administration?

Wes Blanchard  03:11

Yeah. So when we’re doing succession work for our clients, we really want that independent administration to be there, because there’s a big difference between independent administration and just court supervised administration, court, supervised administration means you have to go in, and you have to ask the court’s permission to take actions on behalf of the estate. So if you want to pay debts, you want to sell assets, you want to move assets to management, things like that. You need to go in there and ask the court for permission to do that. Not only is that going to cost you money to do every time you want to put together a filing, but it costs you time. And sometimes that is more valuable than the actual money that you’re putting into the to the docket.

Gregory Ricks  03:54

Is that different from your executor of your estate.

Wes Blanchard  03:58

So it’s it’s a, it’s a function of your executor executor can administer your estate independently or through court supervision. And so your you want to opt in, you want to your executor opt into the independent administration, as opposed to court super.

Gregory Ricks  04:15

So how do they do that has

Wes Blanchard  04:16

to be put directly into your will?

Gregory Ricks  04:19

Okay, that’s that’s the part. You know, we’ve not talked about that particular part, but it’s got to be in your will. So when somebody’s doing the holographic graphic, will they that’s probably a big mess right there. When you’re trying to hand write your own deal. That’s probably going to end up in court anyhow.

Wes Blanchard  04:39

Yeah, it is. And look, you can you can backdoor your way into it. Right. But you have to get all of the heirs to sign off on appointing the executor as an independent administrator. And when you bring that topic to the air and you say, look, here’s what we want to do, we don’t want to have to go in and ask the court to administer the estate. It kind of raises a little bit Have an alert to that error, wait, hold on, this person wants to kind of do it as he or she sees fit. And then just kind of keep me in the loop. Sometimes they’re going to be okay with that other times, they’re going to be a little cautious and they may decline, right. But if you place it into your will, there’s really not much that the IRS can do about it, your executor is going to have that ability, because you gave it to them.

Gregory Ricks  05:22

And you should trust them if you’re naming ms executive. And, and once again, allow them to be independent administrator, I would expect that would shorten the succession or probate process by having that because otherwise, you’re having to function to the court to get approval on everything. So

Wes Blanchard  05:43

I’ll give you the the biggest issue that we see with independent administration and court supervision is the state house, okay, if you have an independent administrator, that person can go hire a real estate agent, place it on the market, sell it, just as if it was their own house, quick, easy, straight to the point. With court supervised, you have to go in, you have to file a motion for authority to sell the house, once you have authority to sell the house, you can then list it, you can get a contract, then you have to place to publications for public notice and the advocate here, they have to run, okay, that comes back, then you can go to the court and say, Hey, I’ve done all these four or five different things that I’m supposed to do, can you sign off on an order allowing me to now sell this house? I mean, that I felt like I just talked for 30 seconds, then I mean, how long have you think that actually takes? It takes forever. And so we do this a little too often. And you know, that really is a big opt in, especially with real estate dealing with where it is now. You know, it’s tough to get a contract on a house. So if you’re lucky enough to get one, and then you have to tell the buyer, hey, this could be a 60 day process, just for us to jump through the hoops.

Gregory Ricks  06:57

That is a great point. He might. So I’m glad I interrupted you there to get into that detail. So please continue. Yeah,

Wes Blanchard  07:05

so those are just the kind of things that when you’re putting your document together, you have to have that that thought, right, that’s when an attorney is going to give you ideally right now you can come in there and you know, pull something off of online and hope that you get all those things, but you know, you’re gonna get a more tailored plan when you’re sitting down with a lawyer.

Gregory Ricks  07:24

It was just interesting on tape where we don’t think about it in a way that yeah, we’ve we think about it wrong, or we think we have plenty of time. And as you’re going through life, you know, I can tell you next thing, you know, 10 years passes by like, gosh, and I’ll help you realize it as your children grow up fast. It seems like Yeah, time passes when when you’re busy. And then it can come to an abrupt end. And then there’s problems. So I liked the admin and independent administrator. So we’ve got a name executives, one of the points always like to remind people of and I know you do this as well, you need to make sure the executor is okay, with discuss with them those responsibilities. That’s like the executor and we can get we’ll get into trust work here in a moment. But they need to be okay. With those responsibilities. It’s, it’s not a simple deal is I don’t think it is

Wes Blanchard  08:36

no, it typically isn’t. And we do our best to, you know, shoulder as much of the burden as we can, right. But at the end of the day, it’s that person who’s actually empowered by the court to go take these actions on behalf of the states. So, you know, we can write letters for you, we can help you, you know, I guess turn over the right stone. But at the end of the day, they want that signature from that person, they want to communicate with that executor. And it’s important for that person to understand that they have been tasked with that role. We typically also prefer to have an heir named as one of the executives, because it gives them that incentive to keep the ball rolling to get the job done. If you’re going to name someone who’s not going to otherwise inherit, that’s totally fine, but I think you ought to understand the law allows for them to be compensated and you need to be okay with them being compensated, because this is not something that is taken lightly. It is it is a part time job for a little while. And some estates are a little easier than others. But some stay open for quite some time and that person can be tasked with communicating with the lawyer a lot more often than they ever planned to.

Gregory Ricks  09:51

Really good point from that and I I agree with your own family being involved. They’ve got a vested interest to move that throughout. Out of that, it’s somebody that’s outside that, say hired to do that, or will be compensated for doing it, it’s on there, it’s part of their to do list stack of things to do. So. And when you were explaining that I see your, when this is properly structured, having a will having a trust, probably should, a lot of the time be in there, you become more of the guide and helping through the process, helping the executor with with the legal understanding there, but they, they’re the ones decision and acting upon it, and giving you then instructions subject to your guidance.

Wes Blanchard  10:44

Correct. Correct. And that’s something that, you know, again, is not to be taken lightly, it really does become a part time job, it gets more difficult when that executor doesn’t have the independent administrator authority. And that’s, that’s, like I said, that’s,

Gregory Ricks  11:00

you have to do filing, that’s it. So it’s a lot easier with that. So that’s something to remember. I also like how you paint with broad strokes, there. I see we’re more detail gets involved, so you want this for my kids, but I want to take care of my grandkids, well, the parents are going to supervise what you’re leaving to the grandkids. So sometimes is that kind of redundant. Unless you’re not trusting that parent to take care of the kids, I’m not sure why we start layering money like that,

Wes Blanchard  11:42

we see that often for college, and things of that nature. So they will say look, this money is going to grow it really, you know, can’t be used except for emergency purposes. And it’s set to grow for you know, 18 years or whatever it may be until they get out of college and sometimes it’s to help pay for college and other times, it’s to you know, we’ve had clients say look, I’m a little I’m a little cautious about paying for their college because then they really don’t have a whole lot of you know, responsibility. Right at that point they may not still understand that the real world is out there after this. So we actually want to release the money at age 25 provided they’ve completed college so we will pay off their student loans with this money and that you know, it kind of dangles a carrot not everybody chooses that particular path. But those are the kinds of

Gregory Ricks  12:36

I might you had I was I might get into the weeds here on this a little bit with with this thought, but I don’t know that I like that at the 25 pay off so okay, then pay off the debt How about let’s not do the debt less if you go to college, add a few lines in there if you go to college will disperse this much a year and then leave a final disbursement when they’re done to clean up things. I just I like structure because you know what, I just don’t borrow money. It’s it’s, you’re headed the wrong direction there then it gets excessive, and, and abuse. And next thing you know, you’re paying for a house for 30 years and you don’t have the house

Wes Blanchard  13:23

right? No, I agree. And I think just to be clear, the vast majority of the clients are paying for it as is incurred. Okay. Other times, there’s more of a, they need to dangle the carrot. And so they say look, this is going to be what we do because we otherwise don’t, we don’t really know that they’re going to be you know, trustworthy if I’m if I’m just letting them live off the land, so to speak. So

Gregory Ricks  13:43

but that instruction says your wishes such as that what you can get into the weeds if you won’t, but it’s the larger items, the bank accounts, the house, the car, maybe the gold coins in a safety deposit box, things that you feel are important that you want to go to somebody’s expensive jewelry, I guess could get detailed, but a lot of that kind of gets handled and sorted out. But if you need more detail if you think there’s going to be controversy or hurt feelings, but also I go back to communication, that you know, Susie’s needed a little bit more help but I’m making up for that here. And the thing is families don’t always know what’s going on inside of that because of lack of communication. So okay, we’ve got a set of instructions here. But now what about let’s can we bypass probate? Can we like, I’m sure you can’t completely eliminate it, but you might just tell me yeah, you can. So can we do that and how

Wes Blanchard  14:49

often we can and just to be clear to kind of set the stage when you have a will. The way that that becomes effective is through the succession slash probate pro assets so you have a will that necessitates you going through succession. Okay. The other option that you have is a trust a revocable trust typically, and it does all the same things we just discussed, except it has one major perk, and that is it allows you to sidestep or bypass that succession and probate process. Okay, so your, your wishes can be followed in the exact same order and function. And you’re really accomplishing all of the same goals. But the added benefit is now you don’t even have to go through succession and probate, you don’t have to hire a lawyer. Typically, our clients who do a revocable trust, their heirs will come in, and we have a couple of documents that will sign and clean up. But I mean, you’re you’re not you’re not getting into the court system at all, you’re fine, and you’re good to go. That’s what a revocable trust is going to do for you.

Gregory Ricks  15:52

So a revocable trust is what I am a big fan of Coase. We like to change your mind over time, for whatever reason, things change over time. It’s one reason to review beneficiary designations every year, it should be a habit. Are you going to change it every year? No, you might not for years, and years and years, but all of a sudden, somebody needs to be added to the mix or somebody died needs to be taken off and clean. That up could be a marriage or divorce that impacts that. But that stuff should be cleaned up. So like own a revocable trust, I can change my mind. So I’ve got to put stuff in let’s call the trust the basket, I’ve got a set of instructions that correlate to the trust. And I’m going to set up a basket. So stuff moves, where where I want it to after I die. So if I’m putting how to stuff go in that that basket does like the property get retitled to the trust, or does this happen it death helped me with how that transition happens, and what’s the best way to do it.

Wes Blanchard  17:04

So the way that the trust becomes effective, actually, and the whole purpose of it is sidestepping succession is by retitling, that asset.

Gregory Ricks  17:13

And we’ve we’ve crossed over from having a will properly set up learned a very important detail today is regarding having independent administration noted into that document. Now, we want to put our stuff in a basket, meaning a trust, and we kind of like revocable trust, because we can change our mind with it. Either. We can even remove it out of the basket and take back control of it, we keep keep control, but say I want to take it out the back, put it back in my name because I’m gonna give it to somebody else. You can make changes irrevocable. You that’s a lot more difficult. Yeah, if not impossible to change your mind. And now I’m not giving it to us. I’m giving it the same, you know, okay, so now we’re putting stuff in the basket. So we’re retitling stuff to that trust, even if I’ve got that on the property or debt on the car, and I could put it there, then I also could still sell it, because the trust then could sell that property, but that profit or gain stays in the trust. Help us with that, from your viewpoint. I probably oversimplifying it there.

Wes Blanchard  18:41

So yeah, I think I think the idea that we’re looking at is, you know, first and foremost, we’re transferring property into the name of the trust. So you can look at it as a basket, a bucket. I think of it a lot as like its own separate entity. And I compare it mentally to like an LLC of sorts, it’s its own separate entity understand that. So when you place that property into the trust, you no longer personally own that property, you keep complete control of it. If it makes money, it’s still taxable to you. It’s this sort of weird fiction and this handshake agreement that is allowable by the IRS. So they understand that, hey, look, for tax purposes, this revocable trust is still you, we get it, we understand what you’re doing, and that you’re simply trying to bypass succession. So from that perspective, you’re not gaining it’s a tax neutral situation, right? But once you place this asset in, because you still have complete control of it, you can sell it outside of the trust. You can take it out, as you mentioned, you can put it back and you can place new items in but more importantly, when you the person passes away, the entity still lives on. Right and because you the person do not own that asset anymore. The trust owns it. Well then there’s no need for

Gregory Ricks  19:59

there’s really no big change to the property you’ve died. But the property in the basket, the trust is still there operational is how it was set up to be.

Wes Blanchard  20:11

And so those instructions that you’ve laid out, as you mentioned in the beginning, now dictate, okay, Gregory’s past, the property is still in this trust. Here’s what the Trust says happens at this moment in time it goes to this person.

Gregory Ricks  20:25

Okay. So the trust also is going to have instructions. Absolutely. And it, those instructions become the priority, not the will

Wes Blanchard  20:34

precisely. And the idea, if executed properly is that this trust is meant to take place of the will. Now we have a poor overwhelmed, which is sort of a backup situation. Yes. And it handles a couple of knickknack things for you. We don’t put cars into a trust for a variety of reasons. But this will allows you to still move the cars into different ownership afterwards, but it’s playing a minor, I wouldn’t even call it a secondary role. It’s like a tertiary role, which is there to play cleanup. But ideally, the majority, vast majority of your assets are going to be transitioned using this revocable trust. And that’s done without going through the succession process. So you save in the time, and you’re saving the money. And really, it’s kind of a much cleaner transition.

Gregory Ricks  21:18

So okay, let’s get to money because people have problems with spending money to make things better come like, why would I do that? Why? Why would I spend $800 on that? Why would I spend 1000 on it? Why would I want to spend 2000? So tell me, we do a will but we don’t do trust, we’ve got to go through probate succession. Is that free?

Wes Blanchard  21:47

Yeah, no, no, it’s not. That’s how I make my living actually. But no, in large part, that’s, that’s when we start adding all these things up. That’s when the trust becomes not only a sort of a transitional idea that that makes life easier. It’s a better financial decision to when you pay to get your will, and your powers of attorney put in place. So husband, wife do that. Then husband passes away, okay, we’re doing a succession for husband then wife passes away, we’re doing a succession for wife, we’ve now done an estate plan, and to probate or to succession processes. With you and your spouse set up a revocable trust, the total cost is going to be probably, I’d say maybe 65% 70%, of what you’re otherwise paying to do. Wills powers of attorney and to probates. And you do it upfront. And your spouse doesn’t have to worry about doing succession when you pass nor do your heirs or your kids. So it’s really again, it’s an outsize value proposition. It’s just about wrapping your head around it a bit.

Gregory Ricks  22:55

Well, one thing it solves is a timing issue or probate succession. And you were telling me, because it’s a lot of your work is the succession process, when things aren’t properly done, people are, are waiting, they’re like, well, when, when can we sell this property? When can we move this asset? When do I get possession? And, and all this takes time? And it’s also jurisdictions as well, or what parish it’s going on? And can also affect it? And then even if it’s in another state? Yeah, and

Wes Blanchard  23:29

that’s a big deal. You know, understanding your jurisdiction can can be important, certain jurisdictions are just a little more technology savvy, right. Jefferson Parish, honestly, is as good as the federal system is. They are quick, they’re fast, you can do everything online. And you feel like as an attorney, that’s where you want to practice. There’s are the other rural jurisdictions that aren’t online at all yet. And so you know, they’re making their way there’s third party services, trying to help them get there. But it’s just not as fluid as functional. And so understanding where you’re going to you’re going to be when you file this succession is important, because that really can dictate in part how long it’s going to take. If you have to mail things in, that’s gonna take longer, or you can pay extra to have at FedEx their two day, every time but you know, that adds up, especially when you don’t want to have independent administration. And you’re mailing things over and over and over and over. Those are the kinds of things that run up cost, and add time to the process. That’s how you get to that six to eight month succession, as opposed to some of our clients can come in, and we can have the succession buttoned up, ready to file, have it filed and signed within a week.

Gregory Ricks  24:43

So thanks for talking about our after tax assets, your bank accounts, CDs, home, second property, or land, what else might be in there? Okay, business or business interest. So sometimes I would think sometimes you might actually need more than one revocable trust how you’re wanting it handled?

Wes Blanchard  25:10

Typically no. Okay, we what you can do your business interest is just like any other piece of property that you own, you know, it’s recognized that way by law. Okay.

Gregory Ricks  25:19

So it’s seen as your interest in that business is what’s being controlled Exactly. The business itself, right.

Wes Blanchard  25:27

So we wouldn’t, you know, we’re not changing the name of the business at all, we’re just taking your interest. And we’re transferring that piece of ownership within the business organization. So there’s some documents and paperwork done to transfer it from, from Gregory’s name into, you know, the trust of Gregory. But I want to circle back really quick because you bought brought up the second property. Okay, that second home, and when we’re looking specifically to differentiate when’s the proper time to use a will versus a trust or a revocable trust, if you own property in Louisiana, and in Mississippi, or and in Florida, or really in any other state. That is, that’s the perfect time to use a revocable trust, because now you placed that second property inside your your revocable trust. And that allows that property to bypass probate as well. That’s important because otherwise you cannot transfer Florida property in Louisiana succession, you’re going to have to go open up another property or probate in Florida,

Gregory Ricks  26:32

more complication more expensive.

Wes Blanchard  26:34

Exactly, exactly. And so those are things that, you know, you really need to keep in mind. Those are the conversations we have with with our clients.

Gregory Ricks  26:42

So, you know, when you look at the value of assets, and I go back to some people we’ve talked to, I’ve said it on air to callers is like don’t get cheap on me now. You just inherited this property, get proper tax guidance on that get proper legal help to move through this process and make life better.

Wes Blanchard  27:06

Yeah, yeah, exactly. And, again, you know, we’ve we’ve seen the horror stories, and we’re just trying to help as much as we can, you know, you avoid those kinds of things.

Gregory Ricks  27:16

What Wes is great. So with that said, how do they reach you?

Wes Blanchard  27:20

Well, a variety of ways. Obviously, you can call into the show, that’d be fun. You can call Gregory’s office and get in touch with us. Grab our website WJ Blanchard law or our phone numbers 504-500-8473