Estate Planning Uncovered: Myths, Trusts, and Protecting Your Assets
Jul 03, 2024
Greg McIntyre, J.D., M.B.A.
Think a will is your ticket to avoiding probate? Think again. Join Greg McIntyre and Jordan Bentley from McIntyre Elder Law as they dismantle some of the most widespread myths in estate planning. From the erroneous belief that a will sidesteps probate to the misconception that a spouse will inherently inherit everything, Greg and Jordan break down the often misunderstood realities of probate and asset transition. They delve into why relying solely on a will can lead to delays, complications, and even family disputes. Learn why a comprehensive approach that includes trusts and other planning tools is crucial for a smooth and efficient transfer of your assets.
Curious about trusts but think they're overly complicated? Greg and Jordan debunk that myth, explaining the simplicity and benefits of convertible trusts. These unique trusts can begin as revocable, allowing you to maintain control over your assets, and convert to irrevocable for additional protection when needed. They discuss how trusts can streamline estate management, prevent family conflicts, and ensure your wishes are carried out without the need for probate. Finally, they highlight the essential differences in inheritance rights between spouses and partners, stressing the importance of explicit beneficiary designations. For personalized advice, McIntyre Elder Law offers a free consultation to help you navigate the complexities of estate planning effectively.
Think a will is your ticket to avoiding probate? Think again. Join Greg McIntyre and Jordan Bentley from McIntyre Elder Law as they dismantle some of the most widespread myths in estate planning. From the erroneous belief that a will sidesteps probate to the misconception that a spouse will inherently inherit everything, Greg and Jordan break down the often misunderstood realities of probate and asset transition. They delve into why relying solely on a will can lead to delays, complications, and even family disputes. Learn why a comprehensive approach that includes trusts and other planning tools is crucial for a smooth and efficient transfer of your assets.
Curious about trusts but think they're overly complicated? Greg and Jordan debunk that myth, explaining the simplicity and benefits of convertible trusts. These unique trusts can begin as revocable, allowing you to maintain control over your assets, and convert to irrevocable for additional protection when needed. They discuss how trusts can streamline estate management, prevent family conflicts, and ensure your wishes are carried out without the need for probate. Finally, they highlight the essential differences in inheritance rights between spouses and partners, stressing the importance of explicit beneficiary designations. For personalized advice, McIntyre Elder Law offers a free consultation to help you navigate the complexities of estate planning effectively.
Speaker 1:
Hi, I'm Greg McIntyre with McIntyre Elder Law and we're here to talk about misconceptions in estate planning. And I'm here with a fellow attorney in our firm, a great attorney, jordan Bentley. Jordan and I have been prepping for the show, having a lot of fun talking about the misperceptions or misconceptions regarding elder law in estate planning, and we're going to talk about the top three today. Okay, so, jordan, the top three misconceptions that we're going to cover are hey, I've got and we hear this in seminars all the time hey, I've got a will. What are you talking about? I'm going to avoid probate. I don't have to go to probate. I have a will Wrong. I need an X. Edit it across the screen right now. And another one is hey, I don't need estate planning. I've got a spouse. My wife's going to get everything, or my husband's going to get everything. You're going to be sorely disappointed. You're going to be shocked and surprised if that happens, and we'll tell you why.
Speaker 1:
Third thing is hey, you know, I don't know about a trust. I think it's overcomplicated. I've heard there's a lot of things to do with maintenance. You know administration, those things, actually, probably the opposite of that. So let's talk about those three things today. Jordan so Jordan, I know you do a lot of presentations along with our firm. Jordan so, jordan, I know you do a lot of presentations along with our firm. I've given a ton in the past and one of the things that always surprises me but I'm prepared for it because we hear it all the time is somebody's going to ask every few seminars hey, I have a will. So what are you talking about? This probate thing? I'm going to avoid probate because I have a will.
Speaker 2:
What say you? Yeah, someone asked me that exact question just last night, basically exactly the way you worded it, and I would say that's absolutely wrong. A will is just a guide through probate or an instruction manual through probate, probate again being the default process by which your assets are going to change title and pass to who you want them to, and you write out who you want to get stuff. You specifically list specific things to specific people. You can say I want everything split 50-50 among my two children, something like that, but that's not going to happen outside of probate. The first step of the probate process is actually filing that will with the courthouse. So will and probate go hand in hand. And if you think you're avoiding probate because you have a will, it's good that you have one. You have a guide through probate, but you won't be avoiding it. You know you're mistaken to think that.
Speaker 1:
So the way I explain it and the way it makes sense to me also is a will is not worth anything Legally. A will has zero weight or effect. It's not worth the paper it's written on. I say but unless, until somebody dies and it's accepted by a probate court which you can submit in North Carolina 30 days after death. So unless it's accepted, properly written under the statute, accepted under the scrutiny of the court, that it meets all the requirements of the self-proving, notarizations, those things, witnesses, unless that's in place it won't even be accepted by the court. But then you have to probate the will before it has any effect. That's why you know, when I see attorneys old school attorneys would always write burial instructions in a will. I'm like man, that's good instruction or it's a good story, but it doesn't mean anything and the executor has no power to handle anything. Until they're qualified as the executor. And after 30 days, unless you put me in the icebox, I'm not going to be in good shape. Please put me in the ground before 30 days, okay. That's why in North Carolina the proper place to put that is the healthcare power of attorney, because the healthcare agent can handle that immediately.
Speaker 1:
Disposition of the body there's so many elements of this and interplay and misconceptions that we could tackle, but number one if you have a will, it has to go through probate. That's the only way it has. The executor is qualified and anybody steps up to the plate. The court qualifies, the executor, issues letters, testamentary letters, which the executor can then go change title to assets with. The only way that happens is through the probate process and the court has oversight. And then the question is do I want to avoid probate? Because, oh geez, if I've done a will, I've actually headed straight toward probate, not avoided it. So, and is the will the best place to pass your assets? I mean, we talk about Jordan, that you know.
Speaker 1:
A will is many times a safety net.
Speaker 1:
I call it also an insurance policy to make sure that if the other mechanisms the deed planning, the trust planning that we've set up, if something's left out of that, the will kicks everything to the trust or the will ensures that things go to the heirs.
Speaker 1:
The other pitfall and reason this is super important to think about whether we need probate or not. The only place in North Carolina North Carolina not being an expanded recovery state where you can reach outside of the probate estate and snatch assets in to pay claims. If we pass those assets outside of probate and we do so in contemplation of you needing long-term care, with the high cost of long-term care, we can set the estate up to avoid any claims, including long-term care benefit claims, that could take the house and force it to be sold with a farm or other assets. So we really need to think about this and sit down in a consult, look at every asset, the goals and think about if a will is the proper place to pass your assets. And that's really where we get to when we're talking about wills and whether that is the right answer or just a part of a piece of the puzzle.
Speaker 2:
So to speak, right. Yeah, Just having a will isn't going to do all that for you. It's not going to avoid probate. It's not going to pass your assets to who you want to outside of probate. Right, it's important you have other things in place. If that's your main goal is avoiding probate and even if you are, even if you have beneficiaries set up you have that deed work or trust work that you were talking about you still want to have one to go ahead and cover you and make sure things go to who you want to, and that's a great segue into the second.
Speaker 1:
You want to set it up in a way that contemplates the potential need for long-term care right that as well, which doesn't just mean you can't do that by just adding beneficiaries to all your accounts, right? Because then there's still your assets as according to a benefit and you wouldn't qualify. So we need to. There's more conversations to be had there, right?
Speaker 2:
Absolutely yeah, and that segues into. Well, if you started talking about that, maybe we're talking about a trust, right, and you mentioned one of the misconceptions being that trusts are overcomplicated.
Speaker 1:
So let's talk about trust. If we wanted to reallocate the assets to a trust and a misconception is, hey, I don't know about a trust because I've heard they're cumbersome, complicated, there's maintenance fees, all those things. Not true, in fact, quite the opposite. Okay, usually a trustee is going to be you during your life, or a trusted family member that has a legal fiduciary duty to maintain those assets for you for the rest of your life. Or you're going to have access to them yourself, even if it's an irrevocable trust, or you're going to have access to them yourself, Even if it's an irrevocable trust, which under a benefits program wouldn't count them as your assets, even if you're still the lifetime income beneficiary. So if I've got rental property, if I've got investments that are kicking off dividends, we want that income to still flow to you for multiple reasons, because we want you to have it. Number two we don't want the income to accumulate in the trust, so the trust will have to have to file a tax return, so you're not going to have to deal with that. We build the trust that way and the bonus is, if it's an irrevocable trust, that they're not considered your assets from a benefit to pay for long-term care perspective. You want the best of both worlds, not ready to give up control, but want to have protection.
Speaker 1:
We can do a convertible trust. You can convert to irrevocable if threatened or you need to, in contemplation of a long-term care stay. So you know, there's all kinds of tools that we have, but we make them really simple to operate. The simplicity is this You're protecting your assets, which a will doesn't do. You're the trustee if it's a revocable trust or it's a revocable trust status in the convertible trust, and you still control all the assets. There's no separate tax return. You don't know really any difference. And then, when it comes to passing assets to loved ones children, grandchildren it's much simpler than a will and the probate process, the trust administration process. The trustee has specific instructions when you die on what needs to happen to your assets and is able and empowered to do that at the time of your death, usually working with an attorney like me or you, jordan.
Speaker 2:
But we're saying. They don't have to go to court to do those things. They don't need a clerk or a judge to sign off on a transfer of assets or to sale of property. They can just do it. According to the instructions.
Speaker 1:
If there's deeds to be deeded out, the trustee signs the deeds that we create.
Speaker 2:
They just carry out your wishes and they have the freedom to do that.
Speaker 1:
Yeah. Or if there's accounts to be transferred, the trustee steps in and transfers those accounts to the beneficiaries. And beneficiaries is a concept built from attorney trust drafting, not insurance companies or something like that. They stole that. So so you know.
Speaker 1:
Beneficiaries are different than heirs in a will and I and I really purposefully call them two different things. Wills have heirs in my mind because sometimes you'll hear wills having beneficiaries too. When I think of a beneficiary, it's somebody who easily and directly gets something. Heirs in a will don't easily and directly get things. It has to go through the probate process, which can be expensive.
Speaker 1:
Once you qualify as an executor of an estate, you may not realize that you're under the contempt power of the court and if you don't do what needs to be done in a timely manner, you'll find yourself having really tough conversations in court hearings as to why you didn't do that and potentially be fined or jailed. That's not a good position to be in. If you want to stay out of that position, trust help you so. From a complexity, risk, liability and stress standpoint, from multiple different life standpoints, from an ease of administration for you and your spouse and your children, trust are much simpler and people don't understand that and that's a common misconception I would love to work to dispel yeah, the main reason they're simpler being you're outside of probate when you're doing it and we keep hitting with that, saying you don't need the court's permission, you're not having to file things.
Speaker 2:
No, you can. You can just sign off as the trustee and do what needs to be done.
Speaker 1:
And if we set it up, correctly yeah, you definitely want to have an attorney drop your trust. You want to apply for long-term care, avoid probate where claims attach from long-term care benefits and pass your assets successfully, while also keeping those assets for you for your use and benefit for the rest of your life.
Speaker 2:
And one other advantage I think that a trust has that Will doesn't write is that dead hand control that I've heard you talk about so much is that you can. You know you can control not only not only who's getting your assets, but but when they get them and how they use them to certain extents and really know that they're being used the way you would have wanted them to.
Speaker 1:
That's right you can. You know you may have a grandchild, that when they turn 18, you don't want them to get a bunch of money or property because that would be a curse for them, not just a blessing. You want to maybe set up a discretionary trust, sub-trust, within that master trust, so the trustee after your death helps pay for their college, university or trade school, gives them a little more aging experience and then maybe do a 10 and 10 distribution at 25, where we distribute 10% of income in principal, starting at 25 to help them get into life, buy a house, start their career. Those are ways that trust can help craft and make your money and your assets and your hard work help your family for the next generation.
Speaker 2:
Okay, and I think those, those details and those things that you can write into a trust or what makes people think, whoa, they're overcomplicated, there's too much going on here. Really, you're simplifying everything and you're making it clear what needs to happen and you're allowing someone to do that stuff outside of court.
Speaker 1:
I identified a long time ago out of a sheet that a business coach gave me that had about a thousand words on it. What's the word? That is the most important part of anything, and I picked clarity, and I think clarity is king for me to get clear on information, for me to get clear on my intention and what I want eliminates drama, eliminates fighting and infighting within families and lets you script what needs to happen to your money and property for the rest of your life and beyond.
Speaker 2:
Sounds like clarity without over complication, so I would rebut that one as well. A trust is not overly complicated. It cites its clarity, provides clarity. I like the term that one as well. A trust is not overly complicated.
Speaker 1:
It cites it's, it's clarity provides clarity. I like the term clarity without complication. A little iteration there, and I like that. It sounds good. So the third thing is and we hear this all the time too, jordan, and I'll let you take this one I've waxed poetic too much. Well, it's, it's.
Speaker 2:
I don't, hey, we're talking a lot about wills and trusts. I don't, hey, we're talking a lot about wells and trust. I don't really worry about either one of those. Right, I have a spouse. She's going to get everything, I don't even need to talk. Stay planning, man, why?
Speaker 1:
don't. I need you. I got a spouse. They're going to get everything right. I'm buried in North Carolina question would be what?
Speaker 2:
do you have any children?
Speaker 1:
you know, yeah, do you have children? Is there children from a prior marriage from your spouse? Because in north carolina when I sit down after the fact with that same person, I find out or I tell them, they find out, hey, um, I have to tell them. You now own real estate, maybe your home, both things went on the deed other assets, all other assets. If he or she had one child from a previous marriage, you now own 50% of those assets with that child. It may not be a good relationship, maybe a strained relationship.
Speaker 2:
Right, that's what I was going to say. Well, that that child's mom and and you know my husband or her parent, my husband or my wife, they're divorced. Right, they're not together anymore. They haven't talked in 20 years. They have no relationship. Does that matter?
Speaker 1:
So if you're divorced yeah, if you're divorced, you know your spouse is not, your ex spouse isn't going to get everything and you'll find yourself owning, you know, maybe real estate and other financial assets with children from a previous marriage of your spouse.
Speaker 1:
And that's a shock when I sit down with a client and they find, or a potential client and they find out that that's the situation, and then we're working to try to reconcile that because there was not at least a will in place or a trust in place that scripted how those assets were passed. You have the ability to draft, outside of what's called the rules or laws of intestate secession in North Carolina that automatically pass assets. You can draft and say how you want assets to pass, or else you're just leaving yourself really like a ship on the ocean with no rudder and no sail and no direction, no capital. Yeah, you're being bounced around by the wind and the waves. Okay, and if that's what you want to do, then that's okay. Right, that's your choice. But you can also choose to choose your direction and your heading and set off toward that.
Speaker 2:
Okay, leave a legacy, leave your assets the way you want them to, to the people that you want, um, and and make sure that that you know your wishes are being carried out. Um, your spouse isn't necessarily going to get everything. And another thing I think we should hit on just real quick with spouses is you know, a lot of people will ask me well, we've been together for for 20, 25 years, right, we, we've been living together. We, we have family together. We've been together for 20, 25 years. Right, we've been living together, we have family together. We're common law married. But certainly that's not the case in North Carolina, if in any state.
Speaker 1:
Yeah, yeah, no common law marriage in North Carolina. It is not a thing.
Speaker 2:
So so if you want that person who you know you have, a partner, you're really talking about that a lot under non-traditional estate planning, you know, yeah, and if you're wanting your partner you know to to be able to, to get your some of your stuff and inherit things from you, you know you're going to want to make sure you have them written into your will or written into a trust or named as a beneficiary or you know. Ensure that they're listed, cause not only will your spouse, you know, not necessarily get everything, but if someone is just your partner and not your spouse, they're not going to get anything at all, unless you set it up that way.
Speaker 1:
Sure Jordan, I appreciate you being here to do this elder law report on the misconceptions the three main misconceptions with estate planning and elder law today. You know, if you want to sit down and talk about your estate plan, our firm would offer a free consultation, be glad to sit down with you and your family and discuss these things. You can take advantage of that by calling 1-888-999-6600, or you can schedule directly on our calendars at mcelderlawcom. That's mcelderlawcom. Thank you, jordan, you have a great day. Thank you, greg, you as well. All right, bye.
