Florida Probate Q&A: Wills, Property, Costs & More with Nicole Bell Cleland

On This Episode

Nicole Bell Cleland of Legacy Protection Lawyers returns to answer some of the most common questions that come up around Florida probate and estate administration. She and John discuss what happens when someone dies without a will, special considerations for blended families and inherited property, when an attorney is required, and what the probate process may cost.

Legacy Protection Lawyers: https://www.legacyprotectionlawyers.com/

 

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Check out all the episodes by clicking here.

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

Speaker 1:

Welcome into another edition of Retirement Planning Redefined with John and Nick, financial advisors at PFG Private Wealth.

 

And Nick is off again on this episode as we have Nicole Cleland joining us again to follow up with a Q&A conversation, some questions and answers about the probate conversation we just had on our prior podcast.

 

So John’s going to jump in and toss out some of the most frequently asked questions that these guys get when dealing with this. And of course, if you need some help, go and check them out online at legacyprotectionlawyers.com.

 

That’s legacyprotectionlawyers.com. We’ll have a link in the show descriptions along with John and Nick at pfgprivatewealth.com. But first, Nicole, welcome back.

 

Nicole Cleland:

Thanks for having me.

 

Speaker 1:

Absolutely. Great stuff last time, so thanks for being here. And of course, John, thanks for being here, buddy.

 

John:

Yeah, yeah. Having a good time here. School year started for the kids, which has been fun. So kids are excited to go back to school. I’m sure parents are a little excited too to have their own little break, but all is good.

 

Speaker 1:

For sure. Well, we had some good response to the prior podcast episode, and so you guys deal with this stuff a lot. Obviously you guys work as a team as well. And so what are some of those top questions, John? I know you got a couple we want to cover on this episode, so take it away.

 

John:

Yeah. So one question I get from clients and some stuff I’m curious on. So one is, and we try to avoid this by doing proper planning upfront, but Nicole, what happens if someone doesn’t have a will, or there’s no beneficiary listed on an account, or it’s not listed correctly?

 

Nicole Cleland:

Yeah, so if someone dies what we call intestate, so they had not signed a will prior to their passing, then we have to look to Florida law, Florida’s intestacy statutes to find who their intestate heirs are.

 

And the idea behind the law is to reflect what most people would naturally want. And if you think about it under Florida intestacy laws, if you’re survived by a spouse, then usually 100% goes to the spouse. If no spouse then to your children, if no children are descendants, then it goes back up to parents and then out to siblings.

 

Obviously with blended families, stepchildren, half siblings, that can vary a little bit, but Florida law tries to reflect what most people would had intended had they created a will themselves.

 

John:

Okay. So in essence, the courts try to make their best effort to do who gets what?

 

Nicole Cleland:

Well, not the courts so much as the law.

 

John:

Oh, okay.

 

Nicole Cleland:

And what I mean by that is, if you passed away tomorrow and you had three children and you were estranged from one of them, but you had not signed a will disinheriting that child, then under Florida law, that child’s going to take an equal third.

 

The court has no discretion on that. So the estrangement of the child has no bearing. It’s just a matter of what Florida law states.

 

John:

Gotcha. And then you mentioned blended families, something that does come up every once in a while, and I think most people miss it. Tell us about elective share.

 

Nicole Cleland:

Yeah, so in Florida you can, and actually most states, all but one, I think, have a similar law that states that you can leave your assets to whomever you want. You can disinherit your children, you can disinherit parents, but the one person you cannot disinherit is your spouse.

 

So in Florida law, your spouse is entitled to a minimum of 30% of your overall estate, not just your probate estate. So that would include real estate, bank accounts, life insurance. Well, depending on the life insurance, but it can vary.

 

But essentially, if you had any desires to leave your spouse with nothing, then they’re going to be a little bit more trickier than you may have thought.

 

John:

And I think maybe this could be a deep dive session, but if you own assets 50/50 with your spouse, how much is considered theirs and yours in this, if it were to come up?

 

Nicole Cleland:

Oh, that’s a good one too. Hard-hitting questions, John. So that’s where we can sometimes go a little bit beyond ownership and we look at the character of the asset.

 

And what I mean by character, I mean, is it separate property? Is it community property? How is the ownership on that jointly owned property? And really digging into the facts.

 

So this is why in the very first, the last session we had, I mentioned why that due diligence period prior to opening a probate is so important is you can look and ask these types of questions.

 

So I would say for a lot of blended families, for a lot of married couples, actually, most married couples own things in joint name. And sometimes when you have blended families, if there’s not proper planning, I’ve seen unintentional disinheritances.

 

So you leave everything to your spouse, but then your spouse leaves everything to their children from their first marriage. Is that what the first today spouse wanted? Probably not.

 

John:

Yeah, unfortunately I’ve seen that happen as well. So definitely do your planning whether-

 

Nicole Cleland:

Yes, especially with blended families, for sure.

 

John:

Yeah, agreed. All right, another question. Something you mentioned last week, we were talking about homes, and I think you mentioned where someone might want to keep the asset. So let’s say someone passes away, the kids say, “Hey, I want to keep this house.” How does that pass to the beneficiaries? Is there any specific documentation?

 

Nicole Cleland:

So it again might boil down to how did it pass to these beneficiaries? Are we going through a probate proceeding where a personal representative is in charge and has the final say-so? If that is the case, then that personal representative decides.

 

They’ve got the ultimate decision on whether or not a piece of real estate or any asset is liquidated or transferred what I call in kind. Meaning if it was received as a piece of real estate, it’ll be distributed as a piece of real estate.

 

So it can depend on the situation. Now, if you’ve got maybe a mom who added her two kids to the deed before she died, and now these two kids own the property 50/50 and one of them wants to keep it, one of them wants to sell it, how do you force the hand of the one that wants to keep it? And sometimes it requires court action if they can’t agree.

 

So it very much can depend on how the property was inherited and really who has the legal authority over that asset. Does that answer that question there?

 

John:

It does. So it depends on how it was titled initially and did it go through probate officially or putting it on the deed bypass probate.

 

Nicole Cleland:

Right, right.

 

John:

Okay, got it. And then what about some question some people will ask is, do you need an attorney to help you with the probate process?

 

Nicole Cleland:

So in Florida-

 

John:

And what is the cost?

 

Nicole Cleland:

Yeah, always the bigger question there. So with a formal administration in Florida, you do have to have an attorney. And I understand why, and it’s because there are so many rules regarding probate and those administrations that you really do need not just an attorney, but an attorney that does administrations to do it well.

 

And that being said, with a summary administration, you can do it on your own in the sense that you don’t have to have a lawyer. Oftentimes though, if I’m getting a call that someone who’s started the summary administration proceeding and they can’t get across the finish line, it takes a lot more work for an attorney to clean it up.

 

So unless you feel very confident in your abilities and maybe even gone to a legal aid center to help you fill out the summary administration paperwork, it can be tricky to do, especially if there’s creditors involved.

 

But in terms of costs, it definitely can depend on the scenario. And for the most part, when it comes to formal administrations, there is a statute that outlines what is reasonable compensation for an attorney for a personal representative.

 

And it roughly falls a percentage schedule where on the first million, it’s about 3% of the probate assets. And then as the millions go up, the percentage typically goes down. And that attorney fee schedule actually is comparable to a personal representative’s presumed reasonable fee schedule.

 

But that being said, there’s a lot of talk about that in the trust and estates world in the sense that even though it’s presumed reasonable to charge that type of fee schedule, attorneys don’t have to charge it.

 

They can charge hourly or some other type of flat rate fee, as long as of course the client and the personal representative, or excuse me, the personal representative and the attorney agree to it.

 

And then for summary administrations, it can depend, but it’s typically a couple thousand dollars to get the final order on those.

 

John:

Yeah. Okay. So it sounds like the fee can vary and the best way to do it is plan ahead so you don’t have unknown fees upcoming for your beneficiaries or estate.

 

Nicole Cleland:

Absolutely. Probate can be avoided, so it just takes some planning. And on top of that, clients can meet with an attorney to try to get an idea if they have to go through this probate process, what exactly would that fee would be?

 

And we recognize, a lot of people want to know at the beginning, what is this going to cost me? So for a lot of our clients, we do agree to some sort of flat rate fee so that we both know at the gate what the fees would be.

 

But in some cases, we really just don’t know what those hidden minds might be, and we might have to do hourly. So again, it can depend, and I know that’s the famous attorney answer.

 

John:

No, I understand. And I’ll just tell you from personal experience with clients, forget the costs and fees associated with it. I think the amount of work some of these PRs, personal representatives do, if it wasn’t planned correctly.

 

I have one person that was going to about 10 or 12 different banks to see if there were bank accounts and probate took over a year and a half just because of how much was undisclosed and not known.

 

And I think we have to look to the Florida, what is it, Florida Treasury Hunt to see if any unclaimed property as well?

 

Nicole Cleland:

Yes, floridatreasurehunt.gov. Yes, for unclaimed property. So yeah, that’s where those estates where we don’t know a lot can be really, really hard because if the client doesn’t know what’s there, how can the attorney provide a quote?

 

So it sort of makes sense, but I think for a lot of attorneys, at least I can speak for the attorneys in our office, we try to be fair. We want to be fair to our time and our expertise, but also to the client and the assets there and the beneficiaries.

 

Speaker 1:

All right, good stuff. So certainly some top questions and answers there for Nicole. If you have questions of your own, again, please reach out to the team.

 

And of course you can talk to the financial side with John and Nick. You can also talk on the legal side by reaching out to Nicole and her team at legacyprotectionlawyers.com. That’s legacyprotectionlawyers.com or at pfgprivatewealth.com.

 

Either way, we’ll have those links in the show descriptions, but always, always check for yourself and see how things relate to your specific situation, not only with your finances, but with your legal stuff as well.

 

And with that, we’ll say thank you so much for tuning in to Retirement Planning Redefined. Nicole, thanks for being back on the program.

 

Nicole Cleland:

Thanks for having me.

 

Speaker 1:

Absolutely. John, thanks for being here, buddy.

 

John:

All right. Appreciate you. Thank you.

 

Speaker 1:

Yes, sir. We’ll see you guys next time here on the podcast. Subscribe to us on Apple or Spotify or whatever app you enjoy using, and we’ll catch you later.

 

Navigating Florida Probate with Nicole Bell Cleland

On This Episode

Probate can feel overwhelming, especially when you’re trying to understand what happens after a loved one passes away. In this episode, John is joined by Nicole Bell Cleland of Legacy Protection Lawyers to break down the Florida probate process and explain what personal representatives and families should expect along the way. They cover the major stages of probate, including identifying assets and debts, handling creditors and taxes, opening estate accounts, making distributions, and understanding the responsibilities that come with administering an estate.

Legacy Protection Lawyers: https://www.legacyprotectionlawyers.com/

 

Subscribe On Your Favorite App

More Episodes

 

Check out all the episodes by clicking here.

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

Speaker 1:

This week on Retirement Planning – Redefined, let’s talk about navigating Florida probate and all that comes with that with John, and Nicole is joining us from Legacy Protection Lawyers. Welcome into the podcast everybody. Thanks for tuning in to Retirement Planning – Redefined with John and Nick. Nick’s not here today. We’re swapping him out with Nicole, which is going to be fun because Nicole’s going to talk to us about navigating Florida probate and she’s just peppier than Nick, so we’re just going to have fun talking with her. How you doing, Nicole?

John Teixeira:

Just a little peppier.

Nicole Cleland:

I’m doing good. Thanks for having me. Excited to be here today.

Speaker 1:

Yeah, absolutely. Thanks for joining us. And of course, John, welcome in buddy. Thanks for being here.

John Teixeira:

Yeah, yeah. I’m excited to have Nicole back on. She’s a wealth of information, so it’s always good to have her.

Speaker 1:

Yeah. And we’ll have links in the descriptions if you guys want to reach out if you have some questions to legacyprotectionlawyers.com, we’ll have a link in there that you can follow up with, of course, along with the guys as well for the financial side of things. So let’s jump in and talk about navigating Florida probate. I know it sounds a little boring and a little worrisome, but it’s also important stuff, Nicole. So let’s get you rolling in there a little bit with some places to start. What’s a good place to start with this? Just the pre-filing diligence, determining what it is that you have and need?

Nicole Cleland:

Yeah, exactly. So when someone passes away and we’re looking at what type of administration might be needed, I usually suggest to clients to really take the time to look at the whole picture. Sometimes you find one asset where you feel like you might need to jump in and go ahead and handle that, but sometimes I think it behooves a lot of people to take a step back, make sure you have your arms around everything before really jumping into one of the options. And the reason why is some people may have gone through experience personally. You might go down one road and find the facts have changed a little bit and now you’re leading down a different road. And that can lead to delays and expenses, and it really helps to really take the time to assess everything. Read the estate plan, what are the assets, what are the debts, and then go from there.

Speaker 1:

Gotcha. And what are some of the administrative type things to think about as far as some bullet point items for folks?

Nicole Cleland:

Sure. So there’s really a handful of different types of administrations. And focusing on probate alone, there are three different types in Florida at least. The first one is very uncommon. It’s when the size of the estate costs less or the assets in the estate are less than a funeral bill. So not a very common one and a little bit more difficult to go through. But the big ones are what we call formal administration and a summary administration. And when people think of probate, usually it’s the formal administration that they think of, the process that can take a bit longer, be a little bit more expensive, but there’s also an abbreviated or an abridged probate process called a summary administration. And those are permitted in estates where a person has been deceased for over two years, or if the size of the estate is less than $150,000. And that’s actually a newer statute that just passed in July. So that’s a convenient one that we’ve upped the threshold for a summary administration from $75,000 to $150,000.

Speaker 1:

Gotcha. Okay. John, what do you think?

John Teixeira:

Yeah, Nicole, quick question on that. Now, is that the full estate or just what’s going through probate?

Nicole Cleland:

Yes, great question. So it’s only the assets that are subject to probate. So what assets are subject to probate? And my rule of thumb is any assets that should go through a probate proceeding are the assets that are in someone’s individual name with no joint owners. So assets that are not in a trust, not necessarily in a company, that don’t have any other spouses, family members, no joint owners on it, and no beneficiaries listed on those assets or accounts.

Speaker 1:

Okay. So what’s the process, I guess, for opening the estate? What steps are we looking at?

Nicole Cleland:

Sure. So step number one is really assessing what the estate plan is. And believe it or not, whether or not you’ve done planning, you have an estate plan. So it’s either an estate plan you’ve created or one that the state of Florida gives you if you’re a resident of Florida, and really understanding who our parties are, who are our beneficiaries, what is the estate plan? And then looking at who is the personal representative. That’s what we call the executor here in Florida. And that’s who typically would be my client, that personal representative, and going through the process of determining if they’re eligible, if they were named in a will to serve as that personal representative.

So in Florida, you have to be either a blood relative of the decedent or a resident of Florida if you’re not a blood relative. And you can’t have any felonies, you can’t have any allegations of elderly exploitation, and there’s a few other caveats in there, but really going through that eligibility process and then making sure that the potential personal representative understands what their fiduciary responsibility is, their responsibility to the estate and to the beneficiaries and walking them through that.

But typically, once we’ve gone through all of that with the client, then it’s preparing the paperwork where you essentially are requesting the court to admit that will and/or to appoint that personal representative and to therefore open the estate officially.

John Teixeira:

So Nicole, is that like doing the petition, assigning that PR once you figure out who it is?

Nicole Cleland:

Yes. Yes. So in that petition, it would state who’s asking to open it, who the beneficiaries are, potentially who creditors could be, and that this is the right venue to open up that probate. And there’s a handful of documents with the petition that are filed at the outset, but essentially all the documents that can vary by county, what would be needed to open the estate formally.

John Teixeira:

And then that’s, I know working with it through Jenny, my wife, there’s the, I don’t want to say the magic, but the letters of administration was what she happened to give to everybody.

Nicole Cleland:

Yeah. So that’s what I call your golden ticket. So once the estate is officially opened, the court will issue, and they vary amongst the states what they’re called, but in Florida, they’re called letters of administration. And that gives a personal representative the ability to act and do anything essentially that the decedent could do. So again, that golden ticket to step into the shoes of the decedent in terms of legal and financial matters.

John Teixeira:

I’m just going through, again, personal experience. What about finding all the assets? And that’s part of it where you submit, hey, here’s what the person had, and this is what’s going through probate?

Nicole Cleland:

Yeah. And that’s why I usually recommend going through that due diligence process before we open up a probate, because when it’s after you’ve opened up a probate, now you’ve got a fiduciary hat on. Your job is a little bit different. So when you do open up the estate, not everyone knows what all of the assets are. Sometimes we discover things six months down the road. But the goal is that whenever someone is serving as personal representative, one of their top jobs is going to be to marshal the assets, to really take the time to determine what is out there and locate all of those assets. They’ve got that fiduciary obligation. And that can be really hard if the decedent didn’t have a list of everything written down, and that personal representative’s really having to search and make phone calls and sit on hold and go into the banks and all that stuff.

John Teixeira:

Yeah, I’ll say, I think as people listen to some good tidbits are, getting that tax return will help figure out what investment or bank accounts were open with 1099s issued.

Nicole Cleland:

Absolutely. Absolutely. Tax returns help, looking through paperwork, requesting a credit report. There are little ways to help piece the puzzle together, but it can definitely be some legwork there.

John Teixeira:

And with the credit report, that’s actually a good segue. How’s the creditor period work? Or you have to notify some creditors, right?

Nicole Cleland:

Yeah. So one of the requirements and what is unique to probate administrations is what we call a creditor period. So it’s a court-required period where you have to publish a notification in a legal newsletter, essentially telling the world that this person has passed away, and if you believe you’re a creditor and you want to be paid, that you need to file a claim within the estate. Moreover, if the personal representative believes that a certain entity or person is owed money from the decedent, then in addition to publishing a notification, the personal representative has to personally notice each of those what we call ascertainable creditors. So who we think could potentially be a creditor of the decedent’s estate. And that can be a job locating in and of itself as well, trying to find all the potential debts or creditors of the decedent.

Speaker 1:

Nicole, what’s the difference between creditor period and post-creditor period? Is there a difference for people to understand?

Nicole Cleland:

Yeah, so during the creditor period is typically when I recommend my personal representatives really have a firm grasp on all of the assets and all the debts. They’ve got three months, that’s how long that creditor period lasts to really wrangle all of those items that hopefully by the end of the creditor period, that’s when we can have that assessment of what are the debts? How can we pay them and how can we pay them timely? Are there any debts we need to object to? And then after that, filing taxes. So where are we in the tax year? Can we file the decedent’s final tax return? Do we need to file an estate income tax return? Do we need to file an estate tax return? And during that post-creditor period is where we can hopefully soon thereafter make distributions. Maybe not the entirety of distributions, but at least a majority of the distributions if we have sufficient assets to pay any creditor claims or pay any final taxes.

Speaker 1:

Gotcha. Okay. Well, since you mentioned taxes, I mean, they’re so, so much fun to talk about. What forms do we need to be aware of or should people be having on their radar?

Nicole Cleland:

Right. So when it comes to probate administrations, I find that CPAs will quickly tell you if this is within their wheelhouse or not.

Speaker 1:

Okay.

Nicole Cleland:

And if not, you can usually tell right away if they are used to working with estate income tax returns or estate tax returns because of their recommendations. So there are going to be certain types of tax forms that a personal representative should file in order to notify the IRS of your fiduciary position, so to speak, within the estate administration to request transcripts if you can’t find any prior tax returns to make sure the decedent even filed within the last couple of years. And then the biggest one, and what I always tell our personal representatives is the IRS is considered a super creditor. So if you do not file a decedent’s tax return or if you’re not adequately managing those tax filings, then the IRS can actually go after that personal representative personally if there’s any outstanding tax liability.

So what I always suggest to our clients is making sure they get that appropriate discharge of liability once they’ve filed all of the taxes for the decedent so that they’ve got that personal protection and the IRS can’t come back after them personally.

John Teixeira:

I think working with you quite a bit over the last few years, that’s something that I’d say talking to some CPAs and other attorneys, it seems it’s often missed. So that’s a pretty big deal because if I was the executor, I would definitely not want any personal liability from someone else’s estate or taxes.

Nicole Cleland:

Oh, absolutely. And that’s something where I call that a hidden landmine in an estate administration. So most people step into a role as personal representative wanting to do the right thing and really taking on that responsibility that they were asked to do.

John Teixeira:

Right.

Nicole Cleland:

And sometimes people unknowingly or unwittingly accept bombs, hidden bombs that could explode while they’re carrying this administration to the end. So I always tell our clients that my job is to teach them how to do their job, but also show them to not get in trouble. And those are the types of things that a good professional does make a world of difference.

Speaker 1:

All right, Nicole, as we’re winding this down, and again, really good points we wanted to highlight here on this episode, what are some final accounting steps? Because obviously people are like, “Well, how do I get my check or my piece or whatever?” Is that coming here in that final stages?

Nicole Cleland:

Yes, absolutely. And if there’s sufficient assets, it’s something that can be divvied out along the way, depending on the administration. But I find if everyone gets along, we don’t have a lot of creditors to worry about, then we’re able to waive a final accounting and people can rely just on statements or trusts amongst family members and receive their check. And that’s how I would say most administrations go. Now, if they’re adversarial to any extent or any tension between the personal representative and beneficiaries, then it is great to do a final accounting where there’s a formal accounting of all of the ins and outs of the estates, and then the beneficiaries get that majority or final distribution check. And that’s something where, again, a good professional’s going to make difference because when you’re working with beneficiaries, especially if there’s any tension between them, you really have to communicate with them when to expect things because they’re going to be in the dark a lot of the way.

And when you communicate with them when to expect certain things and have that open line of communication, it really prevents any potential litigation or adversarial issues arising that can make everyone’s lives a little bit more stressful when the goal is just to get us across the finish line.

John Teixeira:

And Nicole, at what point and when do they actually open up an estate account at a bank or somewhere to put any proceeds or anything that’s sold or any income that’s coming from someone’s estate? When do you open up that account and what’s the process for that?

Nicole Cleland:

Yeah, great question. So whenever you have an estate account, so that’s essentially a checking account or a money market account in the name of the estate of decedent. And all you would need typically are your letters of administration and a new tax ID number for the estate. So that’s like the estate’s social security number. At the end of the day, the IRS wants to make sure they’re aware of every entity that’s out there. And so if you liquidate an account, if you move funds or need to consolidate accounts, if you sell a home, sometimes an estate account might be needed just to accept funds and just sit there until we’re able to make final distributions.

John Teixeira:

Okay. So it’s basically, in essence, it’s an account for the decedent and any past due checks or checks on cash, anything like that can go into it in post-profit accounting.

Nicole Cleland:

Absolutely.

John Teixeira:

Okay.

Nicole Cleland:

Yeah. And it just depends. I mean, I’ve had administrations where the only probate asset is a house and the kids don’t want to sell it. So we don’t need an estate account. So it can vary. I would say most administrations require the opening of an estate account. But again, that’s where when we talk about probate, it’s very fact specific. Don’t listen to what your neighbor did. You really have to talk to your professionals on what you need for your case.

Speaker 1:

Great point. All right. Well, if that’s everything we’ve covered, guys, I think we’ve got it all on this episode. What we’d like to do is maybe do a follow-up on this with some questions and answers and things of that nature. So if you’ve got questions of your own, definitely reach out to Nicole and her team. Again, you can find her at legacyprotectionlawyers.com. That’s legacyprotectionlawyers.com, Nicole Cleland. And of course, you can also reach out to John and Nick at pfgprivatewealth.com for the financial side. And having a financial team, John, we’ll wrap it up with that, is more than just the finances. This is part of it as well.

Nicole Cleland:

Absolutely. From my perspective, absolutely.

Speaker 1:

Yeah. Yeah, you need a whole team. Yeah.

John Teixeira:

100%. Yeah, definitely. It takes a village nowadays to do almost anything.

Speaker 1:

Pretty much. Pretty much. Very, very true. Well, Nicole, thanks for being here and helping us out. Great stuff and very informative.

Nicole Cleland:

Thanks for having me.

Speaker 1:

We’ll see you next time here on the podcast. Don’t forget to subscribe to us on Apple, Spotify, whatever app you enjoy using. Find it online at pfgprivatewealth.com. That’s pfgprivatewealth.com.

Understanding Estate Planning: Trust Mistakes And Issues (Part 4)

On This Episode

We’re excited to welcome back estate planning attorney Bill McQueen of Legacy Protection Lawyers! This episode dives into common estate planning mistakes, the nuances of trusts versus wills, and strategies to protect your assets and heirs. From funding trusts correctly to understanding step-up in basis, Medicaid planning, and safeguarding inheritances from creditors, Bill breaks down complex topics in a clear, practical way.

Learn more about Bill and Legacy Protection Lawyers

Contact info: www.legacyprotectionlawyers.com
Phone 727-471-5868

Subscribe On Your Favorite App

More Episodes

 

Check out all the episodes by clicking here.

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

Marc:

It’s time once again for another edition of Retirement Planning Redefined with John and Nick, Financial advisors at PFG Private Wealth. Find them online at pfgprivatewealth.com. That’s pfgprivatewealth.com. And we’re excited to have our guest speaker, Bill McQueen, back with us to continue our conversation about estate planning, and trusts, and probate, and all these pieces that we need when it comes to our retirement strategies. And, of course, Bill is from Legacy Protection Lawyers based out of St. Petersburg, Florida, and we appreciate your time once again. Bill, welcome in. How are you?

 

Bill McQueen:

Doing wonderful. Thank you.

 

Marc:

Absolutely. Good to have you back. Nick, my friend. What’s going on this week? You doing all right?

 

Nick:

Oh, yeah, just fighting the Florida heat.

 

Marc:

Well, if you picked Florida, right, it’s hot.

 

Nick:

I will lose. Yeah, I will lose, for sure.

 

Marc:

I mean, versus Buffalo, right? You got your choice there.

 

Nick:

Yeah. Rochester, yeah, close enough. But, yeah-

 

Marc:

Oh, yeah. Okay.

 

Nick:

… for sure. This time of year, I’d rather be there, but it’s understandable.

 

Marc:

Par for the course? All right, I got you. Well, we’re happy to have Bill back. And, of course, if you guys have questions about estate planning, definitely reach out to he and his team at LegacyProtectionLawyers.com. That’s LegacyProtectionLawyers.com. And Bill, we were talking a lot about, obviously, trusts and funding them, and all the different kind of pieces that go in there. So, on this final episode, this part four of the series, we want to talk about some of the common mistakes and things that you guys see as professionals, then try to help people avoid these or highlight some of the things. So, we talked as we finished off about the funding issue of a trust. What are some other common mistakes that you tend to see?

 

Bill McQueen:

First off, I would say it might not be considered a common mistake, but a common misconception. A lot of people who think that, “Well, hey, I’ve created this revocable trust, and so my assets aren’t in my individual name. Now they’re held by my trust. And so, if something were to happen and I were to be sued, for some reason, my wealth is protected inside this trust.” And unfortunately, that’s not the case with a revocable trust. Again, the revocable trust just acts as a substitute for your last will and testament. And because the person who creates it has so much control over those assets, they can do anything they want with those assets. If somebody were to sue them, there’d be a lawsuit of some sort, and a judgment was entered against that person who created that trust. Those creditors can get at those assets that are inside the revocable trust no differently than if they were held in the person’s individual name. So, that’s something that we always need to advise clients that they’re well aware of. There may be other ways to protect their wealth from creditors, but putting them in a revocable trust does not give them credit or protection from that standpoint.

 

The other thing that comes up fairly frequently is, I have real estate, and should I put it in my revocable trust or not? If that real estate is something that’s not your primary home or your residence here in Florida, we would definitely say do that, and especially if the clients own real estate outside the state of Florida. They might have a vacation home in North Carolina or something like that. If they own that home in their individual name and they die, and we’re using a will-based plan, not only are we going to have to do a probate administration down here in the state of Florida, but we’re also going to have to do one in the state of North Carolina as well, a second one, because each state’s very protective of their real estate. Whereas if they go ahead and deed that real estate into the revocable trust, then we avoid probate both in Florida and in North Carolina.

 

The issue, though, as to the primary residence, because under Florida law or Constitution, that’s considered your homestead, and there are certain benefits that come from that, like a tax break, and it makes your home creditor protected, there are some restrictions on where your homestead can go, who can get it after your death if you’re survived by a spouse or minor children. And so, that comes into play as to can we put that home into the revocable trust? And it used to be we would usually advise people not to do that if they’re married because of these restrictions that were involved. Now we can do it if it’s done properly, but there needs to be some special waiver language and things that are included in the deed. And unfortunately, if somebody puts it into their trust and they don’t do the deed properly, then when they die, it’s considered what we call an invalid devise. And that home may be going to people other than where they wanted it to go underneath the terms of their trust. So you can do it, and we do it for clients, but you definitely want to make sure you’re getting good advice when you’re setting something up like that.

 

Nick:

Yeah, I would say that’s one of the most common questions that people have. Oftentimes, what leads people to act, obviously, hopefully, it’s from working with advisors and stuff like that, but people talk amongst themselves. A lot of times, it’s friend or family that are like, “Hey, my brother just retired and they got a trust put into place. Do you think I should do something like that?” And sometimes, the answer’s like, “Well, hey, we’ve been telling you to do it for the last 10 years. But also, yes, there’s things that can make sense to do, but you need to make sure that you work with somebody to understand the nuances.” Because I would say one of the most common mistakes that people make is when they do talk with their peers, siblings, etc., that oftentimes they don’t understand the dynamics between the differences of their situations. And so, somebody like Bill and the people at Bill’s team can help walk them through how that works. And the majority of people, no matter what the situation is, when they’re working with an advisor or an attorney, they have some sort of real estate holding, and so that’s often one of the most common questions.

 

Marc:

Yeah. No, it makes sense. With you asking that and talking about that, Nick, Bill, what’s your thoughts on people who say, “Well, who should draft this?” Right? Or, “Can I just go on to one of these, for lack of a better term, robo-advisors or robo-lawyers?” Right? I mean, you should be sitting down with an attorney in your area because state to state, law is probably a little bit different. I’m sure there’s some things that are probably the same from place to place, but you want to make sure you’re getting advice on your specific situation, not one of these cookie-cutter type deals.

 

Bill McQueen:

No, a really good point. Estate planning is specific per the state where you’re residing, and that’s the laws that will apply at the time of your death, so it is important that you’re talking to an attorney who is licensed in that particular state where you live. But I would definitely advise against a do-it-yourself estate plan.

 

Marc:

Right.

 

Bill McQueen:

And there are a lot of, especially with the internet nowadays, various online programs where you can draft your own will or trust. The big problem with that is you’ll never know if you’re the drafter of a do-it-yourself will or trust, whether you did it right, because we won’t know that. We won’t implement it until after your death.

 

Marc:

And you won’t know until it’s too late. Well, it’s too late for you, obviously, but your heirs are suffering. Right?

 

Bill McQueen:

So, if there’s problems with it, we can’t go back and correct it or change it. So that’s very important. I also always tell people it would be … I highly recommend you go to somebody who specializes in the area of trust and estates planning. You wouldn’t want me to handle a criminal law matter for you, and you probably don’t want a criminal lawyer to try to draft your will or trust.

 

And just to show you what the problems can be, as recently as within the last decade here in our state of Florida, our Florida Supreme Court had a case, that’s our highest court here in Florida, where a lady drafted her own will. Actually, I think it was pre-internet. It was a form will or whatnot, but she left out of that will what we call the residuary provision, which is where the remainder of her estate goes, and that’s where the bulk of her estate would go. And it was very clear, the court said, that her intentions were to leave it to her sister, but that’s not what the will said. It was done improperly. And so the wealth went to someone else, and the court said they felt really bad about that, but they have to go with what the will said. And the will was validly executed and everything. It just wasn’t properly constructed, and so, unfortunately, her estate went somewhere other than where she wanted it to go, and we don’t want that to happen.

 

Marc:

Yeah. In a world where we can turn to the internet for so much stuff, there’s just certain areas where I feel like it’s just not a good idea. Right? Legally has got to be one of those. It’s got to be the tops for a lot of those things. Nick, what else?

 

Nick:

Yeah. And these things tie together a little bit. I was having a conversation with a client the other day, and I’ve seen this in other instances, where clients in their 40s, the parents of the clients are in their 70s, and there’s some concern on future healthcare planning. And from the standpoint of the transition potentially to Medicaid and/or titling assets, whether it’s a home, whether it’s other types of assets like investments, so obviously non-retirement, putting the kids on accounts to try to protect those assets per se and the future inheritance while somebody to qualify. Now, I know this is a long, convoluted thing, but I guess, just in general, especially in the state of Florida, maybe helping people understand is that primary homestead residence protected and/or just the definition or an explanation of step up in cost basis and how big of a deal that can be to somebody down the road. I know it’s a lot there, so break it up and down, whatever.

 

Bill McQueen:

That was a lot, Nick. The issue regarding Medicaid, what I would say there is if we have clients where somebody, a parent, has maybe been diagnosed with early onset of dementia or something like that, so there’s a high likelihood that they are going to need long-term care in the future. When that arises, they’d like to qualify for Medicaid as soon as possible. We can help them do that through using a trust. It’s an irrevocable form of a trust where we can move assets that otherwise would be what we call countable assets, meaning that the government says you have to spend those assets first before Medicaid will take over and start paying for the long-term care. And we can move them into this irrevocable trust so that when they do reach that stage that they need the long-term care, hopefully, they can qualify right away. And this wealth that’s in this trust will then ultimately still be there and able to go on to their kids rather than go to pay for the nursing home care.

 

That, though, has to be done well in advance of qualifying for Medicaid or trying to, basically, five years in advance. So, this is definitely a very proactive, forward-looking planning-type procedure. And it’s not something that can be done once they need to get on Medicaid right away or on the near-term standpoint from that part of the equation. Here’s my basic advice. Whether it’s Medicaid or anything else, people will say, “Hey, well, what I’m going to do, I’m going to put my children’s names on accounts with me in joint names, so one, they can maybe help pay my bills and stuff like that. Two, when I die, that asset will just pass by operational law to my child, so it won’t go through the probate process, and I don’t have to worry about probate.”

 

I highly advise clients typically not to do that. One: when you put your child’s name on that account with you jointly, at least as to regards to the bank or the brokerage house, that child now has the right to take all those funds that are in that account. Hopefully, they won’t do that while you’re still alive, but that could possibly happen. But two, the child might get sued or go through a divorce, and somebody else now might be trying to take those funds that are in the parent’s account. So we would highly advise against that and instead, let that child maybe be given a durable power of attorney that I think Nicole spoke with you about in one of the earlier episodes so that they can help pay bills and do stuff like that, but they have no ownership rights in those accounts that maybe somebody else could get at those accounts that the parents will need before their death.

 

One big thing for estate tax or death tax planning purposes, the amount of wealth now that people can leave at their death or give away during their lifetime is at an all-time high watermark. Very few people pay federal estate taxes anymore, less than one-tenth of 1% of the US population. And here in Florida, as a Florida resident, all we’re concerned about is the federal estate tax laws. So, instead, what we focus on is income tax planning for our clients. And so it would be much better for actually those parents not to, for instance, give away assets before they die to their children because what happens is if the parents die owning assets that have a lot of appreciation in them, that’s been unrealized, and by example, maybe they’ve got a house that they bought for $200,000 30 years ago that today is worth a couple of million dollars here in Florida, if they give that house away to the child before their death, the child gets what we call a basis in that asset that’s a carryover basis. It’s equal to the $200,000 the parents paid for it.

 

And so, if the children ever sell that house, maybe after the parents die, they’re going to have to recognize income tax or capital gains tax on that million eight of gain. If instead they hold onto the home, the parents, and when they die, they leave it to the children, that home then gets a step-up in basis for income tax purposes to what the house is worth at the time of the parent’s death, the $2 million. So if the children sell the house soon after their parent died, they’re going to pay no income tax, no capital gains tax, they get the full $2 million, and Uncle Sam doesn’t take any of it in the form of income taxes. So, it’s very important that people be cognizant of what the potential income tax effects could be if they’re talking about giving away assets prior to their death versus holding onto them and passing them to their beneficiaries after death.

 

Marc:

Yeah, tax efficiency, right? It’s just as important when we’re no longer here, and our heirs would certainly appreciate that as well. Any final thoughts or anything that I didn’t cover, Bill, that you’d like to share with folks when it comes to estate planning in general and what you guys do at your firm?

 

Bill McQueen:

Sure. I guess one thing I would just mention, and we’ve talked a lot about probate avoidance, but with a trust, a trust can do a whole lot more. And I guess I would just give one example. It’s not uncommon for us to have families nowadays that are often blended families, so it’s a married couple and they have children from earlier marriages. For those of my generation that grew up watching The Brady Bunch, a family like that. And by using a trust properly, what usually most married couples want to do, one thing we don’t know from an estate planning standpoint which spouse is going to die first. And usually, the spouses want to make sure the surviving spouse is well taken care of for his or her remaining lifetime, and then the assets go down to all of their children from both sides of the family.

 

So, one way to do that is just when the first spouse dies, they leave everything outright to the surviving spouse, with the hope and understanding they’re going to leave everything to all six children in this example. But what can happen is when they do that and they leave the assets to the surviving spouse, that now becomes his or her assets. And again, they can change their estate plan after that first spouse died. Instead, what can be done through that revocable trust is we leave assets into a new trust, a marital trust for the benefit of that surviving spouse, so he or she’s well taken care of for the rest of their life, but that trust, that marital trust, is irrevocable. And so, the first spouse to die knows their surviving spouse is going to be well taken care of, but they also know when the surviving spouse dies, where the assets are going to go, and it’s locked in that it will go to their children as well and not just maybe the surviving spouse’s children.

 

And then the last thing I would say is when we pass the assets to the children, often, most people think the easiest thing is just to leave assets to the children outright. And that can be done that way, but it’s often not the most effective. Often, nowadays, we will leave the assets to the children in a trust, and we’ll let the children be the trustee of their own trust so they get their share of the inheritance. They have it in their own trust that they’re the trustee of, but this type of trust does give that child asset protection. So, if the child ever gets sued during their lifetime, be it age 25 or 85, a creditor can’t get at the inheritance inside that trust.

 

Also, if the child is married or gets married and unfortunately goes through a divorce, their former spouse has no rights to the assets inside this trust either, because legally, the child does not own those assets individually. They’re owned by this trust that the child controls and the child’s the primary beneficiary of, but it’s insulated from what I’ll call bad people being able to get at their inheritance from that standpoint. So, that’s really how we try to protect that inheritance and pass it down to the people we want and keep those creditors and predators away from their inheritance from that standpoint.

 

Marc:

Got you. Yeah. I’ll ask you this final question, and I set Nicole up with this as well. Just in general, I think, mindsets have changed through the years, but people often, many years ago, thought, “Well, you have to be really wealthy to A, have a financial advisor, and B, have a trust. You must be a Rockefeller or something like that.” And that’s just not the case anymore. So, are you seeing more people starting to realize or understand that this could be a useful tool for them in working with someone, and not just something for the ultrarich?

 

Bill McQueen:

Oh, definitely. We serve clients of all different sizes and net worths, and I tell my clients there is no bright line test as to when it makes sense to have a trust as your primary estate planning document versus a will. But if I had to use a rule of thumb, I would say if somebody has assets that are over a couple of hundred thousand dollars, it probably is more beneficial to use a trust as the primary estate planning document rather than a will because, again, looking back to my youth, there used to be a commercial, the Fram oil filter commercial, that they always said, “Pay me now or pay me later.”

 

Marc:

Right, yeah.

 

Bill McQueen:

Yes, putting a trust-based plan into place is probably more expensive than a will-based plan, but it’s not that much more expensive, and all the benefits you get far exceed the cost of when they do die, what it’s going to cost going through the probate process. So, just looking at it from a cost factor alone, I would say most anybody would pretty much benefit from having a trust-based plan versus a will-based plan.

 

Marc:

Bill, does that include the home value as well? Obviously, those have skyrocketed the past few years, so it’d be pretty easy to get to a couple of hundred grand.

 

Bill McQueen:

It would, yes. And I would include the home value in that as well, yes.

 

Marc:

Okay. All right, Nick, any final thoughts from you before we go?

 

Nick:

Really, I think the takeaway, and a lot of things have been pointed out, and something that we try to emphasize with people, whether it’s financial planning, whether it’s legal planning, is that strategy and how just a couple of decisions can make a dramatic impact on somebody’s overall situation and plan. Oftentimes, and Mark, you alluded to it, where people, for many years, had this perception of, whether it’s an advisor or an attorney, it’s something that only people with really substantial amounts of money have. And if anything, people with substantial amounts of money, they have a bigger buffer. You know what I mean? And can make more mistakes and recover, but really, a handful of decisions for a typical client that’s worked hard their whole life, saved a whole bunch, paid off their house, want to enjoy their retirement and hopefully pass on some money to their kids, they can really benefit from strategy planning and adapting to what’s going on.

 

Marc:

Yeah. For lack of a better term, Middle America, right? I mean, a lot of folks in Middle America could certainly use a team, a financial and legal team. And so, if you need some help, reach out to, of course, Bill and Nicole and their team there at Legacy Protection Lawyers. That’s LegacyProtectionLawyers.com. That’s where you can find them online, Legacyprotectionlawyers.com, or call 727-471-5868. We’ll put a link in the show descriptions of this week’s podcast as well. And you can also, as always, go to Pfgprivatewealth.com to get in touch with John and Nick. Don’t forget to subscribe to the podcast, Retirement Planning Redefined, on Apple, or Spotify, or whatever podcasting app you enjoy using. Bill, thank you so much for your time. Great information. We really enjoyed having you here.

 

Bill McQueen:

Thanks for having me, Mark and Nick, appreciate it very much. Enjoy it.

 

Nick:

Thanks, Bill.

 

Marc:

And we’ll see you next time here on Retirement Planning Redefined with John and Nick.

 

 

Understanding Estate Planning: Trust Types with Bill McQueen (Part 3)

On This Episode

This episode, we welcome estate planning attorney Bill McQueen of Legacy Protection Lawyers to break down the essentials of trusts and why they matter. Bill explains the key differences between wills and trusts, clears up common misconceptions, and highlights the importance of properly titling assets to avoid probate. You’ll also learn why beneficiary designations can override your trust, the pitfalls of leaving your trust unfunded, and how working with both financial advisors and attorneys ensures your plan truly carries out your wishes.

Learn more about Bill and Legacy Protection Lawyers

Contact info: www.legacyprotectionlawyers.com
Phone 727-471-5868

Subscribe On Your Favorite App

More Episodes

 

Check out all the episodes by clicking here.

Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

 

Marc:

Time once again for another edition of Retirement Planning – Redefined with John and Nick from PFG Private Wealth. We’re continuing our conversation, our great conversation, with the folks from Legacy Protection Lawyers. Nicole Cleland was on the podcast, and Bill McQueen is going to be joining us now on this episode as we talk a little bit more in-depth about what they do, and some of the differences when it comes to getting these financial and legal documents into place. As always, Nick’s here with me. Nick, my friend, how are you doing?

 

Nick:

Doing great. How about yourself?

 

Marc:

Doing pretty good. We had John on the last episode, so good to have you here with us, and Bill McQueen is joining us. So Bill, welcome in. Thanks for being here.

 

Bill:

It’s my pleasure. Thank you all for having me.

 

Marc:

Absolutely. Looking forward to chatting with you. And again, you guys are from Legacy Protection Lawyers, and you can find you guys online at LegacyProtectionLawyers.com. That’s LegacyProtectionLawyers.com. Give us a little background on you, Bill. You’ve been doing this for how long, and all that good stuff. Tell us a little bit about you first.

 

Bill:

Certainly. Well, I’ve actually been an attorney for almost 40 years, but I sort of had a circuitous professional career. I was a CPA for my first few years out of undergrad and then I went back to law school, practiced law for about seven years, but then I actually ran a family business. My father died when I was getting out of law school, so I took over a family business and ran that for about 15 years, and then came back to the practice of law about 15 years ago now, after I got a Master’s of Law in Estate Planning, and so that’s where my full focus has been over the last 15 years or so.

 

Marc:

Nice. Gotcha. Yeah, I mean, so obviously you’ve been doing this for a while, and you guys work with Nick and John, occasionally helping them out with some of their client situations as well?

 

Bill:

Yes, yes. We work closely with Nick and John and they help our clients out with financial planning and wealth management, and we help out in the estate planning arena when his clients need that.

 

Marc:

Nice. Nick, how long have you guys known each other?

 

Nick:

Bill, when you said 15 years, I was thinking about that, so I think it’s got to be close to 10 years, something like that? Around 10 years?

 

Bill:

Been at least that, because I started the firm back up in, I guess, 2013, so too soon after that. I met you through your other former partner and we started doing seminars and stuff together.

 

Nick:

Sure [inaudible 00:02:11]

 

Marc:

We all lose time in that COVID era, right? It seems like everybody always does that. We’re thinking about time and we’re like, “Oh, man, there’s like a three, four-year window I’ve lost when trying to think of some things.” Well, let’s get into our conversation today.

 

When Nicole was on, we kind of left off, Bill, where she was talking a lot about probate. She went through a lot of great topics and kind of broke some stuff down for us, needing an estate plan, what makes an effective estate plan, things of that nature. We kind of wrapped up a little bit on the probate conversation, and then we started to get into trusts, and she said you were the man when it comes to talking about trusts, so we thought we’d kind of kick things off there. So, tell us a little about what is a trust and just kind what some of the, I guess, misnomers that come with that conversation, or with that word.

 

Bill:

Sure. Well, actually, technically or legally, a trust is actually a relationship where legal title of the assets are held by one individual or an entity for the benefit of somebody else. But I tell people, “The easiest way to think of a trust is more analogize it to like creating a corporation or a limited liability company.” Again, technically it’s not an entity. We typically use trusts so that, as Nicole mentioned, I’m sure during the episodes that she was on with you, a last will and testament only controls where assets that are titled in somebody’s individual name go.

 

But in order to get those assets to the desired beneficiaries after the owner dies, we have to go through the court system to do that. And so many, if not most, of our clients instead use a substitute for a will, which is a trust, or a revocable trust, which allows us to take assets that are in somebody’s individual or joint name and retitle them into this trust while they’re alive so that when they die, the trust is basically still alive and it can direct where the assets go, but we don’t have to get the courts involved, which obviously saves a lot of money, time, and keeps everything private.

 

Marc:

Yeah, I think that’s a big piece for people too is the difference when going through probate … And I was telling Nicole, she said she was going to steal this from me and use it, and I said, “Hey, go ahead.” But I was like, I was always taught that a will just means you will go through probate, and she’s like, “Oh, I like that.” And obviously that’s public record, whereas if you do a trust, you can kind of keep those things private from creditors and things of that nature, correct?

 

Bill:

Yes. Oftentimes people think, “Well, I have a will, so because I have a will, I’ll avoid probate,” and that’s not the case. It’s all how the assets are titled. So, if they have a will, they’re executing their privilege to sort of personalize their estate plan where assets go. Otherwise, if they have something in their individual name and they don’t have a will, then Florida law basically gives them a will and says where the assets will go. But in either instance, we got to go through the court system.

 

With a trust, we don’t, and the trust definitely does remain private, so we do not have to posit a trust instrument if things are done correctly with the court system, as we do with a will. When somebody dies, by law, at least here in Florida, whoever has their original will or comes across it is required to posit it with the court in the county where they were residing at the time of their death, and at that time it becomes a public document. So, anybody, be that the nosy neighbor or the newspapers, reporters or whoever, could go down to the courthouse and read your will, see where you’re leaving your assets, maybe who you’re not leaving assets to, and even get some sense of what your assets are. That’s not the case when we use a revocable trust. All of that remains private.

 

Nick:

And just for clarity, for most of the people listening, the terminology, and correct me if I’m wrong, Bill. But the most popular or frequently used sorts of trusts are either living trusts or revocable trusts, which oftentimes are the jargon or the terminology goes hand-in-hand with each other, just from the standpoint of sometimes we’ve had clients confused between the difference of the two, or if there is a difference between those.

 

Bill:

Right. That’s right, Nick. Actually, when we talk about trusts, there can be trusts that are revocable trust, also revocable trust, I guess potato, potato, but a trust that’s revocable, which also sometimes is called a living trust or even a living revocable trust. But then there can be trusts that are irrevocable, and those are much more often used for more advanced planning type techniques, be that asset protection or estate tax minimization, or planning for nursing home care in the future, Medicaid planning.

 

But when most people talk about, “Oh, I have a trust as part of my estate plan,” we’re talking about a revocable trust. And so like a will, when somebody creates a revocable trust, they keep a lot of control over that, and they have the ability to amend the trust document at any point in time in the future. So, if they like their son-in-law today, but maybe they don’t like their son-in-law somewhere down in the future, they can change the trust and take the son-in-law out. They can even revoke the trust in its entirety if they want to, and if that were to happen, the assets would come back into their individual or joint name. So, when we’re typically talking about estate planning, we’re talking about a revocable trust, which again is just really a substitute for a last will and testament, because it’s going to direct where the assets go once you die.

 

When you have a revocable trust, sort of to give a little more clarity on it, typically, when someone sets up a revocable trust, the person who creates the trust serves as the trustee of the trust while they’re alive. And the role of trustee is sort of similar to being the president of the corporation, if we’re thinking of it like an entity, so that trustee has the authority to deal with those assets in the trust. What the trust says is that while the person who created the trust is alive, they can do anything they want with the assets in that trust, so they can consume them, they can give them away, they can put other assets in the trust, they can make loans or sell assets, just like they could if they were in their individual name.

 

But then the trust goes on to say, “If the person becomes incapacitated or they die, here’s what happens to the assets now,” and that’s when we put the same types of terms that we would normally put it in their will into that trust document. And so, the fact that when they die, they don’t have any assets in their individual name, hopefully they’re all in this trust, or they have beneficiary designations that put them into the trust, then those assets will go to where they want them to go, but we don’t have to get the court system involved again.

 

Marc:

Gotcha. Yeah, when you started talking about that, I was going to ask you, sometimes people … For folks who don’t deal in this world, or very often, we hear about being the executor of an estate, right? Is that different when you’re kind of in charge of the trust? Are those terms interchangeable, or is that different?

 

Bill:

No, good question. The executor is the common name for who would administer a probate estate or be in charge of a probate estate if you had a will and the assets were going through the court system. Here in Florida, we call that role something else, but it’s the exact same thing as an executor. We call it the personal representative of the estate.

 

A trustee is similar to that role of executor, but the trustee is in charge of assets that are in the trust or owned by the trust, and so they’re not assets going through the probate. So, both the trustee of a trust-based plan does pretty much the same types of things when someone dies as the executor or personal representative of a estate would have to do, a probate estate, if we’re using a will. And what I mean by that is, your revocable trust is responsible for paying any and all valid creditors that the deceased individual might’ve had at the time of their death, just like what happens with a probate system. And the trustee is also responsible to make sure that the deceased individual’s, all of their tax returns have been filed and taxes have been paid, things of that nature. So, they do a lot of the same sorts of things like an executor.

 

But again, they’re handling that initial administration outside of the court system, and so we can start right away. We’re not waiting for a court to appoint the person as trustee. In fact, on the day the individual who created the trust dies, we could appoint the successor trustee on that day even, because again, we don’t have to get the court involved, and we can start paying creditors and making sure all the tax returns are filed and taxes are paid, and we’re not waiting on the court system to handle all this. So, things go a lot quicker and smoother from that standpoint.

 

Marc:

Gotcha. Okay. Do you set up beneficiaries kind of the same way you would do with other things, and I guess you’re putting all the different assets under the trust umbrella, and then you have beneficiaries for individual items? Or is it like an overview in the trust, if that makes sense?

 

Bill:

I mean, what happens is, again, it sort of could mimic what’s in somebody’s will if they’re using a will.

 

Marc:

Okay. Gotcha.

 

Bill:

But what happened would be ideally, we’re either going to put all the assets into the trust during the person’s lifetime, or there’s some assets we can’t put into a trust. They have to stay in the individual’s name during their lifetime. The most common one for that would be retirement accounts. IRAs or 401k plans have to stay in the individual name of the owner or the participant under the plan up until their death, but we can direct those assets by a beneficiary designation into the trust once the individual dies, so we avoid the probate process by doing that.

 

Marc:

Gotcha.

 

Bill:

We may very well name individual beneficiaries, and occasionally, there might be specific assets that people want to leave to certain individuals, and so we would put those specific provisions in the trust document. Maybe they want to leave this house to somebody, their boat or some other piece of real estate or something of that nature. There might also be specific cash gifts they want to make. And then ultimately, we have what is typically referred to as the residuary of the estate, everything else that’s left over, where does that go?

 

We more often use percentages of somebody’s estate when we’re putting together an estate plan rather than specific assets or specific dollar amounts. And the reason we advise to do that is because whenever we’re doing an estate planning, I tell people, “We’re taking a photograph or a snapshot of what your life looks like today, what your assets are, what the current law is, who do you want to benefit, things of that nature. But hopefully, we’re not going to have to use these instruments until somewhere far out into the future, and we just don’t know what your estate might look like when that day comes, your death, that we have to now implement the plan.”

 

And if somebody is making a large gift, let’s say today their estate’s worth $3 million or something, and they’re going to give away $1 million to somebody, and then the rest they want divided among their children. If due to healthcare or other reasons, their estate goes down in value before they die to maybe it’s only $1,000,001 when they die, that individual’s still going to get the million dollars, and then their children are only going to split $100,000 versus the $2 million that they thought they were going to split when they put the plan in place. If instead they use percentages rather than specific dollar amounts, then it doesn’t matter as much whether their estate goes up in value or goes down in value. At least regarding the relative size of the gifts, they’ll be the same, and so that’s usually an approach we would prefer to take, really, than using specific dollar amounts for gifts within a trust.

 

Nick:

And I’ll jump in on that a little bit too.

 

Bill:

Yeah, please.

 

Nick:

Just because oftentimes, from a front line standpoint as an advisor, we’re sitting with clients and they’re adjusting beneficiaries. So one example of a conversation I’ve had with a client is, so maybe they have a 401k at a previous company and maybe it’s a couple hundred thousand bucks, and they have a beneficiary listed there. And then they have a second 401k that they’ve had at their current employer for the past few years, and there’s less money in there, and so people tend to segment accounts in their minds. And so they’ll say, “Well, I’ll put this other person on this one, because I have my sister or my brother or …” on the first one.

 

Just them not thinking that, “Well, hey, later on in life, things may be consolidated,” or you may spend from one account before you spend from another account, and using the percentage kind of strategy tends to be much more effective for people. And just to kind of jump on that beneficiary side of things too, because I know that you guys run into this and we run into it, but I think one of the things worth mentioning is, and you can kind of walk us through it more thoroughly, Bill, is just the conflict between beneficiaries listed on an account and a trust, and how one can supersede the other, because maybe somebody didn’t update their beneficiaries or things like that.

 

Bill:

Sure. When somebody dies, how assets can pass are in one of three ways, but one of the ways is by contract law, and those are assets that you can put a beneficiary designation on. And I mentioned earlier, retirement accounts are common accounts that you really need to put a beneficiary designation on. But on a lot of financial accounts, be that a bank account or a savings account or a brokerage account, if somebody wants to, they can hold that account in their individual name, but they can put a beneficiary designation on those that are referred to like a pay on death designation if it’s a bank account, or a transfer on death designation if it’s a securities or brokerage account. And what that means is that when the owner of that account dies, by contract law, the institution agrees to pay that account to whoever their named beneficiary is. All they have to do is take a death certificate to the institution, and that becomes that beneficiary’s account.

 

The issue that people need to keep in mind, though, is sometimes people put beneficiary designations on assets, and yet let’s say they have three children, and then through their will or their trust, they say, “When I die, I want to leave everything equally to my three kids,” but for whatever reason, they put a beneficiary designation on an account that named just one of the three children. Legally, that one child will inherit that account, because that’s what’s going to control that account, that beneficiary designation. And it doesn’t matter what their will or trust says, because it will pass outside of going through the probate process, and it also won’t go through the trust if it’s an account that was in their individual name with a beneficiary designation in favor of one individual.

 

And so, people need to make sure when they’re doing their estate plan that everything lines up and is in alignment, as far as accounts, if they have beneficiary designations on them, that they agree with whatever their trust or will that they’re using calls for. Or at least they have an understanding of how that’s going to flow. I don’t know if that’s what you’re referring to [inaudible 00:17:13]

 

Nick:

Yeah, yeah, just kind of the uniformity and the importance of, I think, from the extent from how we see things, that a lot of times as an advisor we suggest to a client to get an estate plan done, and then we stand ready, willing, and able to help them implement, like retitling accounts in the name of a trust or updating beneficiaries. But there’s instances where not all the accounts are through us or just different things that happen. And so that implementation, that second phase is super important, and I think people do kind of tend to assume that, well, hey, if I have my trust and I’ve gone through and I’ve done this process and I’ve written out exactly what I want to happen in my trust, then all my accounts should just automatically follow those rules. And I think people understanding that that’s not the case, that a beneficiary designation on an account can supersede a trust, is super important, especially if it happens to be an ex-spouse or something like that, which is not a great situation. So, I just wanted to bring that up.

 

Marc:

Okay. Yeah, that makes sense. And what we’ll do is we’ll do one more question here and then we’ll wrap this episode up, and that way we keep these at a normal timeframe, and then we’ll have Bill back on again for a continuing session to chat some more about this topic. One of the things I was going to ask you when you guys were running through some of this stuff, and I’ve heard this before from other advisors, that a common mistake is that you go through the time and the effort to get a trust put together, Bill, and then people don’t fund the trust. Can you kind of explain what that means?

 

Bill:

Right. Yes. That can be a common problem with a lot of individuals, and not with our clients, but [inaudible 00:18:53] the standpoint that some people think that, okay, I go to my attorney, they create this trust document for me that’s going to avoid probate. I sign the agreement and then everything’s done. That’s not the case.

 

What happens after you create the trust, you now have to what we call fund it, which means retitle assets out of that person’s either individual or joint name into the trust, or add beneficiary designations onto the assets, if they’re able to use a beneficiary designation that would be in favor of the trust so that when they die, even though the account is in their individual or joint name, it automatically passes into the trust. If somebody doesn’t do that, if they don’t fund the trust, if they just sign the instrument, but they don’t go out and retitle these various assets, then what’s going to happen? They’re going to die, at the time of their death, the trust doesn’t have anything in it yet.

 

And when you have a trust-based plan, if it’s done right, you’re still going to have a last will and testament that we refer to as a pour-over will. That’s really there to catch assets that for whatever reason were not put into the trust, or a beneficiary designation was not put on them directing them to the trust at the time of the person’s death. So that pour-over will says, “Hey, when Bill dies, if we find anything in his individual name, this will’s going to take that asset and pour it over into Bill’s trust that will direct where the assets go.” But to get that asset or assets out of Bill’s name over into that trust, we got to go through the probate process to do it.

 

Marc:

Oh, wow.

 

Bill:

We don’t want that to happen, so it’s very important that when your trust is put in place, that your attorney and your financial advisors and everybody, that we have all this information. That’s why we work very collaboratively with advisors like Nick and John to make sure that we’ve identified all their assets, and that they are titled into the trust at the time they create the trust, or they get a beneficiary designation on it.

 

And the way you title those assets into the trust, I tell people the rule of thumb is, if you were going to sell that asset to somebody else, how would you do it? So if it’s real estate, we have to do a deed and deed it from that person’s individual name into the trust. If it’s a interest in a closely-held company like a corporation or an LLC, we have to do an assignment of that interest over to the trust, or a new stock certificate. If it’s accounts like that Nick and John are managing, then it’s very easy. They go ahead and retitle those accounts from the person’s individual name into the trust. But all those steps have to be taken, because otherwise they’ve got this trust document that ultimately will direct where the assets go after they die, but we’re going to have to go through the probate process to get the assets into that, and it sort of defeats one of the primary purposes of having a revocable trust.

 

Marc:

Exactly, so you’ve got kind of like a shell with not much in it, I suppose.

 

Bill:

Right, exactly.

 

Marc:

Okay. Well, look, so as Bill said, a lot of times they got to work hand-in-hand, so that’s the importance of a team and working with financial planners and estate planning attorneys, and so on and so forth. We talked quite a bit about that the last couple episodes. If you need some help, we’re going to jump out, we’ll come back in with a new episode here in about a week or so, so reach out to John and Nick, or reach out to Bill and Nicole as well. You can find Bill and Nicole at LegacyProtectionLawyers.com. That’s LegacyProtectionLawyers.com. They’re based out of St. Petersburg, Florida. You can check the show description. We’ll have a link down there for you. Or you can also just call 727-471-5868, 727-471-5868.

 

And of course, if you want to talk with John and Nick, as always, don’t forget to subscribe to the podcast and find them online, and all that information is at PFGprivatewealth.com. That’s PFGprivatewealth.com. Nick, thanks for being here, my friend, as always, and of course, Bill, thanks for being here and being our special guest. A lot of great information and really did a great job kind of breaking that down for folks.

 

Bill:

Thank you. I enjoyed it.

 

Marc:

Absolutely, so we’ll have you back on in about a week or so. We’ll talk a little bit more about our four-part series on estate planning with John and Nick on Retirement Planning – Redefined.

 

 

Understanding Estate Planning: Wills and Probate with Nicole Cleland (Part 2)

On This Episode

This episode, we welcome back estate planning expert Nicole Cleland to discuss important topics such as how property passes after death, the rights of spouses and blended families, challenges minors face when inheriting, and the benefits of avoiding probate. Whether you’re single, married, or navigating a complex family dynamic, this episode offers valuable insights to help you protect your legacy and plan effectively for the future.

Learn more about Nicole and Legacy Protection Lawyers

Contact info: www.legacyprotectionlawyers.com
Phone 727-471-5868

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Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

 

 

Marc:

Time once again for another edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. And once again, we’re going to continue our conversation with Nicole Cleland on estate planning. So really happy to have her back on this chat with us. And if you’ve got questions, need some help when it comes to the legal side of things, reach out to them at legacyprotectionlawyers.com. That’s legacyprotectionlawyers.com. And of course, if you’ve got some questions on the financial side, reach out to John and Nick at pfgprivatewealth.com, pfgprivatewealth.com.

 

Nicole, welcome back in. Thanks for being here again.

 

Nicole Cleland:

Thanks for having me again.

 

Marc:

Lovely to talk with you. And John, my friend, thanks for being here as we continue this chat with Nicole. We covered a lot of stuff and I want to kind of circle back to a few pieces. We were talking about property, how it passes on death. Who should inherit your assets? I think that’s kind of maybe a big question for people in general.

 

Nicole Cleland:

So this is what we call testamentary intent, meaning you can leave your assets to whomever you want. There is no restriction or requirement on who takes from your estate. However, most states, Florida included, has a law that says if you are married, you cannot disinherit your spouse. And sort of the philosophy behind that is if you had, back in the old days, husbands were the breadwinners, wife stayed homemaker. And if husband wanted to leave assets to someone else, his children, a mistress, something like that, the law would not allow you to disinherit that spouse. And that’s sole control.

 

So the law presumes that spouses are meant to be taken care of and you cannot leave your spouse less than a certain percent. In Florida, that percent is 30%. So although you can disinherit the rotten children, you can’t disinherit the spouse.

 

Marc:

Okay. I like that.

 

John:

So I’d also say this becomes very important when you have blended families. I’ll say that.

 

Nicole Cleland:

Absolutely.

 

John:

Working with clients where it’s second marriage, kids. This becomes a very important topic that I think most people I’ll say that haven’t gone through an estate plan or just haven’t made that decision yet to go through it, have no idea this even exists. And also I’ve even talked to some pretty savvy attorneys that I’ve talked to and I mention it, like, “What are you talking about?” And they look it up and they’re like, “I had no idea.”

 

Nicole Cleland:

Yeah, it’s one of those things that a lot of people don’t realize because again, circling back to that testamentary intent, you should be able to leave your assets to whomever you want, but the law’s not going to say that for a spouse. And you’re right on the money there, John, with the blended family situation.

 

And I usually try to even say it’s not always that later-in-life marriage couple. So if you’ve got a husband and wife that get married later in life, they both have children from prior relationships, we usually find that they honor that testamentary intent, meaning, all right, husband, whenever you pass, you can leave your money to your children and then I’m going to leave my money to my children. We don’t need to leave anything for each other. We’re getting married later in life. We’ve built our wealth so we don’t need to support each other.

 

But what ends up happening is if my husband passed away and I’m still alive, I might be older and a little bit more vulnerable. And usually I find that it’s the kids of the surviving spouse that end up saying, “No, mom, you’re entitled to that elective share. You’re entitled to that 30%. You need to pursue it.” And it’s usually the children of that surviving spouse in that blended marriage that end up trying to push for things that that married couple really had no intent to do.

 

Marc:

Is it easier or more complicated for folks on a… I guess if you’ve never had children and just you’re single or whatever, do people feel like, “Well, I don’t need any of this stuff because it’s just me”? But you still have to leave your stuff somewhere, right?

 

Nicole Cleland:

Right. No, and I think it’s where whether you’re single, whether you’re married, like I mentioned on our last podcast, I made a comment that everyone has an estate plan, you just may not know what it is.

 

Marc:

Right.

 

Nicole Cleland:

So a lot of people where let’s say you have a young person who’s working out in Silicon Valley, they graduated from an Ivy League school, they’re making a ton of money out there, and they were raised by their mom but have no relationship with their father. In that instance, if that single individual passes away, not married, no children, their money’s not going to go to the mom that raised them single-handedly. It’s going to go 50/50. And I see that. I see those instances where you have money going to estranged family members, family members you had no relationship with because you just did not know what the law was going to presume you wanted.

 

Marc:

Yeah, that makes a lot of sense. And it gets really interesting because it’s more complex than I think people realize, but yet it’s also something simple to handle. You just need to get it done. And that’s where making sure that you’re checking off beneficiaries and all those things come into play as well.

 

John:

And I’ll jump in here. Just I’d say that the biggest thing I think doing estate plan, and I’ll say guilty where I didn’t officially do one until my daughter, my first daughter was two, it was just kind of peace of mind that it was done. Because it was always kind of lingering there like, “Hey, you got to get this done.” And finally when I did it was just like, “Hey, I’m good.” And then we make updates to it. But it was a relief to get it done and know that my wishes would be taken care of if something happened to me and Jenny.

 

Nicole Cleland:

And I think that type of planning is very important for younger couples that do have children. You can name who you would want to have what I call custodial care for your child, who your children would live with if something happened to you and your spouse. But that also doesn’t mean that has to be the same person that’s managing the money. So you might have one person that decides whether your child goes to public or private school, whether they go to church or not, but then you can have someone else be the one to manage the checkbook, so to speak.

 

But the other thing that’s wrecking havoc on our world a little bit is ancestry.com, believe it or not. We’re having children that no one knew existed come to the forefront. So that’s where planning could be even more important is you might have biological children that you did not know about.

 

John:

So I got to ask, I know this isn’t a topic we were going to discuss, but how often is that happening and do those surprise kids, let’s call it, have any rights?

 

Nicole Cleland:

Great question. So I’ve had it come up once, and it was in the context of what we call an intestate estate. So there are two different types of probates in the sense of who are your beneficiaries, meaning an intestate estate is a probate administration where the decedent had no will. So the law declares who your beneficiaries are, who your heirs are. A testate estate is a probate administration where you have a will. And so your will that you’ve created dictates the beneficiaries under your estate administration.

 

Most wills, at least I will say most good wills define who your children are. So for example, if I was creating a will for someone, I would say, “Okay, your children are A, B, and C. and for purposes of this document we’re limiting your descendants or your children to those three kids.”

 

Now, with an intestate estate, the one that I’m speaking of that we had happen is the family sort of was suspicious of this individual being a descendant. And after a paternity test, it was deemed true. But that didn’t come to fruition until after the person had passed and the parent of this minor wanted to stake a claim in the estate. And they were successful because they were a biological child, even though there was no relationship at all, the child did not know the other family members. But they were an equal child to all the other children, even though they’re technically half sibling. But it was a direct child of the decedent.

 

Marc:

Wow. Yeah, it gets a little sticky there. So we tend to think about that with celebrities or something like that. But I guess, yeah, it can happen anywhere.

 

Nicole Cleland:

Yeah, it really can. And it’s not fun to manage because now as the attorney, I’m having to really make sure my clients understand, my executors or my personal representatives, I have to ask them, “Are you sure these are the only children of the decedent?”

 

Marc:

I’m sure you get, “What kind of question is that?”

 

Nicole Cleland:

Correct. Yeah, it’s not a fun one, but it’s something that I have to say, really make sure we’ve got the right heirs here.

 

Marc:

Yeah, that certainly, it was a great question by John. I didn’t even think about that, kind of kids coming out of nowhere. And maybe this is one reason, Nicole, why people want to avoid probate amongst other reasons, right? Because if you’re going to a trust or something like that, you have more privacy, correct? Where probate is out in the open.

 

Nicole Cleland:

That’s correct. So trust administrations are typically private, meaning we don’t file the trust anywhere. We don’t have any sort of public record of the administration process. But probate is the opposite. We have to deposit your will with the court. The probate administration is all public record. So whenever you have a probate proceeding, we talked in our last session about how long it can take. I’m saying now the average is about 12 to 18 months. And a lot of that is, I think directly dependent on your fiduciary, your personal representative that you have serving in that role. Some of it is the court, but a lot of it is that person that you have named.

 

But a lot of people tend to shy away from probate administrations, not because it’s necessarily public and not so much because of the delay, but the cost. The cost for probate proceedings here in Florida are statutory, which means there is a Florida statute dictating the schedule on what is deemed a reasonable fee for not just your personal representative but the lawyer.

 

And in Florida, 3% of the probate estate is deemed reasonable. So if you’ve got a million dollar investment account that needs to go through probate, and it could just be the one account, what would be presumed a reasonable fee under Florida law would be 3%, 3% for the lawyer and 3% for your personal representative. So just right there, you’ve got 6% coming from that million dollar account, $60,000 for a probate administration. So the cost can add up fairly quickly, especially the bigger and the more complex the size of the estate.

 

John:

Yeah. And I’ll add to that just kind of personal experience. You don’t know what you don’t know. And I’ll tell you that even though I’m somewhat in the industry, not an attorney, there’s a lot of questions that I’m having for helping my wife be the executor of her father’s estate. And it’s like, “Hey, what about this?” So we’re emailing the probate attorney quite a bit of just, “Hey, what about this scenario? What about this?” And there’s a lot of nuances that I think the average person just is not aware of.

 

Nicole Cleland:

Absolutely. I think for most administrations, we always joke here in the estate planning world in the administration side is there’s no easy probate. There’s something new in every single probate administration that you have just because the family dynamic could be different, the type of asset that could be different. You could have what I would deem a very easy probate where the only thing we have to transfer title to is maybe the house. But let’s say the house isn’t selling. Let’s say the mortgage is worth more than the house, or there’s a special assessment on the condo or one of the beneficiaries doesn’t want to consent to the sale. Something, anything can just come up at any time with a probate administration that can turn what I would deem an easy probate into a very, very complicated one.

 

And like John said, you don’t know what you don’t know, and sometimes you can’t envision or foresee what’s going to happen at the end of the probate proceeding. But surprises do often come along. And that’s where I think sometimes experience can really matter in terms of the type of attorney that you pick because they’re going to have experience dealing with this type of issue, this type of condo that’s being sold or this type of family dynamic that’s occurring or something like that.

 

John:

Nicole, how about something that comes up a lot with I would say Nick and I is minors. Minors that potentially could or have inherited money that maybe they were listed on a beneficiary account and the person didn’t know the rules in Florida with minors inheriting money. How does that work?

 

Nicole Cleland:

Yeah, that is just not great planning, frankly. I think a lot of people who maybe don’t have a lot of wealth or have young children, they name their minor children as a default, and it becomes really sticky very quickly. And even in the best of scenarios where let’s say you’ve named your minor as the beneficiary on an account, and let’s say we have to do a guardianship for that child because minors can’t manage over a certain dollar amount, or let’s say you even have a custodial account, even if all of those get teed up perfectly, at the end of the day when those minors inherit the money, they’re 18 years old or 21 years old, or even 25 years old. And I don’t know about you, but I don’t see a lot of financially savvy or financially prudent 18-year-olds or 21-year-olds.

 

So it ends up being where even in best of scenarios, without proper planning for young kids, it’s really hard for someone in their early twenties to inherit any type of money, not just a significant amount.

 

John:

Yeah, I’d say one thing we come across when we’re doing initial consults, we’ll do reviews of beneficiaries and we’ll see minors as contingents. And that’s where, going back to who needs an estate plan or why, I think people really need to take a look at that with kids.

 

Nicole Cleland:

They really do. Because that’s the one where, again, even if we’re able to do the guardianship for that minor or a custodial account or something, it just doesn’t work well when you have a young person inheriting.

 

I’ve had a minor, no, actually take that back, they were an adult, inherit a life insurance policy, and I think they were 21, what the law presumes financially mature enough to inherit money. And this 21-year-old spent over half a million dollars in life insurance in a year.

 

Marc:

Wow.

 

Nicole Cleland:

And they had nothing to show for it at the end of that year, nothing. It was you almost felt guilty asking them what did you even spend that money on? Because they’re just so young. And it wasn’t necessarily their fault in the sense that that was not the planning that should have been put in place for that person.

 

Marc:

Yeah, their sneaker collection was amazing.

 

Nicole Cleland:

Yeah, I couldn’t even say that. There was no collection to speak of.

 

Marc:

Oh, geez.

 

Nicole Cleland:

I have no idea where the money went.

 

Marc:

Really? Oh, no. Well, that’s terrible. That’s the importance, right? That’s the importance of, and that’s a great way to wrap up this episode, Nicole, the importance of planning for the individual, for the situation, just it’s paramount. Right?

 

So get onto the calendar, have a conversation. If you need some help, reach out to Nicole and the team at legacyprotectionlawyers.com, that’s legacyprotectionlawyers.com, or call them at 727-471-5868. That’s 727-471-5868 to have a conversation about your situation. And of course, as always, don’t forget to subscribe to the podcast, Retirement Planning Redefined with John and Nick. You can find that on Apple or Spotify. And of course, if you need to make it easy, just go to their website and get some time with them as well, pfgprivatewealth.com. That is pfgprivateweath.com.

 

Nicole, what does it look like if people want to reach out to you and the firm?

 

Nicole Cleland:

We would love for clients to reach out and ask to meet with one of our attorneys to get a little bit more of a specific recommendation as to their family and their situation. Everyone is different. There’s no cookie-cutter approach to planning, and it’s important that people talk to an attorney or a professional that can be a little bit more custom approach to their type of plan. So they can give us a call and we can offer a complimentary consultation to kind of go over that in more detail with them.

 

Marc:

All right, there you go. So thanks so much for listening to the podcast. We appreciate it. Again, reach out to them at legacyprotectionlawyers.com. That’s legacyprotectionlawyers.com. And thanks for tuning in to Retirement Planning Redefined with John and Nick.