Demystifying Wills and Trusts: Avoiding Probate and Planning Your Legacy

100:00:00,890 --> 00:00:08,790Coming up on this episode of the HWWPlawyers do not recommend wills they200:00:08,790 --> 00:00:15,339recommend trust the problem or issueswith probate is that like i said before300:00:15,499 --> 00:00:22,710welcome to the healthy wealthy and wisepodcast with dr william t chalk tall md400:00:22,940 --> 00:00:28,740jd a special episode featuring attorneybernie brown former los angeles deputy500:00:28,740 --> 00:00:33,770city attorney author and podcasterYou've got questions, he's got answers.600:00:33,870 --> 00:00:38,540Join us listening in as Bernie sharesfacts, wisdom, and knowledge at the Don't700:00:38,550 --> 00:00:40,770Leave a Mess conference held at the St.800:00:40,770 --> 00:00:44,520Stephen Missionary BaptistChurch in La Puente, California.900:00:44,520 --> 00:00:46,959Wow!1000:00:46,959 --> 00:00:49,070This is almost as good as a jury trial.1100:00:52,240 --> 00:00:52,810Okay.1200:00:53,740 --> 00:00:54,220Alrighty.1300:00:54,450 --> 00:00:55,970Well, God bless you all.1400:00:56,245 --> 00:00:57,095Praise the Lord.1500:00:58,085 --> 00:01:03,625Today we're going to talk about how tocontrol your property after you die.1600:01:05,634 --> 00:01:06,705That has a ring to it.1700:01:06,915 --> 00:01:09,674Thirty five percent ofall wealth is inherited.1800:01:10,620 --> 00:01:13,300You can't take it with you.1900:01:13,820 --> 00:01:17,160So why not give it to someone you love?2000:01:17,610 --> 00:01:20,760Leave it to someone you love sothat they can have a happier life2100:01:21,150 --> 00:01:23,229or at least a more comfortable life.2200:01:23,799 --> 00:01:28,000So basically what we're talkingabout today is wills and trust.2300:01:29,500 --> 00:01:32,810Now, I'm going to try to breakeverything down as simple as possible.2400:01:33,240 --> 00:01:33,600Okay?2500:01:33,600 --> 00:01:34,700Make it simplistic.2600:01:35,180 --> 00:01:38,024A will is a documentthat designates a will.2700:01:38,515 --> 00:01:43,865Who you want to receiveyour property after you die.2800:01:44,945 --> 00:01:45,375Okay.2900:01:45,875 --> 00:01:52,795A trust is a document whereby youtransfer your property to the trust.3000:01:53,865 --> 00:01:58,215And a trustee controls thetrust while you are alive.3100:01:58,595 --> 00:02:04,875You can name yourself as the trustee,which means you will still be in3200:02:04,875 --> 00:02:07,505control of all of your property.3300:02:08,194 --> 00:02:14,304And you name a successor trustee, theperson who will take over when you3400:02:14,304 --> 00:02:21,904die, who distributes your propertyto your designated beneficiaries.3500:02:22,480 --> 00:02:26,459So you're in control ofyour property after you die.3600:02:27,159 --> 00:02:29,089What happens when you die?3700:02:31,299 --> 00:02:33,219Your property is frozen.3800:02:33,605 --> 00:02:35,195That's basically what happens.3900:02:35,605 --> 00:02:41,155Your beneficiaries, your heirs,they cannot sell your property.4000:02:41,424 --> 00:02:45,424They cannot receive rents orproceeds on your property.4100:02:45,774 --> 00:02:52,915They basically can't do anything withyour property until the court approves it.4200:02:52,954 --> 00:02:56,285Now there are exceptions and we'regoing to talk about those exceptions.4300:02:56,785 --> 00:03:00,195But basically everything is frozen.4400:03:00,885 --> 00:03:06,215So, the court that makes thedetermination of who gets your4500:03:06,234 --> 00:03:12,965property based on your will or yourtrust is called the probate court.4600:03:13,974 --> 00:03:21,405Now, basically what happens whenyou die, If you have a will, your4700:03:21,584 --> 00:03:26,054property all goes into probate court.4800:03:26,765 --> 00:03:29,875What's created is a probate estate.4900:03:30,704 --> 00:03:35,695Alright, so when it goes in,what happens is, in your will5000:03:35,704 --> 00:03:37,464you would name an executor.5100:03:38,295 --> 00:03:43,015And your executor will hire alawyer, and the lawyers will all get5200:03:43,174 --> 00:03:45,304together, well, not get together.5300:03:49,714 --> 00:03:54,064They will hire a lawyer thatwill file an application with the5400:03:54,094 --> 00:03:56,434probate court to start the process.5500:03:57,265 --> 00:04:03,135in probate court so that the courtcan examine your will and determine5600:04:03,135 --> 00:04:10,424your assets and determine who, basedon your will, is entitled to receive5700:04:10,424 --> 00:04:17,235your assets and to begin the processfor distribution of your assets.5800:04:17,444 --> 00:04:17,914Okay?5900:04:18,694 --> 00:04:27,765Now, generally speaking, Lawyers do notrecommend wills, they recommend trust.6000:04:28,294 --> 00:04:32,674The problem or issues with probateis that, like I said before,6100:04:33,114 --> 00:04:39,655your property is frozen until theprobate court makes a decision.6200:04:40,324 --> 00:04:45,444The probate process can take upto one or one and a half years.6300:04:45,905 --> 00:04:51,454So during that process, it canalso be an expensive process6400:04:51,824 --> 00:04:53,564because you have to hire lawyers.6500:04:53,565 --> 00:04:55,525Lawyers have to come in.6600:04:56,064 --> 00:05:00,514The probate court willfrequently hire appraisers.6700:05:00,594 --> 00:05:01,225Okay.6800:05:01,615 --> 00:05:03,294They may hire accountants.6900:05:04,044 --> 00:05:06,424You may have to pay court fees.7000:05:07,094 --> 00:05:16,575So generally, lawyers Recommendtrying to avoid the probate process.7100:05:16,815 --> 00:05:21,515And generally, they do thatthrough a trust, all right?7200:05:22,155 --> 00:05:28,095Now, there are, I just wantto give you a basic overview.7300:05:28,904 --> 00:05:33,615There are several waysto avoid probate, OK?7400:05:33,655 --> 00:05:37,284And I'm just going to quickly gothrough some of the possibilities.7500:05:38,135 --> 00:05:42,635One possibility is just givethe property to whoever you want7600:05:42,645 --> 00:05:44,424to have it while you're alive.7700:05:45,054 --> 00:05:48,114Now, there are advantages anddisadvantages of giving the7800:05:48,114 --> 00:05:50,235property away while you're alive.7900:05:50,475 --> 00:05:53,614If you give it to them whileyou're alive, then you no longer8000:05:53,614 --> 00:05:54,755own it while you're alive.8100:05:55,375 --> 00:05:59,804And that's a disadvantage because youwant to continue to own the property.8200:06:00,584 --> 00:06:05,174A second alternative iswhat's known as joint tenancy.8300:06:05,490 --> 00:06:10,560What generally happens when youbuy a home is frequently you take8400:06:10,560 --> 00:06:13,340in what's called joint tenancy.8500:06:13,840 --> 00:06:18,860Now under the law, a joint tenancydoes not go through probate.8600:06:19,219 --> 00:06:23,049It transfers automatically when you die.8700:06:23,589 --> 00:06:28,960So, if there's a husband and wife,wife and spouse, when one spouse8800:06:29,020 --> 00:06:31,740dies, if they own the, the home.8900:06:32,625 --> 00:06:36,525In joint tenancy, when onedies, the property automatically9000:06:36,544 --> 00:06:38,965transfers to the other spouse.9100:06:39,545 --> 00:06:43,755Now, that sounds great, and that's easy,it doesn't have to go through probate.9200:06:44,195 --> 00:06:50,485The issue becomes, when these bothspouses die, then you need either a9300:06:50,485 --> 00:06:55,795will or a trust to control who getsit afterwards, which namely might be9400:06:55,795 --> 00:06:59,985your children, but they're not partof the joint tenancy, so that's why9500:06:59,985 --> 00:07:01,605you would need a will or a trust.9600:07:02,285 --> 00:07:06,760Now, in California and severalother states, there are still oh,9700:07:06,960 --> 00:07:08,909she's waving, is that the time?9800:07:10,229 --> 00:07:10,739How many?9900:07:11,340 --> 00:07:12,380Okay, five minutes.10000:07:14,609 --> 00:07:18,520This is the sixth, almosta year class in law school.10100:07:18,520 --> 00:07:23,439And I have five minutes.10200:07:26,879 --> 00:07:30,469Okay, so, pardon me ifI start speaking fast.10300:07:31,399 --> 00:07:34,019Okay, so there are alsowhat's called pay on desk.10400:07:34,614 --> 00:07:35,554designations.10500:07:35,884 --> 00:07:38,504There are transfer on death deeds.10600:07:38,744 --> 00:07:42,404There's a deed that you can go, you canget the form and it's set up so that when10700:07:42,405 --> 00:07:47,274you die, automatically your property,your deed, your real estate transfers10800:07:47,584 --> 00:07:49,354to the person who you've designated.10900:07:49,354 --> 00:07:54,294Transfer on death does not go throughObviously life insurance, you name the11000:07:54,304 --> 00:07:58,504beneficiary in your life insurance,so that doesn't go through probate.11100:07:58,824 --> 00:08:00,054That's automatic.11200:08:00,614 --> 00:08:03,354Living trust, we're goingto talk about living trust.11300:08:03,835 --> 00:08:08,424But that's a document that's createdthat does not go through probate.11400:08:08,754 --> 00:08:11,924A lot of times with regardto your retirement accounts.11500:08:12,565 --> 00:08:16,335They don't go through probatebecause you've named a beneficiary.11600:08:16,665 --> 00:08:21,545Also, there's what's known as a payon death account, and a designation,11700:08:21,845 --> 00:08:25,195and that's where you tell thebank that you want them to convey11800:08:25,195 --> 00:08:30,064your bank account, whatever's init, to whoever upon your death.11900:08:30,505 --> 00:08:34,135So Let me just briefly, I'm goingto be talking faster, I'm going to12000:08:34,135 --> 00:08:35,344get faster, I'm going to get short.12100:08:35,864 --> 00:08:37,224Death without a will.12200:08:37,604 --> 00:08:39,154What happens if you die without a will?12300:08:39,154 --> 00:08:39,974It's called intestate.12400:08:40,804 --> 00:08:45,314That's basically, the courtdetermines who gets your property12500:08:45,494 --> 00:08:47,444if you die without a will.12600:08:47,754 --> 00:08:54,394Okay, and they have certain rules aboutwho gets what based on who your heirs are.12700:08:54,684 --> 00:08:58,004So if you die without a will, thecourt's going to control everything12800:08:58,004 --> 00:09:01,434and they're going to determine whogets your property based on the will.12900:09:02,114 --> 00:09:07,884I'm sorry, based on the rules of thestate of California or whichever state.13000:09:08,304 --> 00:09:10,904is in conducting the probate process.13100:09:11,464 --> 00:09:13,644Basically, just very quickly, wills.13200:09:14,354 --> 00:09:17,714Wills control, like I said,who gets your property.13300:09:17,774 --> 00:09:20,324Wills are revocable.13400:09:20,504 --> 00:09:23,524You can change it, you tear itup, rip it apart, write a new one,13500:09:23,884 --> 00:09:25,224revoke it, you can get rid of it.13600:09:25,670 --> 00:09:29,529As long as you're alive you can do that.13700:09:29,530 --> 00:09:36,309Ok.13800:09:36,309 --> 00:09:38,929Like I said earlier, wheelsdo go through probate.13900:09:39,749 --> 00:09:44,814Creditors One of the things creditors mustmake their claims in the probate court.14000:09:44,814 --> 00:09:47,554If they don't make their claimin the probate court, their14100:09:47,554 --> 00:09:49,104claims are forever waived.14200:09:49,414 --> 00:09:50,764That's creditors of the state.14300:09:51,214 --> 00:09:55,605You can name a guardian in your willto be guardian for your children.14400:09:56,004 --> 00:09:59,704You can provide, you can disinheritanybody you want to disinherit.14500:10:00,824 --> 00:10:03,954However, they still mayhave to pay child support.14600:10:04,374 --> 00:10:07,244That might be paid out ofyour out of your estate.14700:10:07,764 --> 00:10:12,554Basically to To to create a will,well, to authenticate a will, you14800:10:12,554 --> 00:10:17,674know, it has to be signed and dated infront of two witnesses and notarized.14900:10:17,914 --> 00:10:22,544And everybody has to be in the sameroom at the same time when that happens.15000:10:22,914 --> 00:10:28,694Let's talk about another alternative, andthat's what we call a holographic will.15100:10:29,579 --> 00:10:33,189A holographic will is legal in thestate of California, and legal in15200:10:33,189 --> 00:10:35,439many states throughout the nation.15300:10:35,709 --> 00:10:39,289And basically what it is,it's a free handwritten will.15400:10:40,109 --> 00:10:45,679Now the key is you have to entirelywrite the entire document out.15500:10:46,119 --> 00:10:50,449You have to write down, thisis my last will and testament.15600:10:51,449 --> 00:10:54,369And this is, you basically saywho you leave it to, and then15700:10:54,369 --> 00:10:55,639you have to sign and date it.15800:10:56,119 --> 00:11:00,899And if you do that, and if you don'tinclude any typewritten, no typewritten15900:11:01,239 --> 00:11:06,869stuff in there, then that is a validwill in the state of California.16000:11:06,879 --> 00:11:07,419It's free.16100:11:07,629 --> 00:11:09,319You didn't have to pay anybody anything.16200:11:09,559 --> 00:11:12,969Signed, dated, handwritten, free will.16300:11:13,309 --> 00:11:17,879Now so, that's one way to getaround the entire process.16400:11:18,339 --> 00:11:23,029Like I said, there's authentication ofwills, because I'm running out of time,16500:11:23,029 --> 00:11:25,359I'm going to go briefly into trust.16600:11:25,889 --> 00:11:28,619There are several types of trust.16700:11:29,529 --> 00:11:31,249Basically the parties to a trust.16800:11:31,829 --> 00:11:36,189is the person who creates the trust,which is usually you, you create the16900:11:36,189 --> 00:11:40,909trust, and you name yourself as thetrustee, so you're still in charge of17000:11:40,909 --> 00:11:46,399all of your assets and everything, andthen you name a successor trustee, the17100:11:46,399 --> 00:11:51,099person who's going to come after you,who's going to distribute your property17200:11:51,419 --> 00:11:54,349to whomever you want it distributed to.17300:11:54,919 --> 00:11:56,929Trust, avoid probate.17400:11:57,584 --> 00:12:02,424They do not have to go through probate,whatever, whatever property you put into17500:12:02,424 --> 00:12:06,334the trust, you can transfer automatically.17600:12:06,554 --> 00:12:09,914So you don't have thatyear, year and a half delay.17700:12:10,224 --> 00:12:11,764You don't have all the attorney's fees.17800:12:11,774 --> 00:12:14,484Now here's the issue with,with the fees on trust.17900:12:15,629 --> 00:12:20,439The trust costs more up front, becauseit costs more to create a trust.18000:12:21,259 --> 00:12:24,869But, even though it costs moreup front, there is no probate.18100:12:24,929 --> 00:12:27,389So you don't have to gothrough the probate process.18200:12:27,649 --> 00:12:30,599The probate process can be,oh, she's walking toward me.18300:12:37,619 --> 00:12:40,709You don't have to go through theprobate process, so you don't have18400:12:40,709 --> 00:12:44,769to pay for those fees, the attorneyfees, the court fees, the accountant18500:12:44,909 --> 00:12:48,759fees, the appraiser fees, all ofthose different kinds of fees.18600:12:50,634 --> 00:12:53,774Also, just like a will,a trust is revocable.18700:12:55,164 --> 00:13:00,104You can revoke the trust, right, herebyrevoke this trust and no longer want18800:13:00,104 --> 00:13:05,604to do, and write a new trust, preparea new trust, and so that, you know,18900:13:05,624 --> 00:13:07,274those are the alternatives available.19000:13:08,214 --> 00:13:11,684There are severaldifferent types of trust.19100:13:12,234 --> 00:13:18,274The two main types of trust arerevocable trust and an irrevocable trust.19200:13:18,584 --> 00:13:22,664An irrevocable trust givesyou more protection from your19300:13:22,724 --> 00:13:24,994creditors and possibly tax.19400:13:25,584 --> 00:13:30,344Protections, a revocable trustgives you more control because19500:13:30,344 --> 00:13:31,934you still control the property.19600:13:32,574 --> 00:13:39,534An irrevocable trust, you lose somecontrol of the property, whereas19700:13:39,574 --> 00:13:45,854with a revocable, revocable trust,you still retain complete control.19800:13:46,344 --> 00:13:47,724of your property.19900:13:48,164 --> 00:13:50,754There are several other typesof trusts, but we'll get into20000:13:50,754 --> 00:13:52,394those later in the breakout room.20100:13:53,274 --> 00:13:59,554There's a spin thrift trust, Totten trust,pour over trust, testamentary trust.20200:13:59,974 --> 00:14:03,034There are a zilliondifferent kinds of trusts.20300:14:03,454 --> 00:14:06,424The trusts are authenticatedin the same way as the will.20400:14:06,904 --> 00:14:14,014You, two witnesses, witnessing whileyou, when you sign the document.20500:14:14,564 --> 00:14:20,144And everybody's signing off infront of a notary public just for,20600:14:20,574 --> 00:14:24,384just for Informational period,I mean information you can get a20700:14:24,384 --> 00:14:25,884notary public loan signing agent.20800:14:25,964 --> 00:14:30,664You just contact used to be AAA,and I think it is still AAA.20900:14:30,804 --> 00:14:33,864You call them, tell them you want a notarypublic loan signing agent to be present.21000:14:33,874 --> 00:14:38,924You want some documents signed, and youcan appear at AAA and sign the documents.21100:14:39,734 --> 00:14:47,174And and have the whole thing notarizedthere in front of the your witnesses.21200:14:47,174 --> 00:14:51,774I think I'm, I'm prettymuch done with the basics.21300:14:53,429 --> 00:14:55,239Just a couple of other things.21400:14:55,419 --> 00:14:59,299You do have to transfer allyour property to the trust.21500:14:59,349 --> 00:15:06,129If you don't transfer the property to thetrust, the property you did not transfer21600:15:06,369 --> 00:15:09,559may still have to go through probate.21700:15:10,159 --> 00:15:13,399Now, and so that youcould have two things.21800:15:13,399 --> 00:15:18,149You could have some trust propertythat flows automatically and certain21900:15:18,639 --> 00:15:21,319property that you didn't transfer.22000:15:21,319 --> 00:15:25,679A lot of times lawyers don't mentionthat you have to like prepare22100:15:25,679 --> 00:15:32,009quickly in transferring the propertyfrom your cell to the trust.22200:15:32,909 --> 00:15:36,119And so if it's not in there.22300:15:36,474 --> 00:15:38,244Then it still has to go through probate.22400:15:38,274 --> 00:15:43,264So there's still some formalitiesthat have to be taken care of.22500:15:44,274 --> 00:15:49,054And I'm sure I'm missing a few of thethings that I wanted to talk about.22600:15:49,794 --> 00:15:53,579But I think I'm Wellexceeded my 10 minutes.22700:15:55,119 --> 00:15:56,299Oh, she's pointing at the clock.22800:15:58,999 --> 00:16:00,939Okay, well, thank you very much.22900:16:00,979 --> 00:16:03,409We'll be open for further questions.23000:16:10,679 --> 00:16:11,389Cool, thank you.23100:16:12,194 --> 00:16:15,584Thank you for listening to thisspecial episode of the healthy,23200:16:15,844 --> 00:16:17,904wealthy, and wise podcast.23300:16:18,074 --> 00:16:21,384Be sure to go to thwwp.23400:16:21,384 --> 00:16:24,324com to download andsubscribe to the podcast.23500:16:24,534 --> 00:16:27,184This will help ensure youdon't miss an episode.23600:16:27,604 --> 00:16:32,124Then be sure to share this and manyother episodes with your family, friends,23700:16:32,294 --> 00:16:36,314and associates, providing you withthe tools that you can use to be the23800:16:36,324 --> 00:16:38,244change you want to see in the world.23900:16:38,524 --> 00:16:41,824You've been listening to anothergreat episode of the healthy,24000:16:42,154 --> 00:16:44,654Wealthy and Wise Podcast with Dr.24100:16:44,884 --> 00:16:45,594William T.24200:16:45,614 --> 00:16:46,534Chalktoff, M.24300:16:46,534 --> 00:16:47,434D., J.24400:16:47,434 --> 00:16:47,684D.