The WAY to WOW Shows
The Importance of Funding Your Estate Plan
May 19, 2025
Automatically generated from YouTube captions; names and wording may contain errors.

[0:00] Who are you? And where are you going? What do you [Music] want? Hello and welcome to Trust and Estates Weekly. I'm your host, Kevin Bemmel, and we're here every Monday at 10:00 a.m. Pacific time to talk about estate planning and trust um trust and estate administration. uh both from the standpoint of professionals like my

[0:36] guest Schulpa and me, but also for individuals who need to do this for themselves, want to understand more about it, and perhaps be able to talk more competently to their estate planning team. So, this morning, I'm I'm really happy to introduce to you Shopabot. Uh, Schulpa is an estate planning attorney uh based in Orange County, California. For those of you who don't know California, well, that's south of Los Angeles. Uh, it's it's a a newer area than Los Angeles. U

[1:11] incredibly beautiful, especially the beaches. Uh, so and and uh, Schulpa has a team or works with a group of I think it's five five lawyers, four of us. Yeah. Four lawyers. uh and and and they all do uh estate planning and trust and estate administration. I was uh fortunate enough to be able to meet all of them uh several months ago now and and they have a very active practice. Schulpa is extremely knowledgeable in this area. So Schulpa, first of all, thank you for coming. Welcome to Trust and Estates Weekly. Thank you for having

[1:46] me on the show today, Kevin. I'm uh honored to be here with you today. Thanks. So start out if you would. I I gave you a little bit of an introduction, but uh if you would, you know, tell us, you know, how you got into estate planning. I I I haven't had a guest yet who said to me, "Well, you know, when I was five, you know, I I I wanted to be an estate planning attorney, right?" Um, I had one who was I had a guest of a few weeks ago who was really into intellectual property and she became an intellectual property attorney and then

[2:21] realized she needed to pay the bills. So, so how, you know, how did you get into this and and and why? Okay. So, um I um found estate planning kind of like like you mentioned Kevin, it's not like you necessarily go into law school knowing what you want to do, but previously to my practicing estate planning, I was actually um helping people with bankruptcy. So, I I that was my previous life. So, I noticed in that sense it was helpful to be able to help debtors get out of debt and help them start a fresh clean slate and be able to get out of the debt. But, I feel like

[2:56] this is the flip side of the coin. So instead of help I I enjoy helping clients. So instead of helping them rebuild and have to get out from under debt and and clear their slate, this is an opportunity for me to be able to help clients um build that wealth and be able to properly pass it on to their next generation. So I feel like that's something that everybody should have access to. I think it's really important for families to have that education. So, I really enjoy this area of practice because I meet with so many families and individuals and small business owners and it's really rewarding to be able to help them um you know know that they're

[3:32] protecting their legacy and their future for their children. All right. And and perhaps even keep keep them out of bankruptcy in the future. Right. I mean, Right. Right. Yeah. I'm and and bank I I've I've not as a professional fiduciary but in other aspects of my professional life I've dealt with some bankruptcy cases and they are gut-wrenching for forever usually. Yeah. Yeah definitely. So it's it's definitely um you know bankruptcy was a little harder because it's people are going through a tough time and I feel like with estate planning it's more of a time where they've seen what their fruits of their labor have produced and how to

[4:07] kind of pass that on. So yeah. Yeah. I interestingly enough I'm dealing with a case right now where it's essentially an insolvent estate because of how you know the deedent had handled some things and of course the heirs are extremely angry right because they were counting on big chunk of money and unfortunately you know they're not they're not going to get it. So there is a dovetail between the two sometimes, right? Sometimes an intersection. That's right. Yeah. Yeah. So our our topic for today is the importance of funding your estate plan.

[4:42] And uh this is a topic that's near and dear to my heart because oftentimes I see the results of people not having done that. Right. Right. And so talk to us if you would what what does it mean to fund your estate plan and and why is it so important to do that? Okay. So kind of just I guess a a brief overview for people that are just hopping on and they're not even sure what an estate plan is or things like that. So briefly in the state of California the limits have now gone up. So it's I believe

[5:18] 28,850. So if you have that much worth of assets meaning either in a property or in bank accounts or or different assets that you have and they are up to that limit um your estate at the time of passing is going to trigger probate. So why we estate plan and create an estate plan is to avoid that probate process. So that's the the first uh component of why you're getting an estate plan in place. So, so you know, for example, clients come and they say, "Okay, now I have that much in my my estate. I want to do the estate planning so that I'm not having to leave a mess for my heirs. My children aren't having to go through

[5:54] probate and um my assets aren't even getting tied up in the court." So, at that time, you know, we sit down and we do an estate plan. But part of that estate planning is it's not so within estate planning, there's several documents. You have um your trust, you have your will, you have your power of attorney documents, you have your health care directives. if you minor children, you have legal guardianship. There's a lot within that umbrella of estate planning. So, you know, once they come in, as an example, you know, a client comes in and we're sitting down and we discuss the estate plan. Uh there's two components of an estate plan. So, one of it is sitting down and creating that estate plan, right? So, at that point,

[6:29] it's figuring out what your assets are. Making sure what are your wishes, your goals, uh you know, who do you want to leave your assets to? Your children, to charity, is there charitable giving? And so that's the first part is creating that estate plan and and that's the part that most people focus on, right? And it's important it's important to have it created and have a plan in place. But along the wayside sometimes people forget the funding part of it, right? So um our analogy in our office that we always use to explain to clients is we kind of have a bucket, right? So the estate plan is your bucket, but if you don't put any assets into the bucket,

[7:04] you have an empty bucket. So at the time of someone's passing that trust and estate plan documents are there but there are no assets that have been funded inside of the trust. So many times people say I have a trust and I have an estate plan but I'm still going through probate. Why? And if those assets have not properly been funded into your estate plan, you're going to trigger probate. So, so that's why when we discuss estate planning, it's not only just the creation bit, but it's also the funding component because that's the way to have a complete comprehensive estate plan that's going to protect you and your family from

[7:39] probate. So, um that's that's a little bit about the funding. Now, within funding, there's a lot of different layers to that and um I don't know if you want me to kind of get into that a little bit more or um Yeah. Yeah. So, so please do. And and I think this term funding, you know, we use it, right? Right. What it really means is, you know, as as I'm hearing it is it it's it's the actual transferring of the assets, right? It it so for example, if you have a house, probably the most common asset that people have, right? If the house stay is not transferred to the trust, right? The house is not part of

[8:15] is not in the estate plan. And so unless you fall into the small probate exclusion and have a very low value house for California, right, you're going to get dragged through probate, right? So funding the trust would mean essentially creating a document that transfers the house to the trust, right? Right. So yeah, exactly. So I I mean the probably the most important piece that you want to fund is if you own real property in California. And again, we're only speaking in terms of California because that's what our firm is licensed to do and that's the only state that we work within. But in California, most of

[8:51] our property values are so high, right? So, like you mentioned, Kevin, right? If you have a property under 750,000 with the new um exception that's passed, there is a way to kind of get around that and do the small estate. Um but most of our properties in California are over that 750,000 threshold. So if that's the case and you have not titled that property into the trust, meaning Mr. and Mrs. Smith come into me and they have their property held in their name, now they create a trust. We want to make sure that we are transferring the title of that property from Mr. and Mrs. Smith

[9:26] into the Smith family trust, right? And so part of what we do as a firm and which most estate planning firms would do is they're going to make sure that the deed is there's a transfer deed and that's reflected and so they're filing that paperwork with the county of Orange or the county of LA or wherever their property is located. So at the time should something happen to them, they have that deed that says it's now held in the name of the Smith Family Trust. And so that's not going to trigger probate in that case. now their property would pass um you know much more easily. It allows their trustees to be able to sell it, not have the probate court

[10:01] involved in it and um it it just makes for ease of the transfer of assets by having it in the trust. Um so and you said there's there's lots of layers to this. So tell us about some of these layers because I think this is especially for professionals um you know this this may be the part that you know they're not really thinking about right so I mean so the so the big one is you know your your real estate right so your primary residence but along with that it could be your vacation home investment properties sometimes people don't think of that um sometimes even time shares right there's

[10:37] all kinds of different properties that people own and so so those should be put into the trust First off, um the next thing that I would say is really important are your bank accounts and investment accounts. So that's a huge component, right? So if we're talking in the state of California, so say um you don't own any real property, but your bank accounts are over 28,000, right? And we're talking Robin Hood, Coinbase, um crypto, you know, any kind of Charles Schwab accounts, CDs, those cumulatively are over 28,000 at the time of your passing. If those properties uh do not have the or or if those uh assets don't

[11:13] have uh you know your trust named as the additional beneficiary on there, they're going to trigger probate. So in a case like that, you know, you want to make sure your bank accounts, so your Chase accounts, your Bank of America accounts, all the different kind of stock brokerage accounts have your trust named as your beneficiary, right? So it could be in Mr. and Mrs. Smith's name, but they want to put the Smith family trust as their beneficiary. So those accounts again avoid probate and it makes it easier for their trustees to administer those assets. Um so so that's a huge area I would say the the bank accounts,

[11:48] your investment accounts. Um you know I know right now the market's crazy but at you know it's all up and down right so at that time of passing if it's over 208 you don't want to trigger it. So, it's always safer to put those bank accounts um you know under a trust as the benefit. So, so let me and let me just clarify because um as is as as I'm looking or as I'm thinking about it, right, there's two ways that the accounts could be put in the trust. One is the account vesting can be changed to the trust. Before it was Mr. and Mrs. Smith, now it's the Smith family trust.

[12:24] Right? Now, will would it also work though to take an account that is in the name of Mr. and Mrs. Smith and make the trust the beneficiary on death? Um, and and will that will does that in kind of in effect act like a pourover will so that at the moment of death it transfers into the trust and okay, we're good. Yeah, exactly Kevin. Yeah, that's I mean there are two ways. So if if you don't you know the first way that you mentioned a lot of times clients come to us and they don't want to have to go into the bank and close the account and reopen the bank account and title it in the name of the trust. Um so a lot of

[12:59] times people prefer to add the trust as the beneficiary. So in a way you're right at the time of passing the trustees have control of the bank account and makes it easier to administer. Um, a way that I would advise clients is, you know, at the time we create a trust, um, we could add the trustee as the b or the trust as your beneficiary to the accounts, but moving forward, if you were to open bank accounts, you might want to add the the trust as the, you know, the name of the trust as on the bank account. So, it makes it easier. Um, and that's something as well that comes up a lot of times. you know, I will say is um you

[13:34] know, at the time that people are creating their estate plan, they come in and um we discussed this, but then say they open more bank accounts. I mean, just just because you have your estate plan in place, those additional bank accounts also need to have, you know, the trust is the beneficiary or should be opened in the name of the trust. And the same goes with real estate, right? You could come in and do your trust, but say you acquire more property in the future, you want to make sure those properties are also under the trust. Otherwise, I've seen cases and it happens quite a lot where uh half the estate might be in the trust, but the other half was outside because it was never funded because maybe property was acquired much later and um you know and

[14:11] those properties are triggering probate and the others are protected. So, um it's really just about being real clean and and and and a good way to do that is is to do regular follow-ups with, you know, with your trust firm. You know, we we in our office, for example, like to do reviews with our clients every two to three years where we have the client come back and, you know, to see if anything's changed and it's kind of like a quick memory job because I know people are busy in their day-to-day life and they're not thinking about these things. But, you know, as an estate planning firm, we're able to stay on top of those things for clients. Right. So, and one more question about how that would work with the bank accounts. So, you've got a

[14:48] and we're using the example of husband and wife, right? and right and uh you know hopefully they don't die at the same time right so let's say one of them dies so you know does the account vesting have to be um you know like a like a joint teny almost for the account so that the surviving spouse becomes the sole owner of the account and then the trust is the beneficiary um you know does that have to be said or is it going to be understood that when one spouse dies, the other spouse gets it. Because

[15:24] I I could see a situation where a lender would say, "Well, you know, Mrs. Smith, your husband died." Um, and or not not the bank, but um the the lawyer would say, "Well, you know, because it wasn't in the trust, and because you're still alive, the beneficiary uh um provision doesn't take effect." And so now that half of the bank account goes through probate or do you hear the question I'm asking? Usually in the state of California just how it goes is husband and wife have that that relation. So if one passes even if it was a se you know their own account so

[16:00] it's Mr. Smith's sole account and he passes um you know if he has a beneficiary named on there and in many cases people might name the spouse as the beneficiary first because of the marital relationship. So, in the state of California, that doesn't it doesn't split. It's only upon the second passing of that spouse. So, in a case like that, again, it's good to consult with an attorney's office to be able to see what works best for the family, you know, cuz sometimes there are families that have um blended families. So, maybe you know that Mr. Smith wants the his half to go to his children and he doesn't necessarily want Mrs. Smith on it. So

[16:36] again, those types of things are why you work with an attorney to get better guidance um just to kind of see what works best for the family. Okay. Got it. Got it. So we're going to take a break here and um we have a new sponsor starting this week. U Magnum Properties. This is a a company actually that's been around for a long time, close to 40 years. uh and and over the last uh couple of years, Magnum Properties has developed a specialty in managing properties that are going through probate or are being held by a trust.

[17:12] So, you may say, well, it's you're managing a property is managing a property. That's not exactly the case because when uh uh when a property is going through probate, the operations are subject to the scrutiny of the court and the way decisions are made also be uh impacted by the fact that there's an administrator now who's running things. And so all of those issues need to be taken into account. So this is uh Magnum Properties located in downtown Los Angeles and they uh Magnum Properties

[17:48] handles uh commercial industrial specialuse properties. So if you have uh any questions or want more information uh a link to Magnum Properties website will be in the show notes after this episode posts on YouTube after it concludes. So thanks to Magnum Properties for being our sponsor here at Trust and Estates Weekly. So now going back to our conversation, my guest is Schul Pabat and as you could see in just 15 or 16 minutes, we were already getting into, you know, very complex issue or or complex issues about funding

[18:25] a trust, how just the vestings of bank accounts, real estate can work. So So Shelpa, you you mentioned those those two categories of assets. Um, one that jumps to mind uh for me is and and and poss this is I think relevant to you as well because like me you're a business owner is what about a business right even if it's closely held. So you know what do we do about that? Um and and maybe it's complicated by you know having partners or something like that. So how do we deal with with the funding

[19:00] of an estate plan when there's a business involved? No, that's a great question and I'm glad you bring it up, Kevin, because that that's a huge concern for a lot of families or that people don't even realize, right? So, business interest could be um you know, it could be a family business. It could be something with multiple members. It could be rental property businesses. You know, people have LLC's and they're running their rentals or their Airbnbs out of there. Those are all business interests, right? So any kind of entity it's it's really important to make sure that the shares of those uh entities are placed into the trust. So um you know you want to make sure that you have a

[19:36] trust attorney that's assigning the shares of your entity into the trust. So that allows for ease of transition of business ownership as well. So a lot of times uh you know just as an example we deal with uh you know family businesses say so mom and dad have been running um you know a business for a while a construction company and the son's been helping out and he's there but the mom and dad are the ones that are on you know on the entity that sort of stuff and they're concerned if something happens what's going to happen. So we would want to make sure that that entity is assigned into their trust right so the shares of it are assigned. So if

[20:11] something were to happen um you know they go on vacation somewhere and knock on wood something happens the son is able to easily transition into that and be able to handle the accounts receivable payroll anything like that in the event that that is not placed into a trust that entity would go through probate as well and and you know as again u viewers of the show might not be as familiar with probate as as Kevin and I are but as we know probate no one really wants to go through probate right I always analogize it to like going to the DMV. It's like waiting in line and you're there, right? So, if you don't

[20:46] like the DMV, right, you don't want to be dealing with probate. So, you know, in the case of that, a lot of business owners, you know, they're they're high level, they're busy, they don't want to be getting stuck in the probate court and having someone else make those decisions for them and having their assets tied up. So really the smart way is if you have any kind of business interests and like I was like I said even investment properties and LLC's those entities as well could get tied up in the court right regarding getting your rents and things like that because now it's under the administration of the probate court and and quite frankly the probate court is in no rush to to move your estate along. You know they they

[21:22] don't have any kind of urgency regarding that. So it's really important that people plan ahead of time and so definitely the business interests it's very important that you you take care of that as well and fund it into your trust and and and to put a point on that so uh last year I was asked to handle an estate uh the deedent died in test state and he he had a business and be you know it took even though it took I think just two or three months just to get appointed as a special administ administrator, right? And in the meantime, the bank uh would not

[22:00] allow anyone to transact in the bank accounts because it was not clear who had the authority to do so. And look, I get it from the bank standpoint. They're not they don't want money taken out wrongly because they could be held liable, right? And of course, the clients of this company were furious, right? They needed their their things taken care of. And I kept having to say that. said, "I I I I hear what you're saying, and I I you know, I I' I've been asked to to administrate this, but until the court actually issues my letters of

[22:36] administration, I do not have the authority to do anything." And I said, ' And you don't want me doing something when I don't have authority because all that will do is make an even bigger mess that'll be even more difficult to uh, you know, to to to to resolve, right? And in the end, you know, several customers of this company ended up, you know, going elsewhere. And and again, I get it. That's that's fine. Um and and the bottom line is because you know there was no estate plan and it wasn't funded this is what

[23:11] you this is what ends up happening. Right. So it's it's these these circumstances that you're talking about they're they're very real world. Right. Right. Right. And I think I I I like that you gave that example because you're right. A lot of times people think, "Oh, that's not going to happen to me or I don't know how it would play out in the real world." But um you know they are very real world experiences and it can affect the business in the long run like that case you know where now nobody's going to them and you know and and that's a shame just because there wasn't an estate plan and it wasn't funded. Right. Right. So uh so what

[23:46] other kinds of assets I mean do we have to worry about things like you know cars um you know personal property collections? How do we deal with those kinds of almost everybody has a car, right? For example, right? So, I mean, in terms of like, you know, I mean, that's part of the component that you have as well in your estate plan is the pourover will. So, a lot of times the porover will will deal with like your personal property and personal memorandums. So, I I wouldn't say that you necessarily have to like retitle things. You know, if you've got a baseball card collection or you've got

[24:22] some antique jewelry or you've got some, you know, things in your house that you want to leave to certain family members, you don't necessarily have to title it in their name or, you know, I mean, for the ease, what I recommend is for the ease of uh family harmony and to preserve that so that there's no fighting between siblings or, you know, heirs. Um, you might want to just list out who you want to leave each item to, you know, and in terms of that, that that's enough to designate your wishes. So, um, you know, my baseball card collection to my son, you know, my jewelry to my daughter or, you know, my,

[24:59] um, antique car to my nephew, right? So, things like that. just I think generally I found in my experience that seems to be enough as opposed to you know you don't have to go um to the DMV and retitle the pink slope into the name of the trust as a beneficiary nothing like that personal property is pretty straightforward okay and when you say make a list is this something that you would do in your trust or is it just kind of like a side letter where where should that list be right so I mean I would I would recommend in general anything related to estate planning. I mean, you know, generally when you meet

[25:35] with an attorney and you know, you get a pretty thick binder that has all the information in there, right? So, you have your power of attorney, your healthcare directives. So, I would say you should keep all your documents together ideally, right? So, that way um at the end if something happens, your trustees are able to go through and find that list and administer everything, you know, and know what oh, okay, this these are the the assets that they had, these were the properties that people had. You know, it makes it easier if it's all in one place. So, that's ideal to keep everything in maybe a big binder. Um, you know, and I always tell people from a practical perspective, don't put it in

[26:10] the safe deposit box because then you can't access it, right? So, sometimes people will say, I'll keep it really safe and put it in the safe deposit box, but that may be difficult if something happens to mom and dad and now the kids can't access it. So, it doesn't have to be that safe. You could keep it in your closet or keep it, you know, on the bookshelf or wherever. Um, and it's important to tell, you know, let people know your trustees or wherever that there is documents there should you need it. So that way people are able to find it because I mean this is just a practical tip because trusts are private documents. They're not recorded anywhere. So you know on the on the off

[26:45] off chance of that if you don't tell anybody and I've had clients where they have a trust but nobody can find it and so then the estate is going through probate if the things were not properly funded. So, it's really important that you create the document, you fund it, but then you let people know you have that where that document is as well. Um, so someone can access it. Sure. Sure. So, um, now what about um things like insurance policies? I'm thinking primarily life insurance policies. And then what about uh we talked about bank accounts and investment accounts. What about

[27:21] something like an in individual retirement account or a 401k? Right. Right. So are do we treat the insurance pol, you know, the life insurance policies and the retirement accounts the same? Are they different? How do how do we deal with that? Right. So those are great questions. So life insurance policies um generally they pass outside of the trust, you know, and they're not really subject to um tax as well, right? So if Mr. and Mrs. Smith have a million-doll policy and um Mr. if something happens to Mr. Smith, it goes to Mrs. Smith. Something happens to her, it's going to go to their kids, right?

[27:56] That that doesn't have it's it's not subject to probate. So, it can pass on its own, you know? So, in that sense, um I would recommend that it be beneficiary designated, right? So, in that case, he might want to name his primary beneficiary as Mrs. Smith and the secondary as the child. in the event they both are traveling somewhere and something happens, there's still somebody else named on that. Um, now a practical tip to note, just how I prefer to do it, if you have minor children that are the beneficiaries of a policy, it is important in that case to put it in a trust. And the reason I say that is

[28:31] otherwise those children will get that money out, right? And so that's something to cons and those are tips and and and tricks that you get working with an estate planning professional, right? So because the idea is uh if mom and dad were to pass away and the child inherits the money and now the child is 18, if there's no trust in place or the child gets that money outside of it that you have an 18-year-old with a million dollars, right, with no um restriction. Whereas if it's in the trust, it may be a staggered distribution or something along those lines where they get a little bit at 25, a little bit at 30, a little bit. So, it's kind of to safeguard the child and and those are

[29:06] the kinds of things too because it's not just about um you know like money. It's also about leaving that legacy and and protecting the future generation and those are the things that um are so individualized to different families, right? And being able to sit with them and discuss with them what are your future goals, you know, do you want them to have that money for education or for a marriage or um to buy a house or whatever it is that they want. Um, so, so that's what I would recommend with the life insurance policies is make sure that you have at least two beneficiaries on them and it's outside of the trust. But if it is minor children that are the

[29:41] beneficiaries of the policy. So if Mr. and Mrs. Smith have a minor child and they're naming the child, instead of naming that child, they're better off to name the trust just to protect that child from getting that money outright. And so then the money would go into the trust and the trust would would essentially uh stay um open at least until the child reaches u you know the age of majority and then there would be some decision about does is the trust going to still continue or at that child get express your wishes through the trust right it I mean the trust is kind

[30:17] of like your instruction manual so to speak right so it's basically like an instruction manual at the time of passing So a lot of times again with minor children it's not just outright. A lot of times it's a staggered distribution. So again you're right if you had parents pass away and they have a minor children and the way that the trust is structured that the children don't get all the money till 35 or 40 that trust is going to stay open and there is going to be a trustee that has to follow whatever provisions the parents have put in place for the children to get the money. Okay. and and and this may be just a little bit off topic but I you know for for people watching this I think this question may

[30:53] come to their mind and that is well let's say my child is you know 10 years old right when when I die you know god forbid right so it's it's going to be you know 10 20 even 30 years right that that trust and that trustee is going to have what protects the child against an unscrupulous trustee you know I I mean that it's a little bit, you know, I mean it's it's a lot harder if it's just maybe one trustee. Sometimes there's co-rustees where people might do that where there's a little bit more protection if two members are acting together. Um but you

[31:30] know generally it's a if that's the case the child might have to go to the court and and say hey you know hire an attorney on behalf of the child and say you know what we think that they're not following the terms of it. And again, it depends how broadly and or or narrowly the trust is construed. Generally, um, you know, we use like health, education, maintenance, and support. Those are the general reasons for for being able to give money to the child, right? But if you have a trustee that's being really unreasonable and is not allowing, you know, the the child to get money for education and they want to go to USC and

[32:05] they say no or whatever, right? then you're going to have a situation where yeah the child might have to hire an attorney and and say hey this trustee is kind of withholding my money on these basis and um now you're getting involved in litigation right right okay uh and and then okay so so that's um you know like a life insurance right what what about this question of retirement accounts so handle those so those are that's that's a great question so the retirement your 401k your IRA accounts are not handled the same way that your bank and investment accounts

[32:40] are. They are individual. They could just be beneficiary designated. So they pass outside of the trust as well. So again, um you want to designate a beneficiary outright, right? So just like the life insurance policy where you have Mr. and Mrs. Smith and they have each other on there, you know, you want to make sure same thing for your IRAs, your 401ks, things like that, that you name a beneficiary outright. Now, in the event that you don't name a beneficiary, it is going to be subject to probate. So, it is important to make sure because now that that asset has doesn't have a beneficiary, so it's kind of like in a limbo and it goes through probate. So,

[33:16] it's really important and and I always say it's good to have at least two beneficiaries because in the event somebody passes, you know, then and now it's hanging in limbo, right? the account and that's that's also I would say along with funding regarding the you know the life insurance and the retirement and your 401k accounts it's really important too to regularly update your beneficiaries so along with like a trust review you know because sometimes people say oh well you know I want the the pol you know I want the policy to go to my brother well say a brother has already passed away and they haven't updated it right and now or or the one I've seen um you have a couple and they were each other's you know they were on

[33:52] the life insurance plan but they divorce and they have not updated their life insurance policy now, it still goes to that other exspouse just because you know that's the policy. It doesn't matter if you have a divorce decree in place. So, it's really important to update those beneficiaries um especially on these types of accounts because when you have the trust as your beneficiary, you if you want to change your trustees, you update your trust documentation, but it the the property is already covered by being funded into the trust. Your bank accounts, investment accounts are already protected by that trust. But these ones that are individual beneficiary designation, you also want

[34:28] to make sure you're updating your beneficiaries to reflect any type of changes to your life. Right? You get married, maybe you have your parents as your beneficiaries, but now you're you're married and you want to put your spouse on there. So, it's important to make sure that you know your beneficiaries evolve as your life evolves as well. So, Got it. And so it it occurs to me that when we talk about funding the trust, this first of all, this is not a one-time, okay, I'm done with this activity. Um and and and it it it's really it could be broader in the sense that while funding the trust could

[35:05] be construed as specifically putting things in the trust, it's really seems to me it's more about making sure whatever assets you have are properly designated and and there's a um an affirmative decision made about what goes in the trust, what stays out of the trust, right? It's all funding the trust is all part of that or funding your estate plan is all part of that overall process. Does that does that sound right? Yeah. I mean it really is. It's kind of an ongoing thing, you know, like you you create your trust and you fund it, but like I mentioned at some point

[35:40] too if you acquire more assets or it's it's it's something that can constantly be evolving, right? And it's kind of like I would say too kind of like working with like your tax advisor, right? Where as your income changes, things change, different things come up. That's the same thing with like an estate plan. I mean, maybe now, you know, you've put a bunch of properties into the trust, but now you want to create an entity to be able to manage those, right? So, now we have to pivot again and see, okay, let's put it into an LLC, and now let's fund the shares of the LLC. So, it's a lot of kind of um fine-tuning and making sure this is what you want, you know, okay, now you have a business. Before you didn't, now your

[36:15] children were minors. So at that point, you know, they they they were not, you know, they they were you need a legal guardianship in place for them, but now they're your power of attorney. So there's a lot of things and even with the funding component that that could change, right, as you purchase properties and um things change, you get businesses, things like that. So yeah. Right. So, it it also occurs to me uh you were mentioning uh retirement accounts and if there's no beneficiary um they would end up going through probate. But it occurs to me that they're not going to go through probate

[36:50] if nobody files the probate, right? They will they will sit there, right? And eventually, I would think here in California, they're going to estate to the state of California um at some point, right? And so you you may have heirs. They, you know, for whatever reason didn't know that you you passed away and here's this pot of money. It has nowhere to go and and you know that and that's what ends up happening, right? That that can happen sometimes. Yeah. Gen generally. I mean, if you have a retirement account, but you have other accounts um and you have errors, someone will probably follow

[37:25] probate. I think the case becomes more if you don't have any heirs, right? If for some reason you don't have children, you don't have nephews, nieces, you maybe um don't have much relationship with family members, that's when the the risk runs that yeah, whatever. And and I mean from a practical perspective, right? I mean all of us go to work, all of us make money, all of us uh uh work really hard in life because you know people want a good standard of life. But the idea is to also generally pass it on to somebody else, right? Whe and it doesn't have to be in cases where people don't have children or they don't have heirs. Maybe they are into charitable

[38:01] giving, right? But it's it's being able to pass that on to a cause that they believe in, right? Maybe whether it's uh through animals that they want to do charitable giving or um you know uh char outside uh the US different work um educational entities things like that. But the thing is in in a case of somebody that doesn't designate somebody as their beneficiary and doesn't have errors, you're right. It could very well go to the state and that's a shame because you know that person worked hard and the least is they should have it go to whoever they want or whatever entity they want as opposed to just going I mean we pay the state a lot in tax

[38:36] already, right? So the state doesn't really need, you know, it always needs, but it's unfortunate if your retirement or your 401k plan does go back to the state because of improper planning on on your part or I would say just not having um just not being educated about it, right? Just not knowing. And so the hope of a conversation like this today with you, Kevin, is just to educate people and just make them more aware of this and and and be able to know about these things. Right. So, I I have another question, but we're going to take another uh sponsor break here for just a moment. And uh our our other sponsor of

[39:12] of Trust and Estates Weekly is Probate and Trust TV. So, if you like the kind of content that you get here on Trust and Estates Weekly, you will love what you find on Probate and Trust TV because it is it is a an assemblage of all the best content creators on YouTube doing shows about probate and trusts, estate planning, trust and estate administration, complex issues, legal and accounting issues, real estate issues. So, uh, Schulpa knows my friend

[39:48] Bill Gross, for example. Bill is one of the major, uh, presenters on Probate and Trust TV. Um, as is Paul Ravlet's, an estate planning attorney based in Louisiana. So, this is really the central address on YouTube for information about probate and trusts. And so again, like like with our first sponsor, if you are interested in getting more information or subscribing to Probate and Trust TV, please check them out in our show notes. Uh and the and the links will all be there. So also thanks to Probate and Trust TV for

[40:24] sponsoring today's show. Uh so so going back to our our discussion now about funding your trust. You mentioned something a moment ago about people may want to uh they may have charities that that they like. So whether it's education, animals, etc. So how would it work in terms of funding a trust? Let's say they've got a a a piece of property. You hear this from charities all the time. Uh do you have a piece of property with uh um a lot of a lot of gain? uh you know where where it

[41:00] would be high you know there'd be a lot of capital gains if you sold it so you know give it to us and you will avoid you know paying big capital gains taxes right um how would that be set up in the context of an estate plan do I have to transfer that to my trust and then my trust gives it to the charity or do I you know do I arrange for it to go to the charity directly h how how do I deal with u you know the the donation of appreciated property uh to to my favorite charity in the context of funding my estate plan. Yeah, that's a

[41:37] great question. I mean, you could you mentioned both ways and you could actually do either way depending on what what it is that you're trying to achieve, right? So, sometimes people may leave a piece of property directly to the entity because that entity may use that property, right? But in the event that they don't necessarily need that specific piece of property, they may just decide to title into the trust. Their trustee sells it and then they disperse the money as it as set forth, right? So if there's several different charities that are going to get a percentage, they would distribute it, right? But if you had a specific, say you have a property that's ideal for equestrian use, right? And there's, you

[42:14] know, horses and they rehabilitate injured horses or something like that. and you have worked with this organization and you want to leave that piece of property, then you might be able to, you know, um, leave a specific gift in your trust where you say you want this piece of property to specifically go to this entity to be used specifically for, you know, the horses to be caregiving and or whatever you you want and then that way it would pass to that entity. So definitely there are ways that you would be able to um provide for that in your trust. just depends on what um what you're trying to achieve, right? The intention can be

[42:50] different, right? Okay. But it sounds like this is something we want to facilitate through uh a trust. It's it's easier to do it that way and and that way the trustee would have whatever authority is necessary to make to make that gift happen, etc., etc., of course. Right. Yeah. I mean again because if you were not to have a trust in place and um you know you you just had some intent somewhere it could still be subject to probate because you just can't gift property outright right you know I mean there has to be there are rules and like you mentioned uh you know capital gains

[43:26] um you know there are step up in basis rules that's why generally people will gift through a trust because there are ways that you know and then a lot of those are kind of complex and situation by situation based on how much assets people have and things like that. But that again, yeah, th those are considerations that can come under funding and those are things that um experienced estate planning attorneys would be able to help families with. I you know, and again, as you're talking about these issues, it's coming into my mind that look, you know, you you might also have heirs that were jealous of the

[44:01] time you spent with the horses and last thing they want is for part of your estate to go to the charity. And so if it's not clearly in your, you know, in your funded estate plan, they will do whatever they can to defeat that that donation. And then now, now the organization is, you know, out of luck and maybe out of business if they were really re maybe they were operating on that property, right? And now it's sold out from under them and now they're they're not able to function anymore. Right. Right. That's a good point. You know, um that's another I mean it's another important thing, right? Why we we lay out errors or who we would like to leave property to. So there is the

[44:37] chance of less uh fighting doesn't mean it's always the case, right? And so when you have an estate plan in place, you're able to to say I want, you know, 5% of my estate to go to this person or 20% or this entity or I mean, as I've had as well, you can also have the option to disinherit people, right? So there is that as well. So that the hope is there's no fighting, right? Okay, you have four children. Maybe you just never got along with one of them. They never got along with you. And you just disinherit them, right? And say, "Hey, the other three are getting something, but the fourth just isn't, you know, uh for better or for worse, it's your

[45:13] intention." And it and and it allows for maybe less fighting amongst all those children knowing who's getting what. So, and correct me if I if I'm wrong. um we we want to affirmatively disinherit someone if that's our intention rather than just sort of leaving them out and being silent on a particular individual because that leaves it somewhat murky. Um right and and and could create grounds to challenge what appears to be a disinheritance but but there's no clear intent. Yeah. No, that is true.

[45:48] That's a very good point. That's why again when you're sitting down and talking with an attorney and and you know these are your wishes to disinherit or whatever you want to specifically make that note and not just say to my children except this one, right? There has to be an actual um you know to my three children but this child I act I I I disinherit them from my will and do not wish that they receive anything or you know or from my estate or you know there's specific language that they could put in there. So, um, and many times not to say that there might not be a litigation, there could still be where that child could come after the other siblings, but, uh, the idea is that if

[46:26] it's clear and the intent is there, there's less chance of a litigation versus if you don't specifically disinherit that child, the chances of a fight might be greater with the assets. Right. Right. and and and two, if your intent is clear, you know, litigation could be wrapped up more quickly and and not cause a large defraying of the assets of the estate while this is all being worked out. So, yeah, that is true. Yeah. So, okay. So, I let's see. We've we've covered, you know, bank and investment accounts. We've covered real estate. We've covered uh businesses and business interests, LLC interests, etc.,

[47:03] closely held businesses. We talked about uh personal property. We talked about life insurance policies and retirement accounts. What what have we what have we missed that you know potentially falls off the radar in terms of funding in a state and and you know people end up going oh you know I forgot the such and such. I mean, I think we've covered all bases, but I will make a comment just kind of in light of consistency uh purposes, and I know this this is something that had come up recently in

[47:38] terms of like um the LA fires and stuff like this. So, along with when you fund your real estate into your trust, right? So, now Mr. and Mrs. Smith have created their trust and they have it in the Smith family trust. A lot of times you want to update your insurance policy to also reflect the name of the trust as your additional insured. And the reason that I bring it up is I had read a couple articles where some of um the unfortunately the fire damage from you know the properties out in Palisades and the Eaton fires and things like that. Um properties were in a trust but the homeowners insurance um was not in the

[48:14] name of the trust. It was still in in Mr. and Mrs. Smith's name. And because of that technicality, um, insurance companies were denying insurance coverage. So, so that's a that's a small nuance, but in light of that situation, it kind of came into a bigger, uh, picture where a lot of people were asking, is this the case or not? So, uh, from a perspective of just making sure things are consistent and you have that protection, I would say that once, uh, clients have done all their funding within the trust, they've done their real estate, their bank accounts, their business interests, um, they've put their, you know, life insurance as their individual beneficiary designation,

[48:50] their retirement accounts. You want to just make sure that your homeowner's insurance is also adding the trust as an additional beneficiary. So if you were to make a claim, they don't really have any ability to deny it since the name of the trust would be on your property and then the name of the trust is the insured. Right. And I I I will mention that change will happen as part of the process with respect to uh property taxes because the assessor is going to pick up the change in in in title vesting from you know Mr. and Mrs. Smith

[49:25] to the Smith family trust, right? that will that will happen just in a matter of course. But but yeah, something like an insurance policy, unless the insurance company or your insurance broker is told about this, they're they're not going to be checking the title to the property regularly. So, they're not going to know. Uh and I I mean, I I will say it's pretty sleazy of the insurance companies to do that in my my this reporter's opinion, right? But of course, you know, if they're facing billions and billions of dollars of losses, they're looking for a way to, you know, mitigate that position, right?

[50:01] And Right. So, I mean, so it's something to just, I mean, as a practical perspective and sometimes that part doesn't get done because we're so busy with the trust stuff. Um, but it's just important to call your insurance company and just let them know, hey, by the way, I've put my house into the trust. I want to name the trust as the additional insured on my policy. And that's the same for rental properties or anything else that you might have. Um, you just want to make sure and it's usually pretty easy. They might just want to see the certificate of trust, proof that you have the trust. And that way you've got all bases covered, right? Just in the event that there is something that happens. Um, you know, because again in

[50:36] California, our biggest asset for most people is their residence or their real estate, right? And so it's a shame um in terms of like a technicality um to not get that taken care of. So that's that's another I would say a newer thing that we've seen that's come up and so it's it's a pretty easy thing to get done. You know, just to contact your insured and make sure you have them added on there. Right. Now, what about if you have a loan on the property? You're I mean, is the lender, you know, going to, you know, look at the transfer of the the the house, we'll say house from, you

[51:12] know, husband and wife to their trust. Are they going to look like that? look at that as a change of borrower or is that pretty is that such a routine thing here in California? It really doesn't matter when you see you know and even the assessor's office for example and the lender right um you know you have a property again Mr. and Mrs. Smith and they put it into the Smith family trust. Lenders know that you're doing a trust for probate avoidance. So they're they're familiar with it. It's not an asset protection move, right? So it's a different it's a different thing now if you were to take that property and put it into an LLC and now it's Mr. and Mrs.

[51:47] Smith have it into the Smith LLC and maybe they've added another member, right? then the banks and the lenders might get nervous as to where they're um you know if they if they're still protected and if they're still going to get paid on that note regularly. But in terms of your straight basic um you know trust which you're having for probate processes as we call it the revocable living trust because there's different kinds of trusts out there but we're talking for purposes of this uh podcast just revocable living trust. If you go ahead and put that property in there, your lender shouldn't call the note and your property taxes should also not be reassessed. You know, because they see

[52:23] it as just putting it from your name into the name of the trust. But like I said, if you do something different with an entity or an LLC, it could be reassessed or there could be something else. And and those kinds of situations, there might be ways around it. But again, you want to sit down and talk to an estate planning attorney to make sure that you're not um you know, it's it's like I have clients that and this is a little off topic, but you know, I have clients where they say, "Well, I want my son to get the property, so I'm just going to add him on title." And it's like, "No, no, you don't want to do that, right?" Because it Yeah. But that's that's why I'm saying anytime you're doing anything with property and changing title, it's well worth it to

[52:58] sit down and uh talk to somebody because you don't want to mess up that. Right. Right. like that. A few hundred dollars in attorney's fees could save you potentially thousands of thousands of dollars because there's been a potential change of beneficial ownership and now you're reassessed for property taxes and on and on and on. Right. Right. Right. You know, Kevin, unfortunately I do. Well, well, Schulpa, this has been very enlightening and and you know, it seems like it's a deceptively simp simple topic in the

[53:33] sense that oh, fund your trust. Okay, put your property in, I'm done, right? But there is a lot of nuance to this and and it really does require this is the part of the show where I I give my guests a shameless plug because they're too modest to do so. Um, but really, you know, this is where having a highly skilled, highly experienced professional like Schulpa help you with this because here in California where I think the median home value is is like close to $900,000 now,

[54:10] I think. I I looked at it a while back. You know, even a small air, you could be talking tens of thousands of dollars in additional costs and and It's it's it's not it's not worth the potential savings. So, you know, you can rely on on Schulpa and her colleagues to make sure that these things get done properly and in accordance with your wishes. That's I think that that's sometimes it gets left behind. I I want to save money. I don't want to pay taxes or whatever. Those are all great things, but also what about the legacy that you're leaving behind, which is

[54:46] something Shelpa, you mentioned at the beginning of the show. This is also about establishing that legacy. So, so uh Schulpa's contact information will be in the show notes after the show uh posts on on on YouTube and you you can look it up there and I'm I know she will be happy to talk to you about your estate planning needs and um if need be fix the problems of her [Laughter] predecessor. Am I okay? Is it okay to say that that they're not walking in practitioners? Definitely. We can assist in any way

[55:21] possible. So, yes. Well, Shilpa, thank you so much for coming on the show today. Um, I'm going to have you stand by for just a minute or two while I do a quick wrapup and then we can talk offline. So, folks, thank you very much for joining us. I I see we've got some live viewers. It's always a treat to know that there are people out there in the ether uh who are who are enjoying the show. Um including Lammon who uh typically you're you're watching from from Africa. So it's it's I it's sort of a cool thing. We have an international audience almost always. Um tomorrow,

[55:58] Tuesday at 10:00 a.m. Pacific time is my show, Business Lessons from the Military. And you would you would have thought I would have been ready to tell you what it's about and I realize I forgot to open up my my plan. Um okay. Yes. So um my topic is run a business like a seal, not the arf arf kind, the Navy Seal. Uh like the Navy Seals. So uh for those of you who watch the show often, you may have heard me mention I was chaplain to a SEAL team at one time. So there's there's lots of great lessons

[56:34] we can learn about running our businesses based on how uh one qualifies to become a SEAL and and executes his duties. So join me again tomorrow, Tuesday at 10 a.m. Pacific time for business lessons from the military. On Wednesday at 10:00 a.m. is my show, People Making Money. It is our monthly economic echoes and we're going to talk we're going to look at the economic data for the last month. See what that means in terms of making decisions for ourselves and our families, our loved ones going forward. So again, Wednesday at 10 a.m. Pacific time, people making money, economic echoes. And then on

[57:11] Wednesday, uh, sorry, on Thursday at 5:00 p p.m. Pacific time is my every other week show, Jiggers's Place. We're going to sit back. We're going to have a cocktail. We're going to have the Twain. And the reason we're going to have the Twain is because we're going to talk about probably the the first man of American letters, Mark Twain, and all of the wonderful books he wrote, but also the amazing life that he lived. So, join us at Jigger's Jiggers's Place for a cocktail where we talk about all the things that are not related to our professional lives and our financial

[57:46] lives. And we'll relax as we head into the weekend. And then a week from today, uh, we'll be back for the next edition of Trust and Estates Weekly. Uh, I know I take that back. Next week will be a special edition of the Way to Wow shows in honor of Memorial Day. So, uh, please please come and spend Memorial Day with me uh, a week from today, Monday at 10 a.m. Pacific time. So, one last time, Schulpa, thank you. Thank you. Thank you for joining us on the show today. It was great speaking with you. Thank you,

[58:21] Kevin, for having me on. This was great. It was fun to chat with you. Thanks so much. And signing off as I always do. Marie darling, you know you are my bell now and forever. Courage at all times. this way.