0:02 Who are you?
0:03 >> [music]
0:05 >> And where are you going? What do [music] you want? Hello and welcome to Trust & Estates Weekly. I'm your host Kevin Bemmel and I'm here every Tuesday at I'm sorry, every Monday.
0:26 >> [laughter]
0:27 >> Got my days confused here. Every Monday at 10:00 a.m. Pacific time to talk about estate planning and trust and probate administration. We talk a lot from the standpoint of professionals who are actively engaged in this area like like myself and my guest David who I'll introduce in just a moment. But also for those of you who, you know, you got appointed as the executor of your parents' will and now you're having to administrate an estate and it's it's frustrating, it's mind-boggling. So, hopefully you'll get
1:02 some information here that'll help you handle the situation better and and speak with your advisors more cogently. So, today I am really pleased to introduce David Allen. David actually we've worked together on a on a couple of matters in the great state of Alabama. So, today when I do my sign-off to my dear Marie, it's actually Marie is one of the estates with which
1:38 I've worked with David and he does hail from from Alabama. So, we're going a little bit, you know, national here. I'm always happy to do that because it's a great exercise if nothing else to contrast the differences between states like California, Louisiana where my friend Paul is, Alabama, where David is, etc. So, really looking forward to to to to this this show. And David, first of all, thank you so much for being my guest here on Trust in the States Weekly. Thank you, Kevin. Glad to be here. So, so David,
2:14 I I I always like to start out by having my guest tell a little bit about himself, so people can get to know you, get a sense of your background. So, if you would share some of that information with us. Sure. Well, it's interesting. Um I I don't have as distinguished a military career as you did, but I was in the Army Reserves. And it turned out that I was deployed after law school, and so everything was postponed for me. Oh, wow. Um and so when I came back, I needed a job that where a legal job that didn't require
2:50 a license, because I hadn't taken the bar yet. So, Oh.
2:52 >> [laughter]
2:53 >> Um I started talking around and ended up in in a trust department, in the largest trust department in in Alabama. Um and which was really a great approving ground. This particular bank, you know, back in the day had 60% of all the trust business in Alabama. You can imagine in California somebody had had that kind of percentage. So, they were you know, we had these vast file cabinets with all of the wills where where the bank had been named as executor. And I think historically in Alabama that they used banks a lot. I guess everywhere, probably.
3:28 And these days, you know, there's been a trend against that, but I I would argue again, the bank has a good and trust companies, various trust companies have a have a big role. So, I started with the with the bank then. They had their own in-house tax department. Um with some of the most respected tax attorneys, you know, in the state. So, that was a great learning experience as well. So, we did Uh, the person who had recommended me to to estates and trusts uh was a banker and when I told him that I I did estate administration all day long every day, he um he was very surprised. He said, "I would never want to do that."
4:03 >> [laughter]
4:05 >> He liked managing investments himself, but um but it was a great great learning experience. Um and I did eventually pass the bar and um uh and and have been in um in this uh industry for 25 years. And I've worked for two trust departments and been in private practice. Um had done uh uh real estate closings, uh which has also been very helpful in my estate practice. Sure. And currently with Carney Law um is a small uh a boutique firm um in uh Birmingham and all we do is estate planning, probate, elder law. Um do a
4:41 lot of special needs planning. Mhm. Mhm. And try to to service our clients um that way. Um so, you know, I've taught uh some some classes through the years and um uh to attorneys and and and the public and done some seminars. Um but we just have a vast we we try to help um you know, all uh levels and and all um uh handle all needs of our clients whether it be uh simple wills or um you know, family limited partnerships. Mhm. Um so, um we um we've gotten to the point where we
5:17 pretty much as far as probate goes, we have to uh just uh service our clients. We can't take a whole lot of outside probate matters um uh unless it's a special situation um but um you know, we have served uh we've had some some lawyers without family um who have uh you know, been uh at the end of their life in the hospital and the the bar needed needed a guardian to step in uh and help with that situation and and And been able to do that. Um, so um yeah, that's kind of a a general overview. Mhm.
5:53 So so you really and and it's interesting because although we've worked together um I didn't realize the breadth of uh the services that your firm provides. So in addition to estate planning and and trust and probate administration to you're involved in guardianships, conservatorships, it sounds like you said you know elder care. Um because you know not all um attorneys I think get involved in those other areas. Um talk for us a little at least a little bit on what those are, why they're important,
6:30 and how they fit into you know this kind of the overall um uh um I can only think of the word install the overall
6:41 >> you know area of of of uh you know trust and probate law. That's right. That's right. Well, these days when everything is more specialized um you know it helps to stay in one court um you know if you can but you know probate as you know I mean I'm sure the jurisdiction is a little bit different in California. Um but um you know we call it the helping court because the probate judges are really it's it's everything to to to help people. Um unless you're settling a um um or mediating a an estate dispute. And of course you can have contested guardianships. There's nothing worse
7:17 than a contested guardianship. Yeah. Um uh when somebody's trying to decide whether the the loved one should stay at home or uh should be in the nursing home. Um we we we don't seek those out. If you're doing you know doing these kinds of cases long enough you unless you just love um confrontation.
7:37 >> [laughter]
7:37 >> Uh it you know you you prefer to stay in uh where you can just help folks uh uh get the normal cases done, but uh so in probate here, we do have, you know, guardianships and conservatorships. Um and I think that terminology is fairly uh uh ubiquitous um in the US. Of course, that's one area where you end up working with courts from out of state uh transferring guardianships or conservatorships from state to state, and that's there's all kinds of conflicts of laws principles that are that are at work there, but in the end, it just comes down to how do you get it done? And um so that is a Let me
8:15 interrupt you what I'm just interrupt you here real quickly. Distinguish for people between a conservatorship and a guardianship cuz I think not everybody watching this will will um know the difference. Right. And so um and again, the terminology could be a little bit different in in different states, but but I haven't I'm not aware of another term, but basically, a guardianship is a is uh is control of the person. Um and and guardianship and conservatorship are extremely powerful tools, and they can be weapons as well. Um because that once a a person is appointed guardian,
8:51 um and I'm not sure if California has uh professional guardians, but they do in some states. Um yeah, the license I have, you know, it it's a professional fiduciary license. One of the things I can do is be a guardian, although I don't handle guardianship cases. Yeah, it's very problematic um and um so it's tough if you're not uh family member, but that guardian steps in the shoes of of the the ward is what we call the person that uh has the guardianship over them is the
9:26 ward. Um and they can control where they go, what they do. Um that court letter, letters of guardianship gives them the the ability um to control that person. And so we've run into very tough situations where one where the person appointed guardian is not necessarily doesn't agree with the rest of the family and they can exclude people from seeing, you know, that the ward, that person. And that's been very problematic. And of course on the financial side, so that's that's guardianship.
10:02 So you could petition the court just for guardianship if you needed to. We do that a lot in the case of special needs person who has reached adult age and their parents would serve as as guardian so that they can help them do whatever they need to do. And that's fairly straightforward. But then a conservatorship is control of the assets. Mhm. And you could also petition for conservatorship without guardianship if if you needed to.
10:37 And conservatorship, again, that person, you know, we've had banks that push back on letters of conservatorship and they just don't understand legally that person, that conservator, has the right to control any assets. So it trumps a power of attorney, it trumps any kind of living trust in is in place. In fact, a lot of times the court will go ahead and say you know, any power of attorney or um um any other legal document would be trumped by the conservatorship. [clears throat] So
11:12 conservatorships can be burdensome. I'm pretty sure in in any state, at least in Alabama, the probate judge is personally personally liable for any amounts that come through the court.
11:25 >> [laughter]
11:25 >> Wow.
11:26 >> So if they get something wrong with an accounting. Now, I've never seen a judge charged with you know, with certain amounts from making a simple mistake and if they were, you know, engaged in some type of wrongdoing is a different matter, but um, you know, that's why we have bonds. So, that conservator, if there's a million dollars that they're going to control, the court requires the conservator to to obtain a bond. That way, the court's covered and um, um, you know, in fact, we've got one right now where um, the conservator did steal money and misappropriated and but then
12:01 agreed to come clean and to start making payments back to the court and so, you know, that got taken care of, but it was very good to have that bond in place. Yeah. Um, but typically, uh, the court will will by law, by statute here, the the court um, has to uh, have a uh, what we call a a triennial accounting every 3 years. The conservator must file an accounting and um, and have a hearing to approve that accounting. Mhm. Um, in some, you know, it's just and courts are really good about providing a handbook, you know, because sometimes it's just the individual that's doing these
12:37 things without an attorney. I wouldn't recommend that, but um, they do. Uh, but some people I in my experience, it seems like people fall into two different camps. Some are just scared to death to to do anything or and they or they keep coming back and checking all of the time to make sure they're doing something correctly. Or you have somebody who just says, well, I have the power, I can do anything I want to and they're not sensitive to things like, well, don't commingle funds and, you know, you can't uh, you know, pay for if you're going on a vacation, uh, you have to pay for your your cost. Uh,
13:13 Right. and um, not just the um, the ward. So, um, it can be you have to stay in touch with with your client, make sure that they're they're on top of things. Uh, but they're they're good tools and, you know, it ties in with estates. I mean so often we have a decedent's estate. So in Alabama we call the if you're a conservator then that court case would be called the estate of David Allen even though he's still living cuz it's a it's an estate it's a collection of assets. But then when that person dies then it would be a
13:49 decedent's estate. And so we make that delineation. Um So that makes that makes a lot of sense. I I have to say we don't have those kind of distinctions here in in California. It It is interesting in California um and I I can't tell you the the distinction between a guardianship and a conservatorship because in California we have a conservatorship of the person which is I think what what in Alabama is a guardianship and then we have conservatorship of the estate which is sounds like what you described as a conservatorship, right?
14:27 And um uh I know I I I'm handling a probate right now where there was a guardian ad litem uh um the court appointed at a guardian ad a guardian ad litem for one of the adult heirs who is not really you know, capable of looking after his own interest. Um but I don't think she has control over his whole life. I think she has control over his interest as an heir you know, of the estate make sure that his
15:02 um to make sure that everything is done properly with respect to him and that you know, candidly some of the other heirs who were looking to cut him out aren't successful in doing that. Right. Right. Exactly. So it's a little little different. Um But you know, most often when we have a probate estate we can be looking at like we've got one now where it's sort of a crisis and one's the mother has died and her assets are uncertain then but her husband is
15:38 has mental illness and luckily we were able to plan for a special needs trust in her and her documents so that he could qualify for Medicaid when she died and um but we're having to to look at a guardianship and a conservatorship for him as well. So it all kind of ties together. I mean I think you have I certainly we get a lot of referrals from estate planning attorneys that only do estate planning and they're not and they're basically just not trying not to go to court. So they're just doing the
16:13 planning side. And they don't do the guardianships and conservatorships but a lot of times it's sort of all You got to understand all of that. And then of course here in Alabama we've got you know adoptions name changes um you know that type of thing and real estate matters. So we certainly have to do that. I was I've been um surprised to find that a lot of estate planning attorneys don't do real estate and they're not really I mean they can draft a deed they can but as far as if you've worked in the real estate
16:48 industry you know everything is from the perspective of the title company. It's like will this work? Okay, well will the title company approve of it and take it? A lot of lawyers if you hadn't worked in real estate you don't know how that works. So that's very important. And then the other issue that we deal with all the time I just met with a couple this morning when they have family land especially it's been been in the family several generations Mhm. Um, they come to you with a deed, you know, sort of the vesting deed that shows that either they or their parent uh have title.
17:23 Um, but you have no idea what has taken place the last 50 to 100 years. And so, we require a title search before we will Right. you know, work on that file because a lot of times it it's either the title is contested or somebody is I don't know if California has restrictions on what you can record as a deed. But basically in Alabama, you can record anything in the probate records. Um, and and then, you know, if it's wrong or fraudulent, you have to go back and and get it thrown out. So, um, that's Let's take a Let's take a quick break, but I want to pick up on
17:58 that cuz I that's an interesting topic. Okay, we're going to take a quick break. When life brings unexpected changes, managing inherited property shouldn't add to your stress. Magnum Properties specializes in probate and trust real estate management. We handle the complexities while you focus on what matters most. From property maintenance to tenant relations, from legal compliance to maximizing value, we're your trusted partner through every step. Magnum Properties Inc., turning
18:34 property challenges into peace of mind. Call us today at 213-264-4396 or visit magnumprops.com. So, so picking up on what you were talking about, you know, being able to record pretty much anything. This The same is true here in California. And um, I know this was back when I had my real estate career, we would have situations where um, people would record liens in small amounts on on probably hundreds or thousands of
19:09 properties knowing that some of them were going to get into a transaction Mhm. and in order for the title company to clear title, that lien had to be resolved. And they would basically, you know, blackmail the parties to the transaction saying, well, you know, the lien is for, you know, $5,000. Pay me $1,000 and I'll give you a lien release, right? Of course, the cost of litigating is much higher. Sure. You're not going to do that. Many times, for for various reasons, the title company wouldn't allow a bond around you know, the thing. And even if they did, but in the
19:45 end, you're not going to go to court to fight it. So, you end up paying the blackmail, right? And and and there, you know, so you can close your transaction. So.
19:53 >> That's awful. Awful. And of course, you know, family members will do that on a more limited basis just to to cause trouble. So, um yeah, that's it it's very very unfortunate. Um yeah, we just had a a grandson that executed a fraudulent trust and and deed. Um and it was so clear. A lot of times, at least they they might do a good job on the face of of the document and it looks good. But this guy completely botched it. Um you know, had the had one grantor who had already died
20:28 by the by the date of the instrument, but he signed his name anyway. And you know, it's criminal. I mean, it's, you know, but luckily, we're already in court. And so, it's easy to to get that thrown out. Um it's terrible when you have to start a whole new new case and you know, quiet title. Um but um so, yeah, it's you know, people think I think the person on the street would would think that estate and probate's boring, you know, as far as law goes.
20:54 >> [laughter]
20:54 >> But if you talk to anybody in your field or or my field, I mean, most of us could write books on all of the stories. I mean, we just can't even make up what happens, you know, out there. Really. But um I mean, you talk about like I I you and I think are of a similar vintage, shall we say? Like you know, these shows Dallas and Dynasty, right? Yeah. The stuff that would happen on these shows, it's nothing compared to what goes on, right, in in in probate court.
21:22 >> That's right. I mean, I tell my clients a lot of times, I said, "Well, this is a law school exam question, which means it's so confusing that, you know, who knows what the answer is?" And uh it's so it's it's it's very interesting um and uh but again, we are in the mode we're definitely not at the high end of the uh of the revenue model as far as law goes. We we realize that if you're you know, if if you're in this business, you you're trying to help folks. And my partner uh Jack Carney, that is his primary goal. Um and we feel like um that uh that we're able to do that in in
21:58 so many I mean, just the peace of mind, giving somebody the peace of mind that they've got their estate plan done. Um and they don't have to worry about it anymore. And if anything changes, uh we we'll follow up with them and and let them know. So. So, and and I'm I'm glad you brought this up because um what when I got out of college back in
22:20 >> [laughter]
22:22 >> Me too, yeah. you know, I was I was sort of casting around I had an architecture degree um at a time when there was a a building recession, you know, here in Los Angeles, right? And so I was look you know, what am I going to do? So, I had an opportunity to go be a clerk that paralegals weren't really around back then, but a clerk at a at the law firm at which my mother was the accountant. And you know, I I got to see how the law was practiced. And this particular lawyer did a lot of business um you know, business law
22:57 and he did personal injury, that kind of stuff. And unfortunately, he didn't practice uh estate planning and trust and probate law because I was turned off by the the the kind of law that he practiced. It was very confrontational. Um a lot of it it it it was just you know, like people would come in to hire him like, "I want you to rip these guys apart." Kind of thing. And um and then later in my career I I had a real estate company and I started doing real estate work within the uh you know, um conservatorship area,
23:34 you know, trusts and estates and such. And all the lawyers were they were calm. They were very focused on helping people. And you know, and and it was and I remember talking to one of them at one point and he's like, "Yeah, I would never practice any other kind of law." He said, "Cuz I actually my sole focus is on helping people avoid all the pain and suffering and litigation. Right. I'm just I'm curious what you
24:01 >> That's right. And you know, we run into that most often with um family law divorce attorneys because they're always in the mode of seems like that they're always, you know, wanting to go to court and and stirring things up. Um not to disparage them, but I mean, you know, they're um diligently advocating for their clients. Right.
24:19 >> Um but yeah, the whole tone when we we we are really after conflict resolution more than anything. And and you know, more apt to advise that our clients, you know, uh come to a deal on something rather than have to go to go to court about it. Um and um and you know, so much is family dynamics. I mean, I I feel like that we're called on to be psychologists and always have to tell, you know, my my clients, I if you know, you probably need some counseling or or or psychologist and I am not trained. I you know, you're wasting your time and money. Uh uh but but they, you know, a lot a lot
24:54 of times they do want to talk talk through all those uh family dynamics. And I think in a mediation, you know, most of these probate matters can be mediated. Um there's just so starts out there's just so much misinformation um and emotions and and all of that. And if you can weed through it and just um uh and most often our judges, if they think it's there's a matter that's that's ripe for mediation, they'll they'll send you to mediation. And I think that's the best way to go for so so much of this. And you know, probate mediation is so different from any other type of law. So um you know, it's it's important to to
25:30 have that background. So I I I I I tell people, you know, from time to time, my background as a military chaplain, I think, serves me very well in in my current profession, but I'm I'm curious to hear your How is mediation in the in this realm different from other other areas of mediation? I think you just have to be since so much um a mediator needs to understand that there's there's more about emotions usually than it is about money uh or or value. I mean, um and so they need to be sensitive to
26:06 that. If you if if you focus just on the numbers, um you you you may not get very far. I mean, I have a client right now and you know, she's probably looking at um getting half a million dollars um from her grandparents' estates, but all she really cares about is that her brother doesn't get anything. She would give up everything that she had is like if you could guarantee that he wouldn't get anything. And that's where I mean, if if if that's the the the tenor of the case when we start out, I won't even take that type of case because I I just you know, you can't get anywhere. Nobody's happy
26:42 >> [laughter]
26:43 >> Um and so, you know, uh that's the that's the big difference, I think. In fact, we had a financial advisor here just down the road um who required uh his clients to to have a um uh psychological evaluation before they came to see him. Uh Uh and you know, I feel like that's what we need a lot of times with our estate planning clients as well. It's It's probably very helpful. Um So, um yeah, I think patience and and just you
27:18 know, understanding family dynamics is probably the the most important aspect.
27:24 >> yeah, it certainly makes sense. So, talk talk if you would for a few minutes about dealing with probate courts in Alabama cuz I know, you know, I've I've had dealings with them and it just it seems remarkably different than what I deal with here in Los Angeles. You know, the typical judge here in Los Angeles has got you know, 40 He's handling 40 plus cases a day. Oh, And I mean, it's it's an you know, the the the 8:30 calendar,
28:00 there could literally be 35 cases that have to be dealt with before the 9:30 calendar, right? And it's not possible. It's just not possible, right? So, and like I said, the whole atmosphere struck me as as being different in Alabama. So, talk a little bit about that. Make make us make us in here in California jealous. Oh, gosh. Well, no, no, no. I don't think I'd be jealous cuz a lot of it comes down to the efficiency of of the court uh despite how busy they were. Um and you know, I think the the most analogous to to to LA that you that
28:38 you're talking about would be here in Birmingham where we have just a very busy docket. Um and we have two judges. Uh the chief judge is also the county election official. Um which that's a whole 'nother um Wow. you know, ball of wax and and takes up a lot of their time during an election cycle. Mhm. Um and then they manage a big staff, of course. And and so even though you have a a chief clerk, uh the judge uh is uh has to to spend time on the administrative um aspects of of their job.
29:15 Um so, you know, we might have five to 10 cases called at the same time. Mhm. Um and usually the judge is pretty good about identifying cases that that won't require a lot of time and then, you know, save the ones uh with testimony and and disputed um items uh for for later. Um and uh but sometimes it's hard to predict. So, yeah, I I I really feel for the for the judges and the and the staff that that deal with it. Um and we always have to caution our clients that that hey, you know, it may take a while. Um you know, one of the biggest problems we have right now in an intestate estate
29:52 where a person dies with no will, that's why it's so important to have a have a will even if you don't think you need it. I mean, uh even if you think you have all all of your accounts designated jointly and and that type of thing. Um uh it's if you end up having assets to control with no will, then that court is going to be involved, has to approve every um every step in in that uh particular case. And so, they have to the court has to approve the sale of real estate in an intestate estate. Um and that requires a hearing. And and
30:27 testimony. Um and so, uh a lot of times, especially in this real estate market, uh you just can't wait 3 months, you know, to to uh to close on on a property. The buyer will will walk away. Mhm. Um I've had to explain, you know, this well, we had a contract. Yes, but the contract expired. It doesn't It doesn't last forever. Um, and so I was just off the phone with with an attorney and I said, you know, we have a $30,000 property. You probably don't have those in California, but [laughter] No. Cars, maybe. Yeah, yeah, exactly.
31:00 >> [laughter]
31:01 >> Um, and you know, this is just a a house that that that was neglected for a long period of time. Um, but you know, you get a buyer and the way these investors work, you know, they they've got a certain volume they're trying to meet and they if they can't close on something quickly, they just walk away. So, I finally had to tell the attorney, I said, we've what we need to do is deed the property out to all the beneficiaries. And a lot of them have caused trouble. They don't want to agree or consent to anything. Uh, which they've just shot themselves in the foot because it's just driven the costs up. Um, and that's one thing for your viewers to to understand that, um,
31:39 you know, the long the all the time that you spend, uh, objecting and dragging things out, um, and refusing to consent on a on a ministerial matter, um, is just going to cost your your pocketbook in the end. And, um, that's very unfortunate. So, you know, we spent a lot of money on, um, trying to get court approval that we're never going to get. Um, so we have to just deed the property out, uh, close the estate by consent. So, we have two ways to settle, you know, estates here in Alabama, either with an accounting,
32:14 um, which we if we if I'm representing the personal representative, I would like to have an accounting and a full court settlement is what we call it, where the judge approves the accounting. There that way it's it's much brings more finality, um, uh, if there are disputes. Um, but most estates here are settled by consent. And you basically everybody signs consents saying, "I've received everything I'm supposed to receive under the estate. I have no more questions or issues. Close the estate." And the clerk
32:49 will will handle that file and as long as they have the the correct consents, the judge will sign off on it and it'll be it'll be closed. So, that's a much easier way way to do it. So, in the case of real estate, if you distribute everything out and you sell it by consent, then you don't have to have court approval for
33:07 >> [laughter]
33:08 >> for the sale of real estate. And then it becomes their problem cuz you got multiple owners of a one piece of real estate and you know. That's right. That's right. And and you know, we get run into I've got another one was a big family and lot of confusion. Um and everybody wanted my client to be in charge of the estate. Well, as it turned out, there really wasn't much of a probate estate. There wasn't much to do except some headaches. And so, I advised my client, "Don't become the personal representative. Let somebody else do it."
33:38 >> [laughter]
33:38 >> Right. And and they the whole family was up in arms that she didn't do her job. Right. [laughter] But, you know, that's the other thing is if you're ever appointed executor or a personal representative is the new term. Um I assume that's the Yeah, you have personal representatives in California.
33:53 >> Yeah. Yes. Uh-huh. Exactly.
33:54 >> Yeah. Um you know, you don't put Some people think that well, I was named in the will and that means I have to serve. I don't have any choice. Legally, I have an obligation to serve. And that's not true, either. You know, basically anybody can resign um anytime they they wish. Of course, they're accountable for the actions that they took while they were
34:16 >> Right. serving as personal representative. Um but yeah, there's no obligation to serve. Um and and the larger counties here in Alabama, we have what we call a a county administrator who's appointed by the the judge. And that lawyer will take estates that they don't have a a personal representative. Mhm. Um and they charge, you know, a percentage. They charge a good bit more than than than it would cost just for a lawyer to handle estates. Um in Alabama historically, um you know, lawyers have just charged hourly for
34:52 representing estates. Um if the lawyer is the personal representative, then they're entitled to a fee. And personal representatives in general are entitled to a a 3 to 5% uh fee. Wow.
35:08 >> Um of the probate estate. Um and I had one, you know, that we just closed down the other day and we uh objected to the to the personal representative's fee because there really wasn't much to do. It was just processing some savings bonds. Mhm. But that personal representative walked away with $30,000 $30,000 fee because it was part of the probate estate. Um and so, you know, I I don't think that's um I don't know I've never really compared it to other states, but and everybody has different Yeah. ways of working it, but
35:43 um I I I've been seeing more lawyers go ahead and charge a percentage fee, uh which judges will will approve. The other thing in Alabama is um you know, by state law, um the probate judge does not have to be a lawyer. Does not have to have legal training. Oh, interesting.
36:02 >> your smaller counties, you actually have probate judges um who are not lawyers. Um and uh some of them don't like to pay lawyers. Don't like to award fees.
36:12 >> [laughter]
36:13 >> Um but, you know, for the most part, I I think, you know, that works pretty well. I mean, in a smaller county, you know, I can just walk into the judge's office and and we will meet, and it's just they're not real busy. That's that's the big difference usually. Um So here in California, um both the personal representative and the lawyer who represents the personal representative, there is a statutory fee schedule. And unless it's a very tiny estate, when I say tiny like a couple hundred
36:48 thousand dollars, where in theory the the percentage fee could be very high. But once you get into anything And in California, it you know, if if you if if the decedent owned a house, you know, you're probably getting up close to a million dollars at that point.
37:02 >> Right. Um so, you know, you're talking about hm maybe 2% something like that, 2.2% cuz it's a sliding scale. Okay.
37:12 >> but then, you know, once you get above I want to say maybe five million dollars, now you're talking the overall percentage fee probably under 2%. Okay. That's really that's really good. Uh in fact, my client would have come out better the other day if there'd been a sliding scale and there there should have been. Yeah. So that's helpful. Yeah, and and I think it it it certainly makes sense because the fact of the matter is I I I've been having this conversation with a couple of friends of mine. I'm handling a handling an estate right now where
37:47 I think when all is said and done you know, it's maybe like 1.4 million dollars. Which you know, that's a lot compared to a $30,000 house. But here in California, that's a small estate. Sure.
38:01 >> Um and the the time, the aggravation I I I I would rather do a $10 million estate. Oh yeah, sure. You know, because it's it's not much different. That's very true.
38:15 >> dollar estate, I'm getting a larger fee. Right. So, and and interestingly enough for people in my profession, so it's it once you've been in it for a few years, most of us won't do small probates. Right. Because it doesn't it doesn't make sense. And so it's very hard to find uh professional fiduciaries who will do these smaller estates. Exactly. And it's very true. My experience shows um yeah, the the smaller they are, the more problems there are. The more time, the more money it's going to cost. And so yeah, you don't I I just try not to take cases that you know, nobody's going to
38:51 be happy. Yeah. And get them to help you.
38:54 >> with a larger case, so sometimes what I find is often times the heirs or the beneficiaries, so they'll have their own legal counsel. And so number one, I don't have to deal directly with them, which is nice. Right. Um but but secondly, if there are problems, so you know, the lawyers can you know, figuratively anyway, go into a huddle. And you know, cooler heads prevail. And then they can go and advise their client, "Look, you don't want to do you don't want to you don't want to make a big thing about this. All it's going to
39:29 do is cost you a lot of money. You know, let's just let's just figure out a way to work this out and move on with the administration, right? Um but for a small estate, the heirs they can't afford to hire their own counsel. And so that also perpetuates the kind of you know, family conflicts about which you've been talking. Right. Exactly. Yeah, it tends to be you know, you think you're spending more money by hiring lawyers, but you know, as it turns out if you um it's usually easier to work something out, you know, with law with lawyers involved uh than having just a um a beneficiary who wants to
40:06 hold out and doesn't understand a lot of the issues. Um so that's that's very helpful. Let's actually we're I'm kind of over let's take another quick break and then we'll we'll wrap things up. Okay. Probate and Trust TV, your curated source for the most useful and insightful content on estate planning and trust and probate administration, featuring standout professionals like Bill Gross, Paul Rabalais, James Cunningham, and yours truly. Whether you're a lawyer, accountant, real estate
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40:59 >> [snorts]
41:01 >> So so um So we we could talk for another 2 hours. Yeah, absolutely. [laughter] 10 hours if we wanted to. Yeah. Yeah, exactly. You know, it's just it um first of all, it it's it's it's a bit of a nostalgia trip for me, um you know, talking about Alabama and and and how these and you know, how matters are handled there. Right. Um you know, it it's just like I said, it it Well, you have firsthand experience. Absolutely. Yeah. Yeah. And and for me, because you know, the the woman who's who's estate, you know, I I handled, she
41:38 became such a dear friend. Uh you know, it it it it it's just it's it was very special. I mean, I remember uh going her case was actually heard in I think it was Jefferson County. Mhm. Um and uh I remember going in to see the clerk cuz I I I think I had to pick something up from her or something. And um and she and she's she's she says, "Oh, yes, you're you know, such and such is a client." And I said, "Yes, I am." She says, "Oh, what a great lawyer." You know,
42:12 >> [laughter]
42:12 >> it's like you would never First of all, the clerks here in Los Angeles, they don't know any lawyer. That's right. It's like I mean I'm guessing it's a, you know, pretty small, you know, fraternity/sorority you know, for the entire state of Alabama. I know here in in California, we have maybe 5,000 uh attorneys, you know, practicing in this area, which is nowhere near the number we need, but it's still it's 5,000 people, you know, who in the who in the court you know, could know any, you know, percentage of that, but I'm
42:47 I'm guessing it's a much smaller uh Yeah, but it it it's about 2,000, I think, the last time I checked.
42:53 >> Wow. Around this area, that would include the metro area of Birmingham. Um so yeah, we've got a good many and there's a there is a kinship between, you know, trust and estate attorneys. Not a whole lot of folks that um that just specialize in in the estate planning. Um Yeah, more lawyers that will do it um you know um on the side, you know, we we'll take probate cases. Um and then young people, you know, we get we see in my estimation, too many young lawyers coming out and saying, "Well, I can do probate. I can do um
43:29 you know, but they're not trained and they're they're just trying to do it on their own um and just get help along the way." And so you know, I think it'd be it's better to to train, you know, under under somebody. For sure. Work in that area before you you have to to go out and do it on your own, but And we have the opposite We have the opposite here in California. Young people coming into the legal profession, they don't want to practice trust and probate law, and that's one of the reasons that the numbers have been shrinking for for years now. Um I don't know if it's not, you know, prestigious enough. I
44:05 I I know why, but there's not new blood coming into the profession. Right. Um yeah, there's I guess a a some level of fee compression just because um there's virtually no estate tax. I mean, in California you're going to have more estate tax issues. Um but with the, you know, $30 million exemption between spouses and 15 uh you know, we just don't have that much business. So, what's happened in Birmingham is your uh your tax lawyers and the estate planning lawyers who worked in the larger firms have had to leave because they couldn't generate the fees that they can't do
44:40 $10,000 estate planning packages that they used to do. Um you know, we for our firm it hadn't affected us that much just we had the same process and the same um it really doesn't add that much if we have to add estate planning estate tax language um then we can do that for for not much cost. So, it doesn't really revolve around that particular issue. Uh in fact, we spend more time unwinding or or re- uh uh redoing folks' documents where they don't need estate tax um uh the traditional um AB trust scheme that we used to use. Um
45:15 and so, it's nice to uh to get that revised, but um so, it's you know, in some ways you know, for our firm we're we're covered up just because there there are very few firms that specialize. Um and so, so everybody eventually have to go through a probate um situation. So, there's there's plenty of business out there. Uh but the good news in in Alabama is it's fairly a simple process. Um and so, when we look, you know, so many people um uh are concerned that they may need a revocable living trust, which I know were really big in California and
45:50 probably for, you know, there's a big reason for that. There's not as much of a reason to avoid probate and to have a living trust here in Alabama. Um so, you know, a lot of times it ends up I tell clients you can spend you know a few thousand dollars to establish the living trust and put your real estate in that trust. Put everything there and then you can avoid probate which is certainly nice. But if you don't you know exactly what assets you may have um if so many of our clients just don't end
46:26 up funding that living trust the way it should be and then you haven't really accomplished anything.
46:30 >> Right. And then again you know probate in Alabama is a few thousand dollars and a hundred fifty dollars filing fee. Wow. So so I tell clients you can spend a few thousand dollars now to establish the living trust or you can just wait and and spend a few thousand dollars to to probate. And you may you know be able to catch everything that that you need to so That's a big difference in California because it's still you know three to five thousand dollars to do an estate plan here
47:01 >> [snorts]
47:01 >> but even with the lower percentage probate fees because of the size of a typical estate you know you can easily end up paying you know fifty thousand dollars to probate even a you know a million and a half dollar estate because there's going to be the statutory fee to the administrator and the statutory fee to his lawyer plus the court fees could can end up being four five six seven thousand dollars for all the filing fees so it's it's much more expensive to go and and that's even assuming if there's a will and there's no sudden estate
47:38 succession and you have challenges who's an heir who's not an heir etc. etc.
47:43 >> Right. Exactly. Um Yeah so that's the good news here in Alabama we um makes it easier sometimes for us to to explain to to clients but um Well David I'm going to have to have you come back again. We'll have to talk some more cuz I we're going to we're going to have to wrap things up here, but uh you know, it it's it's it's and we talked about this, you know, before the before the show, but to be able to contrast the jurisdictions, I I think is is very valuable so that people get a sense that um you know, these things
48:18 don't happen the same all over the country. Um I don't know, maybe some Californians now are are thinking, [laughter] "Maybe I got to move to Alabama." So, you you make sure you talk to David about getting your estate plan updated cuz what we're doing here is going to be different than what you need That's right. in Alabama. Well, and that's important, too. I mean, cuz some folks um you know, you could bring a California will, probably be perfectly valid here. There may not be no reason to have a new will just because you moved to to Alabama, but you need a lawyer to look at it because you can't assume. Yeah, exactly. Exactly.
48:53 Well, David, thank you so much for being my guest today. I really appreciate you coming on and talking with me. Um let's do a quick wrap-up and we'll we'll talk offline in a minute. So, needless to say, um
49:06 >> [laughter]
49:06 >> David and I are talking like old buddies, which kind of we are. We've known each other for a number of years now. Um but if if you uh need um estate planning, trusts, and probate services in Alabama, David is your man. Uh there's there's no one else there that I would even consider uh referring you to because when you've already got the best in front of you, you don't need to look any farther. I It's always my job to give the shameless plug, David. Thank you. Thank you. I appreciate that. Yeah, and I'd do the same for you. Thank you. So, let's see. Real quickly then, wrapping up, uh tomorrow at 10:00 a.m.
49:42 Pacific time is my show Business Lessons from the Military. Wednesday at 10:00 a.m. Pacific time is my show People Making Money. And And every other Thursday at 5:00 p.m. Pacific time, join me at Jiggers's Place for a cocktail and a smooth. We talk about all the non-finance related issues of life and relax as we head in to the end of the week. So, I thank you very much for watching us today and I hope you'll pass this along if you know of someone who could benefit from hearing the the really excellent thoughts that
50:18 that David had on on how to deal with what can as simple as David made it sound, it's it's a complicated subject and that's why you need someone like David who can make it sound simple because he has the experience, the knowledge to do that. So, a final thank you to you, David. And then that just leaves me to sign off and remind you, Marie darling, you are my bell. Courage at all times, my friends.