0:00 and welcome to this the premier episode of trusts and Estates weekly the next show in the way to wow show series and I am your host Kevin bemel and just by way of explaining what this is all about um for for those of you who are are not aware so I am a among other things you know I'm a rabbi for those of you who watch the show before and you know I was a chaplain in the military for many years and uh I started off life
0:37 uh with as having founded a commercial real estate company here in Los Angeles and um did um over a billion dollars in um various types of transactions um during the 20 years I I had that company so now I'm I'm on what I jokingly refer to as Kevin 3.0 and am back in the business world I am a California licensed professional fiduciary as well as a li licensed salesperson real estate salesperson a licensed life insurance agent and also
1:15 uh I'm registered with finra as as a um uh what do you call it a registered representative um for uh selling things like mutual funds and and those sort of things um because I I train people in the financial services uh industry I I I don't sell products myself um especially as a fiduciary that would be a conflict of interest as as you will note as you either already know or we'll be finding out as we uh join together each week on
1:52 this show so at the advice of a very close friend of mine who's been a guest on the show a couple times um Bill gross who is um one of the top probate real estate agents here in Los Angeles he suggested that there was a need for a program where a variety of estate and Trust matters could be discussed and presented so that people can learn what this is all about not just for their own uh personal
2:28 financial need needs but also for their business needs so um the the um position of a licensed professional fiduciary is a fairly new one in in California um whereas licensed real estate agents have been around for decades and decades and decades professional fiduciaries have been around for only about I think it's about 20 years now and and so a lot of people are not familiar with uh this this particular particular um area and
3:03 what professional fiduciaries do is they um act as the sort of Representative or if you want managing agent of of among other things trusts and Estates there are others who work with guardianships and conservatorships and a fiduciary of course is someone who places the needs and interests of their client above their own um and and there are many um professions that have a fiduciary aspect to them uh in the case
3:40 of a professional fiduciary all of our work is centered around handling matters for other people um so you can think of it if kind of like a business manager only in in in um what's the word I'm looking for sensitive cases so take the example of um a person who is no longer able to handle their own business Affairs perhaps because um they they're suffering from Alzheimer's or they have some other debilitating disease or they
4:17 may be a minor or they they may be an adult um but but they're not elderly it's just for various reasons they're they're not able to look at after themselves so that's where a professional fiduciary comes in and and they go by various names the guardian conservator um administrator and they can be brought in um by the person while they still have capacity to do such a thing they can be brought in by relatives they can be appointed by the
4:52 court and we end up handling as much of the person's business Affairs as is necessary so the sort of Credo if you would of a professional fiduciary is we don't want to take away from a client um any more Authority in decision making than is absolutely necessary so we're here to help them maintain as much of their life as possible so for example in um the an
5:31 estate that I did um a couple of years ago so um the the the the woman I mean she wasn't she didn't have Alzheimer's or anything like that it's just it was it was too much for her and she didn't want to handle it herself and so she asked me to come and handle the um matters relating to the death of her husband and I did that with a lot of consultation with her and with seeking her input and
6:09 where at all possible her decisions as to what would be done with her Affairs okay and in general that is what professional fidu fiduciaries should do now I want to contrast that for a moment with let's say where the children of a person have brought in the fiduciary sometimes there's some confusion that since the children brought the fiduciary in the fiduciary now is obligated to follow the wishes of
6:44 the children now that is that's not the case Okay because the business Affairs being handled are those of the client in in the this example the parents so what the children children want isn't really the relevant issue here and that can sometimes cause conflict because what may be best for the client may not necessarily be best for the long-term interest of the children and and and let
7:19 me give you a situation I was involved in many years ago where that created quite a bit of um disent let's call it um among the various parties so the the client was an elderly woman she was under conservatorship and I came in to handle some real estate matters for her and here was the issue she was running out of cash to live to pay for she was she was no longer living in her residence she was living in a retirement
7:55 home um but she needed money to pay for the retirement home and her her liquid assets her cash essentially was being diminished at a rate that it was going to be used up you know to be blunt before she was dead and so additional cash needed to be uh found somewhere and and what that meant was she had two major assets one was a h her house which she didn't live in anymore and the other was a portfolio
8:31 of Securities okay now the um the way her will was set up was that one of her children would get the house and the other child would get the Securities and it if if if you're following this you probably can see the conflict right so either the house would have to be sold to have the the funds to support the woman or some of the
9:08 Securities would have to be sold and whichever one was done that child was going to lose some of their inheritance and they the two the children along with their spouses started fighting and I was brought in to to do an assessment as to you know what what could possibly be done with the real estate for example that wouldn't necessitate selling it um but that might generate cash you know cash funds in
9:46 order to support the woman who owned the house so for example we looked at renting out the house what kind of rental income would it generate and the reality was unfortunately it wouldn't generate anything close to the amount needed each month to pay for the woman to stay in in the retirement home and and and we looked at a number of of scenarios and and candidly I don't recall what we eventually decided um but but I can tell you that um the children were
10:22 unhappy they were unhappy um and and and and as you might guess they decided to litigate um which of course made the situation for their mother even worse because now an attorney had to be hired putting a further burden on her cash flow and and and in the end you know the court concluded that as as her conservator their obligation was to her and while it was unfortunate the way the
10:58 will was drafted drafted that was the way it was drafted and and she was not in a position any longer to change her will um but it was it was an object lesson and so these are the kind of things that we're going to explore in this in this uh show for a half an hour each Monday morning to get us off started bright and early get some get the the brain juices going as as my friend Michael says and and so let I'm to wrap up not wrap up I want to wrap up this example so here here's here's an
11:35 object lesson that I learned working on this particular matter in talking with um the woman's uh estate lawyer and that is that in in general it he told me it's not a good idea to Dole out specific assets to your heirs because if something needs to be done in your estate that requires selling one of those assets prior to your death you've
12:10 created a situation where your heirs are at odds with each other so what he recommended is rather than sort of trying to balance things out in terms of this person gets this asset and this other person gets this other asset just give them a percentage of the estate so each one gets 50% and then at the end of the day if if when you pass away you you like this woman you you you have this house and you have this stock portfolio and they're worth roughly the same amount well so then The Heirs at that point
12:46 could agree look why don't you take the house you like real estate you take the Securities you like stocks and bonds Etc and you know dos VI as we say um maybe I shouldn't be you know quoting Russia but you know sort of do go go with God um and and and if if there can't be an agreement on how the assets are split up so then the assets can be sold and the money divided up according to the percentage interests in in in the will or or hopefully not a will because that has to be probated but in you know according to uh hopefully a like a
13:23 living trust or something like that and so um you know and this is one of the reasons why if you have any kind of substantial assets and and and I would say you know substantial assets would be certainly $100,000 or more and maybe even less than that you it will behoove you to get the advice of a qualified uh estate planning attorney and I'm going to have some of them as guests on the show um because I think you need to hear from them now maybe I should have
14:00 started the show off by saying this when I talk about these incidents and and what the lawyers suggested this is of course not me giving you legal advice okay these are examples of how lawyers handled things for a specific client of mine in the past or advice they may have given me personally based on the specific situations with which we were conf fronted your situation will not necessarily be the same and so that's
14:35 why I I cannot recommend highly enough that when you're dealing with trust in your own trust in estate matters that you you consult with a a competent uh estate planning attorney and your accountant now if you don't have an accountant it may be time to get one um because there are so many complex issues when it comes to estate planning there are tax issues there are gift issues there are valuation issues that your
15:10 accountant can make you aware of so that you can do the best possible job in in handling these matters now I live in California you know which if you don't live in California you probably think of California somewhat as the crazy State and and probably not without justification uh but but in California you know if you own a house he most I think most estate planning attorneys will tell you you you should have a living trust because that house
15:47 alone the equity in it is a large enough asset that you really don't it will justify the cost of um creating the trust which isn't very expensive um and and that will save you so much money when rather than going through probate okay so and I'm going to talk about just some some basic concepts here um just you know in case you don't know so when when you die okay and you leave
16:25 behind property okay so depending on what that property is it may or may not automatically transfer to your heirs okay now your heirs could be your spouse it could be your children it could be other relatives it could be people who have no uh familial connection to you at all if you've established them as your Heir in a formal legal way now the way that used to be be done or well not used to it's
17:00 still done the the the most common way it used to be done was through a document called the will otherwise known as a a last will in Testament and in a will the person who is is preparing for their death sets out who gets their assets okay and generally speaking it would either be as I was saying before um specific assets going to to specific people or it could be a percentage of their estate going to each of several people or they may have only you know
17:37 one asset I mean one I'm sorry they may have only one Heir and so 100% of their assets are all going to to that to that person okay now in order for the assets to actually be transferred according to the will there's a legal process known as probate that takes place in a part of the courts here in California they're called the probate courts and they specialize in handling these types of matters so the judges are familiar with them and there are lawyers estate
18:13 planning lawyers who that their whole practice is involved with these kinds of matters okay and just like with any kind of Court matter a a um it's not really a law suit but there's a court filing okay typically in re estate of and the person's name okay and and it's filed with the court there are filing fees there's of course a charge by the lawyer to prepare the documents so you can see right away if you fi have to file a probate there are expenses
18:48 associated with doing that and then there under the will there would be an executive if it's a man or an executrix if it's a woman um if for some reason that person maybe that person predeceased the the person who died so then the court would appoint an administrator okay usually whether it's a man or a woman it's called an administrator these days so it is to be an administrator or an administratrix right these these terms that you've probably never heard before right a little a little history in in in in trust and probates and that person
19:25 would then have the responsibility for seeing to it that the wishes of the deceased person according to the will were carried out so they would open a probate uh call well the the court action opens the probate and then once all the property was distributed and all the debts were paid and all the matters taken care of they would close the probate and then that would that would end it okay but you can see that there's there's a lot of expense in that so in order to avoid that in in many if not all states there's something called a
20:02 living trust that can be drawn up it's it's sometimes go goes by its Latin name an intervivos trust doesn't that that's right that sounds like it's expensive you have you have to drop an interos intervivos trust oh my gosh what's that gonna cost me $20,000 no no no um the these days they don't cost anything like that a few thousand dollars um at at the most now what this trust does is it allows the transfer of property without having to go through probate as long
20:38 as the property has been transferred to the trust so what happens sometimes is somebody will have a trust created and they'll stop and and all so their bank account will still be in their own name not in the name of the trust so so when they die it doesn't do any good that they have the trust because the bank account is still in their name and so now there a probate has to be filed in order to transfer that bank account okay now there are certain things where it doesn't matter like if
21:13 you have a car here in in California and and you have a spouse so then your spouse can just go to the DMV and transfer the car into their name that's that's true in Alabama by the way um I know because I handled the matter there not long ago um and and and um if you have a life insurance policy okay so again there's no probate needed for the beneficiary of that life insurance benefit that death benefit to go to the beneficiary that happens just as a function of the life
21:49 insurance policy okay so you know you wouldn't want to put your life insurance policy in in in in your trust um or or you know even worse pull it into probate somehow that's that is ruining the one of the benefits of life insurance which is when the person dies the basically there's a claim filed you you submit a copy of the death certificate to the life insurance company and then the beneficiaries are paid assuming that there doesn't have to be an investigation and for those of you who are oldtime radio fans and you listen to
22:25 Johnny Dollar right insurance investigator you it seems like every single time somebody dies there's an investigation but but I I I that's I think that's rarely the case only if there were some un unusual circumstances okay and and if you by the way just as a d very short digression if you want to watch probably the best movie about an insur a life insurance policy investigation following the death of an insured watch Double Indemnity it's a movie from I believe the early 1950s Fred McMurray Barbara Stanwick and um oh
23:04 shoot I um uh Edward G Robinson and uh Double Indemnity refers to a clause that some life insurance policies have where if the person um has an accidental death the benefit is doubled right so if the policy was for $100,000 if they you know let just died of natural causes but then you know they die in a car accident the beneficiary will get $200,000 under a double indemnity clause
23:39 right and and uh so anyway I recommend that movie but in in any event you can see already that this gets pretty complicated by the way when it comes to whether you owe estate taxes or not it doesn't matter whether you your your property is distributed through a will distributed through um a trust life insurance policy benefits the IRS is going to look at all of the assets of your estate to
24:15 determine whether you're liable for estate taxes okay and um and we're going to we'll we'll talk in more detail about that and how it works because it can also be affected by previous gifts that you've given to people over the years okay so how gift taxes work can also impact what happens to your estate from a tax standpoint so all of these things need to be examined comprehensively and that's why if if
24:52 there's any kind of sizable assets at all that are going to be coming that are in your estate and and going to have to be distributed you you want competent professionals handling them by the way if there's a piece of property you real estate that needs to be sold as a result uh of of your passing away you're also going to want to make sure that you have uh well you're dead so you're not going to be worried about this but the person who's
25:28 handling your matters after your deceased is going to want to make sure that they use a real estate agent who is familiar with how properties owned by an estate are sold it's it's it's not a necessarily A straightforward process there may be other things that have to happen in order for that estate um in order for that property to be sold and by the way the same is true for property being held by a trust even while the
26:04 trust stores are still alive okay so um the the the trust may have requirements about whose authorization is needed in order to dispose of I.E sell certain assets and and one type of assets I.E one type of asset I.E real estate may require a different um set of approvals than say um some stocks or bonds okay so again all of these things
26:42 need to be looked at and professionals who are familiar with and have experience in these kind of transactions are absolutely required in order to make sure that your your Affairs are being handled properly and so my so my my message on this first show of trusts and Estates weekly is number one do you need to be thinking for yourself about uh having a trust what is the state of your estate and
27:19 what plans have you made for that unfortunate time when you're not going to be here and how will that affect your heirs that's number one number two are you in a business where you could where you maybe already deal with trust and estate matters or whether you could expand your business by dealing in trust and estate matters are you in financial planning are you in financial services are you in the insurance business are you in the real estate business real
27:54 estate lending real estate brokerage property management all of these can be extended into the realm of Estates and trusts and because they require a higher a greater amount of knowledge than the typical professional in your field might have so they are potentially more lucrative areas for you to deal with and potentially less competitive because not everybody has the experience to deal in these areas so I invite you to join me
28:32 each week at uh 10:00 a.m. Pacific Time 1 pm eastern time and if you've seen my shows before you know I always do this an hour in for Central and mountain time and we'll be talking about all of these various issues and we'll be talking with Professionals in these areas to get their thoughts and their advice or their General General guidance is is probably a better way to think of it their General guidance on how to handle these matters how to be a professional in
29:07 these areas how to increase your business handling matters relating to trusts and Estates so that's that's our show that's my show for today introducing you and if you haven't seen my other shows so I invite you to tune in tomorrow Tuesday at 11:00 a. Pacific 2 pm uh eastern time for business lessons from the military where right now we're examining Marine Corps War fighting Doctrine for lessons that we
29:42 can take away to improve the performance of our businesses whether we own them ourselves or whether we work for a business and and and that's a half an hour show as well and then on Wednesdays at 12:30 p.m Pacific 3:30 p.m. eastern Time is people making money and that is my show where we talk with people who have interesting professions that they love and do well in so past guests have have included uh a wine maker um a real
30:19 estate investment company owner a uh Professor from the uh Merchant Marine Academy me and let's see most recently I forget oh most recently an author um of a book that will that helps people improve their emotional intelligence through something called anagrams so do check out my channel on YouTube it's the way to wow show just go to atth way to wow show on YouTube and you will find it you can see I think
30:55 we've got over 15 50 episodes there going back over the last three years or so all of this is all of all of my shows are aimed at helping you improve your professional life make more money build wealth and then make sure that when that time comes may it be far far from now that uh it's that that that wealth needs to be passed on to your loved ones and your heirs we don't always love our heirs unfortunately that that's all handled in a way that you can lay your
31:30 head on your pillow each night and and and sleep well with without worry so thank you very much for joining me again I'm Kevin demmel your host and signing off by saying Marie darling you're GNA hear it three times a week now you are and will always be my bell thanks so much for watching look forward to seeing you in the next couple of days and next week