The WAY to WOW Shows
All Things Estate & Trust Related - Part 1
May 8, 2023
Automatically generated from YouTube captions; names and wording may contain errors.

[0:14] good morning and welcome to this the premiere episode of trusts and Estates weekly the next show in the way to wow show series and I am your host Kevin demmel 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 I'm sure 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

[0:49] for many years and I started off life as having founded a commercial real estate company here in Los Angeles and um did over a billion dollars in various types of transactions 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 licensed

[1:24] salesperson real estate sales person a licensed life insurance agent and also uh I'm registered with finra as as a um uh um what do you call 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 don't sell products myself um especially as a fiduciary that would be a conflict of interest as as you will

[2:00] know is you either already know or will be finding out as we uh join together each week on this show so at the advice of a very close friend of mine who's been a guest on the show a couple of times um Bill gross who is 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

[2:36] presented so that people can learn what this is all about not just for their own personal financial needs but also for their business needs so um the the position of a licensed professional fiduciary is a fairly new one in in California 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

[3:11] people are not familiar with this this particular area and what professional fiduciaries do is they 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

[3:46] client above their own um and and there are many um professions that have a fiduciary aspect to them uh in the case 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 uh what's the word I'm looking for sensitive cases so take the example of a person who is no longer able to handle

[4:22] their own business Affairs perhaps because um they're suffering from Alzheimer's or they have some other debilitating disease or they 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 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

[4:58] 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 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 and decision making than is absolutely necessary so

[5:35] we're here to help them maintain as much of their life as possible so for example in um the an estate that I did 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

[6:12] relating to the death of her husband and I did that with a lot of consultation with her and with seeking her input and where at all possible her decisions as to what would be done with her affairs okay and in general that is what professional fiduciaries should do now I want to contrast that for a moment with let's say where the children of a person

[6:47] 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 the children now that is that's not the case Okay because the business Affair is being handled are those of the client in in this example the parents so what the children want isn't really the relevant issue here and that can sometimes cause conflict because what

[7:25] may be best for the client may not necessarily be best for the long-term interest of the children and and let me give you a situation I was involved in many years ago where that created quite a bit of um dissension let's call it 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

[8:01] 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 home 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 found somewhere and and what that meant

[8:37] was she had two major assets one was how her house which she didn't live in anymore and the other was a portfolio 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 if if you're following this you probably can see the conflict right so

[9:14] either the house would have to be sold to have the the funds to support the woman or some of the 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 do an assessment as to you know what what could possibly

[9:50] be done with the real estate for example that wouldn't necessitate selling it um but that might generate you know cash funds in 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

[10:25] scenarios and and candidly I don't recall what we eventually decided um but but I can tell you that um the children were unhappy they were unhappy um and and and and and as you might guess they 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

[11:02] court concluded that as as her conservator their obligation was to her and while it was unfortunate the way the will was 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

[11:38] early get some get the the brain juices going as as my friend Michael says and and so let I'm gonna wrap up or not wrap up I want to wrap up this example so here here's here's an object lesson that I learned working on this particular matter in talking with um the woman's estate lawyer and that is that in in general it's he told me it's not a good idea to Dole out specific assets to your

[12:13] heirs because if something needs to be done in your estate that requires selling one of those assets prior to your death you've created a situation where your errors 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 percent and then at the

[12:48] end of the day if if when you pass away you see you like this woman you you you have this house and you have the stock portfolio and they're worth roughly the same amount we'll send in the errors at that point 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 vidanya as we say um maybe I shouldn't be you know quoting Russia but you know sort of dosfid on you go go with God um and and and if if there can't be an agreement on how the assets are split up

[13:23] 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 uh like a 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 I would say you know substantial assets would be certainly a hundred thousand dollars or more and maybe even less than that you

[13:59] but it will behoove you to get the advice of a qualified uh estate planning attorney and I'm gonna have some of them as guests on the show um because I think you need to hear from them now maybe I should have 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 handle things for a specific client of mine in

[14:35] the past or advice they may have given me personally based on the specific situations we with which we were confronted your situation will not necessarily be the same and so that's why I I cannot recommend highly enough that when you're dealing with trust your own trust in the state 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

[15:10] may be time to get one 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 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

[15:46] without justification uh but but in California you know if you own a house okay most I think most estate planning attorneys will tell you you should have a living trust because that house 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 it will save you so much

[16:21] money rather than going through probate okay so let me let 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 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

[16:58] it could be your children it could be other relatives it could be people who have no familial connection to you at all if you've established them as your Heir in a form of