Trustworthy: Enlightened Estate Planning

By Tara K Wilson

Americans are experiencing the largest generational wealth transfer in history, while questioning their own mortality; now is the time for them to plan and protect their health, wealth and happiness in life through enlightened estate planning.

Trustworthy explores the evolution of an archaic system bui

• Language: English
• Publisher: New Degree Press
• Release date: Jul 27, 2020
• ISBN: 9781641378826

Book preview

INTRODUCTION

Trustworthy will help you see estate planning, and Trusts in particular, in a whole new light. It will help you, your family, and generations to come increase your wealth, health, and happiness.

I wrote Trustworthy as a resource for everyone . . . everyone. Whether you are:

•Generation X, Y, Z, or a baby boomer

•Blue collar, white collar, or retired

•The sole member of your family, a half of a couple, a new parent, someone driving around a minivan full of kids, or a widow

I wrote Trustworthy:

•To dispel myths that Trusts are only for investors or property owners—that somehow these people are the only ones with something to protect

•For people who feel like estate planning is an extra, akin to taking a vacation, a choice a family has to make between the former or the latter

•To let you in on a secret—Trusts put you in control. They do not cause you to relinquish control. Trusts are not just about death; Trusts are about your wealth today, about your wellbeing today, and about your—and your family’s—health and happiness . . . today

Generations of Americans have viewed estate planning as a chore, and they procrastinate as long as possible. Unfortunately, some never start or complete their estate plan to the detriment and expense of themselves and their families. Others may have put a Will in place years ago, they may have paid a nominal fee for one online, or they may have a Power-of-Attorney or Living Will that they may have in a bent folder filed behind all of the bills in their desk. Those are an important, even critical, part of a person’s (or family’s) estate plan, but they are only just a part.

Many people are simply not aware what a Trust is or what it can do for a family.

ALL TOO FAMILIAR

Thousands of families face estate planning issues every day and, often, these issues can be avoided with knowledge and preparation. Take the case of Brynn Robertson, whom you will be introduced to in Chapter 6. Brynn faced a situation familiar to many. In the midst of the emotional tragedy of her mother’s death, she was forced to endure a time-consuming and expensive probate procedure that left her inheritance exposed to creditors and an impending divorce settlement. It was a public record, open to anyone who sought to take a look into her life.

Her mother, Kathryn, never would have wanted to expose her daughter to that, nor lose more than half of what she had left Brynn. In fact, if Kathryn knew of a structure she could have put into place to make the transfer of wealth easier and would have offered safeguards to protect Brynn from ever losing it, she would have done so.

Kathryn’s lack of knowledge had emotionally and financially catastrophic repercussions. While Kathryn thought she had responsibly handled her estate plan, she left only an outdated Will, and thus an incomplete plan, without even realizing it.

For Brynn, she learned a hard and expensive lesson as a result of her mother’s passing and that simple Will. Fortunately, the lesson was not lost. She approached the rest of her life with her eyes wide open, without a preconceived or romanticized notion of life, and it led to a plan that gave her a sense of control and peace of mind. Once in place, she was able to live and love more freely. She had developed a sense of appreciation for her life knowing that it was finite, and she reframed the ways in which she approached her future.

UNIVERSAL FEARS

An estate plan does not make the fear of dying disappear. Even the most faithful have, at some level, a fear of death, an inkling of doubt of an afterlife, a fear of leaving their families. That near-universal fear (or doubt) has also been associated with the estate planning process for far too long.

Most people think, It won’t happen to me. If I don’t think about it, it doesn’t affect me. Unfortunately, we are all mortal, and our deaths will affect our families and everything we have earned and collected for ourselves and for them.

The traditional estate plan is centered around a Last Will and Testament, a document that is only useful after you die. These lie dormant your entire life and then spring to action in probate court. Wills and the probate process are centuries old and focused on death, which leads people to fear, avoid, and procrastinate dealing with them.

While a Will is certainly not a complete estate plan, and should not be the main component of an estate plan, it is widely believed to be. This outdated view and fear-based mindset has led to over half of Americans avoiding it altogether. In a 2020 survey, only 32 percent of Americans stated they had one or more estate planning documents.¹ This is a noticeable decrease from the 2019 survey in which 40 percent stated they had one or more estate planning documents and the 2017 survey reporting 42 percent.² In 2016, WealthCounsel, a network of US estate planning attorneys, and ORC International, a global business intelligence firm, conducted the Estate Planning Awareness Survey finding that approximately 40 percent of Americans had a Will and 17 percent had a Trust.³

Despite 17 percent of people stating that they had a Trust, only 3 percent of those questioned mentioned the word Trust when asked about their estate plan.⁴ It is fair to say that even those people who have a Trust as part of their estate plan don’t completely understand. In my experience, I have counseled families interested in updating their estate plans and the initial conversation revolves around their Will, then I later find out they have a Trust. Like most people, they defaulted to using the word Will when referring to estate planning.

Of the Americans who have not put an estate plan in place, about 35 percent are procrastinators, simply saying they haven’t gotten around to it.⁵ In the prior two years, procrastination was the reason why 50 percent of those surveyed did not have an estate plan.⁶ The other most prevalent reasons were not believing they had enough assets to leave to anyone, the expense of creating an estate plan, and not knowing how to even start one.⁷

It will be interesting to see if the results of the 2021 survey reflect a consistent downward trend, or if the 2020 worldwide coronavirus pandemic has people prioritizing their estate planning. I believe there will be a significant increase in the number of families who put a Will or Trust in place. In my firm, I saw a noticeable increase in the number of clients seeking to put an estate plan in place immediately following the statewide closures in March 2020. Families were calling because they were facing the loss of loved ones from the coronavirus or they were nervous that they could fall ill. The calls were very similar: I have put this off for too long already; it took a pandemic for me to call you.

Besides fear and procrastination, many avoid the subject altogether because they lack basic knowledge about the estate planning and probate processes. Again, these are centuries-old, complicated processes! It does not always make sense and there is usually no class in school in which people are even made aware of it, let alone taught how to do it for themselves.

WHO EVEN KNOWS WHAT ESTATE PLANNING IS?

In elementary school, we are taught the five W questions—who, what, where, when, and why—to help us understand the subject and context of a story. However, students graduating from high school or college generally do not know the five W’s of an estate plan: Who needs one; what is it; why is it necessary; when should I make one; and where do I get one?

Some attorneys might even have difficulty answering these questions. Trusts and Estates is not a required class in law school. So, ironically, although there should be an increased awareness among attorneys regarding the importance of estate planning, there are plenty of attorneys who die without one, just like so many other non-attorneys. I have created estate plans for many.

Risen from the general views (or misunderstandings) of estate planning, there is a common misconception that it is only for the rich. About 30 percent of people without an estate plan believe that they don’t have enough assets to leave to anyone.⁸ Yet, when I ask any client, Would you rather leave the money in your checking account (however much), to your family (children, spouse, sibling, etc.) or the state when you pass, their answer is universally, My family. Seems obvious, right? Maybe for some, the checking account is also a car, home, coin collection, family heirloom, etc., and the answer is always the same. These items have some value, no matter how little, and should be given to your loved ones or a charity that is near and dear to your heart.

Since almost everyone would like to protect themselves and have some assets of value that they would prefer to pass on rather than just lose to the state, most people would like some form of estate planning. Those are the main benefits of estate planning: it names people you love and trust to care for you and to pass your assets to. However, most are confused about the simplest questions posed about estate planning. When asked whether they understand what estate planning is, 74 percent of Americans readily admit that estate planning is a confusing topic.⁹ People admit it is difficult to understand.

In order to understand, it would make sense to seek professional advice. After all, not everyone knows how to fix a plumbing leak, but most have no reservations about calling a plumber to help. Looking up a plumber on Google is similar to typing in estate planner. Google will pull up hundreds of results. However, most people think it is difficult to find an adviser they trust to create an estate plan.¹⁰ After all, having someone come into your house to fix a leak is a little less intimidating than meeting with an estate planner, who is going to ask you detailed questions about your family, your health, and your finances.

So, adding it all up, we have a centuries-old, confusing process that is not taught in our schools, that is rooted in a misconception of extreme wealth as a prerequisite, and that most people do not think applies to them; to top it off, many who do want help feel they cannot even find a trusted advisor to help them.

It is no wonder the current state of estate planning is much like the haves and the have nots.

More than 50 percent of Americans are among the have nots. They don’t have an estate plan because they have not gotten around to it yet, believe their assets don’t warrant an estate plan, or they haven’t found the right person they like and trust to help prepare an estate plan. Even the other 50 percent of Americans who are considered the haves don’t all completely understand their estate plan or whether it is the best one for their family. Of course, the natural tendency is to avoid or procrastinate when it comes to dealing with something that seems so complex.

DISPELLING MYTHS AND TAKING BACK CONTROL

It is time to move away from the old, confusing model based on morbidity and procrastination; the vast majority of people don’t want to acknowledge their mortality. Do not sit back thinking that you or your family or your assets are unworthy of a comprehensive estate plan. Do not let these issues gnaw at you as you or your parents sit in a hospital bed or read the obituary of a lifelong friend: the gnawing getting a little worse with each life-altering event or piece of bad news. The only way to take back that inner peace from the what-ifs running through your mind is to finally take stock of your life and set a plan down on paper. This gives you autonomy and control in your life, rather than chaos with your incapacity or death. Let me turn the negative perceptions of estate planning into positives.

It is time to dispel the most common myths about estate planning.

•It is not just for older people

•It is not just for the wealthy

•It should not be written on a deathbed

•A Will is not an estate plan

•A Will does not help to avoid probate court after someone passes away

The other common myths involve Trusts and focus on the assumptions that they are complicated and involve handing over control of your assets to someone else. While complicated Trusts exist, which the wealthy employ all the time and sometimes hand control over to another party, that is only true of certain kinds of Trusts. However, just because a Porsche is expensive and harder to repair does not mean that less affluent Americans cannot afford to buy a car. It will probably just not be a Porsche.

The most common Trust myths are:

•Trusts are just for the wealthy, and they are not a part of the average estate plan

•The average person cannot afford a Trust

•You give up control of your assets when you create a Trust

It is also time to overcome the biggest hurdles to estate planning:

•Mortality

•Control

•Attorneys

•Expenses

•Decision-making

If we acknowledge and accept that we are mortal, then we take control of our lives to make decisions in advance that will serve us well at a time when we cannot do so. That is the exact opposite of giving up control, and that is the exact opposite of what we believe about Trusts. Instead, we are taking control. Attorneys can be intimidating, but being educated and prepared about the estate planning process decreases the knowledge gap and can also reduce the expense tremendously.

From there, we will be prepared to make important decisions about ourselves and our families knowing that the alternative is having the probate court personnel make those decisions for us. Again, when I ask my clients, Would you prefer to decide who will take care of you if you fell ill? Whom would you prefer to raise your children if you could not do so? or Whom would you like to receive your assets when you die? the answer is never, Just let the court decide. Everyone wants to be involved in these important decisions, and any decision with your input is better than a decision without it.

To make this move, we can compare an estate plan to a home. Just like how everyone needs a home to live in, everyone needs an estate plan to shelter themselves and their families. As a renter or homeowner, you do not need to know how to build the home or how the heating and cooling system works. Instead, you move into the home and learn enough to keep it running smoothly, which in some cases might mean calling the landlord or hiring an electrician, a plumber, or a contractor. You may also keep it updated with minor fixes or major renovations over time. Much like maintaining a household, with an estate plan, everyone must first realize that they need one and they need to find a reliable, trusted professional, in this case an attorney, to put that in place, and then periodically update or restate the plan to keep it functioning properly.

FINDING ENLIGHTENMENT

The goal of this book is to facilitate a shift in perspective toward estate planning from a grim, negative view to a positive and enlightened one; one that comes from a place of tranquility, clarity, and autonomy. This shift is based on using the more modern method of estate planning that focuses on life and maintaining control of one’s dignity and destiny. Ultimately, this will lead to peace of mind, which provides a level of contentment and happiness that has been difficult to achieve under the archaic system that still seems to prevail today.

Over 70 percent of people are concerned about their families’ long-term financial well-being and agree that having a well-thought-out estate plan would help them feel like a good spouse or parent.¹¹ Many people also believe they would feel more successful if they created an estate plan.¹²

SPEAKING FROM PERSONAL EXPERIENCE

I am an estate planning attorney who studied Trusts and Estates as a law school student at George Washington University Law School. After practicing for many years, I went back to school and took a year-long specialized course of study to graduate with a Master of Laws (LLM) in Taxation with a Certificate in Estate Planning from Georgetown University Law Center. I received an Accredited Estate Planner (AEP) designation from the National Association of Estate Planners and Councils. I also teach advanced estate planning to graduate tax program law students at Boston University Law School. I have practiced at some of the largest and most prestigious international law firms and founded a boutique firm that focuses exclusively on estate planning.

Even with all of these qualifications, it was my own personal experience that led me to practice in a more unique manner and share the shift in mindset and method in this book.

I understand that some people are afraid to speak to attorneys and incur the expense it involves. Many people have had negative experiences with attorneys, which influences their opinions for years. It is not that attorneys are necessarily the problem, but often people do not seek the advice of an attorney unless they have a problem, and that creates a negative association.

As a first grader, I witnessed my parents go through a bitter divorce that has left lasting scars on each member of my family to this day. Decades later, my mother and father still cannot speak to or of each other. However, beyond the arguing, I clearly remember, even at seven years old, my mother’s struggle to support us on one salary. She would complain how expensive those attorney’s fees were. Looking back, that was obviously because the divorce was so contentious, but these life-altering events shape our perceptions, for better or worse.

Years after the divorce, when I was asked, What do you want to be when you grow up? part of me wanted to say a lawyer so that I could help my mom and so she would never have to incur those legal fees again. However, the thought of being a lawyer, at that age, meant reliving the divorce every day at work. That is the profound effect this experience had on me. In eighth grade, when I finally realized that family law, or divorce law, was not the only option, I was positive I wanted to be a lawyer—just not a divorce lawyer.

After graduating law school, I started practicing in a litigation group, an area of law many people think all lawyers practice based on portrayals in movies and television—going to court and fighting it out with opposing counsel in front of a judge and a jury. Well, you may find it hard to believe (or not) that the movies do not quite get it right. I spent most of my time in my glass-walled office researching case law and writing motions. The closest my legal career has been to the classic movie portrayal has been that my firm’s office on Pennsylvania Avenue and the law school I attended in Washington, DC, were the shooting locations in John Grisham’s The Pelican Brief, starring Julia Roberts and Denzel Washington.

This area of law is