Why DIY Estate Plans Fail and How to Fix Them, with Lars Kushner

0:03 The need to create an estate plan sounds so ominous when I talk to particularly you know new families who are starting off with their careers and families maybe buying their first house it sounds overwhelming you know you have to go to some big formal law firm you know edifice and the process seems like you're going to court and the reality is that estate planning are really designed around real life real people create real estate plans that really work and one of the components that is a real attorney a real life person you can talk to I think for my money. That's where the best results get. Similarly, excited to have local attorney Lars Kushner who does estate planning here in Southern California and particularly very family focused approach and real life approach. Lars, thanks for joining us today.

0:42 Thanks so much for having me, Bill. It's a pleasure to be on the show. And as you know, so many people, you know, who should have plans don't. And I really work hard at both rising the need for it or the perceived need and then trying to lower the bar of entry. obviously it's easier to go online. I mean, you know, we buy everything online. Ideally, at least these days between Amazon and Walmart and Door Dash, but legal services, a legal relationship, I think, inherently has to be different if you're talking about real life. Yeah, I couldn't agree with you more, Bill. There's obviously a lot of DIY downloadable estate plans. And I see them, they come through my office every day. And I say this, I have some very smart clients that make very stupid decisions. And one of those decisions can be doing a DIY estate plan. This is everything that you've accumulated over the course of your life and you're looking to protect your family should something terrible happen. And the reality is there are gaps in these online plans that people don't think about. And I think the most important thing, and I really stress this with my clients, is building a relationship. I want to know everything about you. I want to know about your family. I want to know what's important to you. I want to know what charities are important to you. And I want to know what your values are because I want to make sure that your estate plan reflects those personal values.

1:57 You know, it's interesting. I've been in real estate a long time and I never got I don't think today ever have got a stay plan for a routine sale. meaning, you know, I have a client wants to sell the house and I pull the public record and it says it's a it's a you know revocable trust and so I have to ask the customer for an estate plan, you know, trust or related documents and I get them you know regularly. I don't think I've ever gotten one from one of the major two or three online services. I have seen them in litigation cases where there's litigation going on, not necessarily because the firm did a bad plan, but it just wasn't personalized or properly effectuated. One of the things I find is that these online services, there's a sense you pay the money, you go online, you print out the documents, maybe you sign them, maybe you don't. and then maybe you transfer the assets in the plan, maybe you don't. talk about the difference between that and your experience when you have customers who do plans about getting the actual funding and particularly the real estate into the estate plan.

2:58 Oh man, that is one of the number one issues that I see. People have DIY trusts that they did and they list their property on the schedule of assets and then they forget about it. Don't do anything. They don't get it filed. They don't follow up with the county recorder. Then something happens and we realize now all of a sudden we may need to go to probate. Well, what was the point of doing the trust? The trust was to avoid probate, right? For my clients specifically, I always will file their deed to make sure that I can get that done. And for the state of California, it's very easy. It's all included in the way I quote my prices. It's never an add-on. I make sure it gets that. I make sure those eyes get dotted and those tees get crossed. And if they have property in other states, I connect them with people that can do it. Funding a trust, it's that one gap that gets missed. And when people try and do things themselves, when they try and do it on the cheap, when they put their information into Claude and or ChatGPT and have it spit out some estate plan, sure, maybe you're going to get some of the law right, maybe you won't, but it's not going to get your plan funded. And without that funding, what are we doing? We're missing a critical step.

4:04 You know, it's interesting you say that with such certainty, and I appreciate that. We talked about this previously because to me, that's a minimum standard, right? I'm not going to interview an attorney who doesn't say that. and I can say that to you because, you know, the client's not buying a bunch of documents and paper. The client's buying a result. Now, that doesn't mean you guarantee your results, but you certainly can take reasonable steps to effectuate it. And I feel like as a listing agent, if I just list the property, put the sign in front, gave them brochures, and said, "Well, good luck. I hope it [laughter] sells." I walked away. Oh, don't forget to pay me. I think that would be my practice. I do know my father was an attorney, you know, long ago. He had a partner, one of his partners did wills and trust. And in those days, they did wills and, you know, it was it was a different relationship. They were small town. They knew him personally. These online services, you know, they're they got paid upfront. They don't have the same incentive. I've seen stats and I believe this. 90% of the do-it-yourself online services never get executed. people

5:04 Right pay for it, they start it and you know they don't disclose that but to me that would be I would love somebody to sue them and force that through discovery. so talk about you say you prepare the deed and you record it. That doesn't just happen, right? Customers just don't run to your office one day say please we want to finish the plan. We need quarter documents. Let's do this. Sounds like fun. Instead of Disneyland, we're going to come to Lars's office. You must follow up on them or, you know, keep in touch to push the process through to the end.

5:32 Yeah, absolutely. I mean, as I said, something like filing the deed, I don't even want you to do that yourself. That's something that I'm going to take care of at my office for you because it's I've got a process in place. It's relatively easy. I can usually get your electronic deed filed back to you within around a week. Depends on how busy the county recorder is, if there's a holiday or something like that. But I can do that for you. In terms of your accounts, typically people will do that themselves. But I want to get involved. I tell my clients, give me the name of your financial adviser. Let me reach out to them. Let me have a conversation with them. Financial advisors love hearing from me when a trust is getting set up rather than when someone has passed away or something has happened and there's a mess that needs to be cleaned up. And I think the other thing, Bill, that gets missed is the whole incapacity side of it, right? Like estate planning isn't just about what happens if you pass away. It's also about what happens if you're incapacitated. And that's I think something that gets glossed over entirely that practitioners don't focus on. A will only takes effect when you pass away. That will has literally no power until you stop breathing. A trust, if you're incapacitated, your successor trustee can come in, access your trust assets, pay your bills, and manage your affairs. We do comprehensive estate plans where incapacity is at the forefront so that if something happens, if god forbid, you're in a car accident and you can't speak for yourself, we know exactly who is the legal authority to keep your life on track.

6:59 You know, I appreciate you say that because I think you can always tell I always say you can tell a real a probate real estate agent from a pretend one because the pretend ones will complain about all the problems and the real ones will brag about the problems they solve,

7:12 Right? I think the same is true with estate planning attorneys, you know, the kind of pretend ones that just wanted to build a client. they complain about how hard it is and the details and when you say for me when you say, for example, calling the wealth advisor, that tells me you want to solve the problem. You're interested in doing that. and oh by the way you meet the wealth adviser and by the way you can communicate with them if it ne it's necessary but you're looking to solve the problem as far as capacity that's an important issue people don't think about I also hear the opposite well I don't have to worry about a will because I have a power of attorney and I say to them well the power of attorney expired with the decedent like that that you can't manage the account anymore once Bank America finds out they're dead they're going to lock up that account it's not going to be accessible

7:54 I know I feel like there's so much misinformation I had a conversation with another attorney who told me he doesn't worry about trust. He doesn't worry about wills because he makes sure that his clients have a power of attorney and when they pass away, the power of attorney can go in and access accounts. I'm like, I'm not going to get in an argument with you about what the probate code says, but the reality is that like when I prepare an estate plan, 95% of the plans that I prepare all are comprehensive plans. They all include a pourover will. They all include a trust. They all include a trust certification. These DIY plans don't even have that typically. How are you going to title assets in your trust? You're going to send them the 70-page document. They also include a power of attorney. They also include an advanced healthcare directive. I want to make sure that everything is tied up at the beginning. And then the other thing I think, and this is something that also gets glossed over, people execute these plans. Maybe they do everything right. Maybe they fund them. Maybe they title their assets. Then they put them on a shelf and they don't look at them. and they just sit there collecting dust. And you know, an outdated plan can be as dangerous as no plan at all.

9:03 Right? Especially in the circumstances where family dynamics change, relationships change. For me, I proact. If you do a plan with me, I give you a letter. It tells you everything that's in your plan and it says, "Call me anytime you want to review it." But we go a step beyond that and we call you every three years and say, "Do you want to come in for a review?" You can tell me, "No, buzz off. Nothing's changed." And that's fine. I'll call you again in three years. But most people will take me up on it. I did a will, this was back in Canada. It's willbased planning. I'm from Canada. I did a will for a friend of mine and he named one of his good friends as a beneficiary and left him 100k at the time and still it's a lot of money. Then he told me he had this blowout fight with this guy and I looked at him. I said, 'You know, he's in your will, right? [snorts] He's like, "Oh my god, I have to change this." Right? People don't think about that. And that's why I think keeping plans updated and keeping in constant communication with my clients is so important. I want to know what's going on in your life. I want to know if you have a new partner, if you have a new child, if someone's passed away, is the person that you named as successor trustee still the best person to fill that role? Well, I think the other thing to your point is that the pace of changes in people's life dynamics are changing faster, right? It used to be people got married and they got married 30, 40, 50 years until one died. Most commonly, occasionally they were divorces. Now, odds are they're going to get divorced.

10:27 Odds are going to have two or three marriages along the way. Odds are they're going to have kids sprinkled amongst the various marriages or outside the marriages. And all that has a play if you don't put it in your plan. You know, the state of California has a plan for all of that. They're that's called probate. They're glad to mire you in legal litigation for the what if you believe in the afterlife, your entire afterlife is going to be involved with your probate case versus you can plan ahead. So talk a bit about and I think that that opportunity for the attorney is by digging deep and finding out about those past relationships, maybe the one they're uncomfortable talking about, maybe talking about falling out or how to handle those things. It seems to me that a deep personal conversation is necessary to really get at what they're really going to want in the long run. Absolutely. I we need to dig deep and our job as estate planning attorneys is to find out about people's lives and ask the questions that they may be uncomfortable answering. Right? Solicitor client privilege is one of the highest levels of privilege that's available. The level of confidentiality that we have to maintain for our clients is one of the strictest levels of confidentiality. And it's critical that my clients feel comfortable disclosing everything in their life to me so that I can make sure that the plan fits into everything in their life. Maybe there's a child they don't speak to anymore. What was the reason for the estrangement? Do we have to do explicit disinheritance language? These are things that I need to know. Are you still legally married even though you've been separated from your wife or your husband for 25 years? You know, you may be in your mind divorced, but you may not be legally divorced, right? These are the things that we need to know and these are the information we need to collect to make an estate plan effective.

12:06 I think another misconception is the difference between defining spouses in a maybe a spousal support situation versus inheritance because you know people I have regularly had customers say they that their significant other is going to inherit because they're basically like a spouse. They've lived with them for 25 years. They've been in the same house. to take care of them. And I say, I'm not an attorney. that may be true as far as you owe them money if you separate. That's one question. But I think the law is pretty clear. If you're not married, whether it's same sex, different sex, or three different sex, it doesn't really matter. That the relationship is legal and either you inherit or not based on the legal status. There is a status for people have other relationships, but if you don't follow the paperwork, then you're not implementing that. Well, I mean, I think the big misconception, and this is one that I run into. I people will argue with me about it, and you can argue with me as much as you want. I just going to tell you what my interpretation of the law is, and I'm pretty sure it's correct, is that California does not recognize common law marriage. There are many jurisdictions that do. I'm from British Columbia. I'm still licensed as an attorney in British Columbia. If you live with someone in a marriage-like relationship for two years, British Columbia considers you common law spouses. That is in their family law act, their version of the family code. California does not recognize common law marriage. Sure, you can. There are claims that can be made for unmarried partners based on contract law. There's a case called Marvin that grounds it.

13:31 But your partner who you live with for 25 years and you haven't become registered domestic partners. You haven't become spouses. They are a legal stranger under the probate code. They will inherit nothing. No matter what promises you made to them, no matter how long you've lived in this property, they are a legal stranger. And I really that's something that gets overlooked. And if there's a gap in your estate plan, and this is something that is really unfortunate, if there's a partial intestacy, if there's something that's not accounted for, you are opening the door for an estranged family member to come in and make a claim over this person you've lived with for 25 years.

14:10 Right. And it is heartbreaking. I mean not I you know if you don't in my case I usually don't know the decedent it comes to me through an attorney referral but you know you hear the claim that hey I lived with him for 25 years I took care of him for the last 5 years when he was capacitated I was basically like a caregiver I didn't work all that time you know I paid the bill and all that can be true and heartbreaking but if he didn't put or she didn't put you in the will and there's other there's other heirs unless the others want to write you a check it's just not going to Exactly. They owe you nothing. There's no legal obligation. The law does not recognize I say this to my clients all the time. Chosen family is very important to me. Recognizing people's chosen family. Often, you know, our chosen family were closer to them than our own blood family. And the reality is that the law doesn't recognize that. Now, we can put steps into place. We can draft documents that crystallize those relationships and give them legal standing. And that's what we want to do, right?

15:13 But it's not going to happen implicitly. It's not going to happen by you just saying to a judge, hey, we live together. He told me I was going to get the house.

15:22 You told me I got a house and it's only fair because I lived here for a year and paid all the bills and I took care of everything. And it's like, well, it might be fair, but it's not the probate law. And you know, I'm in a case right now where it's heartbreaking to listen to the relationship. In this case, it was the same sex relationship that you know I because I didn't meet to see him, but I met the partner or whatever. And I believe him like I mean I think he did out of love take care of somebody. I do believe he felt like he was a spouse. And I do believe that the scene told him he was going to get half of everything. The scene probably believed he was going to get half everything because it was kind of like a spouse.

15:56 And then the this arrange partner or this partner says, "Well, you know, based on all that, can I at least have this, and that?" And the answer is, you know, the administrator has a fiduciary obligation to the other, you know, heirs. They can't just be nice because they feel sorry for them. In fact, my experience is one of the family members is going to hate that person because they don't whatever reason, they'd approve the relationship for whatever that might look like. And it's heartbreaking these things. And it's like it all could have been resolved if you just sat down with attorney and spent the time. So, let's talk about let's try to lower that barrier a little bit. Okay. Hopefully somebody on this call watching this goes, "Oh my gosh, I need to get an estate plan done. Lars seems like a good guy." What where what is the step from that motivation to them ending up with an effective plan look like? How do we get them from a I have nothing but oh my gosh, I need to do something to happily ever after, at least for the next three years, I have things covered and in place.

16:51 Yeah, the first step is just to make a call. Fill out a form on the website, give me a call, and let's schedule a consultation. I offer pretty much all prospective clients a complimentary 30-minute consultation because I want to get to know you and I want you to get to know me. There are dozens of dozens of estate planning attorneys in the city of LA and probably thousands in Southern California. I don't know if that's true, but probably close to it.

17:17 I think so. And the reality is that I never get offended when a prospective client says to me, "I'm going to meet with another attorney. I'm going to interview two other attorneys, three other attorneys." That's great. Go interview a dozen. Take as long as you want. I want you to choose an attorney that you feel comfortable with, that you have a good relationship with. I used to say this in the context of litigation, and I think it remains true in the context of estate planning, that your attorney is sometimes going to have to give you bad news. Sometimes things are not going to go exactly the way that you want them to. So, you need to be working with someone that you trust and you feel you have a personal relationship with. And that person has a p a relationship to you. I don't take on every client that comes through my door either. If I don't feel I'm going to be an effective advocate for them, if I think someone else would do a better job, I will tell that to them. So, the first step is having that conversation, building the level of trust. After that, you start to look at, well, what type of estate plan do you need, right? This is not a cookie cutter copy paste. Everyone gets the same plan. Certain people need different things. If you have children, you may want to consider like a lifetime asset protection trust for those children. If you have a spouse, you may want to consider, is that spouse going to get a right to remain in your residence. It depends on your family dynamic. If you don't have children and you don't have a spouse, what are the organizations that are important to you? What are the charities that you may want to leave a legacy for? And what does that look like? And through there, we go step by step through a very detailed intake process to custom build an estate plan.

18:48 And then the next step once we've got that plan built is I want you to review it. I am never gonna have you come into my office, sit in front of a giant binder that you probably didn't read, and tell you sign here, and here. I deliver you drafts of your documents. And this is controversial. Some people will say, "Don't deliver drafts. Don't they don't they don't want to read them." I'm never going to ask you to sign something you didn't have the opportunity to read. I think that's I personally wouldn't do that. I wouldn't trust someone who did that. I want you to have the opportunity to review everything so that when it comes time to come in and execute those documents, you feel 100% comfortable in the documents you're executing, you know. So, let's talk a little about your practice specifically. you at least to my knowledge, it's Kushner legal. That's you're Kushner as opposed to working for some big firm. What advantage does that give you as practitioner? What advantage that give a client to that's going to select you to be their representative? Yeah. So I think the biggest thing is the relationship, right? When you come to I have a team that supports me like everyone else, but when you come into my office, when you're a client of Kushner Legal, you will be communicating with me. That is the expectation. Just like I would expect to be communicating with you, I don't want to be handed off to your personal assistant. I don't want to be handed off to your VA or your secretary. I want to comm communicate directly with my clients. And my clients should feel the same way about communicating with me. I am there to be your attorney and your advocate. And I think being a smaller firm, being a smaller office gives us the latitude to really provide personalized service to people, right? We're not a mill. We don't have a massive overhead. We're here to do our best to provide a value service. It is a bespoke service. It's not, you know, a 499 willer trust. I'm never going to compete with those and I don't want to. But I think we provide a ve a very fairly valued service where you get a personalized white glove treatment from start to finish. My background is in litigation. I was a litigator for 10 years. I was in court once or twice a week and when you're a litigator, you know, sometimes you're in court for good and sometimes you're in court for evil. That's reality. That's the way our system works. It only works with effective representation on both sides. That's given me an edge. And people say that to me sometimes that, you know, you're very direct. you're pointing things out, but I've seen all the ways estate plans can fail. I've been involved in making them fail. Now, for my clients, I don't do that anymore.

21:16 I don't do contested litigation, but I try and take that and apply it to everyone's fact circumstance. Where is the one issue where that unhappy family member is going to try and stake a claim and how do we make sure that doesn't happen? What are one or two of the more common mistakes you've seen made in your litigation experience that either you wish had been corrected or you used as the opening to get something else wonder if you say what are one or two of the most common mistakes you've seen

21:43 So not naming contingent beneficiaries not naming backups right and I say this in the context of how many layers deep do we want to go and what's the ultimate scoop going to be to make sure there is someone or some organization named should something happen. People often say, "Well, I want to leave my estate to my son and my daughter-in-law. If not to my son, then my daughter-in-law can have the whole thing." And I say, "That's wonderful. We'll put that in your plan." Do your son and daughter-in-law regularly travel in a car together because if the Don't laugh. I mean,

22:20 No, I get it. I get it. I said the same thing to my daughter. I only have one child. It's like, but I have to name somebody else because there's two of you together in the car with my grandkids. God forbid something. God forbid someone who's not going to be in that vehicle, right? Like,

22:35 Yeah. How do we make sure that there's no accidental intestacy? How do we make sure also that we have a chain of successor executives and successor trustees named so that you have someone you know and you love or you trust managing your affairs and advocating for you rather than being a vacancy and your cousin shows up who you haven't talked to in 30 years and the court says well they're next of can let's give it to them and you know I think people get scared when they say well I don't have that many people to rely And that's okay. I have a network of professional fiduciaries that I can introduce you to. These people, you don't have to pay them anything. You only have to pay them until they act. So, let's name a backup. If you don't have a backup, let's find a backup for you to make sure that you have a professional in place. You know, I think that's one of the areas that has really built my business has been working with professional fiduciaries in that I find that need for that niche is growing faster than any other part. I think clients assume that the attorney fills all that role. Like in the client's mind, okay, well, if I name my brother and then my sister and there's nobody else, you're going to step in and do it because you're the attorney. And the answer is, well, you could if you're named, you know, and if you're so inclined, you may or may not be so inclined to do that kind of work. But if you're not in a document, you're not going to do it. That there's no there's no fall back on the attorney because there's nobody else named.

24:04 Yeah. No, absolutely. It is a huge issue. I think the other issue and this is where I think there really is a good role for professional fiduciaries is if you have a relatively substantial estate and face it with property values in Southern California any homeowner has a relatively substantial estate and let's say you've got the homeowner and they have three children or four children and they want to name them all to act and there's conflict. Siblings have conflict in their relationships you know it's no right I'm breaking news to you here.

24:36 [laughter] That's one of three. What? Are you kidding me? It's like you don't This is a perfect time for a professional fiduciary to get named to make sure that there's no conflict and for there's someone to be there who has to follow the letter of the trust to the word and act as a neutral arbitrator between these different parties, right? I mean, families fight over the craziest things. Yes. People get divorced and fight over the craziest things. I've gone to trial almost over a dog. We settled on the steps of the courthouse, right? And you know, something that does not have a lot of monetary value can have a lot of sentimental value. And if you have people fighting over it, having a professional fiduciary and an estate plan in place that settles these issues can alleviate what can be breaking trauma for families, right? How many families do we know of that have broken up over estate disputes? I can think of dozens in my personal life.

25:39 Well, I also think people underestimate the amount of work involved in administering, you know, a even a modest estate. You know, you have a property too, could be a couple million dollars. You have one or two rental properties, could be another couple million dollars. Selling them, you know, I mean, I do it for a living, but many people have never sold an apartment building or, you know, in a business. you know, somebody has to figure out what to do. Do you do you sell it to the employees? Do you sell to key managers? Do you sell in the open market? Do you manage the property, hire people?

26:06 And I and I explained that, you know, when you have a trust, it's kind of like you're running a business that's designed to go out of business. Like at some point, you can distribute the assets. but if it's a $45 million state, it's a $45 million business that you're liquidating. That's you would hire somebody to do that. You wouldn't do that yourself typically. and I've been involved in enough of these estates where there's a business that when they wrote the plan, the decedent, you know, was running it, he knew everything inside and out. You know, 10 years later, he's a little older, it's run down, there's some gaps in the cash flows and this and that. It's a hard thing to get through. It's not so simple as how to run it. So, talk about how do you find the right fiduciary and then you got to sell the decedent on that when maybe they feel, oh, no, I'll just divide equal by three kids,

26:53 Right? I mean there's two there's you sort of brought up two issues. One of the issues I also want to just briefly address because I think it comes up with the complexity of administration is I call it the democratization of investing. Right? This isn't a lot of people don't have all their investments with Schwab anymore and with or with Wells Fargo. There are all these different online banks where they may have bought, you know, a term deposit or they may have an account at Coinbase or they may have an account wherever. And if those aren't documented, the administrator has to do a lot of work to try and collect all those. Now hopefully

27:30 The decedent has done a good job entitled them all in the name of the trust but they may not have and that becomes another layer of work where having a professional really can smooth things out in terms of your question about how do I sell this to a decedent or I at the that point they're a grantor I don't sell it I propose it as an option and I say hey do you want three names or three different people to talk to you anytime someone asks me for a referral even if they ask me for a referral for a realtor I'm not can give them one name. I'm always going to give them three names, right? I want I don't want people to feel like they're being pushed in one direction unless it's something super highly specialized, very niche market that there's only one or two people can do, generally I'm always going to give you multiple names because just like your attorney, you want to have a good relationship with a fiduciary. But I think as people's estates grow, as you know, families there the people realize that there's a risk of conflict, having a neutral third party there is critical now because I've gone to court to have administrators removed and that's an ugly expensive process. So getting someone in there from the jump, it saves everyone a ton of money and a ton of stress and a ton of time.

28:41 Well, and to add to that, removing a mystery is ugly process. And then when you've done it, they don't just go away. Now they're now they're the objector to everything else that the next person wants to do. And it's just so difficult if you start off on the wrong foot to get things back on the right page. It's so difficult.

28:57 Well, look Lars, you're obviously very easy to talk to. I've enjoyed my time. I think anybody here looking for estate plan. There's one message today is it's important to have a relationship with your estate planning attorney. Being able to open up and disclose and plan ahead properly and feel comfortable as things change. I really appreciate our time today. If you want more information, Kushner Legal is the website. and you can reach Lars. He's the founder obviously, Kushner Legal [phone number shown on screen]. [email address shown on screen] or the website kushnerlegal.com. If you didn't get that, you're driving or something, reach out to me. I'd be honored to make that connection. Lars, it was a pleasure as always talking to you. Look forward to doing again sometime soon. Thanks for your time today.

29:37 Thanks so much for having me, Bill. It was a pleasure to talk to you. I hope you have a wonderful rest of your day. Thanks. And for the rest of you, this was [The Estate Planning Podcast]. We get together every episode with oftentimes like this, [unclear] attorneys. I think this was a great one to talk about, you know, where do you start? And I think part of it is starting off with somebody that you feel comfortable with talking. So hopefully you found it helpful. Love to get your feedback, questions, comments, like it, share it if appropriate. reach out to me if I can help in any way at Bill Gross Probate. And as always, make today your best day ever. Thanks so much.