Comprehensive Estate Planning, Choosing Trustees and Trust Notices, with Robert J. Silverman

0:01 If you follow my podcast, you know I always talk about specializing with the right attorney. People often say, "Do you know an attorney?" And I know a lot. But there's the right attorney for what you're looking for. And as I talk about regularly in this program, we have probate administration attorneys who specialize in the day-to-day details. We probate litigation attorneys who really litigate those matters. And then we have estate planning attorneys who seek to avoid probate by protecting their customers assets. And that doesn't mean they don't cross into those other areas, but they're most comfortable and their kind of sweet spot is one of those three typ most typically. And I'm really excited to have today Robert J. So Sman who is an attorney who specializes in protecting assets by estate planning or avoiding probate. And we as real estate agents and attorneys want to make sure that we find the right strategies to help our customers avoid unnecessary litigation or probate. Robert, thank you so much for making time with us today.

0:51 Thanks for having me. So obviously you've had a successful practice. I mean, I've done we've you've been on the on the show before and you know, we know a bit about what you do, but tell me what is it you think you do different? Meaning, when somebody was considering two attorneys, what is it you think that you bring to the market that somebody should be aware of when considering you for their service?

1:10 Yeah. Well, I think u you know, doing estate planning and doing you know, sort of comprehensive estate planning, there's a distinction. We see unfortunately folks who come in some there are lots of good attorneys out there but some folks who come in there are some weak spots and u some things that were omitted or maybe not done in an optimal ma manner so part of it is I've been doing this for 32 plus years so you know you learn a lot of things along the way it's a it can be a complicated practice area particularly when you start getting into larger higher net worth clients and more advanced hand planning, but even the basics you know you can do it and just go through the motions or you can do it very well and comprehensively. You know, you want to make sure that all the documents are done and that they're done optimally which requires a lot of intake and a lot of discussion with the clients about what their alternatives are. There's no one way to do this and it should be customized. So rather than just having some you know software spit out you know sort of conventional answers that's not the way to do planning and I think the dovetail to probate and avoiding probate is making sure assets are titled properly making sure beneficiary designations both primary and contingent beneficiary designations on life insurance and retirement plans are done are done to begin with and then done optimally in connection with the tax laws. You know the secure act changed some of the rules about inheriting retirement plans in recent years and so that needs to be done well and titling real estate. There's this nexus obviously a lot of real estate agents you know listen to the podcasts and so I think the titling of property in trusts which is the basics trusts avoid probate and or help clients avoid probate fully funded

3:16 Trusts will do the trick and real estate is often people's largest asset and we see all sorts of mistakes we see people who do who've done trust but still have their homes titled in joint tenancy or community property. There's a disconnect there. So you know all the documents done well with supplemental documents as well that tie everything together customized and concentration on funding and beneficiary designations. So I think it's really the scope and the concentration on the details and the customization within that comprehensive scope that's critical. Okay, you laid out a lot there. So, I think yeah, we have a whole episode outline answering break it down a little bit for those of us who aren't as familiar. Let's talk about speed versus customization. You know, you know, when I was teenager and hungry, I was in college, I was hungry. U, my college dorm was acquiring from a Burger King. I could go in, get a quick burger, and get out. Today, if I take my wife out for her birthday, that's not going to suffice. It's got to be something more customized, something more personal. I think estate planning there are people who just need to get something and I you know I say now I'm not an attorney but from a business point of view even a bad estate plan is better than nothing about 80 90% of the time that's because you get it done quickly and particularly if it's simple French simple then you're probably going to hit pretty close but you'll miss customizations you'll miss those things that are different you miss changes in the market versus customize as you mentioned So talk to me a little bit about when samba you know I'm sure you would agree that people can't afford your service should get something and it might not be as good as what you do know just like people go to don't go to restaurant to get where do you kind of draw the line that somebody should really think about getting a see with a professional like you versus something online like what would be kind of the one or two main obviously the amount of money that you're talking about is a big issue but what are the circumstances also that are underlly

5:18 That yeah it's a great question. There are various issues where you know custom more heavy customization is important. Certainly if somebody has loved ones that they want to care for and want to provide for in their plan who have special needs that is they have disabilities for which they receive public benefits. There's no easy quick simple way to do that. You're gonna potentially, if you don't draft a special needs trust within the living trust, you're going to have a problem with potentially jeopardizing that beneficiaries public benefits when they receive their inheritance. So, that's one issue. You know, minor or young adult children, you want to make sure that the assets are controlled and there's a plan for controlling the distribution of those assets, you know, for them. God forbid if the you know the people establishing the trust are die prematurely. So that's important because we all know that you know 20somes particularly early 20somes their brains are still developing their skills with money management are still developing. So I think minor young adult children or those you know mature adult children who aren't particularly responsible blended families that's when you really need to take care and make sure it's customized. There are a lot of considerations with blended families and unless the planner has experience and lays out the various alternatives and takes that discussion seriously it's easy for there to be u mistakes misunderstandings and inadvertent consequences particularly after the first spouse dies. So I think you're absolutely right that you know a an estate plan in particularly including a living trust

7:20 Even if it's a fairly basic living trust will do the trick as long as it's funded properly. In other words, assets are transferred substantially. All of the assets are transferred into the trust absolutely better than nothing. And not everybody yeah needs a big fancy customized plan. Now, you bring up the key point. I think for those of us in real estate, I anybody's been in the business a while like I have has been to the customer's house and you sit down with them to sign the list agreement. You say, you know, I noticed Bob and Mary that you hold title in the name of Bob and Mary. Oh, no. We have a trust. Well, that's interesting. I pulled the deed before I came here just to double check. Oh, no. And they go in the back. They pull out this beautiful nagahide or leatherbound notebook with all kinds of tabs and pages. On the top page is a deed into the trust and it has like a little sticky note from the attorney. Don't forget to get this notorized, take it, record it's not done [gasps] and so that's called not funding the trust. So talk a little bit about what the implications of that are and then what you do to help people avoid that I think classic error.

8:29 Yes, that's critical. Not funding the trust is can really defeat one of the major purposes of a living trust which is probate avoidance. So if somebody has lots of assets and one piece of real estate never changes title. So it's just owned by let's say it's a single person an individual with not married who has various assets in the trust but at the end of the day on their death they have a piece of property that never got changed so it's owned by them as an individual. On the surface, there are some exceptions to this, but on the surface, that property will need to be probated. And even if the other assets don't need to be probated, assets that are already in the trust can be handled privately without any court intervention, without a probate. But when you've got a substantial piece of property that is not in the trust, then it triggers probate which is long, expensive, inconvenient that probate, you know, proceeding that can be easily avoided.

9:42 Yeah, we always say that if you don't have a plan or you don't have your assets in a plan, the state of California has a plan for you. And it looks a lot like the Department of Motor Vehicles. It's just not as customer service-oriented as the Department of Motor Vehicles. So, for those of you that who go there. Okay. So, let's talk a bit. Another thing you brought up was designating successors I think I think often times you know people assume like I know for example my family I'm the oldest and I didn't go to law school. I was pre-law so it kind of gives me a little bit of a legal education but I think I you know I more familiar with these ideas and it was assumed that I'd be the administ successive trustee successor trustee and yet that might not have been the right decision and I think oftentimes the most successful sibling is the busiest one the most successful may not be as in relationship with the other siblings and create problems. So talk a little bit about some of the perils and why it's important to pick the right successor trustee that may or may not be a sibling or a child of the deed.

10:54 Yes. With the dynamics of trust and the importance of doing it right from a legal and you know liability standpoint as well as trying to ensure that relationships don't valuable relationships don't get ruined. The it's important to choose the right trustee which is often a close family member. One of the big tendencies for clients particularly those who have two or more children is to name multiple children as co-rustees. There's nothing per se wrong or unlawful about that but it really is not often the best choice. It's there can be tension and problems. One of the trustees doesn't really do anything or wants to do things in a way that the other doesn't. The renegade co-rustee who goes and does things without the knowledge or approval of the other co-rustee. There's a lot of u moving parts and so generally speaking it's better to have a sole trustee in my view. There are situations where it's fine to have co-rustees, but query should a child for example be always be the trustee or nearly always be the trustee? Not necessarily. We have clients and there are plenty of folks out there who have very nice families, but they don't have a child or a close relative who's a good candidate.

12:27 They're either not particularly good with finances. They're not the kind of people who get up in the morning and take care of business and so they may have lack of maturity, lack of skills to do it well. There are some alternatives. There are private professional fiduciaries who are licensed, bonded, and insured under California's applicable statute. And they don't have a dog in the fight. They're not going to be biased toward one beneficiary or another. They're going to do things neutrally in an objective way and experience and it sort of removes the element that can create tension if not damaged relationships among family members. So, a lot of people don't even really know that exists that as an alternative to family members and friends as, successor trustees

13:22 Or the only exposure to it is they think it has to be Bank of America, which nobody wants to go in a branch of Bank of America, let alone give them the keys to your castle financially. And I will say that as a professional real estate agent in the space, you know, when people inherit, you know, a $40 million estate and they're charged running it's like a $40 million business. Like most people have not run an organization that big, you know, personally, you know, I was president of a public trade company that was, you know, maybe not that big and it, you know, it was a full-time job. I mean, it was more than a full-time job. And you know in this case you're doing some specific things. You're usually liquidating and you have a board which are your siblings or the other heirs who are you know chirping all the time. Hey you could have got more for this you should do that faster. We want to keep this. And so I don't think people understand particularly on estates once you get out of just one house there's a lot of moving pieces. And I would say I let me ask you the same question. Let me ask you a question before I answer it myself. I guess that's the proper way to do it.

14:24 Okay. I have a contention that we should be using independent professional fiduciaries way more often than we do. That people want to save money but end up doing themselves and not doing as good a job. Would you agree that's something that more families and or more attorneys should look at implementing or using or is that just me kind of with some tough cases and appreciating the professionals I work with?

14:50 No, I think it's very true. I think it's a kind of a pain point there where people don't even too many people don't even realize it's an alternative or they quickly brush it off particularly from a fee standpoint as you mentioned and that points out a distinct misconception. People say, "Well, you know, I don't want no need to have the family have to pay for a private fiduciary to manage my trust when I'm gone or when I'm incapacitated." Well, you know, the almost every trust says trustee and successor trustees are to be compensated reasonably. And in fact, if the trust is silent on compensation, there's a statute in the probate code that say in California that says trustees are entitled to reasonable compensation. What is reasonable compensation? Well, that's a whole discussion. But the point is that a private fiduciary, yes, they're going to charge fees either on an hourly basis depending on the type of trust and how many how much in the way of assets and a lot of factors either hourly or a percentage of the assets like for example like the platinum standard is 1% per year of the trust assets. The trust assets are $2 million.

16:10 It's going to be $20,000 a year or $1667 a month. It's like, wow, that's a lot of money. Well, is that a lot of money for managing $2 million worth of assets and making sure tax returns get filed and distributions are made properly and all the things that need to happen? I don't think so. But the if a private fiduciary is not chosen and a family member is chosen or a friend, they're going to be entitled to compensation as well. And that reasonable compensation is likely to be similar if not the same as the private fiduciary. So it's just a misconception that if you have family members who are named as successor trustees, they're not going to charge or they're not going to be entitled to fees and private fiduciaries or institutional trustees are entitled to compensation. It's just not that's just not the case. You know, I'm in a spot where oftentimes I will say to a an heir, I get a phone call from my heir who inherits a $500,000 property and oftenimes they're just, you know, impoverished. I mean, I've l had people who are on welfare or whatever, social security, and they have a $500,000 house and they tell me they want to administer it. I say, "Listen, you know, do you have access to e- signing? You know, what's your email? You know, do you have a computer?" "I don't have." "Okay, let me just share with you. If you do this on your own, you're going to add six months or a year probably to the likelihood. I'm just doing the real estate piece. You still have to get the probate closed. And if you have a professional, this is going to move a lot faster and we're going to get you a better price on the house because you're going to move they'll be moving quickly. You'll get your money sooner.

17:48 You'll have less mistakes in the filings. And that's what you should expect. You should expect a professional to outperform your own personal business. And so I would say increasingly I'm really pushing customers to consider. The other misconception though is I think people assume because the attorney is helping them that the that the things that you and I see as job of the administrator are jobs of the attorney. So how do you let me ask you number one how do you draw that line and number two how do you explain that to your customer? Because on one hand we all want to you know help and do extra work for our customers. That's the nature of people. We're polite. We want to, you know, help our customers, but at the same time, you're not sitting on to do, you know, an extra 20, $40 worth of work unless you get paid for it. Doesn't make any sense for your from a business point of view. So, how do you where do you draw the line? Number one, and number two, how do you explain that line drawn to your customers so they understand?

18:41 Yeah, there are a lot of moving parts in a trust administration. And it's interesting. I recall speaking with a former judge who's a client of ours. He didn't have experience specifically with probate, but he was the attorney, practicing attorney for many years and then had sat on a superior court bench. And he called and to talk to me about his mother who recently passed away and he and her estate needed her trust needed to be administered and initially he was gonna just do it as himself. Hey, he's a judge. You would think, hey, no problem at all. And so I said to him, you know, are, you know, I think you may you may miss some things that you just don't know about. You know the old saying, you don't know what you don't know, right? And so he said, "Well, I think I can I can handle it." Okay. And I said, "Okay, fine." And then we went on. And I said, well, you know, of course, the first thing you need to do is to do the trustee send out to prepare and send out the trustee notification, which is a statutory notification with certain data that you need to send out if you're a successor trustee within 60 days of when the trust became irrevocable, for example, 60 days after somebody dies.

20:02 And there was a silence on the phone. And then he said, "Rob, you're hired." He said you know he didn't even know about the trustee notification. Right. There are real estate documents. If you own real estate, there's a form that needs to be filled out and sent to the assessor called a change in ownership report, a death of real property owner. There are even if it's in trust if somebody else dad dies and child is taking over the there to clear title you need to file a an affidavit death of trustee in order to clear title so that the successor trustee can go ahead and sell or refinance or do anything with the property. Right?

20:51 And so these are things that most lay people have no idea about. And to try to figure this out even though there are a lot of resources online and now with AI there are a lot of resources and a lot of smart people are sort of on the surface capable of doing it but we as attorneys we know what the rules are we know what the procedures are we know how important they are to do them and to do them well and right and timely and a one mistake can be you know very damaging if not sort of catastrophic in the trust administration process. It's like real estate. People try to sell their real estate on their own without using a broker. And I always tell people you're crazy to do that. You know there's just too many pitfalls and it's too complicated to try to figure it all out. You make a mistake, it's going to be very costly. Well, plus I have a bunch of services and vendors and procedures I've developed over the years that help me sell a house pretty easily by comparison to somebody who has to on their own and find all those pieces on their own. I imagine the same is true with you know administering estates.

22:10 You know, I know you mentioned notice which I think is really important and often misunderstood. I've interviewed a number of attorneys on this channel and another one where I asked the question when you send out the initial notice do you send just the notice the minimum required that there is a trust or do you also send out the whole trust at that time and I understand the debate is well if I send the whole thing then the clock starts on that because they've received it but I might not want to send it all out because it might be something this finds offensive so I other attorneys might say just send what's minimum required and if they request trust it, then send the full trust out and start the clock. Obviously, there's certain cases where you're going to make one decision the other. But as a general rule, what would you advise or what's your strategy on that? And again, I think your answer indicates that you have a you thought this question that you have a strategy, that's why people are hiring you because you have a strategy, right?

23:03 Absolutely. The vast majority of times, Bill, we send the notice out and enclosed with the notice is a full and complete copy of the trust. Yes, it gets the statute of limitations running. And a lot of people don't know what that's all about, but basically when the successor trustee sends out this trustee notification, if it if it includes the right data, and they send a full and complete copy of the trust, then the it's about four months. If somebody has received that notice and a full and complete copy of the trust then and they contest the trust after 4 months expires then no matter how meritorious their case is they're out okay there's a full defense and so you know if we're our job is to protect the trustee best way to do that is to one be transparent and the other make sure that u we get that clock running right away. Yes. All lots of people say, you know, we there are some sensitive things. We'd rather not do that unless they request it. Yeah. You're just running on thin ground. And you know, it is what it is. The deedent put in the provisions they put in for a reason. And if somebody wants to contest it, they're going to have a period of time to do that. They're likely to ask for request a copy of the trust anyway. And you know transparency is often u both appreciated, respected and favorable to the client.

24:44 You always feel in business speed kills and if you can get things done quicker, you avoid more problems. I know questions come up on selling property notice of proposed action. I would say the sooner we get it out, of course it has to be done properly. The sooner it gets out and the sooner the clock stops running, the less chances for somebody to wake up and say, "Hey, I want to contest this."

25:05 And even if they're wrong when they contest it, just contesting it delays things, costs money. You have to defend yourself. And if you can run the clock out again, legally, properly, with full disclosure, everything done. I'm not saying hide anything. I'm just saying get it to them right away. You know, I've literally seen people come into court, you know, after the hearing and say, "I didn't get noticed." and you know the party had the right you know documentation of notice being served however many times they had to do it and the dates in advance and the judge said hey you had your day and you missed it by an hour I'm sorry but you know we can't be here all day for people who are an hour late two hours late a week late you know and so on so it's interesting you say that I think again I think it's important for people when considering a more customized trust ask that question and I don't know necessarily that Rob's answer is right or wrong I'm not an attorney I've seen it work kind of both ways because I'm I get involved when there's a mess. But I think it's important that they have a philosophy and they work towards it and then their whole system is designed around that philosophy. And so thanks for sharing that. Okay. Mindful of our time. Let me just go on to retirement plan designations. I think that's a often misunderstood area. The assumption is I have I have retirement plan. I remember when I filled out the form years ago, I designated so- and so to be the heir. Does that have to be designated specially in the trust? Do I want it to be in the trust and or does that paperwork I filled out six years ago but I've changed a company and they move the trust the funds from one or two security companies to another. Does that still hold up? Talk about some of the issues in designating and the importance of being precise on retirement plans.

26:41 Yeah. As a starting point the you know there is often a misunderstanding between folks. They do a trust. They provide that they want for example everything to go to you know Jane, okay, in their trust and they have retirement plans and they want the retirement plans to go to Joe not Jane. And they and they might well let me do it another way. Let's say they want their living trust to go to Jane and they also want their want their retirement plans to go to Jane, but they designated they designated Joe a long time ago on their retirement plans. They think, well, that's okay because I did a trust and it clearly says everything goes to Jane. No, there's a distinction and a retirement plan trumps a retirement plan beneficiary designation trumps the provision in your living trust in your will. It doesn't matter that you said everything goes to Jane in your in your trust. If you have a beneficiary designation that says to it goes to Joe, it's going to go to Joe. It doesn't matter that you said everything goes to Jane in your trust andor your will. So that's a fundamental thing and a lot of people do not realize that. So first point is that the beneficiary designations you have on your retirement plans and life insurance should be coordinated with and integrated with your estate planning and understand that's a different deal. The other thing is if you name if you don't name a beneficiary designation and a lot of people just don't know. They've had this IRA or their 401k for a long period of time and they just never designated a beneficiary. They've been very

28:44 Diligent and they've done a trust but they have no beneficiary designation. That IRA or 401k with no beneficiary designation on the plan participant's death is going to be subject to probate because it's doesn't have a beneficiary designation and it's not just a default that it goes to somebody who's named in your trust. So the importance of having any beneficiary designation is important. Number two, some people think okay I know what I should do. I should name my estate as the beneficiary of my retirement plan. Huge error. If you're naming your estate, you are guaranteeing a probate is what you're doing. All right? That's the absolute wrong way to do it. Even though intuitively it kind of makes some sense, but it's not the right thing. So, you want to actually name the person or persons. And if it's more than one person named percentages in you know with a designation form that is submitted and on file with a particular custodian and you make a point hey what if you switch custodians you need to do new beneficiary designations that are put on file with that new custodian. What about Well, people come in and say, "Yes, you know, married and have three kids and yes, I don't worry, I've got it all taken care of. I mar I have my spouse on as my beneficiary designation." Okay, fine. Do you have any contingent or secondary or alternate all same kind of thing any secondary beneficiary designations? No, just my spouse. Well, it's not a smart thing to do. Okay. What if you die in a common accident or your wife or your spouse dies just before you and then you die? You have no living. So, yes, you have a beneficiary, but your beneficiary is deceased. And that's effectively having no beneficiary, which means probate. And so having a

30:47 Beneficiary, thinking through who you want, making sure that you have secondary beneficiaries, all those things are very important.

30:56 Yeah, I think these details it's you really work in a world where it's the concepts you can get right, but you got to get the details right or else the whole thing just kind of falls apart. Lastly, talk a little bit about your strategy with when you have clients, they put a plan together and there's assets that have to be titled whether it be stocks, bonds, or real estate. Do you get involved in preparing the deeds? You get involved with instructions or assets transfers and recording of the documents or how where do you what's your strategy on that? I've seen attorneys going to go both ways. Some want to do it, some follow up with the customer, make sure they do it. Where do you fall out on that?

31:34 Yeah. So, we prepare deeds for all of our clients for their properties. We re research the current titling. We prepare the deeds and the preliminary change of ownership report, which is a form that as you know accompanies a deed and it goes to the assessor. And we have the client sign under notary at our office and we write a cover letter and we send it with the fee to the recorder. We do all of that.

32:04 Wow. I just think it's very difficult. I've had clients who come who came in and had a different attorney maybe years ago do their plan and they either just never did anything about the deeds. Maybe they wrote a letter saying you should transfer your title, right? Meaning on their own. Maybe they did a deed and said you go record it. The client really doesn't know how to do that or messes it up. So I just think it's too important. So, we include deed trust transfer deed preparation and recording. We include that in our package and just to make sure it's done right. So, it's just I just think it's there's just way too many opportunities for problems if the attorney estate planning attorney doesn't do it.

32:56 You know, I knew the answer to that question when I asked it. That's why I have you on the show because frankly if you didn't I mean it'd be one thing if you were if you're a discount service where people are doing it on their own and they expect to do everything on their own maybe in fact and those people never do it on their own for sure but that's but at least at least they're paying to do it on their own. They have nobody to blame to write a check to the state playing attorney and then be left to do it on your own. To me it just seems like you're giving the customer the chance to fumble the ball in the five yard line and you really don't want that to happen. And so I knew that I appreciate that about you and your service and your firm and again that's one of the reasons why I had you on. So thank you so much for going through that. Look, I know we could talk a long time because it's a very detailed broad and deep subject. I really appreciate you making time for us today as previously we had you on as well. This is this is not your first appearance. But I appreciate your approach and being willing to educate our customers. And I think that anybody who's watching if you want to get more information from Rob Robert G. Silverman attorney. There's his contact info on the screen. And there's his website, silvermanandjaffy.com. Or if you lose that information, feel free to reach out to me. Rob, thank you so much for being on the call today. Really appreciate your approach and we appreciate your taking the time to educate us on how to be more effective on getting the right state plan put together and the right state plan attorney as part of that.

34:15 Thank you, Bill. Always enjoy it. Thank you. Anybody on the call, thank you for joining us today on Probate Weekly. We get together a week, talk to attorneys either about in probate or avoiding probate in this case. And obviously attorneys like Rob also will help if you get stuck into litigation to some degree. But we want to be active in helping people avoid that and be of value to our customers. So if I can help in any way, please reach out at Billgross Probate on social media. And as always, make today your best day