No Unfinished Business in Estate Planning, with Houston Attorney John Strohmeyer

0:02 Let's do this. Hey, this is Bill Gross. And welcome to Probate Weekly. We get together every week with leading professionals in probate and avoiding probate, estate planning. I think of probate as you forgot to build the barn or you left the door open. Estate planning is building a barn that's secure with cameras and lights hopefully to keep yourself out of probate. Out of Houston, Texas. We're excited today to have John Stromire whose motto I love is no unfinished business. John, thanks for joining us today. What does I know it's your phrase and you've trademarked it. What does no unfinished business mean to you?

0:33 So, Bill, thanks. It's great to be here. No unfinished business really is what we're looking for. It starts for probate of like, look, we're going to have all of this work to do, tying up loose ends for whoever you've lost. And probate, whether it's the formal probate process or just collecting beneficiary designated assets, dividing up the personal property, you know, it's all kind of that stuff to do that we just want to make sure that one you've lost somebody. We're not leaving anything behind. Taking it back to the planning, well, we don't want to leave anything behind there. We want to make sure that we've taken care of beneficiary designations. How can we make sure that our clients who are busy people and aren't going to get to everything tomorrow just because we told them, "Hey, update your beneficiary designations or make sure this gets funded into the trust." How can we set it up so that they're taking care of that work?

1:27 You know, I'm in a larger estate now about $40 million estate, but this is a common practice as a real estate agent where you ask a customer, "Hey, I noticed that your property is not in a trust. Have you considered an estate plan?" They go, "Oh, no. I have one." and my heart sinks cuz I know what's going to happen. They go back to their living room or whatever and grab the binder that's beautiful. It's like leather, fake leather, all kinds of papers in there, but they didn't sign the signature page or record the document that should have been recorded. I see that all the time. And so that's the unfinished business. So I have to say though for those watching, if you go to his website, stromymeerlaw.com, he has this absolutely forced me to click on the four horsemen of the state planning apocalypse. And I love that phrase that forced me to click on it. I thought it was very helpful in ter in terms of explaining what I think are the most common issues. So let's go to that real quick and use that maybe as a how long I have a talk today. So the four horsemen or maybe the four major problems that you're trying to avoid through estate planning. Number one is potential cost storms you have to weather. Talk about the cost that we that come up that people don't anticipate or don't understand absent a proper plan.

2:32 Yeah. And so Bill, this is where I, you know, love metaphors and I love probably even more mixing and matching metaphors. So, you know, the four horsemen came up with well just kind of categorizing all of these problems and they come down to a few things and sure some of them will overlap, but also storms you must weather. I'm going to turn my camera ever so slightly. And what you can see is I've got these maps that I've got on the wall. I had those done a few years ago just as a way of explaining the process. So, one is a map for what the probate process looks like. The other is a map for what the estate plan process looks like with us. And so it comes back to this kind of subnautical theme that I layer on things, you know, not in a kity way, like I'm not showing up with my peg leg and my tricorn hat or whatever.

3:21 Maybe you should. Maybe I should. But then, you know, coming in, all right, well, here we've got to deal with this. So costs there's just going to be a certain amount of costs that we have to deal with in any estate. Now some of them we can avoid Bill because like you deal with California probate like the probate fees what I just tell clients because I'm here in Texas like we don't have those what is it 3% fees to the executor and the attorney or something like that.

3:52 Right. In California, the there's a structure fee is 4% the first 100,000, three the next 100, two, the next 100, everything else thereafter. Million dollar state, $23,000 to the attorney. That's the maximum statutory fees. You can charge less, but that's the maximum. But the administrator also can charge the exact same amount by law, and the court will likely approve a standard probate those maximum fees. Yeah. So, be $46,000 in a million dollar state,

4:17 Right? Which is I mean it's great but most of the time like there's not $23,000 worth of work to do even if we're you know chauffeering clients around like you know for a million dollar estate that's a house a bank account and maybe a 401k or an IRA like that's a deed and some paperwork and we're done. So thinking through that like even if it's not those costs well what can we you know what are those costs that are hiding in there you know taxes are one of them you know whether it's estate and gift tax or just income tax like how can we set things up so that we're not kind of walking into these storms you know again you're going to have to pay income tax on things but if you've got an IRA or a 401k that is going to be taxed to the beneficiary when there's a distribution. Well, what if you had charitable motivations instead and you know instead of the $100,000 going to a beneficiary who's going to pay 23,000 or whatever in tax and so they net out 77 instead looking at it as well we can leave that to the charity whoever that is and the charity gets 100,000 of the 100,000 because they're tax exempt right

5:32 So thinking about those kind of potential costs that are out there right well with charities also I think you can give assets appreciate greatly and you're not paying the taxes on it, they would. So if you if you buy, you know, $10,000 with a stock and it appreciates $100,000, if you give it to the charity, you get the $100,000 write off. If you were to take the $100,000, you have to pay the taxes on it. So it's one of those ways we really avoid the whole tax situation as well with proper planning. And then the probate cost in California, we have filing fees, we have advertising, publication fees. And then that's assuming everything goes well. In California, people say to me often, well, a trust or estate plan will avoid probate, right? And I'll say, well, many times, yes, but there still is there still is the prospects of estate planning requiring some sort of litigation, whether it be beneficiaries objecting where the there still are some potential costs down the road,

6:29 Right? And you know, the cost of that litigation also rolls into the next one of fights. And again, it's easy to think of the fight among the family members who don't like what they're getting. And so the, you know, on the front end when they're coming in for the planning, helping sus out, are there potential fights that we need to be thinking about for you and your family? You know, I generally am willing to take the word of my clients when it comes to this. It's like, are the kids going to get along if we put, you know, there's Billy and Susie and Jimmy and we only put Jimmy in charge? Billy and Susie going to be okay with that? Or is there going to be a fight? And I don't know, there's not a right answer, but we're going to go with whatever the client says. You know, most of the time, oh, they'll be fine,

7:16 But through many times they assess and they're correct. But boy, you put money in front of people and you have somebody dividing it up. It's kind of like cutting a piece of cake when you're a kid. You know, everybody's fine when you watch your brother cut that cake, hey, come on, move it over a little bit there, right? That's kind of how estate plan can look,

7:32 Right? And just how do we make sure, you know, if somebody's going to be upset because they weren't chosen or they're getting the wrong chair or whatever it is on the front end on the planning side, how can we figure out is there a way to step around that to avoid that landmine? And then also who's in charge of it, the administrator of the estate or the successor trustee to an estate is a major issue when you deal with you know who the who the people are. I find often people assume well the sibling who's most successful maybe in business is the obvious choice. The problem there is they might be too busy to communicate effectively. You might make all the right decisions, but like kind like any every husband I think world in the world knows you can make the right decision but if your wife doesn't agree with it becomes the wrong decision right away. Right. So same with estate planning that you can be right about things but then you end up in fighting. So how do you how do you advise clients to pick the right person of the three siblings? Who's the right person most of the time or more often to be the successor trustee? Yeah, this is this is where it's the conversation with them about, you know, who's here locally. Because that's obviously going to be a factor in it. Who's going to have the bandwidth for it. You know, I've had several times like you've mentioned like the most successful one may not have the bandwidth to do it and it's just going to be a headache for them to try and make that work with their life,

9:02 Right? You know, just who has the skill set for it. You know, it may be this person is the hard charging person, but they're just not going to be able to manage things and keep everybody happy while everything else is going on.

9:14 Right. And then now, do you work in California, we have a licensed position called a licensed professional fiduciary where in a state and a and a beneficiary or trust successful trustee can hire somebody to act on behalf of the state to make those decisions. Theoretically somebody who's professional, knows the material and is skilled at mediating or presenting things in a way. Is that something is that as common in Texas as it is in California? Is that common in larger states? Do you work with fiduciaries? Is that not necessary?

9:44 So I mean we do have professional fiduciaries. Those would be the corporate fiduciaries where they are supposedly above everything. Occasionally we do get those as clients. There's not anything for individual fiduciaries. So, you know, anybody who wants to can go be a trustee or an executive if everybody else agrees. There's no requirement that you know, if you're not a family member or something like that. As far as I know, I haven't even heard anything about setting up any sort of certification like that. Well, I don't think there is other than California, of course, we have regulations, but I guess my question more is are there times that maybe there's multiple choices that you would recommend say an attorney to be the successor trustee on behalf of the state or an accountant or somebody else who has some professional experience is appropriate.

10:30 Oh, definitely. And that's where you know again talking about who's getting things for a lot of my clients it's the you know we start with the assumption that eventually your children should be capable of managing this themselves and trying to get them to tell us about their capabilities. You know if we left this to them are you okay with them doing that? Obviously, if they're three or five or 18 or even 35, yeah, they may not have the maturity yet that you're work that you're looking for, but down the line, you know, eventually we're kind of assuming that the kids will grow into the ability to manage their own share. It's just easier, you know, we avoid a lot of other headaches of fights between the corporate fiduciary and the kids. That said, one of the things that I also think about is if there's too much money, it may not be worth it. You know, it just there's $20 million and those kids have never seen that much before, we may want a corporate in there just to help them kind of deal with the initial rush because we don't want it coming in and then going right back out.

11:38 Yeah. The I'm on a recent state, like a $40 million estate, where there's a company and then there's property and there's securities. The bank they were using went out of business. So, we're in the middle of that transition where Chase was buying them and they wouldn't release any money. And it brought the professional and me and the attorney to our knees trying to keep it all spinning and we got we made it work.

12:00 But to a lay person who's not used to communicating and moving quickly, it would have been too much. And so, in this case, the trust was well served to have somebody. So now I imagine though in this case when we talk about family fights that you know you as attorney one hand you have to have the technical knowledge to know the law and how to structure the estate and the proper documents make sure the documents are executed right but I imagine there's a premium for your success based on your soft skills your ability to communicate with the various parties make sure and re make a recommendation based on that. Yeah. Well, you know, this is where lawyers obviously there are a lot of us out here doing this work. Clients get a choice. I'm sitting here in jeans and collared shirt, but I have not worn a tie to work in years and I don't miss it. People who are looking for that more formal experience have plenty of options. And so, yeah, it's part of how I see it. Like again going back to the four horsemen, nobody else that I know of is kind of trying to have a little bit of fun with this and our clients seem to like that. Again, you can get stuffy anywhere else. If you want, you know, again, we're trying to make it easy for everybody to understand. And the side benefit of it is the more I explain it to clients, the easier it is to onboard new employees so that they understand what's going on,

13:23 Right? Right? And the more likely you they are then the more the customers are going to connect with them. So becomes a virtual a virtuous cycle. Right? So the third so the first problem or potential I guess really the first horsemen of the apocalypse was cost. Second was family fights. Third is loss of assets and you know how to protect your treasure you put. One is I imagine when you do the estate plan, it's important to kind of identify as much as you can everything and then have some system to update the appropriate parties. So, what does that look like? Obviously, initially it's pretty easy, right? You ask your customer and they give you a list and hopefully they're thorough. But what's it look like as time goes on and they're hopefully accumulating more assets or banks change names or they sell or buy property. What's that look like as an ongoing business?

14:07 Yeah, I mean it you're right. When the clients come in for planning for themselves, it's very easy. We can ask them everything. You know, here, tell us more about this. Where have you hidden this? Is there anything else? I mean, it sure does seem simple when clients are right here in front of us. We know where everything is and we can go get it. The problem is if somebody die, you know, mom dies and the daughter comes in and they didn't have any planning or know really anything other than here's the will, what do we do then? And you know we hopefully we can find some statements but again there's no guarantee anymore that people are getting paper statements on where their stuff is correct

14:46 And so you know kind of going back through records to determine was there any life insurance you know I've heard that there's a way to start searching

14:56 Online for life insurance but you know it doesn't mean you're going to pull up every you know the 401k or the IRA they set up and had a couple thousand dollars with years ago there's just so different things to find out there,

15:09 Right? I've had attorneys work with different heir research companies where they'll hire somebody on a contingency basis and they'll find heirs to an estate and I've also had others that know the air fire hires saying we think there's more assets. We just don't know where they are. And they can help identify them. One of the challenges also you mentioned the paperwork well also who has the authority to request the paperwork because once somebody passes if the account's the name of the deedent only then really nobody has the right to get a bank statement or mortgage statement or insurance statement in a trust theoretically you have a successor trustee you provide the deathert and that becomes more smooth that's another reason why to do that kind of planning but somebody has just a will what's the process like to get the documents I guess power of attorney expires with the seedant I would think so how would somebody be able to get those assets.

15:56 So again, you know, so part of our process is, you know, sitting down with clients, putting everything in an Excel spreadsheet of at least as far as this date, we knew what it was. Here are the recommendations we had on, you know, either titling beneficiary designations, what to do with it. Again creating that as our initial way of trying to find where things are because if we can't find it later, there's really no good answer. And again, you know, you could lose those things and people worked hard for it. You know, some of it's easy to find. You know, like you can go find my collections at my house right now. People know where I live. But I always think back, I know where my sister does her banking only because she and I use the same bank. Beyond that, I have no idea where any of her stuff really is or where to go find it.

16:51 You know, it's scary. I recently had a medical procedure and it was kind of routine but planned ahead, but I was going to go under general anesthesia and so I made sure everything was kind of updated again recently and where the folders were and shared it with my son-in-law and my and my wife. So, I'm telling my wife things and she's like, "Really?" "Oh, wow. Really?" I'm like, "Hold on. How do you not know this? You signed the papers for this account. You signed the papers for this product. What do you mean you don't know this?" And the answer is, you know, we're all busy and we just, you know, yeah, I told her two years ago we moved our stocks from this company, that company, but unless there's a statement in the house, she'd have no idea where to find it. She really wouldn't have no idea. I mean maybe they log in my email and find information but it is interesting how we assume people know things or we assume they can find things but that's not always the case

17:36 Right and then one of the things you mention if you go into the fourth area delays and frustration you talk about the importance of keeping these things up to date and reviewing them so as a general rule with somebody let's say with a you know a basic estate million dollars or more you know house some stocks bonds IRAs, 401(k)s that kind of stuff standard family situation. How often do they need to evaluate this once they do the plan? Are they set? Do they need to come back every 5 10 years? Do the laws change here?

18:04 I mean that, you know, what I tell people is there's, you know, the 3 to 5 year rule is probably when I'll see you again because something will have changed

18:13 And those changes break down into, you know, one, the people have changed, whether somebody named in the plan shouldn't be in the plan anymore, they passed on, they're not approp for whatever reason, they shouldn't be in there anymore. Or you've got a new person to add in, better executor, better successor, trustee, new child. Something will happen with people. Something may happen with your assets. Again, I don't care that they've bought two new shares of IBM and sold three shares of Apple. What I think about is did you acquire a new house out of state that we need to think about? Do we need to worry that now that you've got this new business that needs to be worked into your plan somehow? You know, is do we need a buy sell agreement, some sort of transition plan, succession plan for that? Just new assets in or out and then kind of the large fluctuation in values. You know, the estate tax exemption is so high right now that a lot of people really aren't concerned about estate tax, but it's possible that the planning that was done before, well, you may have, you know, you may have a blended family where the marital exemption was going to the spouse and everything else was getting left to the kids. That may mean, you know, the marital exemption right now may be zero and that may not be what you want. And so those sorts of legal changes are things to think about.

19:36 I think it's always something and it's good to stay in touch from time to time and I think that's up to the customer to you know on one hand evaluate but I think as professionals attorneys are well you know well I think should be encouraged to inform us of changes in the laws and changes of the procedures, technology systems and then we as customers go hey that reminds me I have a I just got married. I just got divorced. I just have a new kid. I mean, you know, and I think that's the power of, education in media. It makes us, and that's why I do these podcasts is to, you know, talk to thought leaders like you and be able to share the information, encourage people to say, "Hey, have you thought about those things? If not, reach out to an attorney, from Texas, John, and, you know, let's ask those questions and better to, answer them ahead of time." I think the other thing that's you know odd is you know you again to go back to your four horsemen as far as loss you know where are the key documents and I know that I did a podcast episode like this one day and I was talking to somebody and literally at that time the binder I had with my original documents was in this file cabinet right behind me and I remember pointing to I realized hold on we just changed stock companies and I haven't changed I didn't title it right I remember I didn't title it right I need to fix it and so I think for all of us, we need to think about these things on a regular basis. And so I guess the question I have, I know you have a great blog and I see you have some really good content. How do you engage with clients once they're in yours to keep them updated and educated as far as changes in the market?

21:04 Yeah, I mean, this is one of the big problems with estate planning as a practice areas. You know, clients do something, they go off and live their lives, and then a few years later like, "Oh, we need to change this." They look at their documents, they can't see, you know, they can't look at it and see who did this. And you know, every now and again, you know, probably several times a year, we'll get something and hey, we couldn't remember who did this last time, but here are our old documents and I'll flip through it. And many times the attorney who drafted their documents is the one who was the notary on some of those documents. It's just like there was their name in black and white stamped at the bottom of the document.

21:43 And so, you know, how do we keep them around? Well, we keep them around by continuing to provide that content like what we're doing with our own content. We're sending out monthly emails to clients, potential clients, referral sources. And here's a quick thing. And if you've got a question, jump on my calendar. You know, that's the best way is just don't let them forget because if that happens, then of course that, you know, they're gone. They won't they'll have a harder time of, oh yeah, well, I've got a question. Who do I even ask? I would gladly take that question and if I'm sending it out to somebody else because it's work I don't do don't want to do I earn you know the benefit is side benefit from the friend I'm sending it to and so I'd much rather they remember who I am and spend a lot of time trying to figure out how can I unobtrusively keep me in mind for them so that they're not worried about it. One of the things a good percentage of our audience is real estate agents are a good number are real estate agents. A good percentage is real estate agents. And the reason I did this, my thesis was that we as agents, we often see customers whether they are missing an estate plan because we look at the public record, how the how the title's held or if they're a buyer, we ask the question, how do you plan on taking title? You know, husband, wife, you know, there's different ways here in California to do that. Or do you have a trust? You haven't established.

23:09 It might be a good time to think about it. Maybe you want to do it or not based on where you are. And to reach out to attorneys to say, "Hey, I have a customer who needs a trust. They bought a house from me two years ago. It's still not. They said they're going to or I have a buyer who's interested and they want to know the issues. And so do you work with real estate agents? And what does that look like in terms of a regular workflow if it they are? And if not, how can we get real estate agents to reach out to you when they have customers with needs?

23:34 Yeah. And this is where we do get referrals and requests from real estate agents. Typically, it's, you know, somebody has died, the owner has died, and we're trying to sell the property. Now, what do we do? And unfortunately, if that comes in, you know, we've got a closing in two weeks. We need to get this ready to go. I'm very sorry. There's just no way that's going to happen. And it's not that we don't want to put things together, but we've got, you know, even in the best of circumstances here in Harris County where Houston is, it's probably a six week wait for a court hearing. And it's a low inensity hearing. And that at that point our executive will be empowered to sell the property. Again, minimum 6 week wait. If there's no will, it's probably more like 6 months. And again, people don't want to hear that. So, you know, how do we think about it? Well, you know, the sorts of things that we want to do is just obviously having a better plan in place. Nobody can plan on death for the most part, but what I do with my clients is just make, you know, making sure when they come in and sign, even if we're not doing a revocable trust, we still have transfer on death deeds to make sure that the property is going to surviving spouse. It's going to be transferred automatically to the trustee under the will. And taking that one step out because we sure they're probably going to sell their house before they die, but at least we've gotten that step done now,

25:01 Right? I think often times, you know, when buyers are buying a house who don't have an estate plan set up, on one hand, it'd be ideal to do it while shopping because when you buy the property, you title it correctly and you title insurance of it being titled correctly. That said, there's a lot of work involved in estate plan and there's a lot of work involved in buying a house. And so you put those two together, it becomes a difficult time to get it done. But to all the Realtors® listening, I would say certainly would have the discussion and at least make the introduction to get on the list of things to do. If not, getting it done be you know beforehand and or you know contributing to the process, making it easier providing the documents to the attorney and things like that can be helpful to you. So again, that's why that's why I did this podcast initially was and why we invited on estate plan attorneys as opposed to just probate attorneys because we want to be we want to be part of the solution, not just helping fix up the problem when there's a problem at the end. So John, obviously we had recently as we record this the passage of the one big beautiful bill that I think extended the prior limits, meaning the Armageddon of potential has at least on that issue. We can talk about, you know, I'm not here to talk about the politics, but on the issue of the exemption for an estate that's just been reset for another 10 years. So, were there people who made plans in the interim assuming it would go away that you have to rewrite or though is it just primarily we all kind of assumed it'd be rewritten at the same numbers and we're glad to see that done.

26:23 Yeah. And so, I was telling my clients who were in the zone where if it was going to be extended or not, it would make a difference for them like we need to wait until August. You know what I'd heard was, you know, if they don't have something done by August, they don't expect anything to happen because people will come back from the August recess and then they're gearing up for next year's elections,

26:45 Right? So, everybody would have been dug in. So, my clients who were in the middle, you know, it would affect them. I was telling them, look, we can wait. Don't you know I don't want you to worry about being forgotten because we have you in you're in line now in front of the people who are going to show up you know right around Thanksgiving panicked

27:04 Right and at that point you know like we may have to tell them no but you know it really was a like here we're going to look at this situation for you know if it gets extended you'll be fine in which case we don't need to overdo anything you know and it's just easier for me to not oversell and keep it tamped down like I would love to take your money but right now I can't justify that this is really going to be necessary. If it drops don't worry you're here in line. We kind of know what we need to do. We're not going to have to start from scratch but we'll have to work quickly on that. And so it was just a unfortunately clients I'd love to give you a straight answer but Congress has not given us a straight answer and so we've got to wait it out. So, I'm sorry. You So, we're still waiting it out or

27:54 Oh, no. No. That's what it was. We were waiting until Yeah. We got We got an answer and now we have an answer of if you were in that middle and you didn't really care.

28:03 Well, guess what? You can continue to not have any big planning to do right now. Doesn't mean there wasn't planning for other people who wanted to do it anyway, but

28:12 Or other things or other issues, but I think on that issue, Lisa, it's not yet. It's still a good reminder. Hey, is my plan up to date? You know, and let's go through real quick. Do I have the same business, the same property, same people, same relationships? And if not, give your attorney a call, give John a call, and make sure you're on the same page. So, well, it certainly was interesting. A lot of excitement about potential work, and I know a lot of attorneys kind of lining up on bigger estates and how to, you know, what some of the creative answers were, but it looks like that's kind of blown over. John, it's always a good time to talk to an attorney who can help you. In your case being licensed in Texas best way to get a hold of you I think we have on the screen is your 713 number [phone number] or you go to the website strommylaw.com go there you can learn about the four horsemen of the apocalypse of estate planning and or set an appointment to talk to your staff what's the intake look like somebody has a question they go on there they set an appointment they talk to you or an assistant or how's that what's that process

29:05 Be talking to our intake team and so they'll get some kind of basic information make sure that we can do the work they're looking for you know a lot of times, you know, today we got a question. Hey, can you help us with the guardianship? We cannot, but we have lots of people we send that out to and happy to get people to the right place.

29:20 Very good. Well, again, there's a phone number and website on the page and of course, if ever you lose that information, feel free to reach out to me. John, thank you so much for joining us today and offering your information and the service that you do on a regular basis.

29:32 Of course, Bill, thanks for having me on. Thank you. And for the rest of you, this is Probate Weekly. We get together, we can talk about probate or avoiding probate, which is with proper estate planning. We talk to attorneys and professionals across the country. If you want to continue the conversation, you go to our Facebook group probateweekly.com in Facebook and there you can ask for referrals for if you're looking for an attorney or a Realtor® or other vendors across the country as well as look for referrals in business across the country. Love to have you participate. Was this helpful today? Give me your comments, thumbs up, comments, questions, reach out to me on Elgross Probate on social media. As always, make today your best day