Lakeland Currents 906 – Wills and Estate Planning

Lakeland Currents 906 – Wills and Estate Planning


♪ ♪ ♪ ♪ ♪ Lakeland Public Television
presents Currents. ♪ ♪ Good evening and welcome to
Lakeland Currents. I’m Bethany Wesley. The baby
boomer’s generation began turning 65 in 2011 and now, according to the U.S.
census it is projected that more than 20% of the total
U.S. population will be over the age of 65 by 2029. Yet, it has also been
reported that 55% of Americans die without a
will or estate plan. And so tonight we
are going to be discussing wills and estate planning with
Ron Carpenter, a Bemidji attorney who has been
in private practice since 1973 with an emphasis on estate
planning and real estate law. He is a member
of the Minnesota State Bar Association in the elder law
section and real property law section and is also a
member of the National Academy of Elder Law Attorneys. Welcome
to the program. Ron: Thank you, it’s nice to be
here. Bethany: As we start
talking lets talk pretty obviously.
What exactly is an estate plan? Ron: Well, I like to have my
clients think of estate planning in a broad scope, so we talk about planning for
death as well as planning for incapacity. Bethany: OK. So,
what happens if somebody does not take these steps? What
happens when somebody either
becomes incapacitated or dies without
having gone through these
planning steps? Ron: Well without
ah…if a person becomes incapacitated and they haven’t
done any planning, ah, there’s no one who can sign
deeds for them, there’s no one who can sign tax
returns, um, pay bills, and as a result
of that, the healthy spouse or a family
member’s going to have to go through a court
proceeding to be appointed
guardian or conservator. And that gets to
be quite a costly, time
consuming process. In addition the individual has to file
annual accountings with it too so.«OK» Something
good to avoid in most situations.
Bethany: So, do these plans only come into play upon death or
incapacitation? Ron: Well ah, for incapacity
documents we talk about durable powers of
attorney and health care directives, and
those are valid the day you sign them. So for
example with a durable power of attorney,
your agent even though you’re competent
and capacitated can act on your behalf. Normally though we
think of the person acting only on death
or I mean on incapacity. Ah, with a
health care directive it’s the same thing. The person
who created the health care directive still has control of making their own
health care decisions but they might be laid up in the
hospital with a hip replacement
or something like that where they’re
competent but they just can’t
get around to visit with their doctor or
get test results and the agent they designate
can do that for them. Bethany: OK. So, what are the
benefits of having to go through the steps? You go
through the steps of estate
planning of all these different things
you can consider, how does that kind of become
beneficial for the family upon somebody’s death? For example.
Ron: Well, on death it’s a real gift to the family because
ah, the parent or the person who
died provided some structure for the
family. Who’s going to be in charge, ah and, how assets are going to be
distributed and most often there are special
considerations when putting together a plan. So, ah, with a plan for example you
could provide special provisions for
young people so to hold their inheritance in a
trust or there might be a disabled
child or grandchild and if they were to inherit it might take them off social
security benefits but they can do special planning to
make sure that the gift for that person is preserved. Bethany:
OK. So, there really are different ways that you can
tailor these for your unique
needs. Ron: Oh, absolutely yeah, yep, there’s no one size
people that fits all. Bethany: In your
opinion, when should really start beginning to think
about these things? Ron: About the time they each reach the
age of majority.«OK» So it can be as young as a young adult. Ah, so for
example if there’s a college-age student and ah, and they have um, medical problems well their parents can’t access private medical
information and they can’t be the advocate for
that young student child of theirs so it’s
important for young people to even consider planning. If
you go back ah, about two decades, there
were two famous cases, Karen Quinlan and Nancy Cruzan. And their parents had to go the, ah, Supreme Court to be able to get permission to
pull life support for their young daughters,
college-age daughters and of course more recently
we’ve heard of Terri Schiavo in Florida and
her husband couldn’t be her advocate and
make decisions for her. He wanted to pull life support
but Terri Schiavo’s parents didn’t
so as a result there was a standoff and that
name became more famous than what the
family would want it to be. Bethany: When there’s cases
like that happen you get those,
you know, the more public profile, more
people talking it. Do you see
people starting to approach you more,
starting to ask more questions? Ron: I, I haven’t but I can
always raise these examples with them.
And of course the most recent one is now with Prince. And ah, he not having done planning. And ah, most people don’t have
those consequences to that extent but there, nevertheless those
consequences are still devastating to the family. The survivors are left with a
lot of unknowns and ah, we all look through ah,
our own filtered lenses at things and good kids can get into honest
disagreements if mom and dad haven’t done the
planning. Bethany: Lets talk a little bit
about the type of person should look into this type of
planning or think about whether it would apply for them. You
know, some people think it’s
only for those with kids, only with
those who are maybe perhaps a
little bit more fluent, not living
paycheck to paycheck. You know, is it appropriate for
everybody or is it…? Ron: I would say so. So, for
example we started with the young
college-age person, young adult, who could use
planning in a limited sense. Ah, just this week, I spoke with
someone who is planning to get married and she and her husband-to-be don’t
have any assets to speak of but her
parents are very concerned if what happens if
they die and she inherits everything and
gets into marital problems. So even at that stage we could do pre-marital
planning. And do a nuptial agreement for them.
Bethany: OK, so that’s
something you have to do with the couple that’s
getting married as well as the parents? Ron: I keep the
parents out of it, so. Bethany: So, it’s just the
couple that’s getting married.
Ron: So, yes, yeah, so there…and usually I represent
only one of them. I encourage the other
fiancè to get their own representation to
have another pair eyes look at the plan. But I’m
working for that person who’s about to be
married. And ah, if they’re concerned about inheriting ah, from their parents and
having that exposed and lost through a premature death or
divorce ah, well and that planning is
warranted. Bethany: OK. Do you often have
couples that come to see you only once they start to
have children, that they’re
really worried about the who’s going to take care of
the kids after? Ron: Well
that’s the next stage and so now they’re married and they have a child and they’re
not going to have any more valuable asset than that young
child and I always tell them ah, it’s
important to have a plan in
place if for no other reason than to designate guardians. And I
always let them know that they don’t have to be
worried that no one is going to be
interested in taking care of
that young child of theirs but their worries should be
that they’re going to have too
many people wanting to take on that
responsibility. Bethany: OK. Do you ever have, you know, the
people that are uncomfortable talking about death, they find
it to be unsettling, they don’t
really want to talk about it, because you
know, they just have fears, are
there certain ways you can approach that to kinda
help them think about it from a
different perspective? Ron: Well I think they’ve
pretty well worked through it
by the time they pick up the phone and make
an appointment. I always my observation is that’s the
most difficult thing to do. And ah, when they’re
motivated to pick up the phone and call,
they’ve pretty much worked through it but um, I
think that it takes a few minutes of
conversation with them to get em warmed up
to the concept and understand the importance
of doing that planning. Bethany: So, when people are
coming in for that first appointment, they’ve set
up the appointment, they’re
ready to start tackling this, what are the basic
documents that they should kind
of incorporate into that plan? Ron: Well I
tell them that it’s like, to have a good solid plan, it’s like having a
four legged stool. So, in planning for death ah, the one leg is typically a will, sometimes it’s a trust if
people want to avoid probate or have a trust for any
other reason, so on death we have the one leg, for incapacity, we have two
legs. It’s important to have a
durable power of attorney so that they appoint somebody
who can handle business and financial matters
if they become incapacitated or for other reasons. But those people cannot be your
health care advocate. So the third leg is to have a health care directive. Then
they can appoint whoever they want to be
a health care advocate for them. The
fourth leg is work that they have to do
after they’ve completed the legal documents
for the three legs. And I give them resource
information to go home and do the rest of
the planning. So, there’s a lot of
information that families, parents should put together, ah, in their planning but it
doesn’t need to be included in
the legal documents. But they have to be aware of
what those subjects would be and how to
handle it. Bethany: Do the people that are
specified or named in the
planning documents, should they be consented or
notified either prior to or
after all the process had been going
through? Ron: With ah, it kind of depends on what role
they’re to play. So, for example, if
it’s a young couple who have a young child, and
they want to name one or more people as
guardians for that young child, that’s an awful big responsibility, 24-7
they’re taking on. So, it’s important for, for
that couple to talk with the people who they’re considering designating
as guardians to make sure
they’re willing to take on that responsibility
and ah, for other people it just
depends. Depends upon the family
dynamics, um, parents sometimes don’t want to designate…ah, visit with the kids about who they’re
going to appoint as personal representative because
they might change their minds. So, you have to be careful.
It’s like once those words are outa your mouth you can’t
take them back. And you might hurt their
feelings later. Bethany: Once it’s crafted,
once you’ve kind of gone
through these steps, you have a
plan how often do recommend that it
be reviewed? Ron: I I recommend that they take a
look at it once a year, that they review it, if
they have questions, ah, a good time to do it is tax
time I tell them. Get two miserable jobs outa the
way at the same time. So, take their documents off the
shelf, look at them to see if any family situation
has changed that would warrant a change in modifying their
plan. Ah, the one thing they’re not
aware of is if there’s been a change in the
law. So, I encourage them to give me a call and I can let
them know if there’s a change in the law. The one
thing I don’t know if is whether there’s been a change
in the family circumstances so if we touch base like that,
usually it’s just a phone call and ah, probably a reasonable
expectation for a shelf life might be five
to ten years. Things change over the years
and it’s important to keep up
with those changes. Bethany: But it sounds like
they basically check it over
themselves maybe give you a call. They
don’t need necessarily go
through the whole process again once a year, it’s just an
update, review? Ben: That’s
correct. Yeah, yep. Bethany: Um, lets
talk about some of the
different options they might have. You know, you
mentioned a little bit about
the wills versus the trusts. What’s
really the difference there as
people are looking at those specifically? Ron:
Well a lot of times people come in and um, they, they think of a trust as just a
document and ah, one trust fits all situations but there’s
numerous kinds of trusts. Anything from estate tax planning to planning for an incapacitated child or
grandchild to a trust to ah, consider protecting assets from nursing
home costs, trusts for minors and ah, also then people will come in
and they’ll I’ll ask them what I can do for
them and they say they want a
trust. So I say “Well what do you want
a trust for? Well to avoid probate.” So we go through that
discussion and we weigh the pros and cons of a trust versus a will, probate
versus nonprobate Bethany: When people typically
come in for these appointments
do you feel like they know kind of some of the
different options or you kind
of have to walk them through them, or how much
research should people do in
advance? Ron: Well, when I get a call
and ah, people are setting up an
appointment for the first time invariably they’ll ask me “Well
what should I how should prepare?” And I say
“Bring in a list of your questions and we’ll go through
them.” Ah, I do have clients who come
in though and they say “You know, we
would have been in here five
years ago but it took us this long to figure out what
we want!” And after about fifteen or
twenty minutes of talking and I share different ideas and
options they’ve already forgotten about
the plan they came in with and they said “Oh these other
options are better.” So I tell people not to over think
it and over prepare Bethany: OK, OK. We talked a little bit about how they can
be tailored and you talked
specifically maybe about there are different
ways that if you wanted to
leave money to a child, that it could
be protected from a spouse,
would be a divorce situation. Um, are
there ways to protect like a pet or a
companion animal? Ron: Well, as of, ah, ah this last legislative session
there is. Minnesota was one of the last
to adopt laws that allow for the
creation of trusts for pets. But that
legislation is now passed. In the past though we did provide protections for
pets but it had to be in a pretty convoluted way. So, now we can
be upfront and we can create a trust for a pet. Bethany: Had you heard from
previous clients that this was something that people would
ask? I’m just curious. Ron: Oh,
yeah, yeah they do. And ah, ah, so I remember one in particular,
an elderly gentleman and he wanted Lady protected. And he knew he was…not gonna live beyond Lady’s life so we
took care of Lady and there was a person who took good care of her but ah, ah it’ll make it a lot easier now
for people to do that. Bethany:
OK. Um, are there also ways to
incorporate gifts or you know, you wanna really benefit a
nonprofit or a project that’s
been really important to you in your
lifetime? Ron: Oh absolutely. So ah, this is often not thought about before they come
in and see me but we go through the process
and we say now ah we’ll set aside special gifts. You can create a
separate sheet of paper that disposes of items of
tangible personal property and that separate list will be honored by the will or the
trust. Another special gift that I
bring up is that you might want to
consider leaving a gift to the church or
a nonprofit or an organization that means a
lot to you and suddenly they say “Oh yeah never thought of that! You
know, that’d be, that’d be
nice.” Bethany: Are there other
specific requests people come
in that they really want to protect certain things or
they really want to help you know… Ron: Ah, I think, I
think one area that is quite common is they might have three children
but ah, they helped a child out either through educational
loans or helping finance a bitter
divorce or ah, just making a gift to them
and they feel a little
uncomfortable leaving all of their estate equally to
all three children. because this one child did get ah, already something during
their lifetime, so I say “Well lets put in a special gift for
the other two children to offset that value.” Bethany: So, when
you have a special circumstance like that, do you recommend
that families talk to their
kids about that in advance, or not, not
really? Ron: Ah, not…it…it’s up to
them. It’s a personal judgment call.
Often the other two children don’t
know about it and ah, but if they ever found
out about it when mom and dad were gone
they’d be upset if they didn’t
have see an offset. But they might
very well appreciate knowing that mom and dad took
care of it and they’re much more
understanding then that there maybe, may have
been reasons why they didn’t tell the other two
why that they were making this
loan. Bethany: Sure, sure. Is estate planning expensive? I
mean, for someone to go through
this process? Like, does it take one
visit? Two visits? Ron: Well, first of all most people, 85% of my clients
have a pretty basic plan. They’re all unique and ah, situations need to be addressed for each of
them. But ah, the, usually it takes at least
two meetings. So we have an information
gathering and sharing meeting. That’s where I get more
information from the clients and with that information I can
narrow down the options for them to options that I’d
want to know about if I were on the other side of
the table. And ah, when I lay out those options ah, and answer all their
questions, then they have a
pretty good idea of what they want their
plan to look like and what legal documents would
be needed and if they can provide me with the
informatoin I need to do the
drafting quite often we can complete it
in a second meeting. People often say when they walk out that if they knew it was
going to be that quick and easy, they would’ve
done it sooner. As far as costs go though ah, I let people know that I’ll
just bill for my time at the first
meeting but by the end of the meeting if they
know…have a pretty good idea
of what they want as part of their plan
I can give them a very good idea to what the rest of the costs
would be. Costs can vary anywhere from generally probably not less
than $500. It would be exceptional if it
were a college student or something. But it could get
to be several thousands of dollars when you’re talking
about somebody with $50 million, so. Bethany:
Depends on the complexity of
the estate. Ron: It really does Yep. Bethany: You know, we’ve
all seen it in advertisements or heard things about do it
yourself wills or things you
can do online. Are these also good options for
people to look into? Ron: Well it’s good for them to take a look at it. I don’t go online to do my taxes every year, and I hire an
account professional, and every time I write out the check, I tell
myself this isn’t costing me, it’s
paying. You know, I’m probably getting
better deductions I’m saving more money by having a professional do it
than what I’m paying to that professional. And I think the
same thing applies with estate planning. Bethany: For those
who are ready to really start delving into this, I know
you said to kind of, you kind of have them come with questions,
but when they want to kinda get
an idea to what their estate is, what
kinda documents should they be
looking into? What kind of information should
they kind of take into
consideration? Ron: Well ah, under appropriate circumstances
if the clients want me to provide them with a form I, I’ll mail out a
questionnaire form and that provides some
structure for them then to give
me the basic family background, type of assets that
they own and that gets us off to a running
start. So if they bring that in plus a list of
their questions to make sure I cover all of them, um,
that’s good preparation for the first
meeting. Bethany: OK,
interesting. Can you tell us any specific
examples of um, not people, but some
situations that people might want to keep in
mind as they go into these? Any unique considerations that
people should think maybe this is appropriate for
me? Ron: Well I, I think that it’s a…as we’ve visited earlier on in the
segment I think it, it’s obvious that
people need planning, um, throughout their whole life
spectrum the type of planning just
changes. And ah, so, anyone from a college-age student to
somebody in their nineties really needs a plan but
depending upon the age, the plan can look
different. Bethany: How did you get into
this? Can you tell me a little
bit about what it is about this field that really kind of
intrigued you? Ron: Well, I
have an accounting background. Majored in
accounting and undergraduate so I’m a bean counter by trade ah, but ah, I love estate planning because
there’s parts of it where I can show
how much I’m saving the client by doing
this planning. And they’re not even aware of
it. Or they want to gift some real estate while they’re
living but they don’t realize the capital gains
consequences to their children if they give
it while they’re living. It’s better to actually
transfer it on their death for example. So I think ah, my
back…my undergraduate background drove
me to the area that I’m in now.
Bethany: So when you hear from
your clients you know, what is the benefit
then for them? Is that they
just know their families are taken care and the
process after? Ron: Well, I think first of all ah, the benefit to them, and I
remind them of that is they’ve done a good job for
themselves. So they have their team in
place so even if they become incapacitated, there are people
in place who can be their advocate and ah, take
care of them the way they want to be taken
care of. So, it’s a good benefit to the client themselves first, it’s a wonderful gift for the
family, it’s a wonderful legacy to the
family, and it can save a considerable amount in time expense, taxes, by doing that
planning. Often when I finish doing the
work for the kids, when mom and dad
are gone they’re overwhelmed and they say “What a wonderful gift mom and
dad gave to us. You know, we better do the same
thing.” You know, but it wasn’t on their radar
screen till that happened. Bethany: Do you ever have kids
that contact you and say “You
know my parents aren’t going down
this path, is there anything I
can say to help them think about
that?” Ron: I’ve only had two
this week. «laughs» Yeah. One from Iowa and one from Kentucky and “I’m
gonna be up seeing mom and dad you know this summer and what
can I do to get them in to see you?” So I know there are a lot of kids who are concerned about
their parents and I always remind the parents
“You know your kids they’re concerned about whether
you have a plan or not.” But for the most part the kids
don’t care what the plan is just so that there is one in
place so in case of an emergency the
kids won’t be left with a lot of unanswered
questions. Bethany: And that comes down not only for the
estate and the finances side of things but for if and when
mom or dad became incapacitated or ill. Ron: Oh, absolutely,
absolutely. Bethany: Because
that has to be a big piece of mind for families.
Ron: Well it is and ah, so for example ah, with
health care directives, the way I explain
it to parents is “this is a good gift for you’
because we’re talking…part of the
health care directive deals with end of life issues. Well
when do mom and dad wanna be on life support? When
would they ever wanna consider having life support pulled? Well, I provide them with a
good structure where the kids are instructed to talk to the medical expert either mom or dad’s physician
or a physician of their choice if they want a second
opinion and they’re told to ask specific
questions about mom or dad’s condition
and depending upon the answers they get from the
doctor, mom and dad are telling them what
to do. So, it’s nice for the parents because they know the
kids even under a very emotional, stressful situation,
are going to be asking the right questions which will
help mom and dad and it’s a wonderful gift to
the child who’s making those decisions that
they don’t have to feel guilty. about making tough decisions.
Mom and dad told me what to do. Bethany: Great.
Well thanks Ron. I wanna thank you for joining
us today. I wanna thank you for watching this current
episode of Lakeland Currents
and please join us the next time. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

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