Power Up Wealth podcast – Estate Planning Mistakes – Episode 79 transcript:
Mikal Aune 0:00
What is an estate plan and what are the top five mistakes people make with their estate plans? I’m Mikal Aune, and today we’re going to discuss estate plans with our expert and guest, Nathan Croxford.
Sharla Jessop 0:22
Welcome to the SFS Power Up Wealth podcast, where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
Mikal Aune 0:45
Nate is an attorney with Voyant Legal, and he’s been an attorney for 23 years. The last 17 years has been focused solely on estate planning. Nate, tell us why you focus on estate planning now.
Nathan Croxford 0:56
Yeah, that’s a great question. And first of all, thanks for having me, Mikal. I appreciate the invitation, and I’m excited to be here today. I kind of came out of law school not knowing really what I wanted to do with my law degree. What I wanted to do as an attorney. And so when you do that, you sometimes kind of by default, fall into things that aren’t going to be a good fit for the long-term. So I actually was part of a commercial litigation group at a large firm for the first several years. Spent the first five years in court dealing with disputes and very adversarial, very, you know, stressful situations and just kind of by accident, about five years in, I was already not loving my life as a lawyer. And so probably, you know, it helped that that that was already happening, but I kind of by accident, had an opportunity to sit down in a context that involved estate planning and had an epiphany where I was just like, oh my gosh, these people, you know, they’re not angry, they’re not in some of the worst circumstances of their lives. You know, they’re here because they have concerns and questions, and I have an opportunity to help them avoid the kinds of things that I’ve spent the last five years trying to clean up. So my personality is just much more geared towards collaboration and coming up with creative solutions to problems before they begin, more so than being the kind of guy that comes in when the mess has already happened and trying to clean it up.
Mikal Aune 2:26
So how would you define estate plan to people? Because a lot of people, when you say you need an estate plan, they’re like, I don’t have enough money for an estate plan. So how do you define it and who actually needs it?
Nathan Croxford 2:37
Yeah, so like, the misconception is right, you have to be a very wealthy individual to justify the expense or the trouble of an estate plan. What I would say is an estate plan, it’s more than just a will, it’s more than just a trust. It’s actually more than just a binder full of fancy paper. It’s a comprehensive plan that outlines what you want to have happen to your material wealth after you pass away. How you want it to pass on to your loved ones, most of the time, children, but not always, and who should be involved in making sure that your wishes are honored. That’s what I would say, is an estate plan. Which is probably a very different answer than people are expecting. They want me to say, oh, it’s a trust, or it’s a will or a power, and it’s all of those things. Those are all pieces of those are estate plan. But an estate plan means that you’ve actually thought through what you want to have happen, how you want things to go down, and you’ve sat with someone who has the expertise to understand how to bring the, you know, the technical, legal aspect, and blend it with what your family dynamics are, to make sure that there’s a successful outcome for your family.
Mikal Aune 3:51
I can tell, even just in what you’re talking about and how we’re talking today, that there are a lot of mistakes that happen. Estate plans and in investments with homes, with everything. So let’s dive into those mistakes, and we can kind of tackle each one and then talk about what people should be doing to avoid those mistakes.
Nathan Croxford 4:08
Sounds good.
Mikal Aune 4:08
So, so the number one mistake, or the first one, is just failing to update beneficiaries. And I know that I’ve seen this on our side because, for example, we had one person that had been remarried twice, but the beneficiary on the 401(k) was still their ex-ex-spouse. So if something had happened to him, then it would be the first spouse that would be receiving the inheritance, and not his second or his third, and maybe not his kids.
Nathan Croxford 4:34
Yeah.
Mikal Aune 4:34
And so what are, what things should people be paying attention to with beneficiaries?
Nathan Croxford 4:39
Yeah, and that’s an interesting point, because you don’t even have to have an estate plan to have beneficiary designations, right? So even somebody that doesn’t have an estate plan right now, they should definitely put that on their list of things to do, but updating beneficiaries on retirement accounts, life insurances, brokerage accounts, those are all just, they’re very simple steps. You know how simple they are. It’s as easy as filling out a form and submitting it to the right person.
Mikal Aune 5:07
A lot of times, people just don’t think about it, you know, because or they forget about, oh, yeah, the life insurance with my employer. Oh, that has beneficiaries too.
Nathan Croxford 5:14
That’s right. They don’t consider all the different places where they have accounts that could have beneficiaries named. In fact, most people don’t understand that you can put a Pay on Death beneficiary designation on your checking, savings account, your CDs that you have just at the financial institutions.
Mikal Aune 5:31
Yeah so at the bank level, it’s a POD, a payable on death. With investments, it would be a TOD or a transfer on death.
Nathan Croxford 5:37
That’s correct.
Mikal Aune 5:38
But yeah, your non-retirement accounts can still have beneficiaries, just like the retirement accounts.
Nathan Croxford 5:43
That’s correct. And I think one of the reasons that people don’t update them is because all the reasons you just said they forget or they kind of put it off. But I think in the cases, I mean, I help lots of clients on a yearly basis update beneficiary designations, and in some cases, I’ve dealt with scenarios like the one you just outlined, where it’s 2x wives ago and she’s still listed, and they just think that it’s so complicated to remove it or to change it, that they kind of have this block, and they just they don’t pick up the phone, or they don’t log in and pull down the right form. And I literally sat with a client who had, I mean, his ex they’d been divorced for seven, eight years, and she was still listed on a million dollar plus life insurance policy. And she had already cleaned him out in the divorce, and he you know it made him sick to think about her receiving that money instead of his children if he died, but he was convinced it was too difficult. I said, let’s just pick up the phone.
Mikal Aune 6:48
Yeah.
Nathan Croxford 6:48
Picked up the phone. We called the life insurance company. He didn’t know his policy number. They found him with a social security number. He told them what he wanted to have done. They emailed us the form. We filled the form out, we signed it, we scanned it and sent it back in. It was done in less than 20 minutes.
Mikal Aune 7:03
Oh, so it’s really easy to update beneficiaries. Just make sure that you do it and make sure you do it on all accounts. Now we typically tell people for retirement accounts, specifically that even if you have a trust, we typically list the individual kids, or usually it’s a spouse, first as a primary, and then the kids would be a contingent beneficiaries, just because of the new laws that went through in 2020, and now children have 10 years to stretch out an IRA distribution, whereas if it goes into a trust, they only have five years to take a distribution. And it may be taxed at the trust tax rate.
Nathan Croxford 7:39
Right.
Mikal Aune 7:40
But there might be circumstances where, if you have created a trust, that it should be the beneficiary. So when would you still list a trust as a beneficiary on a retirement account?
Nathan Croxford 7:49
Yeah, so you’re referring to the Secure Act that changed. It was a big game changer in terms of how long people could take the stretch on a retirement account. How long a period of time they could stretch it out the withdrawal. So yeah, whenever possible, we work with our clients’ financial advisors and coordinate those beneficiary designations so that they’re done the right way. And in most cases, we’re going to name the individual children as the beneficiaries, because we want them to have the full 10 years to stretch that withdrawal. But there are definitely scenarios where that is not an appropriate course of action. I’ll give you a few examples. Couple who has an adult special needs child, where they’re on disability benefits, they’re on Medicaid, they’re on other government means tested benefits, and if they were to receive a portion, you know, a third, if it’s equal thirds to three kids, if they were to receive their third directly from the retirement account after their parents have both passed away, then they’re going to lose access to or eligibility for those means tested benefits and a lot of times the amount of money that they’re going to receive from a retirement account doesn’t justify terminating. I mean, if they’re going to receive millions and millions of dollars, maybe you don’t worry so much about those benefits, but somebody has $40, $50,000 come in, that’s not going to last very long, and in the process, they’re going to lose a lifetime or they’re going to have to spend a lot of time and money and energy trying to get back on a lifetime’s worth of
Mikal Aune 9:24
Social security disability and Medicaid and everything.
Nathan Croxford 9:27
All those things. So that’s a that’s a perfect example where, in that scenario, we would name the trust as a beneficiary for that particular child’s benefit, right? Like you could still name, if you had three kids and only one of them with special needs, you could still name the first two kids as direct beneficiaries, and then name the trust as the beneficiary for the special needs individual. That it makes it so that you need to make sure that the attorney working with that trust has tweaked the language and the trust to make it so that it doesn’t then divide three ways in the trust, right?
Mikal Aune 10:01
Yeah a second time.
Nathan Croxford 10:03
Any money coming into the trust from a retirement account goes directly into the special needs trust of the special needs individual.
Mikal Aune 10:12
What would you recommend for people that have minor children and they have a trust? Do you still list the children, or do you list the trust?
Nathan Croxford 10:18
Now that’s another great example of when and again, I always work with the financial advisor that, you know is helping them with that retirement plan. But you know, the five the 10 year stretch versus the five year stretch, it’s a it’s a great thing to have all 10 years, but not if you have kids that are under the age of 18. If something happened and both mom and dad are gone, or if it’s single parent family, the parents gone, you guys have to deal with setting up custodial accounts for those kids. As soon as they turn 18, they’re entitled to access all of it.
Mikal Aune 10:52
And do you want them to get it at 18?
Nathan Croxford 10:54
Well, I don’t know. How are you doing at 18 with that?
Mikal Aune 10:57
I wasn’t very responsibility at 18.
Nathan Croxford 10:59
Me either. I mean, we’re guys, maybe girls do better at 18, but I still think that it’s too young. So in those scenarios, what I tell clients is we we’re going to forego the 10 years. We’re going to live with the five year stretch. There’s going to be a little bit more taxes paid on on those monies as they come out. But the trade off is that we get to control how that money is used. When the kids receive it, what they receive it for, and ultimately, you know, pick an age in the trust when they would receive it outright if it hadn’t been used for their care and support.
Mikal Aune 11:35
Great. So the second mistake is creating a plan that doesn’t fit your needs. So tell us what you think of as a plan and when you need one type versus another.
Nathan Croxford 11:46
Yeah. So we get this a lot, where people will call our office and they’ll say, we need to come in and get our wills done, and we’ve learned to not, like, launch into a tirade with them about, no, you don’t just need a will. You need to, you know, you probably need a trust. We we just interpret that as we need help coming up with what our estate plan should look like.
Mikal Aune 12:07
Yes.
Nathan Croxford 12:07
Because when I meet with a client for the first time and I explain to them, if they’re in a scenario like most people are, where they own real estate, or they have assets that exceed $100,000 in in value, they need a trust.
Mikal Aune 12:20
Yeah.
Nathan Croxford 12:21
And so what I’ll do is, I’ll show them how things would go down if all they did was put a will in place, which is not much better than if they did no planning at all, because a will, by its definition, has to be probated. And so.
Mikal Aune 12:35
You could just specify your wishes, at least in a will, but yeah, it doesn’t avoid probate. And what’s what’s the problem with probate?
Nathan Croxford 12:41
Well, probate is expensive. It’s slow. You’re relying on basically your this is a term I use, or a phrase I used to throw around quite a bit. It’s you could say that probate is filing a lawsuit against yourself after you’ve passed away, using your own money.
Mikal Aune 12:59
Yeah, you say it’s expensive, like, how expensive are we talking? Are we talking a couple 1000? Are you talking more like three to 10,000? What’s the range?
Nathan Croxford 13:08
I mean, it can vary. But, I mean, we don’t even touch we don’t do a ton of probates. We only do kind of the uncontested variety. And you never know if they’re going to be contested or not until you get into them. So if, if they do turn out contest, contested, then we have another attorney office that will handle those. But I would say in Utah, the starting point for an uncontested probate would be around $3,500 plus the court filing fees. Now that’s assuming everything goes as planned, and that there’s no objection, there’s no infighting. There are no creditors that come in and try to make claims. The second you have any of those things happen, then the sky is the limit. And I’ve watched people spend, you know, hundreds of 1000s of dollars on attorneys fees. Those are, of course, the more dramatic cases, but you could easily spend, you know, 10 to $20,000 on a contested probate.
Mikal Aune 14:02
And that’s the question for the parent is, would you rather spend the money up front? And we can talk a little bit about that later, but would you rather spend the money up front, or do you want to have it come out of your estate?
Nathan Croxford 14:11
Yeah.
Mikal Aune 14:11
You know, it’s the money that you’ve worked really hard to build this nest egg and possibly pass on to your heirs to help them get ahead. Do you want it just blown up?
Nathan Croxford 14:19
That’s right, and we’ll talk about this, like you said, in a minute. But the other thing is that it’s not just the monetary costs. The cost to the family in terms of relationship damages and, you know, the contention and just, I mean, I’ve never had a scenario where I took a client through a probate and at the end of it they said, Oh my gosh, that was so that was such a great process. Like, I’m amazed that we’ve got this set up. So, you know, the state has this set up so well, and it’s like, no, everybody that I’ve ever had to take through that they they tell me that was awful. I can’t believe that that’s the best that we can do. And then what I say is, it’s the best the state can do that’s a one size fits all estate plan for people that don’t choose to take planning into their own hands. The best thing about probate is it’s completely avoidable. You just have to do your own planning.
Mikal Aune 15:11
I think a lot of people think, well, I don’t have enough money, but when you said the limits $100,000 if you own a home, you’re going to be facing probate. That’s right. So what should you be doing to avoid it?
Nathan Croxford 15:22
What should you be doing to avoid probate?
Mikal Aune 15:24
Yeah.
Nathan Croxford 15:24
You should be putting an estate plan in place.
Mikal Aune 15:26
Okay, and what does that entail?
Nathan Croxford 15:28
So in a scenario where someone is a homeowner, we need to use a trust. A lot of the accounts that you guys set up here at your financial advisory are the types of accounts that have beneficiary designation capabilities. So you could theoretically assuming there’s, you know, the family dynamics are right. You could just simply name beneficiaries and not have any of those assets end up in probate. That’s not the case with real estate. Real Estate is the number one culprit in terms of type of asset that triggers a probate, and people just don’t understand that they think, well, we’re the children, we’re the next of kin. We’re the only people that are the rightful heirs to this estate and have any claim to this house. Why is this title officer, why is this realtor telling me that before they can do business with us and put this house on the market? And sell it so we can divide the proceeds that we have to go see an attorney and go before a judge, and it’s because the law says if you are not the owner of the property, you cannot sell it without court permission unless you’ve taken steps to avoid that, and that’s what a trust does. A trust, I think of a trust as a treasure box. It’s a place where you put valuables. It has a locking mechanism on it. Certain people have the key and can access that treasure box. In most cases, that’s going to be the clients themselves during their lifetime, that are the key holders, but we need to specify who receives those keys upon their passing, because the second we have created a trust and properly implemented it, meaning, in the case of real estate, drafted a deed that says mom and dad as husband and wife, joint tenants deed the property away from themselves as individuals and back to themselves as trustees of their trust. And then that causes the home to now be owned inside of a trust. And when you’ve set up the trust, named a proper successor trustee, probably one of your adult children that could be trusted, then they go in to sell the house, and the title company runs the preliminary title report. And instead of seeing the name of two deceased parents, they see that in, you know, 2024 a trust was put into place, and the house was deeded into the trust. Their next question at that point is, can we see a copy of the trust? Because what they want to find is the page that lists who’s the successor trustee. Who is the person who already holds the keys all the powers that would be granted in a probate, who already has those powers in their hands? And soon as they’re working with those people, the next question they ask is, How soon do you want to put it on the market? And we’ve watched families that are in a tight spot financially, where a trust has been put in place, go from burying a loved one to closing on the sale of their home 30 to 45 to 60 days later, and the money is in the bank and it’s ready to be used for whatever the family needs.
Mikal Aune 18:36
So it can be turned around quickly if it’s owned by the trust, but if it has to go through probate, how long does that take?
Nathan Croxford 18:42
Probates have to be open for a minimum of 90 days. In Utah, it’s more common to see them open for six months to a year. That doesn’t mean you’re waiting six months to a year to to be in a position to sell the house, but what that does mean is that you’re subject to the the time frames, you’re subject to the delays, you’re subject to the possibility of objections, and it’s just a it’s a big box of question marks that you you want to avoid, if at all possible.
Mikal Aune 19:10
Yeah. Now you need both the will and the trust, right? You don’t want to just have one or the other, because usually they say very similar things, and it’s going to split the assets between the heirs pretty evenly, and the real difference that I see between the will and the trust is that the trust can actually own assets where the will can handle things that don’t have a title, like grandma’s favorite rocking chair. Is that a good way to explain it?
Nathan Croxford 19:33
Yeah, you could, you could have a will that mirrors what the trust says, but in most cases, what we’re doing is we’re creating a specific type of will called a pour over will, and what it says is, if there are any assets in my estate that end up subject to probate, they forgot to put a beneficiary designation on account, or something along those lines, then simply pour that asset from the will into the trust, because I’ve already made all the arrangements in the trust that I that I want to make, and then we never plan to utilize the will when we’ve got the trust. It’s just a safety mechanism that we have sit there.
Mikal Aune 20:15
Good. Well, the third mistake that people make is failing to create POAs, because usually when you create this estate plan, it isn’t just a will or a trust, but there’s also powers of attorney and medical directors that go along with it. What issues do you see if people don’t have a power of attorney in place?
Nathan Croxford 20:33
Yeah, and that’s a good point. You asked me, what does an estate plan consist of and I didn’t completely answer that question, but it would include all of these documents that deal with the various contingencies that might come up. So trusts and wills are designed mostly for scenarios where somebody has passed away. Power of attorney, medical directives, those are documents that only live as long as the person that creates them, but what they’re designed to do is put trusted family members or trusted people in the client’s lives in a position to make decisions and take actions in the event that the client becomes incapacitated. So I think when we were talking before we started today, you brought up that more and more we’re seeing a lot of cognitive decline, a lot of cognitive dysfunction in kind of the aging population, and it’s happening younger and younger, and it’s more and more severe. I’m not sure exactly why that is, but there’s more and more of it, and the problem with that is that once they’ve lost capacity, they can’t sign a power of attorney at that point. So a power of attorney is a document that says, if I’m incapacitated, and depending on the scenario, you might make it effective immediately. A very elderly client who already has a loved one helping them with their financial affairs might say, I want them to be able to act for me now, even though I still have my faculties. But in most cases, people want it to be what we call a springing power of attorney, meaning those powers don’t spring into effect unless and until there’s an incapacitation event. But what that does, it puts those loved ones in a position to sign, as you know, sign documents, make financial decisions, take over kind of the management of finances, stop, you know, behaviors that kind of develop when somebody’s got some cognitive decline where they’re very giving and they’re very trusting, and they end up giving their information to the wrong people that are looking to take advantage of them.
Mikal Aune 22:27
Yeah, they give their credit card number to every charity that calls on the phone.
Nathan Croxford 22:31
Or their social security number. Or they’re out with their credit card, buying gift cards at the grocery store at 10 o’clock at night, sending them to some guy that they got an email from.
Mikal Aune 22:40
Yeah. They’re very vulnerable.
Nathan Croxford 22:42
Very vulnerable. And so what happens is that documents very powerful because it puts the right people in a position to take over those decisions and actions. And when you don’t have it, and you have someone that declines to the point where now they can’t even sign one, because they have to have capacity to be able to sign one. Then your alternative, that point is court. You’re going back into court. You’re asking judge to grant a guardianship and conservatorship over that loved one. And once again, we’re talking, you know, three to $10,000 depending on or more, depending on how much disputing there is in the family and so forth.
Mikal Aune 23:25
I would imagine, it takes a lot of time to get that through.
Nathan Croxford 23:28
Absolutely and that’s a lot of times. That’s the main reason people are are needing help is because they’ve got a hole in the bucket. The parent is, the loved one is, you know, dumping their money out in the wrong places, and they need to act fast. And if you have to go before a court, you know you’re looking at a month, month and a half, two months, three months, easy before you have that guardianship. And the other thing people don’t understand about guardianships just real quick is that not only does the person who is petitioning to get guardianship over their loved one have to have an attorney, but the person who’s incapacitated also has to have their own lawyer. So you actually have two sets of attorneys fees in order for that process to take place, and there has to be some that the attorney for the for the person that’s incapacitated has to have time to meet with them and do their evaluation and be able to make their recommendation to the court. It’s a whole process.
Mikal Aune 24:23
And I can see how complicated it can get, especially if the person who is experiencing the decline is fighting against it, and I’ve seen that in many different instances. And so having these things in place in advance makes it much easier.
Nathan Croxford 24:36
Yeah, and that’s super sad, because a lot of times you have a scenario where it’s clear as day that the kid has, you know, mom and mom or dad’s best interest in mind, but because of the type of cognitive decline they have, it’s they are fighting it tooth and nail, and they’re saying awful things in court, and they’re and it’s just it’s so painful to watch kids have to deal with that. So much easier to just say, you know what? Before we ever get to that point, let’s have a good power of attorney document in place. We can skip that whole mess.
Mikal Aune 25:09
I think that goes into the you know, mistake number four is failing to implement your plan and to make sure that everything is in place, like the powers of attorney, the trust. What’s the biggest issue that people have with the trust and not implementing their plan?
Nathan Croxford 25:24
Yeah so this kind of goes to how the industry works as a whole, and some of the problems, which is, I mean, I spent my first seven years at a great firm here in Salt Lake. I now practice in in Farmington. We have offices in American Fork and in Ogden, but one of the reasons I left that firm is because we were really focused on creating a binder full of fancy paper for our clients, rather than focusing on being a trusted advisor for our clients and helping them come up with the right outcomes for their families, we were just really focused on that binder. And part of the problem when you do that is, I mean, at that firm in it, a lot of firms that you’ll encounter, the implementation, part of the plan is not something that the lawyer takes any responsibility for. They write a letter that basically says, here’s your documents. They’ve been prepared to your specifications, exactly how you ask them to be however, in order for them to work properly, you need to go do action 1,2,3,4,5, or more. And a lot of times, what happens is people, you know, they kind of anticipate that if I pay somebody to help me do this, they’re going to help me get across the finish line, right? They’re not going to leave me in a position where I have to make I have to go out and do a bunch of things on my own. So what happens is those plans don’t get implemented. For example, real estate does not ever get retitled in the treasure box. It never gets put into the trust. Beneficiary designations don’t get updated to account for the fact that, now that they have a trust, a variety of different types of assets that could be placed into trusts don’t get put in there. And people have this misconception that, I mean, I’ve literally sat in on office in my conference room with gentleman who his dad had a trust that had never had a single item placed inside of it. And every time I would say, Well, this is what’s going to happen to that piece of real estate, or this is what’s going to happen to that bank account. He’d say, no, but the trust says this, and I’d have to redirect him and say that’s what the trust says. But the trust is an empty box, and it controls and governs nothing. So doesn’t matter what that trust says, unless we’ve taken assets and placed them inside of that, that box, that trust.
Mikal Aune 27:42
Yeah you have to change the actual title on the the piece of property or an investment, investment accounts, or.
Nathan Croxford 27:50
Use a beneficiary designation to make it so that those assets pay in after they’ve passed away. That works too.
Mikal Aune 27:55
If people are worried about their homes and they’re like, gosh, I have a trust. How do, how do they check and make sure that their home is titled in the name of the trust.
Nathan Croxford 28:03
If they’re able to get on and navigate the county website, they could go to the county recorder’s office for the county they live in, and they could use the search function that is provided there to look it up by name or look it up by their address. And a lot of times, they’ll be able to pull up, you know, what the most recent deed says, or at least how the what the vesting statement is, and how they’re listed on that property. Other than that, you might also be able to get that information from your property tax statement. A lot of times what you’ll see is the letter T R, the letters T R next to their name, which means trustee, which that typically means that when you go in and look at the actual deed, it’s going to show that they deeded it at some point into their trust, and that they’re listed on that document as a trustee. And then, last of all, if that’s too difficult or daunting to get on and try to search it themselves, you can usually pick up the phone and find somebody at the recorder’s office that’s willing to help you determine that. I guess the last kind of, the last way that you could go do that is get in your car, drive down to your county building, walk into the recorder’s office and just say, can you print me a copy of my most recent deed and check and see are you listed on there as husband and wife, and no mention of your trust, or is it clear that you know you’re listed on there as trustees of your trust? Perfect.
Mikal Aune 29:29
So the last mistake is not doing any estate planning because people feel that it is too expensive. And I know from my standpoint, I just look at the dollars and cents. Like you said earlier, either you’re going to pay it now, or you’re going to pay it later. And for most people, I’m like, okay, what is the average cost to go and create that full estate plan now?
Nathan Croxford 29:50
In Utah in our office depends on kind of what exactly they’re trying to accomplish, but I would just say that a good ballpark range would be somewhere between $3000 to $6,000 with that kind of higher end entailing some more bells and whistles that, not necessarily everybody would need, but sometimes people want.
Mikal Aune 30:10
Okay.
Nathan Croxford 30:11
So you’re looking at, you know, $3000 to $6,000. Compare that to, and like you said, it’s a scenario where at some point you’re going to pay this piper, right? You’re going to pay legal fees, and you have a choice. You can either do it now with your cognitive abilities intact, with your spouse or your loved ones involved, and have a very, you know, good plan put in place that accounts for your specifics and is set up exactly how you want it, and it’s generally done on a flat fee, not on an hourly basis, because it we know the type of work that’s going to be required to put that plan in place once the client makes their selection. So we’re able to flat rate that. And there’s no worries about, you know, are they keeping time accurately, or am I being overbilled, or whatever. You’re either going to do that and set your family up for a situation where we’ve dramatically decreased the number of issues that the family could contest or fight over and the magnitude of those of those issues, or you’re going to leave it for them after you die. And I’ve had people say to me, well, why would I care? I’ll be dead. And then I have to kind of go back and redirect them and say, yeah, that’s I mean, that’s an easy thing to say, but you got to understand that what we’re talking about here is not just three to four times the dollar cost to set up a plan if we’re doing it after the fact in a probate scenario, and that’s, by the way, if it’s an uncontested probate. Contested probates I’ve watched people spend 10s and hundreds of 1000s of dollars in legal fees fighting over stuff, which, as a parent, makes me sick to my stomach. You know, if I was deceased, I’d roll over my grave knowing that my kids were at each other’s throats over our stuff. And so that’s, I think, the part that people don’t understand. Like, if you were to ask somebody, even if they’d spent a lot of money in attorney’s fees on a probate after the fact, trying to clean up a mess that their parents kind of left for them, they might not mention the cost as the first most painful thing about it. A lot of times what you hear is it was such a miserable experience. I had to sit across the table with my siblings on the other side, and they had lawyers, and I had a lawyer, and it just crushed our family. Like it destroyed the relationship that I have with them. We’re never going to be the same after this is over, in some cases, people never speak to each other again. It’s a long, slow process. It’s partially public. You have to publish a notice in the newspaper announcing that someone’s been appointed as a personal representative of an estate, and essentially invite the whole world to come sit at the table while you hash out your family situation.
Mikal Aune 33:04
Yeah and how much is the judge? Because isn’t there a judge that would get involved in probate and the judge is trying to interpret, like, if there is a will or anything else, the judge is involved a lot in deciding where it goes, and you no longer have the decision of where money and assets go.
Nathan Croxford 33:19
Yeah if I learned anything from those first few years of practicing in the courts, it’s that if you can take an action to make sure that you never end up in a scenario where you or anything that you own is subject to the jurisdiction of a court or a judge, you should absolutely take that action. You should move heaven and earth to make sure that you never end up there. Because I think one of the things maybe people are understanding more now, as we’ve seen, kind of some of the weaknesses in our legal system in the last, you know, several years. But what they don’t understand is you could walk in to five different courtrooms with the exact same facts, the exact same parties, the exact situation, and you could come out with five completely different outcomes. And so going to court is so much more of a roll of the dice than people believe it is. So there’s just so much uncertainty on top of the expense, the delays, the family discord, the destroyed relationships. There’s just so much about it that if you could take an action to avoid that, you should absolutely do it.
Mikal Aune 34:30
I think this is the difference of being intentional versus apathetic.
Nathan Croxford 34:34
Absolutely.
Mikal Aune 34:35
So if you’re apathetic, there’s going to be a whole host of problems that come along with it, but if you’re intentional, you can help the process and maybe even help your family and prevent issues from arising, rather than just letting things yeah.
Nathan Croxford 34:48
Yeah.
Mikal Aune 34:48
And possibly go downhill fast.
Nathan Croxford 34:50
I’ve actually seen this a lot, where a couple will come see me, and one of them has lost a parent, in a scenario where there was a really good estate plan in place. And they got to watch how that process unfolded, and the great result that their family ended up with, where there was no fighting, or if there was some discord, it was it was very limited, and things were laid out, and they were cut and dried, and it was very easy for that plan to unfold and for things to go where they needed to go. And then on the other side of the family, maybe the wife and the couple has lost a parent in a scenario where there was no plan and that kid had to be dragged through a probate process. I love when I get to meet with those kind of people, because they’ve seen, they’ve they’ve lived it together. They’ve seen and felt what it’s like to have the plan in place ahead of time and have it done right. And they’ve also seen what it’s like to not have anything in place and have to go through the messiness of the one size fits all estate plan that is probate, and that is the state law. And so, yeah, I mean, it’s, it’s a night and day difference.
Mikal Aune 36:01
I can see it in people, too, where it’s if you’ve been through it without having the proper plan in place, you realize that it is so messy and it’s more than just the expense of what you pay out. There’s an emotional toll, and if you can avoid that emotional toll, you help your family out. Your heirs out a ton.
Nathan Croxford 36:20
Yeah. And I’ve heard kids express so much gratitude to their parents when the plan has been done, right and they’re able to be part of a successful winding up of an estate and distribution of assets. And they just they’re so grateful that their parents took that action, and they realize, and I often say to clients, estate planning is one of the most selfless things that you might do in your lifetime, because there are some definite benefits of having your estate plan in place that you will feel as the person who set up that estate plan. You’re going to have some peace of mind, you’re going to feel empowered. You’re going to sleep better at night knowing that those issues are taken care of. But the real positive impact that that that plan will have is going to be most felt by the kids that you leave behind, the loved ones that you leave behind when they don’t have to go through the nightmare that that is that probate.
Mikal Aune 37:13
Oh, that’s awesome. I think a lot of our clients will get a lot of benefit from hearing this podcast. Are there any other parting thoughts or things that you’d like to leave with people?
Nathan Croxford 37:22
Yeah, maybe just one thing, and I and what it is is, I think just like in the financial world, the investment world, I think you would say, I’ll go out on the limb and say that you think it matters who you work with and the way things are done in your business. Would you say that’s the case?
Mikal Aune 37:37
Absolutely.
Nathan Croxford 37:38
That is the case in this arena as well. You’re very rarely going to be comparing apples to apples when you’re looking at firms, one firm versus another. What you need to be focused on, what you need to be looking for is someone who they’re not just interested in selling you a binder full of paper. They are going to take an interest in what are your specific circumstances? What are your worries and concerns? What are your objectives? And they’re going to be very to use your word intentional about helping you create a plan that is going to check all of those boxes. And so if you’re not getting the feeling that that that’s you know, part of you should shop for an attorney by asking them things like, what percentage of your practice is estate planning? You don’t want to be working with the guy who does DUIs on Wednesdays and, you know, business disputes on Thursdays and then Fridays slaps together some estate plans. You want to work with someone who this is all they do, and they’re very versed in it, and they’re very good at it, and they’re experienced. They have the right temperament to be the kind of person that wants to see you get a good outcome for your family.
Mikal Aune 38:51
Well and to make sure that everything is fully funded and implemented and that it is in the right place.
Nathan Croxford 38:55
Yeah and I think that that’s part of the reason that I’m sitting here today, is because Smedley is looking to take care of their clients the right way. They want to be trusted advisors for their clients, and Voyant Legal does the same thing.
Mikal Aune 39:08
Yeah, we’ve seen the the negative outcomes when people don’t have it in place and don’t have things done right, and we want to make sure that it’s done right for clients, and that is why we have you here, is just make sure that the clients understand all the implications and things that need to go in place to make sure your estate plan is really what you want to be, and that you can be intentional about passing your wealth on to the next generation.
Nathan Croxford 39:28
Absolutely, well said.
Mikal Aune 39:30
Thank you. Nathan, we really appreciate it.
Nathan Croxford 39:31
Thank you. Thanks, Mikal.
Shane Thomas 39:38
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
