Demystifying Wills and Trusts: Avoiding Probate and Planning Your Legacy

1 00:00:00,890 --> 00:00:08,790 Coming up on this episode of the HWWP lawyers do not recommend wills they 2 00:00:08,790 --> 00:00:15,339 recommend trust the problem or issues with probate is that like i said before 3 00:00:15,499 --> 00:00:22,710 welcome to the healthy wealthy and wise podcast with dr william t chalk tall md 4 00:00:22,940 --> 00:00:28,740 jd a special episode featuring attorney bernie brown former los angeles deputy 5 00:00:28,740 --> 00:00:33,770 city attorney author and podcaster You've got questions, he's got answers. 6 00:00:33,870 --> 00:00:38,540 Join us listening in as Bernie shares facts, wisdom, and knowledge at the Don't 7 00:00:38,550 --> 00:00:40,770 Leave a Mess conference held at the St. 8 00:00:40,770 --> 00:00:44,520 Stephen Missionary Baptist Church in La Puente, California. 9 00:00:44,520 --> 00:00:46,959 Wow! 10 00:00:46,959 --> 00:00:49,070 This is almost as good as a jury trial. 11 00:00:52,240 --> 00:00:52,810 Okay. 12 00:00:53,740 --> 00:00:54,220 Alrighty. 13 00:00:54,450 --> 00:00:55,970 Well, God bless you all. 14 00:00:56,245 --> 00:00:57,095 Praise the Lord. 15 00:00:58,085 --> 00:01:03,625 Today we're going to talk about how to control your property after you die. 16 00:01:05,634 --> 00:01:06,705 That has a ring to it. 17 00:01:06,915 --> 00:01:09,674 Thirty five percent of all wealth is inherited. 18 00:01:10,620 --> 00:01:13,300 You can't take it with you. 19 00:01:13,820 --> 00:01:17,160 So why not give it to someone you love? 20 00:01:17,610 --> 00:01:20,760 Leave it to someone you love so that they can have a happier life 21 00:01:21,150 --> 00:01:23,229 or at least a more comfortable life. 22 00:01:23,799 --> 00:01:28,000 So basically what we're talking about today is wills and trust. 23 00:01:29,500 --> 00:01:32,810 Now, I'm going to try to break everything down as simple as possible. 24 00:01:33,240 --> 00:01:33,600 Okay? 25 00:01:33,600 --> 00:01:34,700 Make it simplistic. 26 00:01:35,180 --> 00:01:38,024 A will is a document that designates a will. 27 00:01:38,515 --> 00:01:43,865 Who you want to receive your property after you die. 28 00:01:44,945 --> 00:01:45,375 Okay. 29 00:01:45,875 --> 00:01:52,795 A trust is a document whereby you transfer your property to the trust. 30 00:01:53,865 --> 00:01:58,215 And a trustee controls the trust while you are alive. 31 00:01:58,595 --> 00:02:04,875 You can name yourself as the trustee, which means you will still be in 32 00:02:04,875 --> 00:02:07,505 control of all of your property. 33 00:02:08,194 --> 00:02:14,304 And you name a successor trustee, the person who will take over when you 34 00:02:14,304 --> 00:02:21,904 die, who distributes your property to your designated beneficiaries. 35 00:02:22,480 --> 00:02:26,459 So you're in control of your property after you die. 36 00:02:27,159 --> 00:02:29,089 What happens when you die? 37 00:02:31,299 --> 00:02:33,219 Your property is frozen. 38 00:02:33,605 --> 00:02:35,195 That's basically what happens. 39 00:02:35,605 --> 00:02:41,155 Your beneficiaries, your heirs, they cannot sell your property. 40 00:02:41,424 --> 00:02:45,424 They cannot receive rents or proceeds on your property. 41 00:02:45,774 --> 00:02:52,915 They basically can't do anything with your property until the court approves it. 42 00:02:52,954 --> 00:02:56,285 Now there are exceptions and we're going to talk about those exceptions. 43 00:02:56,785 --> 00:03:00,195 But basically everything is frozen. 44 00:03:00,885 --> 00:03:06,215 So, the court that makes the determination of who gets your 45 00:03:06,234 --> 00:03:12,965 property based on your will or your trust is called the probate court. 46 00:03:13,974 --> 00:03:21,405 Now, basically what happens when you die, If you have a will, your 47 00:03:21,584 --> 00:03:26,054 property all goes into probate court. 48 00:03:26,765 --> 00:03:29,875 What's created is a probate estate. 49 00:03:30,704 --> 00:03:35,695 Alright, so when it goes in, what happens is, in your will 50 00:03:35,704 --> 00:03:37,464 you would name an executor. 51 00:03:38,295 --> 00:03:43,015 And your executor will hire a lawyer, and the lawyers will all get 52 00:03:43,174 --> 00:03:45,304 together, well, not get together. 53 00:03:49,714 --> 00:03:54,064 They will hire a lawyer that will file an application with the 54 00:03:54,094 --> 00:03:56,434 probate court to start the process. 55 00:03:57,265 --> 00:04:03,135 in probate court so that the court can examine your will and determine 56 00:04:03,135 --> 00:04:10,424 your assets and determine who, based on your will, is entitled to receive 57 00:04:10,424 --> 00:04:17,235 your assets and to begin the process for distribution of your assets. 58 00:04:17,444 --> 00:04:17,914 Okay? 59 00:04:18,694 --> 00:04:27,765 Now, generally speaking, Lawyers do not recommend wills, they recommend trust. 60 00:04:28,294 --> 00:04:32,674 The problem or issues with probate is that, like I said before, 61 00:04:33,114 --> 00:04:39,655 your property is frozen until the probate court makes a decision. 62 00:04:40,324 --> 00:04:45,444 The probate process can take up to one or one and a half years. 63 00:04:45,905 --> 00:04:51,454 So during that process, it can also be an expensive process 64 00:04:51,824 --> 00:04:53,564 because you have to hire lawyers. 65 00:04:53,565 --> 00:04:55,525 Lawyers have to come in. 66 00:04:56,064 --> 00:05:00,514 The probate court will frequently hire appraisers. 67 00:05:00,594 --> 00:05:01,225 Okay. 68 00:05:01,615 --> 00:05:03,294 They may hire accountants. 69 00:05:04,044 --> 00:05:06,424 You may have to pay court fees. 70 00:05:07,094 --> 00:05:16,575 So generally, lawyers Recommend trying to avoid the probate process. 71 00:05:16,815 --> 00:05:21,515 And generally, they do that through a trust, all right? 72 00:05:22,155 --> 00:05:28,095 Now, there are, I just want to give you a basic overview. 73 00:05:28,904 --> 00:05:33,615 There are several ways to avoid probate, OK? 74 00:05:33,655 --> 00:05:37,284 And I'm just going to quickly go through some of the possibilities. 75 00:05:38,135 --> 00:05:42,635 One possibility is just give the property to whoever you want 76 00:05:42,645 --> 00:05:44,424 to have it while you're alive. 77 00:05:45,054 --> 00:05:48,114 Now, there are advantages and disadvantages of giving the 78 00:05:48,114 --> 00:05:50,235 property away while you're alive. 79 00:05:50,475 --> 00:05:53,614 If you give it to them while you're alive, then you no longer 80 00:05:53,614 --> 00:05:54,755 own it while you're alive. 81 00:05:55,375 --> 00:05:59,804 And that's a disadvantage because you want to continue to own the property. 82 00:06:00,584 --> 00:06:05,174 A second alternative is what's known as joint tenancy. 83 00:06:05,490 --> 00:06:10,560 What generally happens when you buy a home is frequently you take 84 00:06:10,560 --> 00:06:13,340 in what's called joint tenancy. 85 00:06:13,840 --> 00:06:18,860 Now under the law, a joint tenancy does not go through probate. 86 00:06:19,219 --> 00:06:23,049 It transfers automatically when you die. 87 00:06:23,589 --> 00:06:28,960 So, if there's a husband and wife, wife and spouse, when one spouse 88 00:06:29,020 --> 00:06:31,740 dies, if they own the, the home. 89 00:06:32,625 --> 00:06:36,525 In joint tenancy, when one dies, the property automatically 90 00:06:36,544 --> 00:06:38,965 transfers to the other spouse. 91 00:06:39,545 --> 00:06:43,755 Now, that sounds great, and that's easy, it doesn't have to go through probate. 92 00:06:44,195 --> 00:06:50,485 The issue becomes, when these both spouses die, then you need either a 93 00:06:50,485 --> 00:06:55,795 will or a trust to control who gets it afterwards, which namely might be 94 00:06:55,795 --> 00:06:59,985 your children, but they're not part of the joint tenancy, so that's why 95 00:06:59,985 --> 00:07:01,605 you would need a will or a trust. 96 00:07:02,285 --> 00:07:06,760 Now, in California and several other states, there are still oh, 97 00:07:06,960 --> 00:07:08,909 she's waving, is that the time? 98 00:07:10,229 --> 00:07:10,739 How many? 99 00:07:11,340 --> 00:07:12,380 Okay, five minutes. 100 00:07:14,609 --> 00:07:18,520 This is the sixth, almost a year class in law school. 101 00:07:18,520 --> 00:07:23,439 And I have five minutes. 102 00:07:26,879 --> 00:07:30,469 Okay, so, pardon me if I start speaking fast. 103 00:07:31,399 --> 00:07:34,019 Okay, so there are also what's called pay on desk. 104 00:07:34,614 --> 00:07:35,554 designations. 105 00:07:35,884 --> 00:07:38,504 There are transfer on death deeds. 106 00:07:38,744 --> 00:07:42,404 There's a deed that you can go, you can get the form and it's set up so that when 107 00:07:42,405 --> 00:07:47,274 you die, automatically your property, your deed, your real estate transfers 108 00:07:47,584 --> 00:07:49,354 to the person who you've designated. 109 00:07:49,354 --> 00:07:54,294 Transfer on death does not go through Obviously life insurance, you name the 110 00:07:54,304 --> 00:07:58,504 beneficiary in your life insurance, so that doesn't go through probate. 111 00:07:58,824 --> 00:08:00,054 That's automatic. 112 00:08:00,614 --> 00:08:03,354 Living trust, we're going to talk about living trust. 113 00:08:03,835 --> 00:08:08,424 But that's a document that's created that does not go through probate. 114 00:08:08,754 --> 00:08:11,924 A lot of times with regard to your retirement accounts. 115 00:08:12,565 --> 00:08:16,335 They don't go through probate because you've named a beneficiary. 116 00:08:16,665 --> 00:08:21,545 Also, there's what's known as a pay on death account, and a designation, 117 00:08:21,845 --> 00:08:25,195 and that's where you tell the bank that you want them to convey 118 00:08:25,195 --> 00:08:30,064 your bank account, whatever's in it, to whoever upon your death. 119 00:08:30,505 --> 00:08:34,135 So Let me just briefly, I'm going to be talking faster, I'm going to 120 00:08:34,135 --> 00:08:35,344 get faster, I'm going to get short. 121 00:08:35,864 --> 00:08:37,224 Death without a will. 122 00:08:37,604 --> 00:08:39,154 What happens if you die without a will? 123 00:08:39,154 --> 00:08:39,974 It's called intestate. 124 00:08:40,804 --> 00:08:45,314 That's basically, the court determines who gets your property 125 00:08:45,494 --> 00:08:47,444 if you die without a will. 126 00:08:47,754 --> 00:08:54,394 Okay, and they have certain rules about who gets what based on who your heirs are. 127 00:08:54,684 --> 00:08:58,004 So if you die without a will, the court's going to control everything 128 00:08:58,004 --> 00:09:01,434 and they're going to determine who gets your property based on the will. 129 00:09:02,114 --> 00:09:07,884 I'm sorry, based on the rules of the state of California or whichever state. 130 00:09:08,304 --> 00:09:10,904 is in conducting the probate process. 131 00:09:11,464 --> 00:09:13,644 Basically, just very quickly, wills. 132 00:09:14,354 --> 00:09:17,714 Wills control, like I said, who gets your property. 133 00:09:17,774 --> 00:09:20,324 Wills are revocable. 134 00:09:20,504 --> 00:09:23,524 You can change it, you tear it up, rip it apart, write a new one, 135 00:09:23,884 --> 00:09:25,224 revoke it, you can get rid of it. 136 00:09:25,670 --> 00:09:29,529 As long as you're alive you can do that. 137 00:09:29,530 --> 00:09:36,309 Ok. 138 00:09:36,309 --> 00:09:38,929 Like I said earlier, wheels do go through probate. 139 00:09:39,749 --> 00:09:44,814 Creditors One of the things creditors must make their claims in the probate court. 140 00:09:44,814 --> 00:09:47,554 If they don't make their claim in the probate court, their 141 00:09:47,554 --> 00:09:49,104 claims are forever waived. 142 00:09:49,414 --> 00:09:50,764 That's creditors of the state. 143 00:09:51,214 --> 00:09:55,605 You can name a guardian in your will to be guardian for your children. 144 00:09:56,004 --> 00:09:59,704 You can provide, you can disinherit anybody you want to disinherit. 145 00:10:00,824 --> 00:10:03,954 However, they still may have to pay child support. 146 00:10:04,374 --> 00:10:07,244 That might be paid out of your out of your estate. 147 00:10:07,764 --> 00:10:12,554 Basically to To to create a will, well, to authenticate a will, you 148 00:10:12,554 --> 00:10:17,674 know, it has to be signed and dated in front of two witnesses and notarized. 149 00:10:17,914 --> 00:10:22,544 And everybody has to be in the same room at the same time when that happens. 150 00:10:22,914 --> 00:10:28,694 Let's talk about another alternative, and that's what we call a holographic will. 151 00:10:29,579 --> 00:10:33,189 A holographic will is legal in the state of California, and legal in 152 00:10:33,189 --> 00:10:35,439 many states throughout the nation. 153 00:10:35,709 --> 00:10:39,289 And basically what it is, it's a free handwritten will. 154 00:10:40,109 --> 00:10:45,679 Now the key is you have to entirely write the entire document out. 155 00:10:46,119 --> 00:10:50,449 You have to write down, this is my last will and testament. 156 00:10:51,449 --> 00:10:54,369 And this is, you basically say who you leave it to, and then 157 00:10:54,369 --> 00:10:55,639 you have to sign and date it. 158 00:10:56,119 --> 00:11:00,899 And if you do that, and if you don't include any typewritten, no typewritten 159 00:11:01,239 --> 00:11:06,869 stuff in there, then that is a valid will in the state of California. 160 00:11:06,879 --> 00:11:07,419 It's free. 161 00:11:07,629 --> 00:11:09,319 You didn't have to pay anybody anything. 162 00:11:09,559 --> 00:11:12,969 Signed, dated, handwritten, free will. 163 00:11:13,309 --> 00:11:17,879 Now so, that's one way to get around the entire process. 164 00:11:18,339 --> 00:11:23,029 Like I said, there's authentication of wills, because I'm running out of time, 165 00:11:23,029 --> 00:11:25,359 I'm going to go briefly into trust. 166 00:11:25,889 --> 00:11:28,619 There are several types of trust. 167 00:11:29,529 --> 00:11:31,249 Basically the parties to a trust. 168 00:11:31,829 --> 00:11:36,189 is the person who creates the trust, which is usually you, you create the 169 00:11:36,189 --> 00:11:40,909 trust, and you name yourself as the trustee, so you're still in charge of 170 00:11:40,909 --> 00:11:46,399 all of your assets and everything, and then you name a successor trustee, the 171 00:11:46,399 --> 00:11:51,099 person who's going to come after you, who's going to distribute your property 172 00:11:51,419 --> 00:11:54,349 to whomever you want it distributed to. 173 00:11:54,919 --> 00:11:56,929 Trust, avoid probate. 174 00:11:57,584 --> 00:12:02,424 They do not have to go through probate, whatever, whatever property you put into 175 00:12:02,424 --> 00:12:06,334 the trust, you can transfer automatically. 176 00:12:06,554 --> 00:12:09,914 So you don't have that year, year and a half delay. 177 00:12:10,224 --> 00:12:11,764 You don't have all the attorney's fees. 178 00:12:11,774 --> 00:12:14,484 Now here's the issue with, with the fees on trust. 179 00:12:15,629 --> 00:12:20,439 The trust costs more up front, because it costs more to create a trust. 180 00:12:21,259 --> 00:12:24,869 But, even though it costs more up front, there is no probate. 181 00:12:24,929 --> 00:12:27,389 So you don't have to go through the probate process. 182 00:12:27,649 --> 00:12:30,599 The probate process can be, oh, she's walking toward me. 183 00:12:37,619 --> 00:12:40,709 You don't have to go through the probate process, so you don't have 184 00:12:40,709 --> 00:12:44,769 to pay for those fees, the attorney fees, the court fees, the accountant 185 00:12:44,909 --> 00:12:48,759 fees, the appraiser fees, all of those different kinds of fees. 186 00:12:50,634 --> 00:12:53,774 Also, just like a will, a trust is revocable. 187 00:12:55,164 --> 00:13:00,104 You can revoke the trust, right, hereby revoke this trust and no longer want 188 00:13:00,104 --> 00:13:05,604 to do, and write a new trust, prepare a new trust, and so that, you know, 189 00:13:05,624 --> 00:13:07,274 those are the alternatives available. 190 00:13:08,214 --> 00:13:11,684 There are several different types of trust. 191 00:13:12,234 --> 00:13:18,274 The two main types of trust are revocable trust and an irrevocable trust. 192 00:13:18,584 --> 00:13:22,664 An irrevocable trust gives you more protection from your 193 00:13:22,724 --> 00:13:24,994 creditors and possibly tax. 194 00:13:25,584 --> 00:13:30,344 Protections, a revocable trust gives you more control because 195 00:13:30,344 --> 00:13:31,934 you still control the property. 196 00:13:32,574 --> 00:13:39,534 An irrevocable trust, you lose some control of the property, whereas 197 00:13:39,574 --> 00:13:45,854 with a revocable, revocable trust, you still retain complete control. 198 00:13:46,344 --> 00:13:47,724 of your property. 199 00:13:48,164 --> 00:13:50,754 There are several other types of trusts, but we'll get into 200 00:13:50,754 --> 00:13:52,394 those later in the breakout room. 201 00:13:53,274 --> 00:13:59,554 There's a spin thrift trust, Totten trust, pour over trust, testamentary trust. 202 00:13:59,974 --> 00:14:03,034 There are a zillion different kinds of trusts. 203 00:14:03,454 --> 00:14:06,424 The trusts are authenticated in the same way as the will. 204 00:14:06,904 --> 00:14:14,014 You, two witnesses, witnessing while you, when you sign the document. 205 00:14:14,564 --> 00:14:20,144 And everybody's signing off in front of a notary public just for, 206 00:14:20,574 --> 00:14:24,384 just for Informational period, I mean information you can get a 207 00:14:24,384 --> 00:14:25,884 notary public loan signing agent. 208 00:14:25,964 --> 00:14:30,664 You just contact used to be AAA, and I think it is still AAA. 209 00:14:30,804 --> 00:14:33,864 You call them, tell them you want a notary public loan signing agent to be present. 210 00:14:33,874 --> 00:14:38,924 You want some documents signed, and you can appear at AAA and sign the documents. 211 00:14:39,734 --> 00:14:47,174 And and have the whole thing notarized there in front of the your witnesses. 212 00:14:47,174 --> 00:14:51,774 I think I'm, I'm pretty much done with the basics. 213 00:14:53,429 --> 00:14:55,239 Just a couple of other things. 214 00:14:55,419 --> 00:14:59,299 You do have to transfer all your property to the trust. 215 00:14:59,349 --> 00:15:06,129 If you don't transfer the property to the trust, the property you did not transfer 216 00:15:06,369 --> 00:15:09,559 may still have to go through probate. 217 00:15:10,159 --> 00:15:13,399 Now, and so that you could have two things. 218 00:15:13,399 --> 00:15:18,149 You could have some trust property that flows automatically and certain 219 00:15:18,639 --> 00:15:21,319 property that you didn't transfer. 220 00:15:21,319 --> 00:15:25,679 A lot of times lawyers don't mention that you have to like prepare 221 00:15:25,679 --> 00:15:32,009 quickly in transferring the property from your cell to the trust. 222 00:15:32,909 --> 00:15:36,119 And so if it's not in there. 223 00:15:36,474 --> 00:15:38,244 Then it still has to go through probate. 224 00:15:38,274 --> 00:15:43,264 So there's still some formalities that have to be taken care of. 225 00:15:44,274 --> 00:15:49,054 And I'm sure I'm missing a few of the things that I wanted to talk about. 226 00:15:49,794 --> 00:15:53,579 But I think I'm Well exceeded my 10 minutes. 227 00:15:55,119 --> 00:15:56,299 Oh, she's pointing at the clock. 228 00:15:58,999 --> 00:16:00,939 Okay, well, thank you very much. 229 00:16:00,979 --> 00:16:03,409 We'll be open for further questions. 230 00:16:10,679 --> 00:16:11,389 Cool, thank you. 231 00:16:12,194 --> 00:16:15,584 Thank you for listening to this special episode of the healthy, 232 00:16:15,844 --> 00:16:17,904 wealthy, and wise podcast. 233 00:16:18,074 --> 00:16:21,384 Be sure to go to thwwp. 234 00:16:21,384 --> 00:16:24,324 com to download and subscribe to the podcast. 235 00:16:24,534 --> 00:16:27,184 This will help ensure you don't miss an episode. 236 00:16:27,604 --> 00:16:32,124 Then be sure to share this and many other episodes with your family, friends, 237 00:16:32,294 --> 00:16:36,314 and associates, providing you with the tools that you can use to be the 238 00:16:36,324 --> 00:16:38,244 change you want to see in the world. 239 00:16:38,524 --> 00:16:41,824 You've been listening to another great episode of the healthy, 240 00:16:42,154 --> 00:16:44,654 Wealthy and Wise Podcast with Dr. 241 00:16:44,884 --> 00:16:45,594 William T. 242 00:16:45,614 --> 00:16:46,534 Chalktoff, M. 243 00:16:46,534 --> 00:16:47,434 D., J. 244 00:16:47,434 --> 00:16:47,684 D.