Transcript - Jules Haas Episode 4

This transcript was exported on Aug 26, 2020 - view latest version here.

Speaker 1:

Welcome to Financial Poise Presents, a production of Financial Poise Webinars in which we take a deep dive into a specific topic by interviewing a single trusted advisor or expert on that topic.

Carrie Miller:

My name is Carrie Miller and I'm the managing editor of Financial Poise. With us today is Jules Martin Haas. Jules Haas is an experienced trust and estate attorney with vast experience in helping clients with their estate planning and helping their heirs and beneficiaries upon his client's passing. He's here to talk to us today about important considerations in the preparation of your wealth.

Jules M. Haas:

We've sort of come a long way today in thinking about various aspects in our assets and what laws might control our wealth and whether we even need a will. But now we're at the point where we say, "Okay, let's sit down, let's actually write this thing. Let's do this will." So what you need to think about, again, in the context of this whole process is, what is my will going to say, what do you want to do? So the first thing everybody thinks about is who are my beneficiaries? Who do I want to benefit by this will? And sometimes it's very easy. You could say, "Well, I'm going to leave everything to my wife. She's not around, so my kids. End the story." That's good for some people, other people it's not as easy. And they may have a whole list of people that they want to benefit in different ways.

Jules M. Haas:

And it's something that not everyone has an idea about right at the get-go. They sometimes have to think about that. And it could be relatives. It could be friends, it could be charities. If you can think about it, it could be a whole slew of places that you may want to write your will provisions concerning. So when you're thinking about your beneficiaries, it's easy to sort of think, well, there's my beneficiary. I'm going to do this. I'm going to give it to them. No problem. But you really need to sort of step back a little and think about the beneficiary. Who is this beneficiary and if I give them this asset, is this the right thing to do and how should I do it?

Jules M. Haas:

So let's look at this in the context of a couple of examples, let's say that one of your beneficiaries is a child or another person who may have some sort of government benefit that they're receiving. This could be Medicaid. It could be social security disability or something along those lines. If they receive a bequest from your estate, $10,000, 20,000, whatever it may be, this would interfere with their government benefits to the extent that it would disqualify them. And the last thing you're looking to do in planning your estate is to create a situation that makes the life of the beneficiary more unpleasant than if they didn't receive the bequest at all. So you want to think about what impact this may have on them.

Jules M. Haas:

So if you're going to give money, let's say to a person who's receiving government benefits, you may want to think about creating what we call a supplemental needs trust in your will. In a supplemental needs trust, an SNT for short, means that you can put money in a trust. It's held by a trustee who has full discretion, and then it can ultimately be paid to this person or for the benefit of this person without interfering with their government benefits. So that's a very important thing to think about that.

Jules M. Haas:

So let's think about some other examples on a very basic level. Let's say you wanted to write a will and leave something to parents. Well, again, parents, it's an older generation, by leaving something to them it may interfere, impact their estate plan. Also the parent may very well have some health problems or it may be concerned about that in the future. And again, you don't want to put money into their estate that might impact their ability to receive government benefits or some other types of subsidies by filling up their estate with dollars of financial assets that might adversely affect their situation. Also, there may be beneficiaries that have other life issues. They may be going through with divorce. They may have financial problems. They may have lawsuits against them.

Jules M. Haas:

So you want to think about what's going on because you don't want to put money into the name of a person when you know that person, from their own perspective, may say the last thing in the world they want to receive are dollars. So you can have this conversation with them, but you should take a look at the beneficiary's situation when you're doing this. Another issue, and you'll see we're talking here, we have a slide number four up, which I'm referring to. We have alternate beneficiaries. So when you do your beneficiary designations, do you want to think about, well, I'm leaving the money to X person, but what happens if that person's not alive?

Jules M. Haas:

We want an alternate beneficiary, because if you don't do that, you're not going to be able to control necessarily where that asset goes, or it's going to be controlled by provisions, if you will, don't necessarily put it in a place you want it to be. So in a simple case, you'd say, leave $10,000 to my friend, Joan and if Joan isn't alive, then I'm going to leave it to Joan's son, so and so. So this way you're able to benefit Joan in a way that she would have done if she was alive, because you cared a lot about her. And you're send it down to her family. Again, it's a matter of you being able to control what's going on in your will. So sometimes it's easy to think about this within that context. I will say that many times when I sit down with clients and we talk about their estate plan, I'll say, "Fine, who's your alternate beneficiary?" And they'll say, "Wow, I didn't really think about that. That's something that's a little harder for me to decide where it's going to go." So again, another consideration.

Jules M. Haas:

So you'll see, we have an item listed on here called reciprocal wills and I've just sort of made that term up. But what that means is this, if you have two people that are making a will together, and they basically are sort of mirroring themselves in their dispositions, we'll take an example of a husband and wife. We say, the husband and wife, they both leave their estates to each other. What's the ultimate beneficiary in their estates? Well, when one of those individual dies, the entire assets of both of them end up in the estate of the last to die. And when that person dies, if they have a will that says, I leave everything to that person's family, then in effect, the first spouse to die, his family would have been cut out of their combined estates. So again, it's a consideration.

Jules M. Haas:

A lot of times what will happen is we'll say, leave everything to my husband. I'll leave everything to my wife, if nobody's there then it goes to a group of people that could be made up of, let's say a combination of family members from both sides. So both sides of the family can be benefited equally at the end of the day. Now you don't have to do that, it's just a consideration. And it's just important for people to understand that when they're doing their wills and doing their plan, what the outcome is of what they're saying. So again, it says, they say food for thought, and then people can ultimately decide what they want to do when they're doing their plan.

Jules M. Haas:

The next category that we have is what type of bequests, and it could be a specific bequest, such as I leave $10,000 to so and so. I leave my house to so and so. I leave my diamond ring to so and so. And again, you can make all of these specific bequests in the will and benefit people with particular items. You can also do bequests in a more general way, which is very often done in what we call a residuary clause the ending part, where you say, leave everything, the rest to so-and-so, and you have a number of people. You can do with your percentages and say, leave 10% to this person, 20% to this person, et cetera. And that's sort of a good way to do it because when you're doing your will today, you're not really sure what your assets may be down the road. So they may change. They may go up, they may go down, but by using percentages, you're benefiting people in the same proportion to each of them that you wanted to when you originally wrote the will. So it's a good way to sort of organize things. And it's sort of simple and easy to understand.

Jules M. Haas:

You see that we have an item called trusts and under that there are trusts you can create for minors, supplemental needs trust, which we spoke a bit about. And particularly with the younger individuals, parents that have young children, if someone's under 18, they don't have the ability to own property in their own right, so you can't really give anything to them. A guardian would have to hold that property for them. So you can create a trust in your will and say I give X to Y trustees in trust for my children to hold until they reach age 21 and at that point they get half of the property. And then when they hit 24, they get the rest of the property. You can make up any numbers that you like, and you can put basic provisions in for the money to be held for them to use for that benefit. And the trustee has discretion to pay money for them.

Jules M. Haas:

So again, it's very common, it's very sort of straightforward. And again, you can use trust for different purposes. It can be in estate planning, financial estate planning and a whole sort of other reasons to have a trust. And again, these are sort of basic items. If you have particular issues that you need to consider again, you would do so at the time when you're thinking about creating your will. Also, in your will, as we mentioned earlier, you have the right and the ability to select who your fiduciaries are going to be, who your fiduciaries are, your executors, your alternative executors, your trustees, and you can actually name these people in the will.

Jules M. Haas:

And these are the people that most of the time, the court will appoint because that's who you desire. So you can pick whoever it is. I nominate them as executor. I nominate so and so as the alternate executor. I nominate so and so as the trustee of my trust created from my child. I nominate so and so to be the guardian of my child. Now, again, guardianship, the court always has to make that determination about, but ultimately, you put these intentions that you have in your will, and you can select people that you feel would be the most appropriate, that you trust and that you feel would carry out your intentions with respect to whether they're a guardian, trustee, executor, whatever.

Jules M. Haas:

One thing that is important, and people do ask me about this is, "Well, should I ask my executor if they want to serve as executor?" You know, if you're not really sure, obviously, you know your spouse or whatever, but if you're not sure, and let's say, I'm going to nominate my best friend as the executor. It's not a bad idea to ask them because when the time comes and the friend finds out that the executor, the friend may say, "Listen, I'm not. The last thing in the world is, I want to be an executor of an estate and deal with all of this person's relatives. I got other things to do. No way. You know, I remember my Uncle Bob's estate was a massive family. He had a big fight. I'm not going to be involved in this." So you may want to talk to them about it and ask them. Again, that's up to you, up to the individual person, but it's always a good idea if they're going to be trustees or guardians or whatever, to run that past them.

Jules M. Haas:

You see this as an item here, disqualified fiduciaries. When you're naming people, like anything else that you do, you need to have a little forethought about who it is you're naming. So will this person under the law be able to qualify as the executor or trustee because under the law, for instance, if you have a felony conviction, you can't serve as a fiduciary. Well, you can, if you get a certain certificate from the state, but in most cases, that's going to disqualify you. If you're a nonresident of the state and an alien, in other words, you're not a US citizen, and you're not an illegal New York resident.

Jules M. Haas:

You can't serve as a fiduciary unless someone who is qualified serves with you. So if you say, well, I'm going to just name my brother, John, he lives over in England, he's a UK citizen. He's not going to qualify. So you need to understand that because you don't want to name that person unless you're naming someone with them. Or you want to pick someone who can qualify to act as a fiduciary here in New York, at least.

Jules M. Haas:

And lastly, again, when you pick your fiduciary, you should see that they have good credit history case state may need to be bonded or meet other requirements with the court. So there's a lot of stuff here. I know most people think about their estate plan, giving everything here and there, but really there's a lot to work to think about.

Carrie Miller:

So you've made a perfect case why people need a will. You've given us a lot of important considerations in preparing a will. And so this might seem like a silly question, but after I sign the will, then what do I do with it?

Jules M. Haas:

Well, that's a good question. A lot of people ask me that. And in fact, we do have a discussion about that. So most of the time people will keep their will themself. I advise them to keep it in a safe place, of course. A lot of people have these little safes at home, which is a good place or a secure filing cabinet. But you can keep it in a safe deposit box, although it may be difficult to get to the safe deposit box initially, after someone dies. You may need a court order, but it would be safe. Sometimes it's kept with the attorney, not always, but it's important to keep it safe because if a will is not found when a person dies and it was known to be in their possession, the court may presume, or the law will presume that it was revoked.

Jules M. Haas:

So you want to keep it a safe place. You can tell people where it is. You can give it to someone else to hold for you. But again, you want to make sure that it doesn't fall into hands of people that might want to see the will disappear, because they're not happy about what might be in it. So, that would be my advice as far as keeping it in the most secure place you feel would be good. And we have some other people, maybe the named executor, knows where it is to go look for it.

Carrie Miller:

Just one final question since we talked about that, people wanting your will to disappear. Who has the right to contest a will?

Jules M. Haas:

Typically, a person who is interested in your estate. And primarily the people that will be interested in your estate will be your next of kin, your next of kin, your distributees. Because if there is no will, your estate will go into intestacy and your next of kin will be the people that will take it. So they have the primary interest in seeing that a will that they may feel is not a proper or valid is not allowed to be probated, is rejected by the court, is denied probate because then the estate will come to them. You also have people that may be benefited in a prior will, that might have an interest as well. So those are the people that get notice of the probate proceeding. When you file a probate proceeding, the court requires that those next of kin, those distributees be given notice of the proceeding because they have a right to come into court and they have a right to challenge the will if they think there's some basis for it to be declared invalid.

Speaker 1:

For attending this edition of Financial Poise Presents. Financial Poise has one mission, to provide reliable plain English business, financial, and legal education to individual investors and private business owners.

Jules Haas Episode 4 Revised (Completed 07/29/20)
Transcript by Rev.com