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Is your estate plan a “cure” or a “woe” for your family? In this episode, Dr. Friday is joined by board-certified estate planning attorney Russ Cook of the Cook Telman Law Group. With over 30 years of experience, Russ dives into the critical steps every family should take to protect their assets from creditors, minimize taxes, and avoid the public headaches of probate. From the dangers of putting children on bank accounts to the massive tax benefits of Tennessee Community Property Trusts, this episode is a masterclass in financial peace of mind.
Summary
- Essential Documents: Every adult should have a Durable Power of Attorney (financial), a Healthcare Power of Attorney, and a Living Will to ensure decisions are made if they become incapacitated.
- The Joint Account Trap: Russ advises against adding children’s names to bank accounts. Doing so exposes your money to your child’s creditors, lawsuits, or divorce settlements. Use a Power of Attorney instead.
- Will vs. Trust: A Will must go through probate—a public, court-supervised process. A Revocable Trust remains private, avoids probate, and allows for a seamless transition of assets.
- Special Needs Planning: Learn the difference between Third-Party Supplemental Needs Trusts (which protect government benefits for heirs) and First-Party “Payback” Trusts.
- Tax-Saving Trusts: Discover how a Tennessee Community Property Trust provides a full “step-up in basis” on assets after the first spouse passes, potentially saving survivors thousands in capital gains taxes.
- When to Update: Review your estate plan every 2 to 7 years, or immediately following life changes like marriage, divorce, or the acquisition of new real estate.
- Business Protection: Business owners should ensure their LLC or corporate interests are correctly titled in their trust to avoid legal gridlock or forced liquidations upon death.
Episode FAQ
Q: Why shouldn’t I just put my child’s name on my bank account to help me pay bills?A: If that child gets sued, files for bankruptcy, or goes through a divorce, your bank account becomes an asset their creditors can seize. Filing a Power of Attorney with your bank grants them the ability to help you without the legal risk to your funds.
Q: Does a Revocable Trust change how I use my money day-to-day?A: No. A revocable trust is not a separate tax entity during your lifetime; you remain the trustee and beneficiary. You can buy, sell, or refinance assets just as you did before.
Q: Can I put my IRA or 401(k) into my trust?A: You shouldn’t transfer ownership of a retirement account to a trust while living, as the IRS will view it as a total distribution and tax it immediately. Instead, you should name the trust as the beneficiary of the account.
Q: How does a “Spendthrift Trust” work?A: This is designed for heirs who may struggle with addictions or poor financial choices. The money is managed by a trustee who doles out funds for the heir’s needs rather than giving them a lump sum that could be lost quickly.
Transcript
No, no, no.
She’s not a medical doctor, but she can sure cure your tax problems or your
financial woes.
financial woes.
She’s the how-to girl.
It’s the Doctor Friday show.
If you have a question for Dr. Friday, call her now.
737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor, and tax consultant, Dr.
Friday.
Alrighty, the doctor is in the house.
We are here.
We’re going to talk today a little bit about maybe some of the things you
don’t know you should be doing for estate planning, or especially since we
have an at
don’t know you should be doing for estate planning, or especially since we
have an at
attorney on the line, we’re gonna try to get some good information about what
you should and shouldn’t do when you’re thinking about planning or even just
you should and shouldn’t do when you’re thinking about planning or even just
giving things to your children, maybe putting your name on bank accounts.
We have Russ Cook on the phone.
Hey Russ, you there?
Yeah, I am.
Thanks for inviting me.
No problem.
Been a while since I’ve seen you, even though I seem to send things back and
forth.
forth.
So he’s with Cook Telman Law Group.
Um, and uh Russ and I have known each other for a lot of years.
We’ll just leave it at that.
And um and it’s uh it’s it’s always great when I get to to get him on the
phone because I think a lot of times
phone because I think a lot of times
First, Russ, why don’t you tell them a little bit about what you do, how long
you’ve been doing it, all the good stuff so they know who you are.
you’ve been doing it, all the good stuff so they know who you are.
Oh, that’s great.
Yes.
Um I’m a board certified estate planning attorney.
I’ve been doing this for over thirty years.
My father and grandfather were also estate planning attorneys.
Uh, went to law school in D C, got sick of the traffic and then moved to
Nashville.
Nashville.
Yeah.
Well I don’t blame you on that one.
one.
I can only I’ve only visited DC and I can imagine living there or anything
else.
else.
That’s just a little too busy.
The whole East Coast is a little too busy for me.
Um, all right, so one of the biggest questions a lot of times people think is
um is a lot of my clients as their parents get older
um is a lot of my clients as their parents get older
They want to be able to make sure they can help or manage or even um
situations where elderly people are sometimes targeted for fraud, different
things like that.
situations where elderly people are sometimes targeted for fraud, different
things like that.
What can be some steps that you should take maybe to help?
you know, to protect if you can.
I mean like should you put your name on the bank account?
Should you um what documents should be being gotten together so that you can
do something to help or protect your um family or yourself as you get older?
do something to help or protect your um family or yourself as you get older?
That’s a lot of people.
Yeah, it is it is a great question.
Uh uh I get it a lot and the documents that I suggest clients
have in place are durable power of attorney.
It’s a power of attorney in which you are appointing a family member to make
financial decisions for you in the event you cannot
financial decisions for you in the event you cannot
A power of attorney for health care and a living will.
The reason the power of attorney for financial matters is so important is that
it allows the person that you’ve named
it allows the person that you’ve named
to make uh decisions concerning your assets in the event that you become
incapacitated or need help just kind of managing things day to day
incapacitated or need help just kind of managing things day to day
And you mentioned putting names on bank accounts.
We usually tell clients not to do that.
In fact, we always tell clients not to do that because
we found that when the child runs into creditor problems then the creditors
can go after those bank accounts.
can go after those bank accounts.
So if you have your daughter on the bank account and she gets divorced, then
your son in law might end up with it.
your son in law might end up with it.
So
we try to keep the bank account with just the client as the owner and you can
file the power of attorney with the bank and they’ll honor it and allow your
child to still continue
file the power of attorney with the bank and they’ll honor it and allow your
child to still continue
to control the account or sign for you I guess in a way but you don’t have
that risk of it being attached.
that risk of it being attached.
So I guess that was a question.
Um so on the durable POL of attorney, let’s say they come in, they get all
those documents set up with you guys.
those documents set up with you guys.
Is that something you should go ahead and go to the bank and put down?
I mean, now while everybody maybe doesn’t need it?
Or is it something you only really need to think about unless somebody is
Um because you know, I mean if they’re already incapacitated then it’s a
little harder maybe.
little harder maybe.
Or maybe it’s not because the power of attorney.
Well, we usually recommend that you do go to the bank right after you sign one
and
and
and put it uh give it to the bank officer and let them have it on file.
And the reason that I say that is because and
Some banks are very good at accepting those and whenever you’re dealing with
brokerage firms, however, they might have their own version of that.
brokerage firms, however, they might have their own version of that.
that they would want you to sign in addition.
So obviously if you wait until you’re incapacitated, you won’t be able to sign
the one that they present you
the one that they present you
‘Cause you won’t you’ll be incapacitated.
So I think getting it done now is the best bet because you don’t run into that
risk.
risk.
Yeah, and and that’s good news.
‘Ca
I mean, because that’s what I was trying to figure out.
Had a client come in and maybe it was uh a brokerage account.
It was like a Schwab account, which would be, I guess, a brokerage account.
And that was one of the things they said is that even though they had it
They had just put it in the file, right?
Waiting, figuring they would use it when they needed.
And they had a difficult time trying to get that switched over.
when the time came or, you know, when because she hadn’t passed away, but she
had become um she she wasn’t herself or whatever it’s called where you
basically start losing your memories and things.
had become um she she wasn’t herself or whatever it’s called where you
basically start losing your memories and things.
So um
She, you know, they they had uh they had to go through and they had to get her
what is it, incapacitated?
what is it, incapacitated?
There’s a term anyways, and I’m so good at these legal terms, Russ.
Um But they go to court and get something.
There you go.
They had to do that, which
Seems like that if they had been done the way you wanted it or the way it
should have been done, it seems like they would have been able to get it with
the pile of attorney that they had.
should have been done, it seems like they would have been able to get it with
the pile of attorney that they had.
already signed or whatever, but apparently that’s not the case.
Um so yeah, so the the thing is, and now let’s talk a little bit about the
difference between a will and a trust
difference between a will and a trust
I mean, I’ve known you long enough to know or you and Hank Perry and a couple
others.
others.
I have fallen in love with the idea of a trust.
And we’re all talking about a couple different types of trusts, but
Um, what’s the difference between a traditional will and kind of a traditional
trust, if that makes sense?
trust, if that makes sense?
Yes, the traditional will is a document that doesn’t come into effect until
you pass away.
you pass away.
And when you pass away, the person that you name as the executor is the person
in charge of carrying out the terms of your will.
in charge of carrying out the terms of your will.
And in order for them to have the power to do that
they have to be appointed through the courts and that process of getting
appointed through the courts is called the probate process.
appointed through the courts is called the probate process.
Uh it’s a process that could take a few months.
It does require disclosure of certain assets.
It allows for certain creditors to file claims.
And so when we’re doing estate planning, we probably do what we can to avoid
that process.
that process.
And so we do estate planning using what are called revocable trusts
A revocable trust is an agreement that you would set up now.
A trust you set up now, you make yourself the beneficiary and the trustee
You can amend or revoke it at any time.
It’s not a separate legal entity.
It does not have a separate tax ID number.
And then you fund the trust with your assets.
And so in the event of your passing
the person that you’ve named as the successor trustee can step in and manage
those assets without having to go through that court proceeding
those assets without having to go through that court proceeding
And also to dovetail on the prior uh subject, in the event that you become
incapacitated or need help
incapacitated or need help
when you’re dealing with banks and financial firms, if your account is already
in a trust then it’s much easier for the successor trustee to take over with
either a death certificate or a resignation.
in a trust then it’s much easier for the successor trustee to take over with
either a death certificate or a resignation.
from you or whatever they need and that way they don’t have to worry about the
power of attorney, you know, effective or not effective.
power of attorney, you know, effective or not effective.
Uh that, you know, that brings up, okay, so a lot of people are concerned when
they say, well, you’re gonna put everything in somebody, you know, in the
trust name.
they say, well, you’re gonna put everything in somebody, you know, in the
trust name.
Um, but that really, I mean, for the revocable trust, that doesn’t change
anything because I know I have one and I have taken things in and out of it
all the time when I’m either refinancing or selling something
anything because I know I have one and I have taken things in and out of it
all the time when I’m either refinancing or selling something
but it doesn’t really affect your day-to-day operation.
But you do want to have everything in the truss so that way when you pass away
it does easily transition.
it does easily transition.
But what if I don’t have it in the truss?
What happens?
Do that to go the probate?
Ye yeah, it depends.
Sometimes there are clients that because of the nature of the asset we don’t
title it in the trust, like a retirement account.
title it in the trust, like a retirement account.
Because as you know, if you change the owner of a retirement account, the
government’s gonna want all their income tax money up front
government’s gonna want all their income tax money up front
So we instead name a beneficiary of the retirement account and typically it’s
the trust.
the trust.
So in the event that there’s an asset that’s not in the trust
then if it names the trust as a beneficiary, you’re still okay.
It’s gonna pass directly to the trust as a result of your death and there’s no
probate.
probate.
However, if the asset you own is in your name alone
and it does not have a beneficiary or joint owner, regardless of whether you
have a trust or not, it’s gonna end up going through probate
have a trust or not, it’s gonna end up going through probate
‘Cause that’s the only way that you can get it in the trust is by passing it
through the estate and then into the trust through the the will.
through the estate and then into the trust through the the will.
So so when you’re buying and selling and doing things you do, how often should
someone update their I mean obviously when something happens because basically
what you’re saying is hey if I haven’t brought another piece of property, I
should probably have that
someone update their I mean obviously when something happens because basically
what you’re saying is hey if I haven’t brought another piece of property, I
should probably have that
put over or at least make it named as the trust.
But how often should we be looking at these documents or updating them?
Well, we send our clients a letter every two years reminding them to look back
on their uh state documents and make sure that they are up to date.
on their uh state documents and make sure that they are up to date.
especially when it comes to revocable trusts and the and the revocable trusts
being funded.
being funded.
And if there’s some question as to that, they can always call or email and we
can help guide them through it.
can help guide them through it.
Uh but that would be my thought.
Now obviously if you’re getting into the six and seven year period, then
you’re you really want to get it updated, um, because we’ve seen there’s been
a lot of family changes.
you’re you really want to get it updated, um, because we’ve seen there’s been
a lot of family changes.
that occurred since then, asset values have uh changed and situations have
changed.
changed.
So I would not wait any longer than six to seven years for sure
Hopefully that wasn’t a hint to me, because it’s probably been a while.
Have you gotten married or anything that we don’t know about?
No, thank goodness I haven’t made those kind of life changes, but I now own
about twelve properties and so it it may be that it’s time for us to update.
about twelve properties and so it it may be that it’s time for us to update.
It’s time for us to get together.
Exactly.
I knew that was going to come up in this conversation because it’s like, oh
man, I should have seen before I put them on the radio.
man, I should have seen before I put them on the radio.
Um, all right, we’re gonna get ready.
to take our first break here.
Again, I am speaking with Russ Cook with Cook Telman Law Group.
Um the phone number there, if you would like to call and get um a
consultation.
consultation.
I’ve been working with Russ for 30 years and to be honest with you.
He’s uh not only a great guy, but he does know um a state law better than
anyone I know.
anyone I know.
Even when I have questions, I’m always and he’s great to answer my crazy
questions sometimes and come on my radio show.
questions sometimes and come on my radio show.
But you can call the office at
615-370-2444.
615-370-2444 is their direct number.
right there in the Brentwood area.
Um and they can uh set up an appointment and then talk about, you know, what’s
going to be best for you because today we’re going to talk generically about
estates, wills
going to be best for you because today we’re going to talk generically about
estates, wills
We’re going to get into different types of trusts that are out there, maybe a
disability trust, which uh will work with some people and we’ll have Russ
disability trust, which uh will work with some people and we’ll have Russ
Talk a little bit about all those different options and what you might want to
have.
have.
So keep pen and paper so that way you can make a little list of all the things
you want to do and pick Russ’s brain when you meet him
you want to do and pick Russ’s brain when you meet him
And uh we’ll take a quick break when we get back with the Dr.
Friday show.
Okay, we are back here
In the studio with Russ Cook with Cook Telman Law Law Group.
Sorry, I keep wanting to think if it’s association for some reason, but that’s
all right.
all right.
Cook Telman Law Group.
And um
Let’s go in a little bit into the different types of trust and not too far
because I know there’s a lot of trust I’m not even going in.
because I know there’s a lot of trust I’m not even going in.
But what’s the difference between the revocable we were just talking about and
an irrevocable, Russ?
an irrevocable, Russ?
The revocable trust is one in which you’re setting up where you want to be
able to change it.
able to change it.
It’s not designed to move assets out of your s your your estate for any
reason.
reason.
And so most folks that are doing estate planning use a revocable trust because
like a will, they want to be able to change it as time and life goes on.
like a will, they want to be able to change it as time and life goes on.
Right.
Uh irrevocable trust is one in which let’s say you create it during your life,
but you do not have the ability to revoke it
but you do not have the ability to revoke it
it’s typically put together for a specific reason.
Like you’re trying to move assets out of your estate for estate tax purposes
or
or
You’re trying to set something up for someone else in a way that makes them
not be able to control it or do anything about it.
not be able to control it or do anything about it.
And so normally we’ll pick uh that trust to use for very specific situations.
And then when you die and you’re no longer able to revoke the trust because
you’re dead, your your revocable trust does become an irrevocable trust
you’re dead, your your revocable trust does become an irrevocable trust
But you do want that because you don’t want someone else stepping in and
changing all the things that you did.
changing all the things that you did.
So obviously you want the ability to do that while you’re living and when you
pass then it becomes irrevolution.
pass then it becomes irrevolution.
Okay, so that’s the simple ones.
But now a lot of times you’ll hear about like a charitable remainder trust.
What would that be used for?
That would be used for people that are looking to sell an asset but they don’t
want to pay all the capital gains tax on it at once.
want to pay all the capital gains tax on it at once.
And so before they get into any negotiations on the sale, they create what’s
called a charitable remainder trust
called a charitable remainder trust
which basically pays them over their life expectancy and you can either use a
a single person or husband and wife, it’s joint life expectancy.
a single person or husband and wife, it’s joint life expectancy.
a percentage of the assets that are valued each year in the trust and I’m just
using five percent as a
using five percent as a
a number.
So husband gets paid five percent for his life, he passes, wife gets paid five
percent for her life, she passes
percent for her life, she passes
and then at the second death the assets go to a charity or a donor advised
fund that they’ve picked during their life and they can update that as they go
by in the trust.
fund that they’ve picked during their life and they can update that as they go
by in the trust.
And the benefit of that is when you
You when the trust sells an asset, so let’s say you put a piece of real
property into it, if the trust sells the asset, it’s a tax exempt entity, so
it does not pay income tax on the monies it
property into it, if the trust sells the asset, it’s a tax exempt entity, so
it does not pay income tax on the monies it
receives from the sale of the asset.
Now every time you get a payment from the trust you’ll pay tax on that.
But you can see that you’re spreading that tax liability out over your
lifetime and creating a stream of income.
lifetime and creating a stream of income.
that you can depend on until you pass away.
Yeah, I I actually really love those, especially when you have things with a
lot of capital gains in them.
lot of capital gains in them.
Yeah.
Um it’s
It’s a wonderful.
All right, so um we have one in our family, but um let’s talk a little bit
about I call it a disability trust.
about I call it a disability trust.
I don’t know if that’s the proper term or not, but uh setting up for someone
that maybe um is on the spectrum or something like that.
that maybe um is on the spectrum or something like that.
Uh-huh.
Um those are irrevocable trusts and there are two different people that can
set it up if the let’s say I’m gonna use a parent child relationship.
set it up if the let’s say I’m gonna use a parent child relationship.
If the parent sets the trust up either during life or at death, and the parent
funds the trust with the parent’s assets
funds the trust with the parent’s assets
It’s called a third party supplemental needs trust.
And in the trust there’s a trustee selected who’s able to make
Distributions, but only after ru the trustee determines that the person has
received all their government benefits.
received all their government benefits.
So it basically is a way of setting aside funds for a disabled beneficiary
that are available but they’re not counted when you
that are available but they’re not counted when you
count the benefits that are available to someone with that disability.
So it’s a very useful tool and and actually it’s a
It’s a slam don’t you have to do it basically if you are if you have any kids,
parents that have kids that are special needs or things like that.
parents that have kids that are special needs or things like that.
Um, the other trust is called a first party supplemental needs trust.
It’s when there’s a uh oh or an oops where the person
that is disabled actually receives assets directly.
It could be through a lawsuit, it could be through a an aunt or uncle that
didn’t realize that they shouldn’t
didn’t realize that they shouldn’t
And what it does, it allows for the person who’s disabled to take the funds.
Well actually their parent takes the funds and puts them into this trust
and they’re not counted for uh government benefit purposes.
The only difference is that when the disabled person dies
then the um trustee has to pay back to the government whatever benefits that
they’ve paid during the life of the beneficiary.
they’ve paid during the life of the beneficiary.
So that is a payback trust, um, just delaying the issue.
So the first party one is a payback trust, but if you do it in advance, the
third party one would not be.
third party one would not be.
Would not be, yes.
Gotcha.
I didn’t know that.
All right, so that’s why I always love having Russia.
on the phone because I can just pick this brain for a while.
Have a un one hour of unreliable.
Okay.
Um so there’s also something called a spendthrift trust
Yeah, that’s and if these don’t apply, just let me know.
No, no.
who’s not capable of handling money for whatever reason.
Um, it could be an addiction, it could be just bad financial
decisions.
It could be always picking the wrong spouse like me.
It could be all sorts of s not no offense to my current wife.
I’ve just been married a few times.
We love her
Um, but in the event that there’s a s situation where the client feels the
parent feels that the child cannot handle the money, then instead of giving
the
parent feels that the child cannot handle the money, then instead of giving
the
inheritance to them outright, they would allow for it to go in trust, and that
trust would have a trustee who then makes sure those
trust would have a trustee who then makes sure those
Funds are managed properly and they’re doled out to the child in ways that
allow the child to live comfortably.
allow the child to live comfortably.
But not to like give the a huge chunk to the child and they can go to Las
Vegas and put it on red and Lou Rulette wheel, that sort of thing.
Vegas and put it on red and Lou Rulette wheel, that sort of thing.
I have seen that, unfortunately.
Okay, so all these you keep talking about, a trustee, um, executor, I think
mostly trustee.
mostly trustee.
How how do you I mean how do you check and see if you have current trustees
How important?
How many do you put in there?
Do you have multiple trustees?
How does that kind of work?
And I’m sure it’s not black and white, but what’s the basic rule of thumb?
Well, when I talk to a client about who should be trustee, I describe what
they’ll be doing.
they’ll be doing.
So in the case of a parent setting up a trust for a child
who’s a spendthrift child, then the trustee will have to be able to say no to
the child in order to make sure that the funds are taken care of.
the child in order to make sure that the funds are taken care of.
Now that may mean that the child’s
sibling is not the best choice or some other close family member.
It might be that they want someone or an entity that’s a little bit distance
or separate from the families so there’s no emotional issues there.
or separate from the families so there’s no emotional issues there.
if the trustee that we’re picking for a uh a third party special needs trust,
that has to be someone can be family member, but it has to be someone who’s a
little bit knowledgeable on how government benefits work.
that has to be someone can be family member, but it has to be someone who’s a
little bit knowledgeable on how government benefits work.
And so we tell clients there might be some education that goes into this
because again, you’re picking somebody to be in charge of money for somebody
else.
because again, you’re picking somebody to be in charge of money for somebody
else.
So you just gotta be conscious of what sort of dynamics might be involved
there and if the person that’s doing it can take care of it for them
there and if the person that’s doing it can take care of it for them
But that’s great.
Because and then I’m assuming like in our family the case is the child that’s
in the special needs has just turned sixteen.
in the special needs has just turned sixteen.
So having someone myself who’s just about ready to turn six zero um is going
to be it’s not you know, I’m just saying age comes into play, right?
to be it’s not you know, I’m just saying age comes into play, right?
So you do you need to have
multiple people, I’m assuming so if one is unable or or deceased, that you
have someone else that can pick it up.
have someone else that can pick it up.
Yeah, that’s true.
And we try to get, you know, initial trustee of maybe at least two alternates
just in case something like that happens
just in case something like that happens
And then we put in a mechanism that allows for us to select successor trustees
if we run out of existing trustees.
if we run out of existing trustees.
And if it’s successor trustees, you know, i are we just dealing with banks or
trust companies or can we pick individuals?
trust companies or can we pick individuals?
But we make sure that we’re not in a situation where we run out of trustees
and we don’t have any any way of getting a new one in there.
and we don’t have any any way of getting a new one in there.
And so for the typical revocable trust, again, it it do you have you have a
trustee that will assume once I pass away there’s going to is that a trustee
that takes over at that point
trustee that will assume once I pass away there’s going to is that a trustee
that takes over at that point
Yeah, so in the case of an individual who has a revocable trust, obviously
they’re trustee of their own trust till they pass away, and then you have
someone step in as a successor trustee.
they’re trustee of their own trust till they pass away, and then you have
someone step in as a successor trustee.
And the process of administering a trust is uh somewhat similar to what people
would describe as what an executor goes through with a will, only you’re not
going through probate.
would describe as what an executor goes through with a will, only you’re not
going through probate.
You have to gather the assets, pay the final debts and expenses, and then
distribute the assets according to the trust.
distribute the assets according to the trust.
And the trustee again has to be able to kind of navigate all of those
situations.
situations.
When I tell clients about who you should pick as a successor trustee on your
revocable trust to go through that process
revocable trust to go through that process
just know that it might be almost a part time job for them in the very
beginning, depending on how much they want to take on.
beginning, depending on how much they want to take on.
‘Cause in our office we have an attorney that does that for anyone that wants
to just hire us to do it.
to just hire us to do it.
And so it might not be that big a deal, but a lot of folks want to do it
themselves, they want to learn all about it, so you know, we kinda walk ’em
through it.
themselves, they want to learn all about it, so you know, we kinda walk ’em
through it.
It’s a lot of work.
All right, we’re going to take our second break and we may talk a little bit
about what your expectations of that person would be.
about what your expectations of that person would be.
When we get back here in just a moment with the Dr.
Friday show
We are back here live in studio with Russ Cook with Cook Telman Law Group.
And their direct number if you’d like to set up an appointment to talk to them
about, you know, estate planning, because there’s a lot more to it than we can
do on a little radio show.
about, you know, estate planning, because there’s a lot more to it than we can
do on a little radio show.
But 615-370-2444 would be the direct number to set up a time because if you
are trying to figure out what happens
are trying to figure out what happens
when you’re not here, if you’re the one that’s providing and there’s a lot of
different moving parts.
different moving parts.
Russ, is there anything that should I mean, I heard you say obviously, um,
like an IRA or 401k would not put directly into um
like an IRA or 401k would not put directly into um
a trust because you’d have to show it’s sold to change the name at least on
but you could do paid on death situations.
but you could do paid on death situations.
How about land, primary homes, step up in basis for all those?
Does that apply if they move it into a trust?
Yes, the the best asset to put in the trust would be your home and any
investment accounts that you have or stock, bond, mutual funds that are
carrying capital gains.
investment accounts that you have or stock, bond, mutual funds that are
carrying capital gains.
Um, especially if you’re a husband and wife, because a husband and wife in
Tennessee can create what’s called a
Tennessee can create what’s called a
Tennessee Community Property Trust, which is a fancy name for a joint
revocable trust.
revocable trust.
So instead of there one trust for husband and one trust for wife, we just make
one trust for both.
one trust for both.
The two of them are trustees, the two of them are beneficiaries.
Again, they commend to revoke it at any time.
And the benefit of this trust is if you have real estate
or capital other capital gain assets in the trust, then when the first spouse
dies, the trust assets receive a full cost basis step up.
dies, the trust assets receive a full cost basis step up.
And so you can see especially in some of the surrounding counties here where
value of real estate has gone up significantly, that could be a big bonus to
the surviving spouse if they have to sell and downsize.
value of real estate has gone up significantly, that could be a big bonus to
the surviving spouse if they have to sell and downsize.
‘Cause they won’t be looking at hardly any capital gains tax.
Yeah, that’s I mean that’s one of the things I do love about if people just
sit down and do
sit down and do
a little planning.
I mean, because I have a woman that’s her husband passed away three years ago,
brought a home back 40 years ago in Williamson County, you know, um, but it
was just jointly held.
brought a home back 40 years ago in Williamson County, you know, um, but it
was just jointly held.
There was nothing there.
And so, you know
There’s gonna be a lot of taxes uh that she’ll be looking at on this
particular situation, which could have been a different story had she just
taken a little time
particular situation, which could have been a different story had she just
taken a little time
time to talk to someone about estate planning while both of them were still
living.
living.
And you know, you never know when that last day’s gonna be, and I get that,
but you know
but you know
A little planning is always a good idea.
How about because a I’ve also talked to a lot of people that are young um and
you know they have children.
you know they have children.
and they basically don’t have anything in writing, what would happen if, God
forbid, the parents pass away and there’s children in the state of Tennessee?
forbid, the parents pass away and there’s children in the state of Tennessee?
Well there’s a a couple things that are concerning, one of which is who’s
going to be named as guardian for the kids.
going to be named as guardian for the kids.
Oh I told my mother she’d always have them
That’s right.
Um that’s unfortunate that it’s not in writing.
Um so what we look at whenever someone passes and
there’s no one specifically named, then it allows for all the family members
to step forward and put in their two cents as to why they should be the uh new
guardians of the kids.
to step forward and put in their two cents as to why they should be the uh new
guardians of the kids.
And that can be a bit of an uncomfortable situation when you’ve got, you know,
different families from you know, the husband and the wife trying to work in
with this
different families from you know, the husband and the wife trying to work in
with this
That’s that’s one of the big problems.
The other problem is uh the assets that a person owns, if they don’t have any
estate planning documents, whether it’s a will or a trust
estate planning documents, whether it’s a will or a trust
then they’re gonna have to rely on the state of Tennessee’s qu quote will,
which says that when the husband dies, the wife doesn’t get everything if
there’s kids, the wife basically
which says that when the husband dies, the wife doesn’t get everything if
there’s kids, the wife basically
uh get shares with the kids.
So if the husband dies and there’s a wife and two kids
the wife’s gonna get a third and the two kids each get a third, and I’m pretty
sure most clients I’ve met with don’t necessarily want to skip over their
spouse and have assets go to their kids
sure most clients I’ve met with don’t necessarily want to skip over their
spouse and have assets go to their kids
No, I’ve and I’ve seen that happen unfortunately.
I even had one where the kids tried to sign back the assets to the mother.
Um, it got very messy.
I mean again, I’m not an attorney, but it you know, just hearing their side it
w it’s not as easy as you think.
w it’s not as easy as you think.
Well, I’m just not gonna take the assets, but the courts mandate it.
You know, I mean so it
It’s it’s not as simple as even if the kids want to take care of the mother,
knowing that dad would have wanted that, um, the courts have a different idea.
knowing that dad would have wanted that, um, the courts have a different idea.
Yeah, and I’ve had uh a few cases like that as well where the clients if they
had come in and
had come in and
planned initially, then this wouldn’t have been a problem, but in a certain
case the assets ended up getting split between the wife and the kids and the
kids had to go through all these ho hoops.
case the assets ended up getting split between the wife and the kids and the
kids had to go through all these ho hoops.
after they received the assets then they had to s set up their own estate plan
to get it back to the wife and
to get it back to the wife and
Or mom at that point.
So it was a very expensive mistake, unfortunately.
I feel sorry for the family, but
Right.
You know, it’s just something, you know, that people should consider if
they’re thinking, Oh, I’ll I’m never gonna pass away or let the kids.
they’re thinking, Oh, I’ll I’m never gonna pass away or let the kids.
I like to believe.
I’ll live forever.
Put the burden on my children.
It doesn’t make well I don’t have any of those, so I don’t have to worry about
Yeah.
But um the the other side of that is um I know I I don’t know if you told me
or someone, but um if you don’t look at your estate from time to time and
you’ve married, you divorced, you’ve married, you divorced or whatever.
or someone, but um if you don’t look at your estate from time to time and
you’ve married, you divorced, you’ve married, you divorced or whatever.
Um, I have a I have one that the ex-wife received the life insurance and now
the current wife is suing her because it never got changed on the policy.
the current wife is suing her because it never got changed on the policy.
Yes, and that is a problem too.
I’ve had that happen.
Especially on retirement accounts.
So whenever we meet with a client initially, we always ask
uh about their assets and we ask who did you name as a beneficiary?
And if they say I don’t know, then we usually ask them to go and find out.
Right.
Sometimes this does come up and we’ve had I had a situation not recently, this
is back in the early years when estate taxes were a huge problem.
is back in the early years when estate taxes were a huge problem.
Uhhuh
Um the ex-wife ended up getting a big chunk of a retirement account and
unfortunately the ex wife was not a spouse, so it was a taxable transfer.
unfortunately the ex wife was not a spouse, so it was a taxable transfer.
And it ended up creating a state tax that the current wife had to pay.
So you can imagine what sort of problems that rose.
Right.
Well, I mean, and that’s the problem.
We we get busy in life, and I guess that’s the reason I really wanted to have
this show, uh, because
this show, uh, because
It is one of those things where we get busy and next thing you know, you think
you’ve got everything kind of, oh, I’ve got a will someplace.
you’ve got everything kind of, oh, I’ve got a will someplace.
I’ve got this someplace.
Um, but you know, again, we don’t always
um keep track of everything that we think we should.
And then unfortunately it’s not us, it’s the people we’re leaving behind that
will have to clean up the mess.
will have to clean up the mess.
So it’s kind of our job before we pass away to make sure that these things are
in play.
in play.
What kind of documents would you need?
Um, is there, I mean, do I have to go through and and get a ton of documents
to give you or is it fairly straightforward if I was going to come in and and
take a meeting to set up a basic revocable trust and all the documents that go
with it?
to give you or is it fairly straightforward if I was going to come in and and
take a meeting to set up a basic revocable trust and all the documents that go
with it?
We suggest that you come in with a list of assets if you can put that
together, values and if they have beneficiaries, who are the beneficiaries?
together, values and if they have beneficiaries, who are the beneficiaries?
and then have a general idea of who you want to appoint and all these
positions we’ve been discussing, like who you would want as a successor
trustee
positions we’ve been discussing, like who you would want as a successor
trustee
or executor if you decided you just have to have a will.
Uh who would you want as an agent on a power of attorney for financial and
health care matters and living wills?
health care matters and living wills?
Um, but don’t let that be a barrier to come in and get started.
We’ve had clients that come in and don’t have all that.
We can certainly gather it later.
But that would be very helpful to get organized as far as those uh issues are
concerned, and then bring it to us, and then we’ll be able to handle uh have a
really good discussion about what direction they should probably go in.
concerned, and then bring it to us, and then we’ll be able to handle uh have a
really good discussion about what direction they should probably go in.
So not everybody probably needs a trust.
Is that cr true?
Yeah, not everybody needs a trust.
If you’re, let’s say, a single person, no kids.
um and you have accounts going to just one person like your parents, like I
mean obviously we have plenty of clients whose kids are in college.
mean obviously we have plenty of clients whose kids are in college.
They don’t they don’t need a trust
Um, you know, a lot of folks do it through beneficiary designation.
But I would say the the the change is if you go out and buy a piece of real
estate
estate
then you might want to consider a trust simply because you can’t name a
beneficiary of real estate and if you’re a a husband and wife, you want to get
that step up and cost basis at first death.
beneficiary of real estate and if you’re a a husband and wife, you want to get
that step up and cost basis at first death.
So that’s usually when we we start talking about trusts over wills.
But you also I mean if you do have a kid in college and then
you do, God forbid, pass away and now they’ve got five hundred thousand
dollars worth of assets and they’re twenty, twenty-one years old.
dollars worth of assets and they’re twenty, twenty-one years old.
It seems to me you might want to have more control even though you’re not
here, if that makes sense, which a trust would give, versus a will, which
would basically say go to probate.
here, if that makes sense, which a trust would give, versus a will, which
would basically say go to probate.
They now have all that money in the bank.
And you know
Yeah, you may have raised them right, but I’m just saying that sometimes
really temptation is a little hard.
really temptation is a little hard.
Yeah, and you can create a trust for the beneficiary under a will.
It’s just gonna require a whole lot more steps to get there.
Whereas if you already have your trust in place and you pass away and your
child’s the beneficiary, then the successor trustee takes over right away.
child’s the beneficiary, then the successor trustee takes over right away.
But it’s just like the scenario we talked about, you know, what is a
spendthrift trust.
spendthrift trust.
Uh anytime you have a beneficiary who either cannot control their own expenses
or they’re just not old enough to handle money or finances.
or they’re just not old enough to handle money or finances.
then you definitely want to make sure what they’re inheriting is in trust
because there’s no better way to take care of it than through that
because there’s no better way to take care of it than through that
All right, we’re going to take our last break here in just a moment.
Again, this is Russ Cook with Cook Tellman Law Group.
You know I am Dr.
Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes
and representation.
Friday, an enrolled agent licensed by the Internal Revenue Service to do taxes
and representation.
That is why we have Russ on the phone because I am not an attorney and I have
too much work to do without having to become one.
too much work to do without having to become one.
So if you have questions that deal with legal issues, even establishing an
LLC, setting up a corporation.
LLC, setting up a corporation.
These guys do it all.
I have Russ talking about estate planning today, but the firm handles all of
that.
that.
Um, and they’ve handled all that for us for years.
And so it’s it’s also a good way because if you have businesses
you need to also talk to them because what happens to you if something happens
to the business?
to the business?
And we’ll probably come back and talk a little bit about is there some steps
we need to take to make sure our businesses can continue to work
we need to take to make sure our businesses can continue to work
And or should there a certain entity that we should be looking at, all that
good stuff when we get back with the Doctor Friday show?
good stuff when we get back with the Doctor Friday show?
We’ll be right back
Alrighty, we are back here in Stydia with Russ Cook
And Cook Telman Law Group, 615-3702-444.
And if you uh are listening and you’re thinking, what should I be doing?
First thing you need to do is just give them a call, set up an appointment,
talk to them.
talk to them.
because they’re going to be able to tell you what you need.
Maybe you don’t need any of the trust that we’ve talked about.
That there’s a whole bunch of others and it gets just a lot.
So Russ is one of those people that can say, hey, this would be what was best
for you.
for you.
Be
But when we took the last break, Russ, I I jumped in on something.
I was thinking, because someone had emailed me saying something about, well,
if I’m in an LLC, do I need to do something with my trust?
if I’m in an LLC, do I need to do something with my trust?
That’s a good question.
If we have businesses, corporations, LLCs, do they need to be listed somehow
as beneficiaries or something?
as beneficiaries or something?
Well, when we create a revocable trust and we’re looking to make sure
everything at the decedent’s death is
everything at the decedent’s death is
is in the trust or payable to the trust, then that would include any business
interest that the client owns.
interest that the client owns.
So as part of our intake we ask the client
Are you a member of an LLC or are you a stockholder in a business?
And then we normally
determine if that person can transfer the it that asset to the trust and
whether it makes sense to do it now while they’re living.
whether it makes sense to do it now while they’re living.
Now, there are situations where we can’t put a business interest in a trust
easily.
easily.
Sometimes we run into cases where the operating agreement or the bylaws
say that the person that that owns the interest can’t put it in anyone else’s
name including, you know, a spouse.
name including, you know, a spouse.
Right.
Right.
So we have to maybe jump through some hoops to get that done.
Because remember when you set up a joint trust, you’re setting up a trust in
which you and your spouse own a half interest.
which you and your spouse own a half interest.
So if there are restrictions you have to be mindful of that.
And then the other is just there are some tax these this is Tennessee tax.
Tennessee tax issues.
that we have to make sure we address when we’re dealing with business
interests and whether or not we’re claiming certain exemptions.
interests and whether or not we’re claiming certain exemptions.
So we go through all of that with the client to make sure we got the right
uh information and then if we do then we go ahead and we’re able to we’ll go
ahead and just assign that business interest to the trust
ahead and just assign that business interest to the trust
and hopefully that’ll take care of it.
If not, then sometimes we get an amendment to the documents that they have
that say when they pass away that business interest automatically goes to the
trust if we have to do it that way.
that say when they pass away that business interest automatically goes to the
trust if we have to do it that way.
Yeah, because I mean I know I have uh a family one and we specifically put in
there that they couldn’t sell or transfer to someone else because we none want
to be in business with the sister-in-laws in my case
there that they couldn’t sell or transfer to someone else because we none want
to be in business with the sister-in-laws in my case
Um, you know, so you know, at that point they would just be brought out um of
that situation.
that situation.
So I could see where they wouldn’t want that
to come up.
Um and and then with corporations, since it’s stock based, is the stock just
transferred over?
transferred over?
Like do you get step open basis for a regular
Situation on that?
I’m just curious.
Yeah.
Well, it’s the same as the LLC if the documents
have a shareholders agreement that prevents transfer, then we’ll have to be s
we’ll s we’re stuck with the person still owning it.
we’ll s we’re stuck with the person still owning it.
But if there’s nothing like that in place, you’re right.
We just change the stock ownership from the client to the trust and that
allows us to get the full step up at first death and not go through a probate.
allows us to get the full step up at first death and not go through a probate.
Gotcha.
Yeah.
And why does people not I mean, I know one thing I like about trust is the
fact that without probate, no one really knows everything, right?
fact that without probate, no one really knows everything, right?
Because in in a probate, doesn’t all your assets get listed somewhere?
Depends on the county.
Oh, okay.
Yeah.
Um certain counties require a complete disclosure
Certain counties don’t.
Um I’m just gonna pick on Davidson County.
Uh although they might not ask for all the detailed information, if you do
have a business and you pass away in Davidson County
have a business and you pass away in Davidson County
then you do have to list your interest in all of those businesses as part of
the probate proceeding.
the probate proceeding.
And a probate proceeding is public record.
So any person or
Any uh let’s say bad actor can find out what your documents say, what your
will says, and then
will says, and then
decide whether or not they want to uh make a play for uh whatever it is that
they think you own and they’ll know who gets what and everything else.
they think you own and they’ll know who gets what and everything else.
Um certainly if you’re the type of person that wants to keep your personal
information close to the vest, you definitely do not want a will because that
will just expose who gets what of everything you own.
information close to the vest, you definitely do not want a will because that
will just expose who gets what of everything you own.
And like for instance when we talk about who needs a trust, every person in
the entertainment industry needs a trust.
the entertainment industry needs a trust.
I mean if they come in and say, Hey, I’m you know, I got I’m writing songs or
I’m in this band, we’re like, Okay, trust.
I’m in this band, we’re like, Okay, trust.
We don’t even talk well.
So it
‘Cause they’re in that public eye and we just don’t want to create more um,
you know, fodder for TMZ or anyone else that might want to know what’s going
on.
you know, fodder for TMZ or anyone else that might want to know what’s going
on.
Well that’s what I mean, not that I I mean myself, I mean I just don’t like
the idea that when you pass away everything gets kind of or at least a lot of
it can
the idea that when you pass away everything gets kind of or at least a lot of
it can
get out there and that just seems to me it’s no one’s business what you have
or don’t have besides the people that are either inheriting or needing to deal
with the documents directly
or don’t have besides the people that are either inheriting or needing to deal
with the documents directly
So that to me would be a big reason to have a trust.
And again, I think one of the biggest reasons I love a trust is the fact that
I can control things even if I’m not here
I can control things even if I’m not here
here.
In essence, I still am here because I’m still controlling something.
Um, you know, it’s a power thing.
I I I like that kind of situation.
My clients know that too.
So any last bit, we have uh about two or three minutes, Russ.
Any back uh wisdom or suggestions if someone’s listening and they’re like,
okay, I I want to do this, what would you know, steps to move forward to get
this?
okay, I I want to do this, what would you know, steps to move forward to get
this?
moving because a lot of people procrastinate on this subject big time.
Yeah.
Well we would encourage them to call whomever they feel is is good enough to
handle
handle
advising them on this.
If if they’re doing estate planning, they probably should seek out the advice
of a board certified estate planning attorney or someone that clearly
indicates that that’s all they do because
of a board certified estate planning attorney or someone that clearly
indicates that that’s all they do because
There’s a lot of complex issues that come up in estate planning and if you
only do it maybe once a month, uh you’re not gonna have the the background to
be able to help clients navigate these situations.
only do it maybe once a month, uh you’re not gonna have the the background to
be able to help clients navigate these situations.
So
Um I’m not trying to make a full pitch for me, but I’m just saying if you need
to get work done, make sure you do seek out
to get work done, make sure you do seek out
a competent estate planning attorney because they can they can not only talk
tell you what you should do but they can also tell you what you shouldn’t do
tell you what you should do but they can also tell you what you shouldn’t do
And a lot of times uh when you don’t get that conversation uh in the you know,
you don’t have that one, you’re in you’re in big trouble, or at least your
family is
you don’t have that one, you’re in you’re in big trouble, or at least your
family is
Well again, that that’s I think that’s the big thing to take away too is that
if you know you’re listening, you’re any age, because again, I used to say,
well, if you’re over the age of 50, you should have this, but then I started
talking to some young people and I’m like, well
if you know you’re listening, you’re any age, because again, I used to say,
well, if you’re over the age of 50, you should have this, but then I started
talking to some young people and I’m like, well
You know, if you’ve got children, if you have some assets, you should at least
be talking the idea of a will.
be talking the idea of a will.
Maybe you don’t need to go through a through full-blown trust
Uh, but you know, if you want to be able to make things easier, you should be
moving forward towards that kind of conversation.
moving forward towards that kind of conversation.
And I know Russ will not, he’s always been that way, will not push, but there
is only a handful of attorneys that are certified, correct?
is only a handful of attorneys that are certified, correct?
Yeah, yeah, there’s not many.
All right.
So thank you.
You’re so good at this.
Um all right, we got about one minute, 30 seconds.
left so I’m gonna go through the big closing again Russ Cook Attorney at law
with Cook Telman Law Group 615-370-2444
with Cook Telman Law Group 615-370-2444
615-370-2444.
Um you can also call our office, um, Dr.
Friday, tax and financial firm, six one five three six seven.
Friday, tax and financial firm, six one five three six seven.
0819.
Again, 615-367-0819.
Or you can always check us out on the web at drfriday.
com.
If you are a current tax client and have not yet
booked your 2025 tax appointment, you better get hustling because it’s pretty
full and I want to make sure I get all my returning clients
full and I want to make sure I get all my returning clients
before we open up the calendar.
And then that way we’ll be able to move forward and do what we need to do.
And if you’re a new client and you would like to set up an appointment, we
still have some of those too, but you can call the office on Monday,
615-367-278-278-275-27.
still have some of those too, but you can call the office on Monday,
615-367-278-278-275-27.
0819 Russ again.
Thank you for joining me.
Thank you for bringing me on.
No problem, buddy.
All right.
If you want to reach Russ’s office one more time, 615-370-2
444.
You can check them out on the web too.
Cook Telman Law Group.
Um, and if you have questions, you can also email friday at drfriday.
com.
Friday at drfriday.
com.
And one more time, my phone number 615-367-0819.
615-367-0819-DrFriday.
com.
And if you um haven’t
File taxes in a number of years, guys.
You just need to give us a call.
And I think that closes out the show.
And as we always say in Australia, cop you later.