Welcome to the Dr. Friday radio show! In this episode, Dr. Friday talks with Russ Cook on questions about estate, setting up a trust, including the following topics:
- What Is A Trust?
- How You People Should Look At Their Estate Planning
- How A Trust Works
- When Should I Have A Will?
- How Much Money Do I Need To Have A Will?
- Should I Add My Children To My Bank Account?
- Why You Should Have An Estate Plan
- Is There An Estate Tax?
- Do I Have To Change My Estate Documents Every Time the Law Changes?
- Why You Need Help With Tax Representation
and so much more!
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Dr. Friday show. If you have a question for Dr. Friday, call her now at 615-737-9986. So here’s your host financial counselor and tax consultant, Dr. Friday.
Dr. Friday 0:44
All kinds of great things. I do have a wonderful guest on and you can just open his line if you want. Russ Cook and Associates will be joining us today. Let’s see if Russ is online. Can you hear me?
Russ Cook 0:59
Yes, I can
Dr. Friday 1:01
Look at you. Technology is working fabulously. Hey, you know what? It is what it is my friend we all live and learn. Alright, so Russ, why don’t you tell my listeners a little bit about who in the heck is Russ Cook? Not that they shouldn’t know you already?
Russ Cook 1:20
Well, I’m a board-certified estate planning attorney. I’ve been doing it for over 30 years, my father and grandfather did as well. So it couldn’t escape generationally. Went to law school in DC and came here.
Dr. Friday 1:33
Lucky us. I’ve known you for good, I don’t know, 15 years, at least I guess. Russ handles all of my stuff and I refer him to my clients. I’ve got all kinds of noises going on over here. So today I want to have Russ on because it’s getting close to the end of the year. I always love having you on to talk about some of the things not even really necessarily the end of the year situation. But this year, gosh, it’s been a crazy year. But a lot of times, things happen every year. Dealing with estates, it seems to me that would be one of the things that we need to consider. How often should we look at our estate planning? Are there certain times when something major obviously people may be thinking of getting married or getting divorced? So is there a certain time period people should do it is every time there’s a major event? How should people look at their estate planning?
Russ Cook 2:28
Well, we’re sending letters out to our clients every two years, asking them to look over their estate planning documents, and if certain events have happened in their lives, then, of course, it’d be a good time to come in and review what they have. Because the estate planning documents are not only wills but also power attorney for financial matters, power attorney for health care matters, and living wills. You want to make sure that the people you have in place are the ones that you think will do the job.
Dr. Friday 2:57
Yeah, I have one that will pull the plug. I’m very happy with that theory. Okay, so one of the big things, and I learned this years ago from you, and I didn’t even know it. And I have people to this day that whenever I hear this, I’m like no, no, no. But how important it is to have like a joint bank account with your kids. A lot of times, especially as we get older, we want to make sure that our children have access to help pay for bills and things. So they add them to the bank account. Is that a good idea or not?
Russ Cook 3:26
It’s probably not a good idea, because in the event that the child runs into creditor problems, or even if the child gets divorced, that account is considered owned by the child just as much as the client. So they can lose those assets to third party creditors.
Dr. Friday 3:46
What can they do instead of doing that?
Russ Cook 3:49
Well, we usually recommend that they keep their name on the account. And if they need someone to manage that account for them as they become incapacitated, file a durable power of attorney for financial matters with the bank. That will allow the child to then manage that account during their lives. And they have to be also careful as far as putting beneficiaries on accounts when they pass. Some people come to me and say well, I’ll just make my mom the beneficiary and she’ll give the money to my kids. Well, there’s no reason for the mom to give the money to the kids and it’s the moms running into problems then the mom could lose the assets to her creditors. We have to make sure that the estate plan is a little bit more coordinated with that with either a will or a vocal trust.
Dr. Friday 4:40
Yeah, I have a situation where I sent them your dress not sure if they went or not. But the daughter inherited everything at the time the father passed away. He had her as the power but you know automatically at paid on death, I guess it’s called. And the wife is still alive. So the money is actually mom’s, she Having to use it, it’s the mother’s money. She’s the only child I think, they miss the step in there somewhere. So like, you inherited the money. And thank goodness in this particular situation, it is not an issue. But my concern is what if something happens to the daughter before the mother, then it’s the husband, which may not be on the same page.
Russ Cook 5:19
That’s right. And sometimes it’s sibling, or one sibling gets all the assets and the other gets none. Under the thought that the one that gets it will split it with the other. A lot of people change their minds when someone dies.
Dr. Friday 5:36
Money has a funny way. I can also say, from the tax standpoint, it’s not always good, because there’s not a way, if somebody leaves it all to one child for let’s say, a 401k. And that person takes the money out, there’s no way of showing that they gave half of that to their child to their brother or sister, they have to pay the tax first, which could be a higher tax before that actually happens. So it’s not always a good idea. Their thought is, “I’ll leave it all to the oldest and he’ll take care of the younger kids.” And yeah, that’s just not a plan I would want. You know, especially my family when there was a kid, you know, that would have been I was the last one, I would have bought nothing by the time he got to me. Thank Goodness, goodness gracious.
Russ Cook 6:17
Yeah. And the other problem we run into is when clients may minor children, as beneficiaries of accounts and life insurance, not realizing that in order for the minor to take, the minor has to have a guardian. So even if you name your child as a beneficiary of a life insurance policy, expecting your wife to take care of it for your child, that’s not going to happen. The child’s going to need the mom to file a formal action in court, in order to be able to handle those assets.
Dr. Friday 6:52
Yeah, so you’re causing a lot more conflict. Instead of leaving it directly to a minor, what should they be considering?
Russ Cook 7:00
Well, they should have an estate plan in place in which there’s a trust created for the minor. That way, you’ve got someone in place to make sure these assets are taken care of properly. And then you name the trust as the beneficiary of the asset instead of the minor directly.
Dr. Friday 7:17
Yeah, see, that makes a lot more sense. I mean, I know a lot of people are like, “Well, you know, it’s like $11 million, or something. So I don’t really need to worry about state planning because I don’t have anything near that.” What would you say to someone like that? Because we’ve covered five different subjects that have nothing to do with the value of an estate. But I do have people saying it.
Russ Cook 7:38
Yeah, and it’s a common misconception because you want to have a plan in place, when you pass away, regardless of how much assets you have still had something that’s going to be inherited by your family. So whether it’s a million dollars, or 100,000, or, 10,000, they’re still assets, you want to make sure are going in the right direction that you want them to go in, and you’re not unintentionally creating discord between your family, as assets go in the direction that no one expected.
Dr. Friday 8:13
Right? I mean, because that’s what I love about trust. I mean, I think it was Someone once told me, it’s kind of like a suitcase. And so you know, it basically you put everything in there, and then it comes out according to your wishes were a will, of course, could change based on probate and everything else. Or if you just leave it as POD, assuming the children are going to do what you want them to do when you pass away, which is a pretty good assumption that unless there’s only one child, that’s probably not going to happen the way you want it to. But so when we’re dealing with estates and taxes and all that, is there any estate tax right now? I mean, how much do I have to worry about making before I worry about paying state taxes?
Russ Cook 8:57
Well, for most people, they’re not having to deal with it, because the current exemption gives you $11 million to pass estate tax to whomever you want. Also, if you’re married, you can give an unlimited amount of assets to yourselves without paying any tax. And if you are a married couple, and you’re the surviving spouse and you die, you can actually inherit the exemption of the first spouse. So that would bump you up to 22 million when you pass, not subject to estate tax. I think what is concerning people now at least not the ones that are below 11. But the ones that are probably above 11, is the fact that if the democrats get in the White House in the Senate, then we may have a decrease in that exemption, or it’s going to decrease in 2026 regardless, but they’ve also been talking about pushing that up to a much earlier date. So people with Assets over 11 million are gonna lose out on an extra 11 million of exemption. So that’s been kind of running through some of the estate planning discussions we’ve been having recently. Basically those that are concerned with that.
Dr. Friday 10:15
Right? Well, but the entire tax changes, I mean, according to the Democrats will be basically eliminating all of the tax changes that Trump has put into play, which, from my standpoint would not be a win-win for anyone. I know, they always say they’re for the rich, but my listeners already know, that’s not my opinion. So it’s going to be downhill if that happens. But all we can do, and that’s another reason. Now, let’s just say because we’ve had over the last 15 years, it’s gone up, it’s gone down, I think, when we first thought was like a million dollars, right? Or something like that. It went up and down. Do I have to change my estate documents every time the law changes? Or do they pretty much go with the current laws as they change?
Russ Cook 11:01
Most documents, at least the ones that we’ve prepared, are using a formula to determine what direction you want the assets to go, depending on the tax laws at the time of death. So there are options available at the first step to make sure that we maximize the exemptions. And then at the survivor’s step, to maximize the exemptions. And that pretty much is carried the day since the exemption was 600,000 back when I started. The only issue that did come up is when we had a Tennessee inheritance tax in the exemption that was different than the federal estate tax. But we don’t have a Tennessee inheritance tax now, and I don’t see one coming back. So that issue probably won’t play out. So hopefully, if you have documents that have been properly prepared, they will have already incorporate those changes into them. Because we anticipate stuff like that if you’re not sure, or it’s been a long time. And that would be another reason to get a review of your state plan and make sure that you are maximizing your exemptions at the time of death.
Dr. Friday 12:17
All right, we’re gonna take our first break, and then we’re gonna come back because I’m gonna ask him what if we have properties in multiple states and a couple of other questions that are coming through. If you want to join the show, and you have a question for Russell, you’ve got a tax question. We made it through October 15. Thank you very much. It was quite an exciting day for me. Now we’re working on 2020 taxes. So if you’re working on your 2020 taxes, or you have questions, you can join The show also 615-737-9986. We’ll be right back.
Dr. Friday 13:06
We got some rock and roll going on. All right. I have Russ Cook and Associates, Attorney at Law. Well, actually Russ Cook not Russ Cook and Associates. We only have Russ on the phone. Hey, Ross, you still there?
Russ Cook 13:17
Dr. Friday 13:18
There you go. I didn’t lose you during the break. I try sometimes. But he keeps staying on. No, I’m just joking.
Russ Cook 13:23
It’s just the two of us. I’m lucky I didn’t hang up.
Dr. Friday 13:29
Exactly. You know, we have history. Okay. Really quick before I get too much into things. What is exactly trust? I had someone email say, Well, what is a trust? Exactly. So I always assume people probably know that. But it’s a great question. So what is trust?
Russ Cook 13:47
Well, it’s basically an arrangement where you pick someone, called a trustee, to manage assets for a person called a beneficiary under certain terms that are put together in an agreement. So it’s basically like a contract that you create between these two people, in order to make sure your wishes are carried out. Now in the context of estate planning. We have different types of trust. There are trusts that are created during life, and then trusts are created at death. And depending on the goal that the client has, there are different trusts to make sure that we are able to take care of those desires.
Dr. Friday 14:30
So can everything just go into a trust?
Russ Cook 14:34
Yeah, yeah. So give an example. A common trust that we create for clients is called a revocable living trust. It’s usually set up where the client is the trustee. The client is the beneficiary. And the trust is there for the client’s benefit. And the purpose of the trust is to fund it during your life with your assets. So they didn’t the event of your incapacity. There’s a person who can take over as the successor trustee, and manage those assets, and more importantly, in the event of death, you have a successor trustee that takes over, according to the agreement and manages those assets for the people that you’ve named a successor beneficiary. And that process of allowing the successor trustee to take over is different than with a will where you have to file the will at the courthouse and get court approval in order for someone to be able to handle your assets. With trust, there is no court approval required.
Dr. Friday 15:33
So that means you basically avoid probate, correct? Yeah,
Russ Cook 15:37
Yeah, you avoid the probate process. The probate process is when you have to file a will with the court, get your executor appointed, in order to handle your assets at your death, and give them to your beneficiaries. With a trust, you’re naming a trustee instead of an executor. And the trustee just follows your wishes according to the trust agreement, and they don’t have to be formally appointed by the court. So the process is very streamlined and is especially useful for clients that have property, not only in Tennessee but other states as well.
Dr. Friday 16:12
You opened the door to the next question I have. So if I have a property in multiple states, do I have to go through probate in those other states with the trust. If I’ve got properties in multiple states, Is it based on state law? How does that work exactly?
Russ Cook 16:32
Well, if you pass and you have a will, then in order for you to have someone appointed formally, to manage those assets for you, you have to file the will in the county where you died, you’re in Tennessee, and then you have to file the will, again, in each county, where you have real estate outside of the state of Tennessee. So that may be a county in Colorado, in Florida, and each and every time you’re susceptible to whatever probate laws are affecting the transferred property in those states as well. So as you can tell, it’s double, triple probate for those assets because of that.
Dr. Friday 17:16
If i have a trust?
Russ Cook 17:18
And if you have a trust, then you can deed the property into the trust while you’re living so that in the event of your death, the successor trustee takes over the property you own in Florida or Colorado. And you don’t have to have someone formally appointed you don’t have to apply to the court. It’s a much more efficient way of transferring assets.
Dr. Friday 17:41
So then at the time that they once the trustee or the distributes the asset to whoever is supposed to or they sell it, then they would only have to deal with the taxes at the time of sale like anyone else?
Russ Cook 17:53
That’s right. That’s right.
Dr. Friday 17:54
Okay, that’s much easier. Good to know. That was a question that someone had sent over. They have multiple states, and they’re like, “Well, what do I do if something happens?” And I’m like, I don’t know. But I have rust on the show. So let me ask for sure. Because I wasn’t sure if a trust actually did allow you to basically I was afraid you’d have to go to every state and file the trust somehow or do something I wasn’t sure what the next steps were. So is there a time or age that you suggest? Is there a amount of money someone should have? How does someone know when’s the time to consider even having a will, as far as that’s concerned, what’s your suggestion or expertise on that?
Russ Cook 18:37
Well, we usually encourage clients to start early. For example, let’s say that you turn age 18, you have nothing. But if you end up in the hospital, and your parents are knocking on the doctor’s door asking for information, and they’re not appointed your power of attorney for health care, there could be some pushback from the hospital, on what sort of information you can use, they can get. We have clients that have kids that are 18, signing power of attorney for financial matters, for health care matters, and living wills. They may not be wells, you may not have anything, but they’re at least starting with those documents. And especially if you have kids that are going overseas know that they will be subject to the laws of the country where they’re living. If that country requires a formal document in order for you to see or talk to your kids to get medical information, and there’s no power of attorney for health care in place. It can be a real nightmare. So that’s kind of the starting point. Then, as people get older and start accumulating assets or if they get married, and they want to make sure the assets go to their spouse. That’s a good time to sit down and maybe discuss having a will prepared. Most certainly when you have children because you have to have something formal in place that names who you want to serve as guardians for the kids. And then, of course, we talked about the issue of giving assets directly to the kids. And so a good deal either, so you want something in place, that will make sure that kids are taken care of. And that’s either a will or a vocable trust. And then as years go by, as you accumulate additional assets, it just makes that issue even more apparent.
Dr. Friday 20:26
What if you have a child with special needs? Is there something you can do to help them?
Russ Cook 20:34
That’s a unique situation where if you don’t have an estate plan in place, then you’re probably going to create a much bigger problem after you’re gone. Because typically, a child with special needs qualifies for certain government benefits. And if they inherit assets, they’re going to lose those benefits. That’s number one. Number two, they may need someone to serve as a conservator, even though they’re 18 or older, they still might need someone to make decisions for them in a legal capacity. So you need something in place to make sure you have those people lined up to take care of your child after you pass away. So for them, it’s even a greater need, because there are more issues involved after they’re gone and making sure the kids are taken care of.
Dr. Friday 21:28
So is that an independent trust of some sort? Or an estate plan that’s fully put together? I mean, is it something separate from the living trust that you put together for yourself?
Russ Cook 21:39
Yeah, it would be part of it. So let’s say you have a special needs child, and you’ve done your estate planning either through a will or a revocable trust, then the language in either document will set up what we call a supplemental needs trust for that child in order to make sure that it’s the recipient of not only any assets going through the estate but also any beneficiary designations on retirement accounts or life insurance. So it’s all being coordinated into that special needs trust with someone who you name and it could be an institution can be a corporate trustee could be an individual that you trust, as trustee to make sure the child’s needs are met. Sometimes if it’s an institution, like a bank, or a Trust Company, you might need someone to advise the bank or Trust Company on the needs of the child because those are very unique. And then, of course, you have a guardian or conservator that would also be appointed in case the child needed one to take over in the event of your death to make decisions for that child.
Dr. Friday 22:48
Yeah, and I guess you can’t really get a conservatorship until what age 18? Or is it 21>
Russ Cook 22:55
18. So usually with clients that have special needs children, we’re encouraging them, within a couple of months of them turning 18 to come back into our office so we can start the process of getting them legally appointed conservator for their children.
Dr. Friday 23:13
Yeah, that seems like the best plan, and be curious. In this particular case, they’re getting divorced. And it’d be interesting to see, can you actually have two people as conservator? Even if they’re not married?
Russ Cook 23:26
Dr. Friday 23:29
If they’re in the same house, it makes sense. Well, what are you doing? It’s outside the house. Hey, what do I know? I mean, I’m like, let’s keep it simple. One person makes the decisions because I’m thinking that’s gonna be harder to make it work. But that’s, you know, divorce in itself. So if I change divorce, let’s talk about divorce. Why not? Because everyone’s going to almost go through it, at least 50% of people. So if you have, you know, paid on death on everything, obviously, your best bet is to do it through a trust that way, every time you get married, divorced, or something happens, it will always stay to the trust not go to an individual because I know one time you told a story about where the ex-wife ended up getting the inheritance or something because the guy forgot to transfer the POD or something.
Russ Cook 24:16
Yeah, that’s a common problem. Usually, when we’re meeting clients, we asked them who they’ve named as a beneficiary on their various assets, so that we can see if something like that is still in existence, but even then clients forget or don’t remember, whatever. So if we can get everything coordinated through one document and usually it’s the revokable living trust, again, because you can set it up during your life. It’s the best way to coordinate assets. So, as you said, if you can change the beneficiary on your assets so that they’re not going individuals but going into the trust, then all you have to worry about is what does the trust, say? And that’s something that people check more often than beneficiary designations on various accounts.
Dr. Friday 25:07
I agree. Especially when you have people that have retirement accounts that they forgot about until they get ready to retire, and they get notices, and they’re like, Oh, yeah, I had one of those with this company, and that was 15, 20, 30 years ago, and they don’t have any idea. Thank goodness, they were alive to get it.
Russ Cook 25:24
Yeah. And sometimes it’s a pain to go through the process of just changing beneficiaries. But that’s just me personally throwing that out there.
Dr. Friday 25:34
Let you do all that kind of work. I just love to deal with it, please. All right, we’re going to take our second break. And if you have any questions, this is Russ Cook and Attorney at Law and, of course, Dr. Friday, you can reach us here in the studio at 615-737-9986. I will give out Russell’s number and you can always check the web at russcookpc.com. And we’re gonna be right back with the Dr. Friday show.
Dr. Friday 26:16
All righty, we are back live in-studio with Russ Cook and Associate Attorney at Law. And we are taking your calls. So if you’ve got questions, either legal questions about estate or setting up a trust or maybe you’re a beneficiary of a trust, and you’re not too sure exactly what you need to be doing or an executor or whatever that maybe be 615-737-9986. All right, Russ, we have Barb on the phone from Murfreesboro. Barb, can you join us?
Yes. Dr. Friday. I had a question. My only child my son was killed in May. I was wondering, I want to leave all of my estates to my brother. Is it just a simple will enough to take care of that?
Dr. Friday 27:10
Russ, are you there?
Russ Cook 27:11
Yeah, yeah, I couldn’t hear this question though.
Dr. Friday 27:14
Okay, that’s right. Let me repeat it real quick. The question is, she lost her son in May her only child, and so she wants to leave everything to her brother. She doesn’t have a lot, she’s just got a basic situation is a simple will good for that, or does she need something more to accomplish it?
Russ Cook 27:33
Well, if it’s just going to her brother and there’s not really any problems with the rest of the family members and that sort of thing, then yeah, a will be able to take care of it.
Dr. Friday 27:45
Barbara, the way we have Russ hooked up, he may not hear your side of it. But you can hear his answer?
No, I can’t hear anything.
Dr. Friday 27:53
Okay, well, we’re just doing great here. Let me repeat, he says yes, a will should be fine. As long as there’s not a lot of other members. Do you have any other siblings?
I have one other sister. She’s a stroke victim. And they have plenty of money. So my brother would be the one that I would want to give it to.
Dr. Friday 28:15
And so he says yes, but my suggestion would be your brother younger, older than you?
Dr. Friday 28:20
Okay. I mean, we never know when our day’s going to be and I’m sorry for the loss of your son. That’s, that’s difficult. But when it’s said and done, you might want to have a second person, obviously in place or a charity, whatever your situation might call for. You know, just in case, the brother or maybe his kid, you’ll leave it to whichever it might be.
Okay. That sounds good. I appreciate it, thank you.
Dr. Friday 28:42
Thanks for calling. Thank you. Bye, bye. All right, Russ, can you hear me now? Yeah. All right. I’m not too sure. Probably because of the way it’s hooked up today. But she didn’t have only an older sister that had a stroke. And they were financially set. So she wanted to make sure her brother would have whatever she had was the situation. So I just said she might want to have now can you can have, let’s just say, the first person I want is my brother. But if he decides he dies before I do, can you then leave it to either his children? Is that generation-skipping if that happens, how does that work? Just curious. She didn’t ask it. I am.
Russ Cook 29:22
Okay. Yeah, you would want to make sure that there’s an alternative plan in case the primary one doesn’t carry out. So if he’s not living typically, you would say at least I would, and the estate planning documents client wants it to his issue or descendants, the brother’s descendants. It’s a way of making sure that the generations below the brother his descendants take equally. That’s something that’s important because if you just say to my brother, you don’t say anything about whether he’s living or deceased in order to take the inheritance. And he predeceases her, then he’s going to end up with his estate, getting that inheritance and who knows where it’s going to go from there. So we always try to encourage clients to do a lot of what-if planning. What if your brother’s not living? Okay, now to his kids, we have that document, what if he doesn’t have kids? Like he said, Is there a charity that you want to go to?
Dr. Friday 30:31
That’s always the problem with any of that because that’s probably the hardest part because you don’t really know. And that’s why visiting it every two years, or because children are born, unfortunately, family members are gone, you know, I mean, and things change like that. And you may have them listed in some system. And so that needs to be updated and reviewed, you might not like them anymore. No, just joking. Hey, you know, what happens. You had one that was for a child that is disabled, you know, maybe not able, but what if you have an irresponsible child, is there a way of using either a trust or an estate, to maybe making sure because I may be in passing away my state’s big enough, where if I leave all this to this child, it is going to go from bad to worse because they don’t have the mindset to be able to do anything, you know, but spend it or whatever, is there a way of controlling, you know, how much can be paid out, for what, something along those lines?
Russ Cook 31:34
Yeah, they can. Just kind of similar to the supplemental needs trust for the disabled child, you would have what I call a, possibly a support trust for the irresponsible child, where there’s a third-party trustee. Typically, in that scenario, you would want somebody who’s not a family member controlling the child’s money, because you don’t want to create a conflict between the family members. So you might have like a corporate trustee, a bank, or an institution to do it. And their job would be to make sure that the child’s needs are met on a monthly basis, but the trustee is in charge of making sure the assets are invested properly. And they’re there to say no, because a lot of these children will press the buttons, saying,” Oh, I need this Lamborghini because that’s my style. And I need to live in a $2 million house” and that sort of thing. Now, I’m not against those things, I’m just saying that if you keep going in that direction, chances are the money’s not going to be there very much longer. That’s where the trustee and institution neutral trustee can do a really good job. And then I have clients that come in, that are worried about addiction.
Dr. Friday 32:55
Right, that’s what this person was leading up to their child was an addict. So if they get the money, they are afraid they would actually just kill themselves, right? Because they would or go through the money so fast that it wasn’t funny. So is there a way of me Can’t stop them from, from using the money for I mean, they have creative ways, but limiting their access so that they maybe don’t have so much money that they kill themselves because they get too many drugs or I don’t know.
Russ Cook 33:27
Yeah, that those are big, very, very legitimate concerns. Because whenever an addict receives that much money, it’s going to make things much worse. So we try to set the estate plan up where the trustee has the ability if there’s a situation where they feel the child is an act of alcoholism or drug use to postpone any distributions until the child enrolls in a rehab facility, and to allow for the trustee to request drug tests in the event that they feel that that’s a condition the child is under. If a child ends up in prison, you don’t necessarily want to keep going money out to a child. They can’t take it in prison either. And there’s, I assure you, there’s now a whole lot to buy in prison anyways, probably don’t need a lot of money. So there are situations where we build that into the documents so that the trustee has some latitude to make sure that those issues are taken care of. A lot of times we even tell clients, it might be good for you to write a letter to the trustee, telling them of your particular situation so that they’re aware that your child has a history of these things and what sort of treatment you want them to have as a result. It gives the parents a lot more input into the planning if they’re able to kind of guide the trustee on specific issues, it’s not part of the document, because we don’t want to be written in stone. It’s just more of guidance to the trustee. And I think that that’s helped a lot of situations.
Dr. Friday 35:13
So have someone just emailed says, “What happens if you know you set up a trust, but you can’t find it or the attorney?” Sounds like me, and you start over, but hey, I didn’t want to put that on the email. So the question is, do you need to start over?
Russ Cook 35:29
Well, you probably do, because any new attorney that you go to, will probably have their own set of planning documents. And it would be a lot cheaper for you to have them prepare an estate plan for you using their own documents, and for them to try to hobble something together based on a copy that you might have that was prepared, many years ago. So I would suggest it’s less expensive to go in knowing that you’re probably going to have to redo the estate plan.
Dr. Friday 36:04
So I’ve always told a lot of people because well, I mean, I’m a big advocate of trust because one of the things I like is that doesn’t go through probate, or at least most nothing. I mean, I’m sure there’s always that exception to exceptions, but 90% won’t go through probate, which means the world doesn’t have to know everything about what happens in your estate. Most people are like, so expensive. But to me, if you have to go through probate, you’re buying attorneys time, which is got to be fairly expensive when it comes to that time, right?
Russ Cook 36:36
It’s probably a minimum of $5,000. At least that’s how we’re handling it as a deposit on the front end. Any estate plan that you put together with a revocable trust will be less than that. So all you’re doing is may pay a little more upfront, but you’re saving a whole lot of time and effort and issues on the back end when you’re having to transfer those assets from family members.
Dr. Friday 37:04
Yeah, I mean, that the whole idea that basically someone could walk in and go ahead and start dealing with the estate versus having to wait for a court to tell you what you can or can’t do already got me on the right side. So that makes it so much simpler. What kind of things that does, Is it an executor who handles a trust? Who’s the one this the distributions?
Russ Cook 37:28
It’s the trustee, the trustee.
Dr. Friday 37:31
So what kind of job does the trustee have? Because when you’re looking to put somebody in that position, you don’t want to put somebody that maybe can’t do certain things, or whatever. So what kind of things would they be doing in a normal trust, let’s just assume that there’s basically bank accounts, retirement accounts, and a house or something, standard, what I would consider a standard retirement.
Russ Cook 37:55
Well, when a person takes over a trust as trustee, their first job is to make sure they can coordinate with all the different advisors, like the accountants and the attorneys and the financial consultants to gather up all the documents that are necessary to administer the trust. Then basically follow instructions to get the job done because a lot of the folks that are already put in place by the decedent can take the trust and administer it, according to the decedent’s wishes. Typically, the trustee just has to make sure that they’re following that. That would be probably the low end of the scale. When it comes to more sophisticated plus planning, a trustee may be in charge of making sure that the beneficiaries interests are met, they may have to talk to them and make sure that they’re yes or no if they’re continuing the trust robe beneficiary, so they may have to do make some hard decisions going forward.
Russ Cook 39:07
So it’s, it is a position that requires somebody that probably knows a little bit about finance, knows a little bit about the family, maybe a little bit, I know a little bit about just following instructions and accountable and doesn’t have a situation where they might be in conflict. I think they say what the worst situation is, is going to trust me and that probably shouldn’t have been and that’s when we have people that are in you know, the trustee and the other beneficiaries or siblings or you know, and they’re not getting along and nobody’s doing anything.
Dr. Friday 39:46
Yeah, one yelling at the other and how that works is never very good. All right, we’re gonna take our last break here and we come back we continue talking with Russ Cook an Attorney at Law. You can join the show at 615-737-9986. I think the weather is way too nice outside. People may be listening, but they’re out doing something fun and exciting. We’re gonna be right back with the Dr. Friday show.
Dr. Friday 40:21
All right, we are back. The final part of the show. We are live here in the studio along with Russ Cook, Russ Cook and Associates an Attorney at Law right here in Brentwood, Tennessee. I’ve worked with Russ for a long time. Seems like quite a while. So definitely love working with him and being able to refer my clients to him. because let me tell you, he’s helped quite a few of them. So Russ, what if I want to get ready to set up for trust or something? Is there a set of documents you can send out? Does that usually help people kind of start with the questionnaires? Because it seems like setting it up myself. I know, there’s a lot of questions who’s going to get this? When what, and where that you can get people? Or is it something that you kind of take the first meeting and then get them on the right track? How do you work it?
Russ Cook 41:11
When we make the appointment or if a client calls to schedule an appointment, we’ll email him back a series of things that they’re probably going to want to have answers to, when they come in for the initial meeting. Also, we encourage them to bring in their documentation, if they have the deeds to their real estate, bank account information, balance sheets, those are all helpful in the initial consultation, because we’re going to go through everything that they have. And also talk about the people they want to put in place for the various whether it’s executor, Trustee, Guardian, power of attorney, agent, etc.
Dr. Friday 41:58
Right? Because I mean, obviously, in my own personal situation, I have quite a few real estate, then I have businesses and different things. I know if you’re a business owner, there are bylaws or partner agreements, whatever that would also need to be at least reviewed correctly as part of that?
Russ Cook 42:14
No, no, it would be. We usually do a comprehensive review of all the assets to make sure we have everything that you know is going to pass and even death. Some assets do victory designations like 401 K’s now array. So we need to know who’s listed on those life insurance back on course, with businesses, especially when you’re in business with other folks want to know what happened. Some of those interests are subject to I sell agreements and things like that. So we get into all of that can cover some things the clients didn’t know like, “Oh, my corporate charter expired three years ago?” Those are the stuff that we try to make sure people get up to date with, and then keep them up to date. Because that sort of stuff is important.
Dr. Friday 43:14
Yeah, you don’t think about as a small business owner, you’re worried about every day today. And then you know, then you get that letter from the state that says that you’re expired or whatever. I’ve just dealt with two of my clients that received some of those letters. And you have to do the reinstatement. And but you know, I mean, the reason we have shields is that you’re afraid of something happening or whatever. And if you don’t keep those shields up, then theoretically, you’re operating as a sole proprietorship in my mind. I mean, there may be some legal differences and all that. But, you know, that’s not what you wanted to be operating on. And I can tell you, there’s a lot of people that are listening right now. I always talk about Russ in estate planning, but Russ also does bylaws and all that, because I know because he handles mine, and I send people to do, and that’s something that I think a lot of people go into either LLCs or corporations and they go down the secretary estate or they obtain a charter or whatever. And, and that’s all they have.
Dr. Friday 44:11
And so when you have two people in business, even a husband and wife, there is always an exit plan. What if there’s a divorce? What if there’s, you know, something happens to one person, all those questions need to be answered. So if you’re listening and you have a business and you’ve gone down and you’ve obtained a bylaw or a charter, you need to call Russ as well, because I can’t tell you how many people walk into my office and we don’t have anything to work off of to know what the exit is on the partnership or anything else. And in accounting, we still need some of that. But enough if it actually broke up and partnerships are a lot like marriage to me, Russ, it seems about 50/50 if they’re gonna survive or not.
Russ Cook 44:53
And that’s a good point. Because the other thing is if the corporation gets sued, and you don’t have Operating agreements or bylaws or anything like that. And don’t open yourself up to the argument that they can pierce the corporate veil and go directly to the individuals because there’s not a whole lot of corporate structure there.
Dr. Friday 45:18
Well, that’s it. I mean, and again, the reason you went and did all this and you file the taxes, and you did these things was because you wanted that shield. I know even opening a bank account nowadays, many of the banks at least the SunTrust, Truest now, they always ask for him, because they want to know if I have the ability to open up the bank account, right? I’m not saying all banks are equal, but I’m just saying you do need to have that information so that you can do you can’t sign for a loan if you get in a line of credit or something unless you have those documents. So really important to have those documents. Same thing with the estate planning, anything you’re doing along those lines. Call Russ, that’s my answer. Always call Russ, because if he doesn’t do it, he always knows how to get someone to do it.
Dr. Friday 46:04
All right, Russ, the number I have for people to call you directly or to your office is 615-370-2444. Good because that’s the number I’ve been giving people for about 15 years. 615-370-2444 Russ Cook and Associates is in Brentwood. You can also check him out on the web at russcookpc.com. Russ, awesome to have you on the show.
Russ Cook 46:31
Thank you very much.
Dr. Friday 46:31
Appreciate you joining me. All right. And if you need my phone number at 615-367-0819 and you can reach me at drfriday.com.