Episode 20 - Estate Planning for Firefighters with Roy Schneider, Esq. and Jessica Villar, Esq.
Roy Schneider and Jessica Villar, attornies with Schneiders & Associates Law Firm, talk about what nobody wants to discuss...what happens to your property and family if you are incapacited or die. Bottom line: nothing good unless you take the proper steps now. Learn all about wills, trusts, avoiding probate, and how to ensure your wishes are carried out.
Transcript
Peter
Welcome to the Firehouse Roundtable podcast, brought to you by the Ventura Fire Foundation. My name is Peter McKenzie. I'm one of the hosts. I'm retired fire captain with the city of Ventura Fire Department.
Jason
And I'm Jason Kay. I'm an active fire captain also with the Ventura Fire Department.
Peter
And we are. Excited that you are going to spend some time with us at the kitchen table learning about Firehouse issues that we're trying to bring awareness to.
Jason
Thanks for joining us. As we discussed the issues of being a firefighter both on and off duty and how it affects us.
Peter
Let's get right to it. Alright, welcome to another episode of the Firehouse Roundtable. Jason, how are you doing?
Jason
I'm good. I'm good. I'm excited for the show today. This is one that I think we've been talking about for a long time. We've needed something like this on the fire department side of things for a long time and it's good to finally establish. What to do? I know a lot of the conversation when we have new guys is they sit around going OK. I got my dream. Job and we go. OK. You're not done. There's some ways to set up your life. So that's what's going to happen today and we're going to give some tips and tricks and then I know we have a pretty exciting event with these guys coming up in.
Peter
Yeah, I'm. I'm looking forward to it. I think it's everybody's favorite topic. I mean, I feel like everybody talks about this all the time. So what to? Do when you die. Which is obviously a joke, but yeah, let's bring we have Roy Schneider and Jessica Villar, who are attorneys at Schneider and Associates. But let's welcome them to the show. And let's get into it. So, Roy, Jessica, welcome to the show.
Jessica
Thank you. Thank you for having us.
Roy
Thank you. Appreciate.
Peter
It yeah, we're looking forward to the conversation. I'm sure you guys are. You know obviously well versed in talking about this stuff, it's this is not a topic that you know is very popular because nobody likes to talk about what happens when they die, obviously. But I think it's it is important and especially in our line of work where we see the worst case scenario in people's lives all the time. It is relevant and it needs to definitely be. We need to normalize the conversation more, but why don't we take a second each of you to kind of introduce yourselves? Tell us a little bit about you that way we don't mingle your BIOS and then we can kind of dive into the conversation after that.
Roy
All right, I'll start, I guess so I'm Roy Schneider. I'm one of the founders of Schneiders and Associates. Been an attorney out in Ventura County for about 40 years. Our firm opened up in August of 2012. We have 11 lawyers, one of our areas of practice is a state planning. I'm also an adjunct professor at California Lutheran. University teaching, business law, and. We handle all aspects of business too. Instead of companies and sell companies, we have tax lawyers, employment lawyers. We've got all the needs that people have. But a big part of our practice is state planning, and that is something that that Jessica kind of focuses in. So Jessica introduce herself.
Jessica
Yes, I'm Jessica liotta. I am an associate here at Schneiders, so my background is I'm actually a transplant. I'm originally from LA, where I started off in music while I was entertainment attorney. I came up here with Schneider, started doing business, law actually nonprofit, which is how I think we. Met you guys through the foundation and I also do we also do state planning. So we started talking just out of organic conversation, that's how this came up. Yeah, that's I am currently five months pregnant with my first child. And so I'm excited for that. But yeah, it's going to blow.
Speaker
Up me.
Peter
Yeah, that's awesome. Definitely exciting time starting a family for sure. That is just. For the interest of Full disclosure that. That your guys's firm helped us. Set up the foundation. Back in 2014, I think is when we started. Is it? You probably know more than. I do.
Jessica
So we, umm, we got brought in a little bit afterwards to help you with some things and now we're pretty much any time that you need legal representation. We do that as well because we do. Focus in a lot on nonprofit.
Peter
So we started somewhere else and then we came there. But anyway, you're our our go to people. So alright, well, thanks for giving us the bio. Let's get right into it. So what it let's start with the basics cuz some of our listeners don't even know what an estate plan is. Start us from the very beginning. Why is this important? What is it? How does it kind of work in general?
Roy
OK. Well, estate planning is more than just what happens when you pass away a state. Planning involves what happens to your assets while you're alive as well as when you pass away. Many times people become incapacitated, they get injured, they get ill, and who's going to handle their affairs? You have the bills to pay. Things to take care of, taxes to pay. Who's going to do that while you're alive? Plus, who's going to sign your name on documents if you can't? If you're not around you and you're hell out of the out of the country? Who's going to handle healthcare matters for you? So estate planning is not just a will or a trust to who gets things when they die. It has lots. Of lots of different factors and and yeah, anybody with any kind of assets at all, you've got a bank account, you got a pension, you've got insurance, you got a house, you need to have planning. So that's in a nutshell. That's what the state plan is it, it encompasses all these areas of your life and and what you're gonna do with these things, doing your life, doing in capacity after death. And that's what a state plan basically is.
Peter
I think to to make. It real or for our listeners, what happens if you don't have an estate plan and one of those things happens, I think that like we'll conceptualize it a little better for somebody.
Roy
Well, interesting.
Peter
Yeah, go ahead.
Roy
Well, great. I'll say a couple things that Jessica can add, but if you don't have an estate plan, the state of California has has one for you and it will decide by statute who's going to get your assets. And it's also if you do not have an estate plan and you become incapacitated, the courts may have to get involved. And a conservator will have reappointed for you. And that is really not a very pleasant proceeding with the court examined you. They send out people to interview you and determine that somebody is going to have to now be in charge of you. So if you don't wanna stay plan the state of California, we'll take care of it for you and. It may not be what you want.
Peter
Let's dive into that. What does that mean? When when you say it may not be what you want, what do they do like? Why would that not be to your advantage?
Jessica
So on 2 fronts, while you're alive. And let's say. You you become ill or you become injured. Or you lose capacity. If you don't have some, if you don't have a state plan in place, the court will actually point a conservator. So I'm sure most people here are familiar with Britney Spears and the decade long battle for having a conservatorship. That's what that was. The court stepped in and said since you're not able to handle your own affairs now for her it was for obvious reasons. Here you know, somebody might be in capacity, they'd be injured and may become ill. The court comes in and then dictates who's going to be responsible for you, for your financial affairs, for basically your a grown adult with now with the babysitter. And if it's a conservatorship, it's a court proceeding. So you have to go to court. The court examines you, the court talks to you, they talk to your doctors and it's very public. It's very long. It's very embarrassing. At the end of the day, you may get assigned somebody that you. Don't want to. Be responsible for your affairs and at that point, if, since you don't have capacity. You don't have to. In it. So this actually steps in front while you have capacity you can dictate who can, who responds before the things for you. So whether it's a spouse, whether it's a sibling, a parent, you know, a close friend, somebody that you trust is more responsible. And let's be honest, we have certain people that we love that maybe would be great to make certain medical decisions. But you wouldn't want them responsible for your bank account. And vice versa, right? So that's with regards to a conservatorship while you're alive. When you pass away, if you don't have a trust or a will. Then the court dictates there's actual by law. Who gets what, right? It's it's not. It's statute, and that's the defaults. So if you have for instance. Children that maybe you're not close with or if you have parents that you're not close with but you don't have any children and you would rather your assets get all go to your siblings or a close friend or maybe a life partner that you never got. 3/2. That doesn't happen unless you have a document assigned. A legal document like. A will or a trust that dictates that. And and more to that point in California. And I love this state. I love the. Weather I love many. Things about this, but the probate process is very long. It's very expensive and it's very public and you don't have control over that if you. Don't have a trust. And plan. So even if you have a will and we will kind of get over that when we do our presentation in August, but even if you just have a will, you have to go through the probate. Access and that's where the court steps in and says, OK, this is everything you owned and this is who now is going to legally own it. If you have a will, you're basically telling the court who you want to own it but the. Court still has to order that. Whereas if you have a trust that avoids probate.
Roy
And the problem with probate too is it's very expensive. It's very costly set by statute, lawyers fees, attorneys and executive fees. It's not negotiated fees, it's costly and it is, as Jessica said, it's public. So everyone will know exactly what everybody's getting and what you had. And if you have children. Unless you have a trust, they're going to get everything at 18, which isn't a very good idea, but they will get calls from the Ferrari salesman and the yacht salesman, and and they'll be spending their money before they even see it. So probably it's something you want to avoid. It's it's just you want to stay out of court. You know, once you get involved, the courts, it's a year long process. And you have no control. You can't just Willy nilly do things you. Want to do so? And it's as I. Said it's very costly, so you do want to avoid.
Jason
That's a good point, especially as firefighters. You don't want the big truck salesman calling you right after you inherit money. 18 years old, right? So by default I would assume.
Roy
I'm sorry.
Jason
That if I. Something horrific happens to me, and let's say I get a. Brain injury and I'm. Incapacitated, I would assume that by default. My wife would then be able to make decisions for me. Is that correct?
Roy
It's not.
Jason
First of all, go ahead.
Roy
It's not. It's not by default. I mean it, it has to be a proceeding. If she doesn't have a power attorney for you or she's a successor trustee or a Co trustee, she may have to become a conservator of you too. She doesn't have automatic rights to just deal with your. Affairs, but if you. Have power turning set up, which is part of the state planning process, and you have a trial. Just it's seamless. She just thought signing things and everything is owned by the Trust she has the authority to sign your name, but you have to go through those couple of steps first.
Jessica
And and there's also umm to piggyback on. That there's two types. Of power attorneys in in California and really in any state, it's you have a one town or your legal financial affairs and you have one to handle your medical affairs. So in California, we call that the. Advanced healthcare directive. And so one allows them to literally step in your shoes and sign documents. On your behalf, which is your regular power attorney. What you want and what we always. Create is what's called a durable power. Of attorney. And that's an important difference. Between a regular power attorney and a durable power attorney, so a regular power attorney the moment you become a capacitated, it is no longer valid. You have to have capacity in order for it to be valid. So what you want is a durable power returning because that stays valid even after you're. In capacity, which really is what? You want it for. The Advanced Healthcare Directive is now dealing with medical decisions and dealing with your doctor. And and the and the life care. Decisions and things of that nature.
Jason
So why would there? Be the other kind of power of attorney that that would stop when you become incapacitated. Why would anybody want that kind?
Jessica
So you a lot of it is for business purposes. A lot of it is just because that's kind of the default. In essence, you're what you're grounding. You're grounding a really strong authority. You're granting authority for somebody to to step in your shoes legally and act on your behalf. That's sending legal documents, entering the contracts, buying things, buying homes, buying cars. If you don't have. Capacity. Think about it like if you don't, if you don't have capacity and somebody's doing. These things. On your behalf, that could be dangerous. So usually the default is some. You can grant somebody the authority as long as you know you're granting them that authority, and you have the ability to say, hey, I don't want them to have authority anymore. So that comes up a lot. For instance, ice use a lot in music, so when I would make a record deal and I would, you have to send all these documents, right? There would always be a provision that said if you don't sign these documents, when you when you're supposed to, you're going to give me a limited power returning to sign it on your behalf so we can make sure this still goes through. It's very limited, right?
Jason
Got it.
Jessica
And it's for that specific purpose. So that's a regular power returning. But here on the state plan where you want is a durable power attorney and that's usually. Pretty broad. There are a few things that I won't allow you to do unless you specifically state it and. We'll always go over that with you. And we'll ask you if that's something you wanna cramp the individual. UM, keeping in mind the type of a door to your granny over.
Peter
So just to clarify for our listeners, if husband and wife are married, they have a couple of kids. They don't have an estate plan. They've given no thought to this process. It is not automatic that the wife steps in and just business as usual, going to handle everything. This is key because I think a lot of people have that assumption. Based on the question Jason was asking. Is that accurate?
Jessica
On the big picture stuff, yes, correct. That's not always gonna be the case. So if it's gonna be a long, they're gonna be capacity for a while. Then at some point, yes, they're gonna. People are gonna want to see conservation papers.
Peter
I got a question. For you guys, what is? What is the relationship between taxation and? Probate? Or is there? One is is is it? Is a trust a way to? Avoid taxes and with probate.
Roy
OK. So with regard to taxes, with your estate plan, there's three different taxes to be concerned about. One is income tax. Properties are sold. If there's gain, you know there's going to be capital gain tax in California is a Community property state. If property is owned by husbands and wives on the death of one they property, whether it's stocks, bonds, real estate, all gets up to and has a step up in basis, which means the IRS will treat it as if you just bought it. So if you bought a $400,000 rental property in 1995 and now it's with. A million or. Two, if you sold it, there'd be a huge capital gain tax, but if a spouse passes away and then you sell it, they'll be tax free income tax free. And that's regardless of your estate plan. Except you should take property and Community property formed owning it as joint tenants, which many people do. They don't pay attention. They just listen to their Realtors. You may lose that benefit, so that's important to look at that. That's all part of what we help you do. Also with regard to property tax used to be. You would inhabit your parents property tax base, and people would have rentals and extra properties at a low tax basis. Now it is all we assess to date of debt value. Unless your parents lived in that house and you move into that house, then you get some property tax break. But it's not, ah. Percent. So that's a concern. And then the other concern is estate taxes. That is taxed on your death. A state tax is at 40%. Right now it's about $13 million per person. So you could have a $26 million before there's a tax. That's a lot. If you don't have. If you have that kind of money. But do not have a trust. One spouse dies, the other spouse inherits it all. Now they may be over the 13 million and they'll be attacked by having a trust who can separate it so each spouse gets the benefit of the full tax exemption, and that will go away in 2025, at the end of 2025. And I'll go back to around 6:00. Million per person. So trust can help you avoid estate.
Peter
OK, so let me clarify on this a little bit. So I know when I've bought property in the past, it's always a little confusing on how you're gonna hold title, right, whether you're talking about Community property, joint tenants, survivorship all the different ways that you can do it. Clearly, getting legal advice from an expert is the best case scenario, right? Like that's what you should do, but I don't think most people go OK pause what we're doing here. I need to call my estate planning attorney to figure this out right, although arguably they should. What does it look like if somebody wanted a couple of things, we'll lump this into cost too. Like how much does it cost to get all this stuff dialed in? And then if you do go that route, like do we have access to this kind of information if you need it like what, what does this look like logistically for a firefighter who's buying his first house and he needs to be considering all these things? Who doesn't have an estate plan? Like, what does that look like? How do they? How do they? How would they go about solving these issues and and getting themselves set up properly?
Jessica
So there's a couple of things. If they don't have an estate plan yet, they don't have a trust and they are married and they plan on taking the property as Community property. Bake what they can do is we would recommend taking title as Community property with rider survivorship Realtors usually recommended joint tenancy because it had the beauty of, you know, rider survivorship meaning once the first spouse died, the surviving spouse automatically became full owner. That was an automatic right. And so that and that was really what people assumed the intention was, right. If you're you're owning property with your spouse, California. Now if you own it as Community property, that wasn't always an automatic given because the Community property you have a 50% undivided interest. You can do whatever you want with your 50% so, but if you have 50 Community property with rider survivorship now you're getting the best of both worlds and that's also something that's relatively new. So that may be why not everybody. Who holds title that bought property a while back? Holds it that way. But so that would be the first step, right? If you have a young firefighter, that's fine. Their first home or buying a investment property or whatnot in their. The next thing that we recommend is you get a trust because I know we were talking about probate earlier and why you want to avoid it in California. If you own anything right now, the amount is $184,500 to your name when you die, that's the that's the amount that triggers probate. If it doesn't have any place to go. If those assets don't have a place to go. Meaning they don't have a beneficiary of some sort. So as we all know, in this state you can't own any property that's worth less than $185,000. It's not possible. So the first thing we would say is get a trust and then you just transfer it to the trust. It doesn't change anything for tax purposes. It doesn't change. Anything as far as right, so. Long as you're. The trustee, it just puts it in the trust. Now, if you already have a trust, you can actually buy the property in the name of the trust. You just take title into the trust and you avoid that all. The other and by the way also what's good to know is that it doesn't cost you anything to put money into a living trust. So a lot of times like when you do a deed right, you're paying documentary transfer tax or you're maybe paying reassessment. There's all these things you. Got to pay for that stuff you don't pay. For when you put. It into a trust. There's recording fees, but those are very minimal. In comparison to everything else and the.
Peter
So if you hold the property because right now the property we have is held in the trust, it's titled to the trust or whatever, so then the Community property thing kind of doesn't matter at that point.
Jessica
Yes and no. So it doesn't matter in the sense that so your trust is an actual legal agreement you have with yourself and with the trustees in the future. So that's what's going to govern, right? So if whatever. However, the property is supposed to be. Handled on your dev. That's what controls. It's like any kind of. Contract. But in the event. That you were to revoke the trust for any reason, right? It's you choose to revoke. You there's a divorce, whatever the reason. It comes back to you the same. Way that it. Was held, so if you owned, if you put it in as Community property comes. Back to. Its Community property. Also, it's important because that dictates the rights of you to change the trust. So, for instance, you may have separate property that you inherited. And you want to put. That in the trust, because to to safeguard. It but that means that it's your separate property unless you stay otherwise. Usually you're the only one that can make changes to it. Your spouse can't just give it away. You know, without your permission.
Peter
What does all this cost? I mean not like to the dollar and cent, but just ballpark figures. If someone wants to set this up the right way.
Jessica
I so we the the I would say it. It ranges probably from about 25. 100 to 30. 100 and we do everything on a flat fee, and that's gonna cover dropping your trust and this. And I'm also talking about a couple here drafting the trust, drafting 2 wheels, one for each spouse, drafting 2 Advanced healthcare directives, drafting 2 durable power attorneys, and then all the supporting documentation. Now where it varies. Why there's like $1000 variance. It depends on if you own lots of properties that we have to transfer. If you own side businesses. I know that's very common. UM in your field is for, you know, people to have side levels. If you have that you want to put down the trust too. But that also requires documentation and then also how? How difficult or how imaginative you get on the distribution? So if it's very simple like you have adult children and it's 5050 distribution and you really don't have to say a whole lot with regard to that, it's relatively easy. If you have young children and you. Have or you have children from, let's say previous. Relationship that's going to take. Additional drafting because we have to make sure that we account for that and make sure we protect their interest in your wishes with regards to drafting that so that takes a little. Bit more work.
Peter
Got you now.
Roy
Sometimes people have children with special needs and that has to be accounted for too, and that can cause an increased cost because you don't want the child to. If they have government benefits, so also sometimes people have property in other. Rates and that all increases the cost a little bit. So it depends on the complexity of the state, what we like to do is we would meet with people, they fill out a form, a questionnaire and after we get a full handle of what they have and what their wishes are, then they come up with a fixed fee and it's usually in. The range that. Jessica mentioned and by the way, it's free.
Peter
What's free? Sorry.
Jessica
The meeting, the initial meeting where we talked to you.
Peter
So firemen and the tourists were trying to do things. Themselves, what are the risks if somebody goes online and tries to figure? This all out on their own.
Jessica
Do not do. I don't. Don't do that. Don't do that with your state plan. Don't do that with any of your businesses. I will say probably a third of my work is cleaning up those. Passes and it ends up costing them about three times the amount of money that they would have spent had they just came. To me to begin with.
Peter
Got you.
Roy
And the problem is they don't know. They made a mistake until it's done and and what we've seen is you go through these online places or other kind of service that aren't lawyers. They say, Gee, I got all these choices. It's the same price. They think I'll select all these choices. Well, the contradictory they don't work and you end up with this total mess, so you should never try to do. It yourself or?
Jessica
You the other thing, that common thing I see is they think. They they created a. Trust and they didn't. It wasn't properly done, so it's. Not really a. Legal document and then they start taking title and that and that creates a mess because now we have to unwind everything we have to transfer everything back. We have. You know, and every, every document we have to prepare. Everything we have to file. That's more money and also we have to kind of track it down and start asking questions. And you got to try to remember, like, where did I? Do this how did? I do this. Who did I open this account with? Yeah, it's. Yeah, it's.
Peter
A mess. So stick stick to the home improvement projects on the DIY. Side yeah. One other thing. And then let's go to Jason. He's got. His hand up when? Is the right time to do this. Should you wait till you have a bunch of assets and you're all set up in life and you've got it figured out? Or when is the right time?
Jessica
So here's the thing, with an estate plan on 2 fronts like we were. Saying in the. Beginning, it's not just when you die, right? It's also to plan and prepare for if anything would happen to you now, and it's one of those things that. I always say this is part of adulting. Everybody knows adulting sucks. Nobody likes it. But this is just part of it, right? So the way you draft these things, it's like if the moment you sign, you walk out of our office, you're gonna get hit by a car. So even if you don't, let's say you don't own property yet, right, you're you're 18/19/20, but you know you you are in the field. You definitely want a durable power attorney. You definitely want about childcare directive, right? So and you also want a will. If you have any kids, so here's the other important thing. But if you have any kids that are minors and you want to nominate who their guardians are and should you and your spouse pass or you and and their other parent past you, name that. In the will. That's that's where you put. It at so if you don't then. Again, it goes up to a court. And the court decides. But the short answer. Is Mommy you become an adult whether you want to or not is the moment you should. Have an estate plan.
Roy
There's no magic number and I think if everybody takes a minute to think of all the stuff they have cars, boats, coin collections, baseball cards, furniture, silver things they've inhabited. Add all that stuff up. It it. It's all gonna be just giving away, throwing out and and. And so it's stuff that you want to, you know, deal with your state is large and it doesn't matter. It's not a dollar amount, it's all the stuff you have now if, if basically sometimes older people think grandparents, they've kind of spent a lot, they don't have any real estate, they just have cash. You can set up payable on death account. That people do, where you can have your investment accounts, bank accounts and just set up. So when you pass away, it goes to certain people and you can avoid having some other documents, but you still need power attorneys. In the healthcare director and and.
Jessica
You still want to talk to in the. State planning attorney because you want. To make sure that. You're accounting for all of that, I think sometimes. The one of the biggest benefits of talking in a state planning attorney is the light bulb moment. Because we asked the questions that you don't think about, why would you think about it and that that's what we do, right? And we also because we we do this on a day-to-day basis, we see all of the. Unlikely but possible outcomes because they come across their. Desk so we know to ask those questions. So it'll be you can plan and prepare for it. You know, nine times out of 10, you don't include an attorney because best case scenario you go to attorney. Is this CYA for worst case scenario and we just plan for that.
Peter
Jason, what do you?
Jason
It's funny you guys say that because that's exactly what we deal with our in our job aspect too. You call us when it's worst case scenario. Most of the time. So I understand that thinking. I feel like you guys are masters at this stuff. Peter is maybe in college, so I'm going to come at you from the elementary school. Side of this. And I'm going. To take it way back to probably where we should have started for somebody like me and dumb it down even further. So what we have a 25 year old which is on the younger side of guys getting hired. When they come to work, I tell them you need to get life insurance and a will for sure for your family. As soon as you have a kid or as soon as you have a house, can you break down? First of all, why? They need a trust, and honestly, I would say what is a trust as compared to a will and how does all that fit?
Jessica
So the both testamentary documents and other documents that state what you want to happen in the. Event that you pass away. Both have their benefits both, but one being the trust is a lot more beneficial, So what it will does is it tells the probate court. What your wishes are, should you die. And now this goes with your property. Then this goes also. With your minor children. But it still has to go through the probate process. So this is that thing we were saying you want to avoid the court making or California making the decisions for you, making the decision where your assets go, make a decision. Who is the guardian of your children, but it still. Has to go through the. Process and that's the process we were talking about. It's very long, it's very public and it's very expensive. And at the end of the day, that's now your wishes may be granted, but they still have to go through that cuz appropriate court still has to order. Whereas and that's the thing that we're saying, if you own. Assets as of right now, it's $184,500 to your name. You have to go through the probate process if those assets don't have a place to go. A trust avoids that, so a trust does everything the will does, with the exception of the guardianship. It does dictate where your assets. But you can own as much as you want, as long as it's in the trust. You avoid probate in California now. Keep in mind this is California specific. Every state is different. So as long as you have that, that's that's the reason why you have trust. If you own property you or like what I was saying, you own assets and you add it up and it's more than 184,000, you get the trust. You also still have a will, so that's another misconception is that people say if I have a trust, I don't need a will and you still need a will. Even if you one. If you have minor children cuz it deals with the guardianship. And two, it is very easy to own assets. And forget to put them in the trust. It happens all the time. You buy a car, you buy in your name, you refinance your house, you pull it out of the trust to refinance, and the mortgage company doesn't prepare the deed to put it back in the trust. Or you just think something's in the trust. The name of the trust, and it's not. So what? So when you have an estate plan with the trust that will is actually. Called a horrible. And what it? Does is it tells the probate court? Hey, anything I? Have that's not in the trust poured into the trust, so your trust still governs.
Roy
You know the the important thing about the trust also, if you're a young firefighter and you're told to get insurance, you get $1,000,000 life insurance. OK. Maybe it's payable to your spouse, and you have small children, but your spouse passed away. You both passed away. Now there's $1,000,000 and there's, you know, a 5 year old. Well, they're not going to give $1,000,000 to a 5 year old. You'd have to get a court appointed guardian and you'd have to make reports to the court. All the time. It's a big mess. That's why you have the trust. Then the $1,000,000 goes into the trust, that's your second beneficiary. And then your trustee, who you've named a mother or sister, whoever you've named. They then will manage their money and protected for the child until the child reaches what age you think it's appropriate. So that's why even a young firefighter with not a lot of stuff, yet they don't have life insurance. That's a bunch of money. This should be a trust.
Jason
OK, that makes a ton of sense to me. Now, when you talked about if you only have a will and not a trust and it goes to probate, are you still paying all of those probate? Costs and fees.
Jessica
Yes you are.
Jason
OK.
Jessica
Yeah, that, that.
Jason
And then how often or what things should somebody just use myself be making sure that you now have in the trust, so some of the stuff you just said with buying a new? Car refinancing your. Is that like a question that's typically asked when you purchase big items?
Jessica
Yes. So well, no, it's. Not if you have a smart realtor, a very smart title company. They may ask that question. Unfortunately, it's kind of left to you when you're making those purchases to say I want to put in the trust. Now we're talking about material items. Here or real property or. Property meaning like what we think. Of as property houses and. And land that you can always put the name of the trust because there's an actual title there. Same thing with cars now, unless you own, you know, a car that's over. 250,000. Dollars or 188,000 mark 184,000. I'm sorry, mark. It's not that it's not going to. You're not going to have to go to probate over a car. There's some exceptions to that, but it just makes everything easier, and then what also happens when you when you create a trust is we do what's called a general assignment. So anything that you don't that you own, you're assigning to the trust. So let's say you forget to name it in the. Trust, we take that general assignment and we take. It to the court after you pass. And say hey. They forgot to put it in the name of the trust, but they owned it at the time they signed this and. There wasn't a general assignment to the. Trust you would probate the court just signs a petition and puts it in the trust. And you can avoid that whole process.
Jason
OK, so you said something super interesting that I didn't catch the 1st. Time you said if the car is worth 184 or five more than that, then it needs to go in the trust. Does that mean that each thing in the trust is individual? So or is it a total of? Over 184 five.
Jessica
Is so the 184 five number in California, that's what's. That's the small estates affidavit number. So that's the amount of money that you can own the amount of worth of your assets that you can own on your debt with without having to go to probate it has. To be. Under that amount, if it's over that amount, then you go to probate so.
Jason
If it's over that amount.
Jessica
Well, what were you?
Jason
If it's over that. Amount total and you buy a $50,000 car. That is something that you would then need to put into. The trust as well, correct.
Jessica
So yes, we would we, we would recommend putting in the trust you can usually you there's there's ways for cars certain certain property you can actually go and under that and separate apart from that amount and you can kind of deal with the DMV directly. But we do recommend especially if it's a high material worth. Like a a collectible car or just. A car that's worth. A lot. Easier to go into the trust because then. There's no issues with as far. As dealing with it, and who has legal title.
Jason
OK, I understand.
Roy
Yeah, just for the simple. No, you want to put everything the trust. That's what we hit. Hit people with, buy a car. You buy a boat, you buy a plane, you buy anything with there's a title to it. Just put in the name of the trust it makes. It's so much easier when you pass.
Jessica
But the the key thing that was trying to make a difference is if it's real property that is extremely important to being a trust. If it's a car, if you own, you know of. F-150 and you buy it in your name and you pass away. It's you're not going to have to probate that. You know they can go to the DMV and show your death certificate and you know they there's ways to get around that. But it is extra steps for your loved one to have to go through that versus. If it's in the trust. Nothing. There's not a whole. Lot they have to do.
Speaker 5
Hi I'm Austin folk, an engineer with the Ventura City Fire Department. I'm also on the board of the Ventura Fire Foundation, an organization that supports firefighters and their families. The foundation produces this podcast as part of our mission, I worked with the foundation because I was witnessed to the help that it was able to provide. To my family, the foundation needs your help. First, please subscribe and rate this podcast on your podcast platform. This helps us get a higher ranking and more visibility for the show. Second, if you support the podcast. And the foundations work. Please consider donating. Every dollar helps us support firefighters and their families. There is a link in the show notes where you can donate through the website at www.venturafirefoundation.org. Thank you for listening.
Peter
I I just want to speak to something for our listeners sake, who hopefully are considering. OK, I'm gonna. Go do this trust thing like I. I need to talk to Schneider and associates and figure this. Well, on what that looks like, so obviously I didn't. You guys didn't do my trust, I didn't. This was years ago, but when I went through this process, it's not as like intimidating and as daunting as it sounds, just with all the legal talk that we're talking about, there definitely are those lightbulb moments, just that you were referencing. And I vividly remember. Sitting in the room with the attorney, with my wife and going ohh, yeah, we think we got this all figured out. The kids are gonna go here. This is gonna go there and then the questions started coming, like, well, do you want the money to go to them when they're 18? Do you want us to delay it till they're 25? Do you want to? Do you know if this happens and that happens and all this these. And those were the things that I think are invaluable. Like you were referencing like I didn't know the answers to these questions. I never even thought of the questions, but the fact that the attorney was asking the questions was spurring conversations between my wife and I on. Oh, there's more to this. We need to give this some consideration. In fact, we left that meeting and had to go home and continue the conversation. And decide what we actually actually ultimately are. We're going to land on with the answers to all the questions, but for the sake of our listeners, it wasn't. They walked us all through it. It took a couple of. You paid your money and it was pretty much done. I think you do need to modify like how you take title to things and there's some things you need to do on an ongoing basis, but the actual like, we're gonna do this, it's not that big of a deal, which is why it's important that you use an expert who knows how to do this specializes in it, because I could imagine if you have an attorney. Who practices a different kind of law? Who's going to try to set you up in a state plan? Probably not a good idea, right? You want somebody who does this day in and day out? So I just wanted to put that in perspective for our listeners who are saying, OK, I need to do this, but maybe they're gonna put it off cause they think it's gonna take them weeks and weeks of their time. So do you wanna talk?
Jessica
Yeah. So UM, like, we're always saying we you come in, we have a consultation and that with our firm that's free and we sit down and what we'll do is we send you a question every beforehand and it has the the main points, right, the big picture item stuff. He said that to us beforehand we take a look at it, then we sit down, we start having the conversation and depending on your answers, then we start asking those. Those questions that you know have the light bulb moment. After that what I usually like to do is I'll send you a summary of what we discussed and the questions that we had brought up, because nobody like you said right, you and your wife had to go home and have that conversation. You're not gonna have those answered. Right. There and then so I. Like to e-mail them to you so you guys can have those conversations. You give me the responses and then we draft it and you take a look at it. If you want to make changes, you need to make. Changes. We do that we. For lack of a better word, to behold your hand to the whole process. And there's no such thing as a dumb question, especially anything legal, anything legal. There's no such thing as. A dumb question. You know, we went to law school. You didn't. So we. I mean, we don't expect you to know any of this and you can Google questions and you get 3 different answers. So definitely come back to us and ask us because I don't put things in perspective when we'll answer it, we'll we'll find the answer for you. If you don't have it right away, answer really important so. It it's not. I know this sounds scary. I think the scariest thing about this whole situation is if you don't do it. I know it's like to talk about, but like I said, I always when I always give a state planning. It's part of a dull team. Nobody likes doing it. It sucks, but it's just part of being an.
Roy
One of the things that makes it a little different than other state planning attorneys, we're very attuned to the concept of family dynamics and and it's very important to look at how that family is set. And then picking your financial fiduciary, for example, number of families say we'll just make my eldest daughter. Well, she may or may not be the best choice. You may have siblings who are going to be how. Come. You're the. Trustee and I'm not who should take care of who? The last thing you want is to have. A child be trustee for another child. That's a mess. We've seen situations where. Yeah, I think I'll. Just name my brother. Was twisty. Not my kids. Well, that may may not be the best because those kids are gonna call your brother every day. I want money. I want money, and eventually they give up and give the. So picking that financial fiduciary and family dynamics, and I'll tell you something interesting is that when the last parent passes away, the children revert back to their adolescents. I don't care if the children are 70, they all become 16 again. And how come I'm like you best? And why did you get that? Then Dad promised me. The baseball and. Those are that's family dynamics and we have a whole presentation just on that and and a lot of times people don't think about that and keeping the family together and not fighting is sometimes more important than who gets what, when and where, right? Because they do and. And if you name one child as trustee. Me and the other siblings don't get all their money within a week. They'll convince the person stealing, so it it's it's it's important to think.
Jessica
Peter, you wanna say something?
Roy
About that.
Peter
Yeah, I can speak to that, so. Unfortunately I have way too much experience with this, so in my own family, my mother's side and. This happens right the second the the grandparent passes away.
Speaker
OK.
Peter
The boxing gloves go on, and then in my professional life, cuz I own a property management company and the biggest messes that we have to unwind and deal with are when the when the parents pass away and the kids are left with rental property and the fighting begins and I see that way more than we want to see and it is a giant mess. So I can just. For what you guys are saying like it it is. A nightmare, yeah, yeah.
Speaker
It is true.
Jessica
It's two things that I would bring up to the .1 is, it's usually the people you don't expect, right? Like I remember, we had a client and. There was a sibling that had some substance abuse issues, had been in and out of rehab, had always lived with one of the parents and they were supposed to get a certain amount of inherent once, and that was the one that. All of the siblings were like, that's gonna be the problem one. You know, they're they're going to demand this. You're going to demand that and I said OK, let's have set up a meeting. Let's have a conversation. Let's see if. We can get ahead of this. And they came in and we sat down. We were talking about and I. Said OK, you. Know what? What is it that you? Would like from this. You know, obviously the. Trust is what it says, but there's a lot of wiggle room depending on how it's. And could you not the sibling looked at me and said whatever it is that's. Going to bring my parents back. If it's like get. Back, I don't want any of it. And I mean the the ceiling was fine with whatever they were given, because then in the day it didn't mean anything to them versus the people that usually make the biggest. Hassles and headaches are there people that are the beneficiaries that are already well? Off and they don't need anything. Right. So it's not always. Like what he was saying, people revert back to you would be surprised the way they act. So keeping that in mind and and you brought up a good point with world property. It's not, and this is your property. And then other day, let's make it very clear this is your property. You can do whatever. You want with it and we will. Talk to you. We will give you all the warnings. We will objectively say this is what could happen, but at the end of the day, it is your property. You can do whatever you want if you want to leave it all to a nonprofit. If you want to spend every last time it's your, you can do whatever you want with it, but leaving property to multiple siblings. Is never a good idea, especially if they're married, because now you.
Peter
So yeah, I want to talk about that specifically and this this transfers over into our work as a nonprofit, obviously, our foundations a nonprofit.
Jessica
Have multiple others.
Peter
What is the cleanest, best way in your guys's opinion to handle the assets of a trust and and this coming from a little bit of like personal question for me. I kind of have a problem with leaving a bunch of money to my kids and knowing that the kids are gonna fight over it and the the glove. The boxing gloves are gonna come on or there's people in our nonprofit world that they leave. Excuse me. They leave their assets to a nonprofit and they'll put that in the trust. And they know you guys probably have some experience with that and I'd like to expand on that a little bit too because those are opportunities for nonprofits. To, you know, raise funds and do the work that they do, but you guys have seen the good, the bad and the ugly. So what is the best way in your opinion? Obviously it's, you know it's your clients stuff and they ultimately get to. Side, but from your perspective, is it better to liquidate everything, divvy the money up and call it a day or give it to a charity? Or what do you see in this regard?
Roy
What's interesting, parents have different views and and different decades have different positions. At one time, parents had the view I want everything to go to my kids. I want nothing to go anywhere. And then it's become. I don't want my kids to all to be just, you know, cut potatoes and live off the trust funds and took it back and forth at 12:30, individual leaving money to charity. One of the things we always ask is, is there a charity? Is there a church? Is there something that means something to you? Leave them some money. I mean, even 10/15/20 five $50,000 is not going to change your kids. Lives means a big difference with charity, so we always encourage. That the other thing that's to think about it and it's up to the individual person is once they come up with their plan, should they discuss it with their children or not. And one of the problems that sometimes we see too is parents want to control their kids lives from the grave. And they'll get money if they do certain things, and if they don't do certain things, they get money. We're going to hold. In trust to their 50. You know, if they, you know, marry this person, we're not gonna give them money.
Jessica
Or go to college.
Roy
Yeah, it's, it's, it's. Too much and and you don't want to control life after death. Sometimes you can leave money in trust for their lives if you think they're not responsible, and then give it to the grandkids. That there's it's just so individual.
Jessica
The one thing I will say this, and as always tell my clients at the end of the conversation at the end of the day, what really matters is. You cannot. You have two ways to look at it. One, either you can try to plan and prepare and get ahead of it and. Avoid as much fighting and just content between everybody as much as possible and try to, you know, account for that or and we do have a lot of clients that take this position. There's nothing wrong with it. They can say I'll be dead. I don't care. This is what I'm. Saying this is how it's going to go. I won't be around to deal with. So and their adults let them. Don't the chips let the chips fall. Where they may as long as you can go to sleep at night with a clear conscience. It does not matter what view you take, as long as you're comfortable with it, because in a day that's all that matters. It's your assets, you know it's your. Life, you know, we'll we're. Here to give you the objective. Views and opinions based on our experience, but a trust is a very subjective thing, so it's going to come down to what you're OK with and what your circumstances.
Peter
Yeah, that makes a lot of sense. So August 7th, you guys are doing an event webinar for us. What are we going to be doing if someone just shouldn't come to that? What's gonna? What's gonna be like, what are they gonna learn? How's it gonna look?
Jessica
So we're going to go through all of the things that we're talking about in more detail. And it's gonna be more like the legal stuff and. Really what the document does and things that you have to think. About when you're. Drafting it so the power of attorneys, the durable power attorney. The Advanced healthcare directives, the wills, the trust, the different ways you can have a trust, right? Let's say if you have minor children, when you drop the trust, you want to drop what's called a pot trust in there, and we'll explain that. If you have children from a previous relationship, you know that's something to really keep in mind. Then we you can give recommendations on how you can draft certain provisions to make sure that if you were to die. For your spouse. Your child from the previous relationship is taken care of and doesn't get cut. Out that, believe it or not, happens a lot more than people would realize or think. Because you marry your spouse, you stay married for a long time. You would. Never think they would do that. It happens a lot more often than people think so. So we we explain that and how to kind of account for that and you can actually control that before you know and make provisions for that things of that nature.
Peter
So, yeah, it's our recommendation that our listeners attend and we'll have all the information more than likely on our website. It's August 7th. Roy and Jessica are gonna be putting it on. So definitely attend that. Is we'll then get some more clarity. I know we've been all over the place talking about every different aspect of it and you're. Probably more confused than you are. You know, having more clarity, but if you come to the the webinar that we're putting on and this is right in line with what the foundation is doing like. Our goal is to. You know, make a positive impact in in the. People that we influence, which is, you know, firefighters and their families, and this is a big part of it. Like if they don't have these conversations, if they don't set up the trust and the will and all that, they're, you know, they're essentially screwing their family potentially. And and nobody intentionally wants to do that. So I think this is pretty valuable information that we're gonna that you guys are gonna provide.
Roy
OK, we were looking forward to it very much so.
Peter
Yeah, Jason, any parting words?
Jason
Here I just had one more question to throw in there. A lot of this has been talking about once you set it up, the initial cost, what are the fees to change some things inside your trust is? It kind of time based.
Jessica
It so it depends on the changes. If you it's just a minor change. Let's say you decide to change distributions or let's say you decide just to change successor trustees. That's a common one that gets that changes over time. It's it's merely an amendment. If we restate it. Then it's can be a little bit. More expensive or it actually? Could be cheaper depending on the amount of changes you want to do. So the initial setup is always a flat fee, and anything after that, unless it's something that's pretty material in nature, we charge hourly an amendment if it's like I said, pretty small maybe takes an hour. You know, I charge, I think 400. Dollars for an hour. So that's that's all you're looking at. If, like I said, it's gonna be a whole lot of changes or if you don't want your beneficiaries to see the changes you made and we do a restatement then and we'll get into more of that in the presentation. Then that might be. A bigger fee, but it'll be a flat fee.
Jason
OK. I appreciate your transparency and I will definitely be there on August 7th. I'm looking forward to this seminar a lot. I've been meaning to set one up pretty much forever, so yeah, I'll be there for sure. And and I appreciate you guys being on the show with us today.
Roy
OK. Well, thanks for having us.
Jessica
Thank you for having us.
Roy
Take care.
Peter
Jason, that was a a ton. Of information and. Frankly, a little bit confusing. How did you feel? About it.
Jason
Yeah, I felt the same. That was some high. Level tax planning, especially in this estate stuff, and I'll tell you my big take away from it is that this is important. I'm going to for sure attend the webinar on August 7th and you know I'm going to put myself out there and say that I don't have a trust and I have. I have some assets that you know are are up at risk right now. I've always had a will on life insurance and I've always known I should have a trust and. My parents do. But this is absolutely. Gonna push me over the edge and and get me.
Peter
There. Yeah, I think the the, the main take away. Is do this. Put an estate plan together because it's literally either your spouse and your kids that you're screwing, or your kids that you're screwing, and no one in their right mind would do either. And then obviously hopefully on August 7th at the webinar, it'll it'll clarify a lot of things for people and I'm sure they're gonna be way more. Methodical and how they present it, and part of that was our fault for just asking random questions all over the place and jumping, you know, around from topic to topic. But just for our listeners benefit, it's August 7th, go to our website theturffirefoundation.org under upcoming events you can find all the info you need to attend the webinar. Arguably not the. Not the most exciting subject, but definitely one that needs to be addressed.
Jason
And I think that, like you said, it'll be more specific and then more than anything, when you get to sit down with one of them, I think they're pretty relatable and they would go through your specific situation in life and get you there.
Peter
Yeah. Yeah, I'm excited too. Well, thanks as always and look forward to. These events, and we'll go from there.
Jason
All right. We'll see you soon.
