Nugen Law; specializing in estate planning and elder care law, emphasizing independence and quality of life.

Serving Indiana, Ohio, Michigan, and Florida.

More information at NugenLaw.com.

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>> Good evening.

I'm Sandy Thomson, the host of Life Ahead and I'm so happy you're with us here on PBS Fort Wayne.

We have a very interesting show tonight and we have a returning guest who's been with us many times Brian Nugent attorney and you'll meet him again in just a few minutes.

But let me tell you about our our show this evening.

>> Basically we're going to talk about the benefits of a trust win win should you and is it right for you?

So that's kind of an overview.

But if you have other legal questions in that vein, please give us a call.

>> You see the number on the bottom of the street screen periodically through the show.

That's for you.

We want you to call us if you're thinking of a question that I have and ask please give the column.

>> Brian's right here to answer that for you.

So good opportunity to get some complimentary legal advice.

>> How about that, Brian?

Yes, I'm ready.

Please call in.

It always makes it more fun for glissandi myself.

It does meet you on the air and Brian Nugent by the way and Brian Specialisms as an elder law attorney, sir, you know a lot about trust.

>> That's a big thing you deal with.

I do.

I do them on a very regular basis almost daily.

>> Oh, seriously that often of course.

Yeah.

Wow.

Well, all right.

There might be a few people that aren't even really sure what to trust is.

They haven't encountered that yet.

So what is the trust and for whom is a trust?

>> OK, well a trust Sandy is I like to think as a contract.

So a trust is it's a legal document that is written generally there are three main players in those trusts.

We have someone called a settler or trust maker.

That's the person generally has the money and they're structuring how that money is going to be used during their lifetime and after they pass away the next category would be someone called a trustee.

That's the person that manages the trust, manages those assets inside the trust.

And then finally we have someone called the beneficiary and as the name implies, it's the person that benefits from the money in the trust.

So what does a trust a trust is a legal instrument.

It's like a contract that's written that says during my lifetime I'm going to put money into this instrument and the money can only be spent on me if if my spouse and I want to go traveling we're going to pull money out of the trust and use the money for our traveling.

>> We're going to buy a new home.

We purchased the home in the name of the trust and I often get a question from clients if I'm using a trust where's the money go who is it that's managing it?

It doesn't go anywhere if you have been banking at bank or credit union why the money can remain in banks or credit union.

Why?

But just instead of it being in your individual name it would be in the name of your trust.

>> When we think about trusts we generally think about types of trust revocable trusts and irrevocable trusts revocable you have complete control over and irrevocable generally you give up you give up some level of control and depending upon what it is that you as a client want to get accomplished, are we looking to protect assets or we're looking to avoid probate?

Why is it that there were speaking to the attorney about having that trust prepared?

The attorney would be able to give you advice on whether or not irrevocable or an irrevocable trust is most appropriate for you.

>> Brian, we have a phone call already and we would we have such a wonderful audience out there and PBS land and we appreciate everybody that wants LIFE Ahead, including you, James, who just called in with a question.

>> Here's what he wants to know how much protection do beneficiaries of a trust have from each other meaning someone feels they have rights to another person's part of the trust to ever deal with that?

>> Yeah, it's a great question.

Thank you, James for calling in.

I appreciate that.

So what I would say generally is as I was saying initially trust like a contract.

>> So when the contract says for example, child gets a certain percentage of the trust in child B gets another percentage of the trust child cannot get into A's percentage and child A can't get into child B's percentage these should be very clearly delineated parameters around what each of the beneficiaries can or cannot receive from the trust.

>> So to your point, what protection does a beneficiary of a trust have from each other?

>> One hundred percent.

It should be a very clear line between the two now it could be that a trust was set up that it said all of my children for example, are benefited from this trust.

>> So there's something called a pot trust where all the kids could pull from a collective amount of money that's sitting in the trust and it doesn't have to be doled out equally.

>> So in that instance one child could be benefited more than another child typically when the attorney is speaking with the client about developing that trust, we're asking the questions do you want this money to be available to all the children?

>> Do we want a certain percentage for this child, for this child?

So when you're having that initial discussion with your attorney, the attorney should be prompting you to ask how is it that you want the money to be used if James what you're really asking is gosh, I was a beneficiary of a trust and I feel like some of the money that I should have gone to me was used for somebody else then the trustee wasn't doing their job as clearly or cleanly as they should have been eroded when they wrote the Trust when the trustee was managing it and when and so if they were permitting your money to be used for somebody else then the trustee was probably not as diligent as he or she or the trust department should have been.

>> What could somebody do if that were the case, say with James?

What could they do about it?

>> Anything so there is liability on the part of the trustee if the trustee is mismanaging the trust isn't handling an appropriately so the first line of defense would be for James to speak to the trustee and say please show me an accounting of the money that to which I was to benefit from and what's happened with that money?

Where is it gone?

The trustee does have a responsibility to provide an annual accounting to the beneficiaries.

So if James discovers that the trustee in fact wasn't managing the money properly or was permitting the money to be used for others, then then James is a beneficiary in this instance he does have the right to pursue James and litigation or to pursue reimbursement of those monies.

So if you're serving as a trustee or a professional trust department, they do have responsibility and they do have liability to the beneficiaries.

That's very important.

>> OK, complicated but not so complicated yet generally so James, to your question, could that happen and has that happened Yes, it isn't something that you see happening on a daily, weekly, monthly basis with trusts.

Typically they're very clean instruments.

They're used with great regularity.

It's a fantastic way to avoid going through probate.

You can drastically cut your expenses when you at a time of your passing so that you don't go through probate.

You're not paying the attorney a lot of fees to go through probate so you're skipping that entire process.

It's also private so a trust doesn't have to be spread of record with a court or filed with the court.

>> So if a nosy neighbor wants to see what you have or how you divide things up when you passed away, a nosy neighbor can't see that.

>> So that's one of the things that motivates folks to use trusts and it's a private thing.

Yep.

OK, Jackson, thank you for watching us here this evening on LIFE Ahead.

Here's Jackson's question.

>> He says Would you recommend a trust for real estate or real property?

Good question.

Great question.

So I really enjoy using trusts for real estate holding real estate.

To me it's again it's a very effective way of protecting assets if we're using irrevocable trusts, it's a very effective way of transferring wealth when you pass away in the form of real estate and being able to avoid going through that probate process, I will say that a significant majority if not one hundred percent of the time if I'm developing trusts for my clients we're putting their real estate into the trust without a doubt.

So yes, it's a very clean way of transferring real estate managing property inside trusts.

If Jackson if you had a question in particular about the real estate or the issue that you're dealing with, I might be able to help you a little bit more with your unique situation.

>> But very generally, yes, real estate goes into trusts on a very regular and and this is very standard if you were to do a search in Allen County, DeKalb County surrounding counties of what real estate is held in the name of trusts, I would assume that you would come up with thousands and thousands of titles that would show trust of the the and trust that Thompson the Smith Trust you would see that over and over again where real estate has been conveyed into a trust.

>> It's a very common you said that's common to put real estate in.

>> Do people do just real state or is it real estate and money or or some other financial asset could be either or it's client specific.

>> So let's say that we make to just twisted up a little bit, get a little bit more complicated sometimes we may put real estate in, do something like an LLC, a limited liability company and then we transfer that limited liability company into the name of the trust.

It could be that we're wanting to separate ourselves from ownership of that real estate keeping a little bit more private.

Who does doesn't own it but know very commonly property is put into a trust it could be if somebody is wealth is significant enough where we might want to use two trusts to separate the the assets to make sure we get enough credits when we pass away a federal estate tax credits.

I'm saying so you don't pay federal estate tax we might use one trusts for the husband one trusts for the wife.

It's not as common as it used to be when our federal estate tax level was much lower than it is now.

>> But yes, we still use more than one trusts but not as frequently as we used to simply as a result of the federal estate tax credit being so high now what other kind of assets, Brian, would people possibly put in a trust other than real estate or they're their money?

>> Gosh, a trust could be funded with something like life insurance policies checking account savings accounts, brokerage accounts, the things that we can't put into trusts are things like qualified money.

>> And when I say qualified money an IRA for example is qualified money IRA I stands for individual so individual retirement accounts those retirement accounts have to remain in the individual's name.

So as a result of that I couldn't put an IRA into a trust but with generally most every asset that you can that you have can go into a trust personal property this this love seat this table can go into a trust.

>> Normally when trusts are written we do something called an assignment of personal property.

So we even assign a personal property into the trust.

>> So at the time of your passing if we're trying to avoid probate all your personal property is already in there because of that assignment and I don't need to go through court to have that transferred out.

So Sanday, you could put any type of an asset into that trust.

>> What the trust permits you to do is create beneficiaries that they're going to receive that money at the time of your passing or during your lifetime and you can put all kinds of unique twists and ties on that.

You could say I want my children to receive this money but I want them to receive 10 percent at twenty five thirty percent at thirty five, another thirty percent at forty five and the rest when they hit sixty five.

>> That's contrasted to if I'm at a bank and the bank says oh I have a savings account do you want to put beneficiaries on that.

You say yes my children's names.

So when you pass the money automatically goes to the children but the so a trust allows you to automatically pass that money to your children however it allows you to dole the money out over time so that maybe a twenty five year old would spend the money a little bit more quickly than a thirty five year old would.

So it gives you a few bites at the apple and make sure that you can protect the money and protect the kids maybe from themselves and and sometimes like that that's taxable to protect from themselves.

Sometimes I have clients put money into a trust because they have a concern about the marital relationships that their child has.

And so if the money is given directly to the child and there's a divorce that happens then that that inherited money may be lost.

We can use trusts.

Let's say that someone is special needs or supplemental needs person.

That's a way for us to set money aside for them but still allow them to receive public benefits so they could be on Medicaid, for example, and I could establish a trust for a child of mine.

So they're on Medicaid which has limitations about how many assets you can have.

So as a parent do you think my gosh, what can I do?

How can I benefit my child when I pass away?

If I give them money outright they'll lose all those public benefits so we might talk about doing a special needs trust fund.

The money is there for the child.

It can be used for the benefit of the child but it wouldn't negatively impact their ability to get Medicaid or other public benefits.

>> Is there speaking of special needs trust.

>> Are there specific kinds or types or names of them?

>> So generally special needs trust.

We look at two different types.

One is a first party or first person special needs trust and there is a third party special needs trust meaning first party means it's my money so I want to go on Medicaid and but I have some money so I'm going to put my money into a special needs trust and that's for my benefit versus if I'm a parent and I'm wanting to put money into a trust I'm a grandparent and I'm putting money into a trust for a special needs grandchild, special needs child.

The first person special needs trust when you pass away if there's money remaining in that trust you have to reimburse Medicaid or other benefit programs if there's money left they have to be reimbursed for the money in that trust.

However, if a third party establishes that trust for your benefit a parent or grandparent when you pass away if there's money remaining in that trust, the money does not have to go back to Medicaid.

It does not have to reimburse Medicaid.

So we use special needs trusts on a very frequent basis.

>> In fact typically I know that I do and I'm certain other attorneys do as well.

I I put special needs trust language inside clients wills in sign clients trusts so that if there happens to be they're not special needs now but if a client or a child becomes special needs in the future we are able to protect the money now.

So we we tuck that inside those instruments so that if in fact circumstances change in the future and we need to have that special needs trust the languages are there and you have that ability you've got we have so many interesting calls here this evening and we have another one tonight Jim Jim, thank you for watching LIFE Ahead.

>> Here's what Jim wants to know and Eleanor, I know you're coming up next.

>> So stay stay with us here.

Jim says if you have a revokable trust and the trustee dies, do you have to assign another trustee or does it get Ribeau?

>> Sure.

Great question.

Thank you so much for asking.

What I would say is that typically when we're preparing that trust I as an attorney, a drafting person of that instrument I'm going to say here's my first choice as a as a trustee if that person can't serve who's number two ?

If that person can't serve this number three, if we don't have listed trustees normally there's language inside that instrument that says here's how you pick a successor trustee somebody's appoint one a beneficiary perhaps could appoint one, a court could appoint one.

>> We could use a professional trust department and then normally inside those instruments we also say if we're going to be appointing a trustee here qualifications that they have to have they have to have so much money under advisement they have to be insured whatever it may be.

>> So no, the trust does not get revoked simply because the trustee passes away.

That would not affect whether or not that trust lives on.

We would look to that contract ,that trust and see what does it say about who the next trustee the successor trustee is going to be.

>> But all right, let's say you're your second and your third one that you actually have named you set it up is not available then what?

>> Sure.

So the judge could assign the judge can decide but we would look to the trust and what does the trust say if the trust says you go to court and apply to the court?

>> We would automatically say that if there is no language within the trust indicating who the new trustee would be, most definitely we would at the trust we would petition the court to appoint a particular trustee or trust department if the court sanction it, sanctions it then that trustee is appointed and then we remove the trust from the docket.

>> We just leave it there for a short period of time.

>> The judge to appoint someone sounds like a lot of these issues have happened before and that's why they have a way to accommodate that.

Eleanor has been on the phone with us tonight and LIFE Ahead and she has a question if you and your husband have each other's name on property, do you still need a trust to avoid probate so you can hold title to real estate in any number of ways us so if the deed simply says Eleanor and Steve and their husband and wife, it would automatically go to the survivor of the two if you had language on your deed that said something called tenants in common it wouldn't automatically go to your spouse.

>> But the default in Indiana and in most states frankly is if you're married when you own it, it does automatically go to the to the surviving spouse.

That having been said, Eleanor, we have to think about beyond just when the first spouse passes we have to think about when the second spouse is passing.

So in the second spouse passes, do you want to go through probate at that time?

Typically no.

And remember we're dealing with your question was joint names on property I'm assuming you're talking about real estate, real property.

You could be talking about other property checking account a savings account excuse me but normally just because you're married and you have jointly title assets we wouldn't say you don't need a trust.

It's something we should explore and determine.

Do you want to avoid probate and I'm talking about avoiding probate.

That's the revokable portion of the trusts we can use trusts to protect assets if you have a nursing home, stay in assisted living facility, stay to protect against liability car accidents, those types of things.

We can use trusts for those purposes as well.

So it's not just to avoid probate.

>> They can accomplish many any number of things.

OK, we can't say that trusts are a fairly new type of accommodation for you or has this been around for decades decades really a long, long tme as it become more sophisticated and varied?

>> I will what I have noticed with my clients is I think people are more savvy to trust now they're probably tuning into shows like this or they're reading articles or they're seeing the benefits of it.

Yeah, So as a result I think for me there's so positive and there's such a good thing to use as a tool for estate planning for asset protection integral part of elder law when we're protecting assets should we go into a nursing home?

>> They're not really scary but clients are nervous about it and so it's important for the attorney that you're speaking with to be able to explain it clearly and succinctly and give you a level of comfort and make sure it is a good fit for you.

>> Trusts are not appropriate for everyone.

There are instances in which we don't use trusts.

>> I will give you an example before about qualified moneys, IRAs so on those IRAs although we could make the trust a beneficiary of that you could make your children a beneficiary of it as well.

>> So perhaps someone's entire estate is consists of something like an IRA and they don't worry they're not worrying about spreading the money out over time or protecting the kids against themselves.

We could just do a direct beneficiary.

But trusts are our something that shouldn't be feared.

>> You should ask your counsel about them, make sure that you understand and I'm always dubious when someone says Oh no, no, I heard their terrible thing.

Don't do them.

>> I don't understand that I got bad counsel from someone.

Maybe they get that recommendation from a neighbor.

>> A neighbor.

Yeah.

OK, we have another question tonight.

We have just a few more minutes on our show.

>> We want to make sure we get Paddys a question answered.

She says If my parent has a strange children question that I have never met by the way are those children entitled to any part of their estate when they pass?

>> Very good question and I bet this comes out great question and it does come up.

pIt has come from my career so if the individual that passed that has these children didn't have any estate planning in place, then yes, the children are able to come forward and say I get a piece of that estate through something called intestate succession but if you've done a will if you've done a trust, if you've got your estate planning in place and you want to disinherit someone children that you don't have a relationship with that are estranged from the family or for whatever reason weren't engaged in the family then normally what I like to do in my wills or my trust is I will say I'm intentionally disinheriting these people and I don't explain why you don't have to huh?

>> You don't have to.

And also if you explain why my position has always been it's giving that person a reason to challenge the will to challenge the trust to say that's not true.

>> I did try and reach out to them.

I did try and have a relationship.

So even though it says that I didn't try and do that, I'm going to now challenge that will.

So I like to simply say we're intentionally disinheriting person a person person see and leave it at that.

>> So to answer your question, Patty, if a person doesn't have any estate planning in place they haven't taken those steps, then yes, it is possible that children that have a been far afield for years and there is no relationship for them to receive a portion of the estate .

What's interesting is a majority of folks don't have estate planning in place.

>> A majority don't really.

Yeah, statistically they don't and it's I am always I'm always amazed at this.

>> You've worked your whole life to create that wealth and accumulate and when I say wealth if it's a dollar if it's one hundred thousand if it's a million if it's ten million one hundred million that's your wealth.

It doesn't matter how much it is.

Take those steps to get appropriate estate planning in place which may include a trust may or may not may or may not be appropriate for you a basic will beneficiary designations that's very important.

>> Yeah.

You know I wonder though if sometimes people put off making those decisions or doing those actions because well number one they have no idea how much longer they're going to live and whether they're going to need that money or it's one of those it sounds so fatal I put it on I'll do it next month so I'll do it next year.

>> I have had clients that oftentimes the kids will drag the parents in and that's putting this off.

Mom's putting this off because they have this notion that if I do that I'm accepting my mortality.

>> That's what I'm talking.

Yeah, but but doing doing that state planning to your point, Sandy , doesn't mean that they're giving up being able to enjoy that money or they're not giving up being able to use that money for their well-being.

But I would encourage folks to get their estate planning in order.

>> It could be well could be a trust beneficiary designation and other documents that go with it.

>> I always learn so much from Brian when he's here and I thank you all that have called in tonight we have Jim and James and Eleanor and Patty and I really appreciate you watching as well.

And by the way, coming up here next month we're going to have some financial adviser here too .

It'll be able to give you some ideas as you begin to plan next year and begin to do your tax planning.

Meanwhile, take some recommendations here as you think about trust Brian, thank you so much for being here.

>> Sandy , appreciate it.

And the rest of you will see you right here next here Wednesday night at seven thirty.

>> Be safe.

Be happy Nugen Law; specializing in estate planning and elder care law, emphasizing independence and quality of life.

Serving Indiana, Ohio, Michigan, and Florida.

More information at NugenLaw.com.