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What Even We Didn’t Know About “Protecting” Our Wealth


Are you working towards FIRE or building a financial legacy? Then DON’T skip this episode! What’s the point of creating generational wealth if it will be lost after you’re gone? Jenny Rozelle, estate and elder attorney, is back on the show to answer some of our most pressing questions about wills, trusts, estate planning, and everything in between! She’s got some answers that even personal finance experts Mindy and Scott didn’t know. And if you’re just starting to think about preserving your future wealth, this episode may shock you, too.

From “napkin” wills to bad inheritances, protecting your heirs’ wealth from potential future divorce, and whether or not you’re owed millions after your tipsy Aunt promised you her vacation home, Jenny clears up all the misconceptions that most Americans have about inheritance and estate planning. 

Plus, if you’ve got children or loved ones you’re planning to pass your wealth on to, it’s crucial to follow Jenny’s advice on updating your will. Neglecting to update your estate plans or planning around the wrong people could put your wealth at risk!

Mindy:
Does a will written on a napkin pulled up. Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and with me as always is my still for informational and educational purposes only. Co-host Scott Trench, BiggerPockets has a goal of making 1 million millionaires and that starts right here with us and a strong financial foundation because we truly believe financial freedom is attainable for everyone no matter when or where you are starting. And once you become a millionaire, you’re going to want to protect your wealth. So today we’re continuing our conversation with elder law and estate planning attorney Jenny Rosell Scott and I consider ourselves quite knowledgeable about money and you’ve got some questions that even we didn’t know the answers to. Like is choosing your oldest child to be the executor of your will, the best option, or just how binding is that promise made from your great Uncle Bob after six glasses of wine last Christmas? If you are new to our show or didn’t catch Jenny’s first appearance on episode 532, you might want to press pause on this episode and go back and listen to 5 32. First, you definitely do not want to miss the three legal documents that Jenny says are the most important for your estate planning no matter what your age. Alright, Scott, I trust you can handle this question,

Scott:
When do I want a revocable trust versus a non revocable trust?

Jenny:
Yeah, usually when you’re dancing into irrevocable trust world, it’s usually because of either asset protection purposes or tax planning purposes. And when I say tax planning purposes, what I specifically mean are things like estate tax planning. Taxes are really boring and I don’t think you guys want to get into it, but estate tax, the estate tax limit is pretty darn high right now, and so you have to have a pretty significant net worth. It’s 13.61 million per person. So as a married couple you get two of that. So it’s a pretty small percentage of the population that really cares about the estate tax leaning side of things, but that number is supposed to drastically reduce at the end of 2025. It actually cut in half is about what it’s supposed to do. So you’re usually in irrevocable trust world, Scott, for asset protection planning purposes and tax planning purposes, if not really one of those, you’re usually in revocable trust world.

Mindy:
You alluded to having a meeting with somebody to get an idea of what they’re looking for before you start working on their estate plan. How long should I expect the creation of an estate plan to take? It doesn’t sound like it’s a one hour meeting. Am I unreasonable to think that it can be done in a week or a month or a year or what am I looking at?

Jenny:
Totally unreasonable. Unless you want to pay an expedited fee for a week and unfortunately I we’re kind of laughing at it, but we get a lot of phone calls too where people have hours or days to live and now they’re thinking about getting their, or really their family is thinking about getting the estate plan in place most of the time that’s impossible. I mean my office and I’m sure most reputable estate attorney’s offices, you’re not going to be able to swing that so quickly having an estate plan from start to finish through the process start to finish, totally unreasonable to do within a week or two, the more advanced planning that you’re due, if you start getting into trust planning, that’s going to take at the very least a couple months because part of trust planning is also to take assets and move the ownership or beneficiaries to support the actual trust document. And you’re of course at the mercy of financial institutions and recorder’s offices to transfer property. So that’s going to be a much longer process than a basic plan like the healthcare documents, power of attorney and a will. We can have that from start to finish usually within a month-ish. So from a shorter timeframe, probably about a month.

Mindy:
Okay. I mean these are facts. These are what they are. So I want somebody to be thinking, oh, I can’t just do this overnight, but Jenny, since you can’t take care of me overnight, can IDIY it? Is that still legal if I do it myself?

Jenny:
Sure. I mean there are people truly that do DEIY, their plans and the success stories of that you don’t hear about or at least you rarely hear about. So I would be being a party pooper if I said, oh yeah, if you DIY, your plan, you’re just asking for trouble. Sure. If you try to DIY your plan, the risk you’re running is that you just don’t understand what these documents are, what these documents do. It just comes with a much higher risk. Mindy and I, you and I were talking about John Grisham. John Grisham has all the, I’m in the middle of a book right now where this gentleman hand wrote his own will and there’s all these stories about people handwriting wills and handwriting deeds for properties and would I do it? Heck no. But do people do it all the time? Yep. Do some of them work? Yep. Do a lot of them not work? Yep.

Scott:
One other component for this that I feel like is really important or at least I perceive is really important from what I’ve read, who I’ve talked to and all this is how you behave around your family errors. These other folks in the context of this document, like alcohol influenced discussions at holidays, create seemingly huge drama. I imagine for people like you when what was discussed after six classes of wine at Christmas three years ago is not actually in fact in the will. So can you give some advice there and do you have horror stories along those lines that you’ve dealt with or disappointment? Yeah,

Jenny:
I mean, what I always tell people is I wish that I could make a blanket statement about communication regarding an estate plan, but it doesn’t exist because sometimes people are much more private about this sort of stuff. So if someone’s like, I think of a lot of my clients that are call ’em seventies, eighties, they live in rural Indiana. They’re very private. If their kids dare ask them about their estate plan, they would be disinherited as quick as you could blink. I mean, it’s like, it’s just you don’t touch it. Interestingly, the kids often know not to touch that conversation. They know that it’s dad, mom, whoever. We just don’t have that conversation. I personally and professionally am a big fan of communication. I think it does eliminate an immense amount of headaches down the road and immense amount of miscommunication down the road. So I would prefer people be more communicative and transparent about their estate planning and what they’re doing and the kind of documents they have and who mom and dad decided to put where sometimes people decide to have that conversation with their family. I would not recommend doing it after six classes of wine at Christmas, but if you do, I guess if that’s what your family loosens up and after six classes of wine at Christmas, and that will be best for them, I guess that’s best for them. But I would not recommend that strategy that also would fuel lots of emotions. I’d probably start crying after six classes of wine

Mindy:
Should you keep it fair and equal when leaving money to multiple people. We’ll be back with more questions and Jenny’s awesome answers right after this quick break. Welcome back to the show.

Scott:
How about unequal treatment? Right, because what is fair is not agreed upon by heirs and I’m sure many instances and is not just as simple. I think in most cases I would argue or I would be willing to bet as everybody, if there’s three kids, everybody gets a third. It’s like, well, which kid had the more expensive college education in which kid lived at home? What were the, I think the millionaire next door calls it economic outpatient care components that the parents deliver to their children during life and how that factors in. So how do you think about fairness in the context of this for someone’s passing on the state?

Jenny:
My first reply is fair is not always equal. Sometimes I’m working with a family that has a farm that is passing down and there’s one child maybe has been doing some sweat equity or you think of a business owner that maybe a child has expressed interest in taking over the business. What I would say is most of the time people will kick the can down the road. Most of the time they’ll just say, I just want to to go equally to the kids, equally to the beneficiaries, and I’m just going to, regardless of if little Bobby went to Harvard and little Susie went to a community college, most of the time people don’t put, at least from my experience, most of the time people don’t kind of dangle that carrot over kids’ heads. They’ll just say When I passed away, it goes equally to my beneficiaries.
But trust me, there definitely are people that I have multiple clients, multiple families that I can about expect to see them after every holiday season because at least one of the kids has made them mad and now it’s time to decrease their share. And it’s a very interesting psychological experiment sometimes to see how people think through how they are leaving things to their beneficiaries. But I’ve had honestly, and I probably shouldn’t share them in public, but I’ve had some cases where I very much disagree with reasons that parents are disinheriting their children for very personal reasons, that those are the kind of things that as an attorney keep me up at night because it makes my heartbreak and those kind of people very much exist and at the end of the day, it’s their estate plan. They can do whatever they want with it and it allows them to be put in the driver’s seat. This

Mindy:
Is a perfect segue into my next question, which you didn’t even know about, but how frequently should I be reviewing or updating my will besides, apparently every year after Christmas when I have a big fight with someone,

Jenny:
If you ask 10 different attorneys this question, you’re probably going to get 10 different responses. There’s a lot of attorneys that will say, you need to update your estate plan every five years or every 10 years. I usually anchor to life events. Of course, if you want to pull that baby out once a year and just double check it, great. I’m going to be your biggest supporter in doing that. But I always have clients anchor to life events and what I mean by life events are new kids, new grandkids, people getting married, people getting divorced, people dying, people experiencing personal issues, those kind of life events, those are the things that are usually going to impact someone’s estate plan. Estate plans don’t expire. So if you did an estate plan at 23 and it’s still the estate plan that you have at 63, if nothing, if your wishes and goals haven’t changed, then sure it’s really old, but it’s not expired, it’s not game over. You have to start again. So I say to answer that question, to focus on life events, and it’s those life events like your belly, your gut knows those life events that I’m talking about, and it’s those ones that you need to be like, oh, does this impact my estate plan? Let me pull out my documents and look,

Scott:
You’ve mentioned the word divorce a few times here and I have observed in some wealthy families a desire to protect family estate from future divorcee of child. Is that a common fear of people in estate planning and what are the mechanisms that are used to alleviate that fear?

Jenny:
Yeah, I mean I think that we would all be putting our head in the sand if we didn’t realize the divorce rate. If you think about it, if a beneficiary receives an inheritance outright, so say, Scott, you’re my beneficiary and I die and you are my beneficiary that you’re going to get your inheritance outright. You get that inheritance tomorrow and your spouse files for divorce the day after tomorrow, well, that inheritance is going to get dragged into that divorce proceeding because it’s now in your name. And so what a trust does when a beneficiary receives their inheritance into a trust is it provides that separation between them personally and them in this trust entity type of thing that allows for them to gain asset protection against a divorce for their inheritance.

Scott:
Yeah, this is, I’ll admit, one of the things, my baby is less than two, but I don’t want her if that were to ever happen for that to be a problem in there. And that was something that we thought through and there’s a number of mechanisms, but I think that that’s perhaps a common thing I’d imagine many people want to plan for with the tool of a trust. I think it’s a lot harder to do that with a will, for example, where you can’t really direct all of those things.

Mindy:
So if I am understanding you correctly, Jenny’s trust that is left to Scott Trench personally doesn’t belong in the marital assets.

Jenny:
If he in that example, inherits a trust, so you can have an estate plan set up where my estate plan, my trust creates a trust for Scott’s benefit to gain him asset protection against divorce creditors, lawsuits. It’s used quite frequently for a lot of different reasons, divorce being one of them, but the difference there is that it’s not in his personal name. He doesn’t get a check when I die. He gets a check into a trust that gets created and that keeps it out of his personal estate.

Mindy:
Oh, interesting. The

Scott:
Trust is a person, it’s an entity, right?

Jenny:
Kind of

Mindy:
That’s an interesting way to phrase that. Okay. So to muddy the waters a little bit more, should you review your estate plan with your family or should you keep it close to the vest?

Jenny:
I mean, it’s kind of that same line of thinking of your family better than I do. If your dad is going to get red hot mad, if you ask him what his estate plan looks like or your mom will be very open and transparent and actually respect bringing that conversation up. Like I said earlier, I mean, I’m always going to be a fan of communication and transparency. Where that will bite you in the rear end is if you have spelled out, Bobby is your healthcare representative, and maybe Susie is all things financial, if either one of them, if your relationship with either one of them or both of them become strained or estranged, there could be a little bit of backfire there where now they know what’s in, what’s your estate plan looks like, what it consists of, and now we have a strained relationship with someone that maybe we didn’t want to have that information.
Probably the theme you guys are picking up on here is that there’s rarely a clean blanket answer for anything. It’s annoying, and maybe it’s just my lawyer brain that I just can’t give clean answers. Maybe that’s more what it is, but it just depends on the personalities and relationships involved. My husband, who I own the practice with, he’s an attorney as well. He says it best. He said, estate planning and estate planning documents are easy. It’s the personalities and the relationships that make it difficult. And I always think of is that little saying that he just came up with because it’s so true, it’s the relationships involved and the personalities involved are what’s going to make an estate planning venture really successful or not

Mindy:
Well, and I think that it depends as a valid answer. I like how you’re going into, well, you could do this, you could do this, you could do this. It depends. This is really helpful because you might live and breathe estate planning law, but we don’t

Scott:
Probably, it depends and it evolves, right? No, right. The answer that’s right for me for now is not going to be right for me when I’m 60 and not going to be right for me if I’m lucky enough to live to 90 either

Jenny:
And everything evolves, right? Something I was thinking about earlier, I think a lot of people out there think that there’s this magical big brother that when someone passes away that we can knock on big brother’s door and find out everyone’s assets and that big brother doesn’t exist. And so you think from a place of communication and transparency, the more you’re communicative and transparent about this sort of stuff, that it’s helpful because at the very end of the day, if someone needs to step into these roles, they know a little bit about what’s going on, what they’re stepping into, rather than surprise, something happens and Hey, you’re my power of attorney, guess what? And you have no idea what assets are out there. There’s plenty of families that don’t share with their person that they’re appointing, that they have listed them in these documents, and it’s like, surprise.

Mindy:
Up next, we’re going to talk about what to do when you don’t want your inheritance right after this quick break, we are here with an estate planning and elder law expert, but don’t forget about our community of experts in our forums, which is a great resource for getting your questions answered fast. Go to biggerpockets.com/forums.

Scott:
Aside from mismatch between expectations and reality, can there be a negative consequence from inherit? So for example, could I inherit a property that has debt on it that is underwater, for example? How does that work? Can you give us a quick framework there, Nika? Any gotchas in that world?

Jenny:
Yeah, yeah. I mean, yes, you could. To answer your question, if you said, if I had in my plan, I want Mindy to inherit my beautiful Michigan cottage and I think it’s the most beautiful thing ever, and then I passed away and Mindy goes to Michigan and she’s like, this is a hunk of junk, and oh my gosh, there’s it’s upside down in a mortgage. That stuff does happen, and there’s different strategies around when those kind of things happen. In that example, if I was Mindy’s attorney, I would say, okay, well, you’re going to disclaim you. You’re going to waive your interest in that what she thought was a beautiful Michigan cottage, and it’s not worth anything. Beneficiaries can disclaim and say, I don’t want it. And so if a listener ever finds themselves in kind of a little bit of a pickle of like, gosh, wait, what am I walking into?
What am I supposed to receive? Be sure that you understand that as a beneficiary, you’re also entitled to seek your own attorney’s advice if you want to. The fun part of my job is coming up with strategies and options, so may be options that someone has no idea exists of. Like I just said, if I left Mindy my terrible cottage and then Mindy goes over there and she’s like, I don’t want this thing, and then Mindy calls the attorney, hopefully the attorney is like, okay, well here are your options. You could take over the cottage and maybe put some money into it and rehab it and dah, dah, dah and turn it into an Airbnb. Or you could say, I don’t want it. I’m going to disclaim. I mean, there’s different strategies often in my world that people can explore to make sure they’re doing what’s best for themselves.

Scott:
So if you’re paying attention and have a reasonable attorney in this, you’re not going to just all of a sudden realize, I inherited stuff and now I’m a hundred thousand dollars poorer as a result of it. So that’s just something for folks to realize. But if you’re not paying attention, that could absolutely happen if you’re unlucky and not on top of things.

Mindy:
Okay, as the inheritor, the person getting the cottage, do I need my own attorney? Can your estate attorney advise me on my options?

Jenny:
So it’s a little bit of a gray area because when I help someone after someone’s passed away and I am representing the executor or the trustee, I am a very kumbaya kind of person where I’m like, okay, if beneficiaries have questions, direct them to me, that allows me to first of all, keep a pulse on people, but also control communication and what’s being delivered. So there’s a certain amount that the attorney that is navigating through the administration process, they can share information and help you explore options, but their duty in all technicality is to the executor or to the trustee. So if they start sniffing around and they’re like, oh, this could get sour quickly, then they may say, Mindy, I hear you and I respect you and I respect you so much that I’m going to say that I cannot help you explore those options. I want you to seek your own legal advice to make sure that you are understanding fully what your options are. So it’s kind of a gray area because they and a estate attorney can kind of help with that communication, but it does, is it a little bit of a gray area merely from an ethical standpoint of who’s the client, and technically in those cases, the client is the executor or trustee, not the beneficiary.

Mindy:
Okay. And well, that’s good to know, especially for our listeners who may be on the verge of inheriting something as an heir Scott or creating their own estate plan. Yeah.

Scott:
What about the napkin will written at the last minute to override the painstakingly built estate plan? Is that a thing? Oh

Jenny:
My gosh. Oh, there’s so many cases about that from law school of people taking a, I forget what kind of tool it was, but there was some very famous case in the estate world where he took a tool and scratched on the side of a truck. His estate plan as he was there was some kind of accident and he was riding using this tool and riding on the side of a truck. Yeah, please don’t do that. Please don’t. Please don’t like Mindy. And I know that’s the stuff that happens in John Grisham books, and those books are 500, 600, 700 pages of reading for a reason because there’s usually litigation involved when that happens.

Mindy:
Oh, okay. In one of those John Grisham books, he’s put in his will, anybody who can test this will is instantly out of the will. Is that a thing that you can put in your will?

Jenny:
Yeah. Yeah. It’s called the no contest clause. Weird fun fact. My state of Indiana is always one of the last states to do everything. Indiana was the second to last state to pass the no contest clause. So at this point, I think most states have it. What I always tell people though is that is a very real thing that you can incorporate into your estate plan to say if you try to contest this estate plan, it is essentially the way it works. It’s like you’ve predeceased, so you kind get skipped over, but there’s always going to be ways to attack an state from a different perspective of if there’s legitimate concerns about, were you of sound mind, were you influenced in a way that you shouldn’t have been? If there’s legitimate concerns around that, that no contest clause is going to get thrown out the window, but if someone’s just grumpy pants, then they can just be grumpy pants, and I’d recommend that they not hire an attorney because they may have some serious consequences to that.

Mindy:
That is, it’s good to know. Like I said, I’ve read all these John Christian books and I’m like, oh, I could just do this and this and this. It sounds like what you’re saying, I need to get an estate attorney to help me with my estate plan.

Jenny:
I just want more people to have these estate plans in place. I think the statistic I heard was like 50 or 60% of people die without an estate plan, and that’s way too many people.

Mindy:
Thank you, Jenny, so much for your time today. This was so much fun. And we will link Jenny’s information in our show notes. We invite you to post your follow-up questions in the BiggerPockets forums, which can be found at biggerpockets.com/forum. Alright, Scott, that was Jenny Roselle and I learned that there’s a lot of gray areas in estate planning and that DIY is probably not going to serve me best. Really, this is something that my estate plan needs and I’m now going to go back and revisit my estate plan. How about you? What’d you learn from the show?

Scott:
It’s the laws of the state where you pass away and there’s no right answer is what I learned to all of this. The right answer is to have a plan, and it’s just a process you have to go through and think through and no substitute for a professional to walk you through all that.

Mindy:
I really do believe that the DIY plan is only good for when you don’t really have anything to protect. Don’t really, protect isn’t the right word when you don’t have a ton of assets. You’re 18 years old, you own a car and you have a thousand dollars in the bank. Okay, great. That’s a great DIY time. I don’t think it’s a good steward of your money to hire somebody to craft a plan that says, my mom gets my car and my dad gets my a thousand dollars.

Scott:
And I like how Jenny corroborated that maybe use one of these online platforms, which I think is great, and I think we should search those and maybe look at some of those at some point here. But yeah, you don’t need to build a trust and have all that stuff set up when you’re 18 to 23 and have very little an asset in the way of assets there. But you do need to think through some of these things. It is good to have those in place and everyone should check that off the list.

Mindy:
Alright, Scott, so we get out of here. Let’s do it. That wraps up this episode of the BiggerPockets Money podcast. He is Scott Trench. This is Mindy Jensen saying, where there’s a will. There’s a way, don’t delay. BiggerPockets money was created by Mindy Jensen and Scott Trench, produced by Hija Aldos, edited by Exodus Media Copywriting by Nate Weintraub. And lastly, a big thank you to the BiggerPockets team for making this show possible.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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