Episode 301: Who Needs a Trust? - More People Than You Think with Ashley Waddell-Tingstad

We’re revisiting one of our most-requested conversations — a practical, myth-busting look at estate planning with Melissa Joy, CFP®, and Ashley Waddell-Tingstad, founder of Treetown Law.

Trusts often sound complicated or “for someone else,” but Ashley breaks them down into simple, everyday tools that protect families, minimize stress, and provide clarity during life’s biggest transitions.

What You’ll Learn:

 • The essentials: Why powers of attorney and healthcare directives are the cornerstone of any estate plan.
• Trusts vs. probate: What probate really involves — and why many families prefer to avoid it.
• Beneficiary designations: How small updates can prevent major complications.
• Revocable living trusts: The privacy, flexibility, and ease they provide (no, you don’t need to be wealthy).
• State-specific guidance: Why your plan should be created with local laws in mind.
• Post-death protection: How trusts help shield assets from legal and financial vulnerabilities.

Whether you’re planning for the future or simply want to understand your options, this replay delivers clarity and confidence.

The previous presentation by PEARL PLANNING was intended for general information purposes only. No portion of the presentation serves as the receipt of, or as a substitute for, personalized investment advice from PEARL PLANNING or any other investment professional of your choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion or content, will be profitable, be suitable for your portfolio or individual situation, or prove successful. Neither PEARL PLANNING’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. PEARL PLANNING is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. No portion of the video content should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. A copy of PEARL PLANNING’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https:...

Chapters

• 0:00 Setting The Stage: Estate Planning 101
• 2:02 Relationships At The Heart Of Planning
• 3:40 Incapacity And After‑Death Basics
• 5:27 Trusts Demystified: Roles And Purpose
• 9:10 Avoiding Probate And Why It Matters
• 12:48 Beneficiary Designations, TOD And POD
• 16:50 Real Estate And Lady Bird Deeds
• 19:29 When A Trust Is The Better Tool
• 23:08 Planning For Minor Children
• 27:10 Special Needs Trusts And Benefits
• 30:25 Protecting Heirs From Risks And Creditors
• 33:34 Privacy, Taxes, And High‑Net‑Worth Nuance
• 37:28 Keep It As Simple As Possible
• 39:06 Costs, Flat Fees, And What’s Included
• 42:25 Emergency Documents And Real‑World Use
• 45:15 Action Steps, Finding The Right Attorney
• 48:03 Closing, Resources, And Disclosures

Transcript

SPEAKER_03: 0:00

Welcome to the Women's Money Wisdom Podcast. I'm Melissa Joy, a certified financial planner and the founder of Pearl Planning. My goal is to help you streamline and organize your finances, navigate big money decisions with confidence, and be strategic in order to grow your wealth. As a woman, you work hard for your money, and I'm here to help you make the most of it. Now let's get into the show. Who needs a trust? What even is a trust? These are all questions that I'm often talking about with clients, even though I'm not an attorney myself. But I wanted to bring in the expert today. We've got Ashley Waddell Tingstad as a guest. She is the founder of Treetown Law, which is an Ann Arbor-based estate planning law firm. She's got a lot of great experience in the legal world to begin with, but also personally, she's passionate about estate planning, which is basically the documents that you need to keep your affairs in order. She's passionate about that because of circumstances within her family. And she has dedicated her legal career to helping families and individuals get the right documents in place. Ashley, welcome to the podcast.

SPEAKER_02: 1:18

Thank you for having me, Melissa. This is uh such a pleasure.

SPEAKER_03: 1:22

Well, estate planning is something that most people don't do every day. And it's also something with a lot of assumptions because, you know, growing up, we all hear about wills, like, you know, you're reading in books, and it's like, everybody come to the reading of the will. But in the real world, that's not exactly how most things work nowadays. Because yeah, most assets are in financial accounts where there is some sort of instruction or lack thereof, right? Linked to each account. So let's talk about, let's talk about estate planning, give me a little intro, and then we can talk about the topic of the day. Absolutely.

SPEAKER_02: 2:03

Well, at Treetown Law uh in Ann Arbor, we, you know, I think about estate planning in terms of um, it's really about relationships. It's about our relationships and our relationships to the people in our lives, the people we want to protect, the people that are depend on us, the people that we want to leave our assets to, our relationship with the people that we trust, whose good judgment will help us and help our family in times of need. Um, and our relationship to our assets, right? Um, uh, the values that we hold dear and those that what we want to pass on. Uh, so we always try to like really zero in on what's going on in your particular family, your particular relationships, and how can we honor those in your estate plan? So, estate planning, you know, we we're really planning for, you know, both the inevitable and also the unexpected. Um, and so we are planning for incapacity, and then we are also planning for after death. So that's really when estate planning documents um shine uh is as real as in times of crisis, incapacity and after death. Incapacity actually is a pretty broad, broad definition. Um, people are always surprised when I show them that it also means um detention or disappearance for more than 30 days without an explanation. So, you know, God forbid, I say, like, you know, your cruise ship gets lost in the sea or something like that, you know, or you're you get quarantined because there's somebody who got sick on your cruise ship. You could be detained for more than 30 days and unable to manage your affairs. So those are all types of incapacity. But then, of course, other types of incapacity, medical and cognitive incapacity, really, really important. Um, so those are the two times that we plan for. And so we have different sets of documents that really help us and help guide us and are legally operative at these times. Um, so on a high level, you know, the vague documents when it comes to incapacity are our power of attorney for finances, all your financial administrative affairs um can be handled by a power of attorney, and then also your healthcare power uh as a patient advocate, right? So making medical decisions when you can't communicate your medical wishes. And then after death, um, the big documents are um oh, I should pause for a second. Actually, trusts, trusts are also in capacity documents. So they bridge the gap. They bridge the gap. And then after death, we've got um the will is really obviously really important, and and a trust. So you can see that trust sort of like bridge the gap between incapacity and after death.

SPEAKER_03: 4:46

Um well, I think people when they hear about trust, they think, oh, trust fund baby, somebody that has a ton of money, maybe they need a trust. Can you like step back? And if you didn't have any pre-existing knowledge of a trust, how would you define it? How would you ask people to think about it?

unknown: 5:03

Yes.

SPEAKER_03: 5:03

Um, to kind of dispel some myths.

SPEAKER_02: 5:06

So there are the word trust is describes many, many, many different kinds of financial situations and arrangements. Um, and so when people think of trust fund babies, that's that's one kind of trust. And that's probably a tax shelter trust, an irrevocable trust. That's not your typical complicated trust, right? That's a very complicated trust with professionals managing it. Um, that is not your typical estate planning trust. So an estate planning trust is an amazing tool. It's called a revocable living trust. This is the most central document. Even if you have a more complex estate and you want to do complex things, you'll also still have a revocable living trust. Um, it's it's sort of like the tr the trust version of a will, in a way, it's just everybody, not everybody needs one, but it can be very helpful for most people. And the reason why is that a trust is essentially imagine it as it's a relationship. It is a relationship between three roles. No matter what kind of trust that you have, whether it's a complex one or a simple or or a living trust, um, or somewhere in between, you're always going to have these three roles. The three roles are the trust maker who makes the trust, they design the trust, they put the money in, they are typically, you know, making all the rules. The trustee manages the trust assets based on the trust agreement. So it's based on the document that the trust makers have created. And then the beneficiary is the lucky one. They get they get they get the benefit of the assets. And so during someone's lifetime, if they create a revocable living trust, during their lifetime, and while they have capacity, they're going to serve as all three roles. So all three in one. And the revocable living trust is called a grandor trust. What that means is that it does not have a separate identity separate from the trustmaker. It is just the trust maker's money. It takes the trustmaker's social security number. So if the trustmaker creates a if you have a trust account in your revocable living trust and it earns income, you're going to report that income on your regular tax return. There's no separate tax filing, no separate complication. It's just another investment account.

SPEAKER_03: 7:27

Um, or it's really just the title on the account and then it has some extra set of instructions that might be useful or probably will be useful at some point, but we don't know when. Right.

SPEAKER_02: 7:38

And because the trust is totally revocable, amendable, restatable on the part of the trust maker, the trust maker can use that money as they wish. They have the right to fund them, to put money in and take money out at will. So they really, you know, it doesn't change their relationship with the assets. Um and so that is during the life during lifetime while you have capacity. Now, the advantage here is that this same account, this same trust, when you lose, if you lose capacity for any reason, now the trust maker is not all three roles. We actually have a new trustee. A new person steps in. Yeah.

SPEAKER_03: 8:17

Yeah. So that trustee, then you can basically create the document and list, hey, if I can't be here, I am here today. I'm planning to be here. But if I can't, here's the next person that should be named, or you can even have a corporate trustee or something.

SPEAKER_02: 8:35

So during incapacity, right? You would just write, you'd have that next person who's named, someone who's gonna take care of pay your bills, take care of you while you're incapacitated. And it can be a family member. Um, often spouses, it's a spouse, right? It's sometimes an adult child, sometimes a close friend, a sibling, or it can be a corporate trustee. Absolutely. Um and then, of course, after death, now we've got the the trust maker has died. Now we've just got a new trustee and a new beneficiary. And there's two there's those two roles left. Um, and so that's kind of how how it works. The trust document in a way, it you know, it's it's organized to say, like, okay, at in capacity, this is what happens, this is who serves. After death, this is what happens, this is who serves, this is who gets the money, right? And these are the rules about that. So it's really just like sort of an instruction book, you know, what what's going to happen from stage to stage. And we try to give as much judgment and discretion to the trustee as possible because we don't know what the future holds. We need that document to be flexible enough to meet the needs of beneficiaries who may become catastrophically injured, for example, or who may have a substance abuse disorder, um, or may have some other issue that happens to them that they really need help. Um, we really want that document to be flexible. And we want our trustee to have the discretion to use their good judgment in any circumstance.

SPEAKER_03: 10:21

So if we think about it, this is not the most basic topic. Like there's, you know, moving parts, different people, the person putting it in, the person who's in charge, the people who will end up being beneficiaries, or even in some cases, if for certain people, they may have institutions, nonprofits as beneficiaries. If we were to back up and you were sitting down with someone and they say, Hey, I live a pretty simple life, um, perhaps I could throw out a couple examples and we can talk through potential, um, we could talk through potential, you know, do you or don't you need a tr need a trust? And of course, this is very generic. It is not you sitting down with somebody hearing their all the specifics of their life. But if somebody really doesn't have any financial assets, they just have, you know, maybe social security income for a retiree, rent their house or own it, but it's just an individual owner. If they don't use a trust, what what would they do instead? Right.

SPEAKER_02: 11:26

So, um, so what I like to describe to people is, you know, let's imagine all the things that you just said, you know, the bank accounts that this person has, maybe they have a house, they have a car, um, whatever things that you own that are in your name, imagine those as as a monopoly pieces on a on a table, just kind of strewn around on the table. They're all in your name. If you die with a will or without a will, it doesn't really matter. I mean, your will tells the judge what to do. But if you if you die with um your all those monopoly pieces have to make their way to the right person. And that process of figuring out who it goes to is probate. That is the probate judge, right? So um, if you don't have a will, then the probate judge is gonna look to Michigan law to figure out who your heirs are and who they give those assets to. If you do have a will, that is a letter to the judge. Just a letter to the judge. Imagine it that you're saying to the judge, don't look at the law. I'm telling you who, who's supposed to get my things and who I want to be my personal representative and come and bring this matter to you. So that is um, that is, that's sort of how it normally works. Now, a lot of people want to avoid probate for good reason. Why do you want to avoid probate? I mean, and it's not, it's not it can be expensive, right? Because you need to usually you get a lawyer to go through it. It's stressful, whether you have one or not. It's usually people's like only, you know, dealing with the court system, and it takes time. So you're gonna be it's very slow. You have to wait for your hearing, you have to file the petition, and it's you know, it's it the proceed the process is not super um easy to follow, I have to say there's like so many forms that um they can be overwhelming, especially for grieving people, for anyone, to be quite honest, but for grieving people, especially. So it's just a pain, it's a pain and it can be avoided.

SPEAKER_03: 13:37

Um, and so I have a client who had a will, yeah, and actually for most accounts had also indicated who receives the assets, but the attorney had advised to utilize probate to avoid the cost of a trust. And we are three calendar years in and finally closing the accounts. So it can be very, very slow, and there's countless hours that the personal representative sets. You know what?

SPEAKER_02: 14:06

Honestly, typically the price to set up a trust is about the same price that you would pay initially to do probate before anything complicated happens.

SPEAKER_03: 14:16

Like you're just in this case, it was about a 10 to 20 timefold cost, I would say.

SPEAKER_02: 14:23

By the time you get done, right? If it's a simple, uncontested probate with like a very simple estate, you're gonna pay the same amount as a trust. If there's any any complication or hiccup whatsoever, yeah, it's gonna start exponentially growing in in probate.

SPEAKER_03: 14:38

Um and I yeah, and I would just mention, um you may just be of the mind, hey, I'm not gonna be here to have to deal with a lot of people say that's okay. But just know if you especially if you've named a personal representative, you are giving them a job that is not an easy task.

SPEAKER_02: 14:56

Yeah, yeah, and that's the hard thing. It's like this this personal representative, you're probably naming someone who you love very much and who has been close to you throughout your lifetime. And let's try to keep things as as like simple and straightforward as possible for that loved one.

SPEAKER_03: 15:16

Um now there are ways without going to the, it's not really extremes to me, but without going to the eventuality of a revocable living trust, there still are ways where you can avoid probate, correct?

SPEAKER_02: 15:29

Right, right. So what I like to think about is I like to think about if you can imagine a few boxes, a few boxes on the table that you can take assets out of your probate estate that are just strewn out on this table. If you can pluck those assets out of your probate estate and put them in the box so that they won't go through probate. They'll go directly uh to a beneficiary. So the biggest one is beneficiary designations, right? So we have to do those when we create a life insurance policy. It has to have a beneficiary designation. Um, typically, we also do beneficiary designations when we have retirement accounts. You set that up with your employer. But often people will they might start and set that up with their employer and then later get married, later have life changes and never look back at that beneficiary designation. Later get divorced, but they still have their ex-spouse named.

SPEAKER_01: 16:22

Yeah.

SPEAKER_02: 16:23

So what we we like to, I mean, part of the estate planning process is maybe is just getting that inventory, right? When people are working with someone like you, Melissa, their beneficiary designations are up to date. Um, but a lot of my clients who come in who are who don't have financial advisors are telling me, I have no idea who's on that. I have to go look that up, or it was from five employers ago.

SPEAKER_03: 16:45

That's that sort of thing. Well, and I just make a note because we sit in Ann Arbor, Michigan, where the biggest employer is University of Michigan. Um, if you have an employer plan that has a 41A, 403B, 457, the alphabet soup, you may have might have updated one, but not all. I've seen a lot of um custodial lack of beneficiaries where maybe there was some piece of paperwork 20 years ago, but it's not showing up digitally. Here's a reminder to do from this episode go back and check your beneficiary designations. You might be surprised. Yes.

SPEAKER_02: 17:18

Yes. We there's a we we cover a lot of surprises in this practice. Yeah. Um, so and and and and ones that needed to be corrected, right? Like not good surprises.

SPEAKER_03: 17:30

So we covered life insurance and retirement accounts, both biggies, because that's often those are big pools of money in many cases for families. But what about like your bank account or a brokerage account, things like that?

SPEAKER_02: 17:42

So those accounts, you have to go sometimes you have to jump through hoops to get a beneficiary designation on them. It's not every, you know, it's not just automatic. Definitely not automatic. You know, sometimes you have to talk to a different division of the bank and jump, you know, and do some faxing and things like that. I've I've seen some crazy things, but they're called transfer on death or pay on death designations. And that you would name through your bank the transfer on death designee or the pay on death designee, and then that would also skip probate because the instructions, you know, what we typically do is we've got this bank account with a TOD, we call it T O D or P O D, and we call up the bank, we have the death certificate, right? We have to give information about the beneficiaries, banking information, and then they will be able to transfer the money. Um, so that is really, really helpful and important, and it's very it's much, much quicker um than going through probate. The um let's see, what I just lost my train of thought here. Um that's okay.

SPEAKER_03: 18:54

So I like so we've we've talked about the T O D P O D. Yeah. You really it's really important to list all your assets. List your mono pull out your monopoly board. Yes. Look at your list. Yes. And you know, A, if you if you kind of are a collector of accounts, because I see some clients, they're like, the more institutions I work with, my money's safer because then I have it a little bit everywhere. Okay, you've got your job cut out for you, and not to say that you can't do this, but you need to stay on top of what the game plan is everywhere. Because you could have a solid game plan if you miss right one or two accounts. It's most accounts have a plan, but the rest is over to probate.

SPEAKER_02: 19:37

So that is a big part of what we do in estate planning. People, before they even come and meet with me, they have to do an asset inventory. Yes. And often that's the hardest, I mean, one of the hardest pieces, right? Because it's like I have to figure out where all my accounts are and write them down. And I've seen some very long lists, but it's very important because I say to people, I'm not really interested, you know, I'm interested in how much. Money you have for specific reasons. One is a you know tax reasons and strategy reasons. But the but I'm really interested in making sure we have a plan for every asset. Yes. Every single asset passes in a different way. We need to have a plan for it. And the last way that we can avoid um avoid probate for is for real estate. Um in the state of Michigan, we really do have an amazing tool called a Ladybird deed. Not every state has it. And this deed will allow a homeowner to separate out what their their regular ownership. Regular ownership is to it's called fee simple, right? It's where I own the property during my lifetime. And when I die, my estate owns it until you know the estate is dealt with. So I own it during life and after death. Um, but what we do is we separate out that ownership through the Ladybird deed, and we say, I own it during my lifetime, and I also, I so I have a life estate, but I also can mortgage it, sell it. I have a right to sell this property as well. So I'm not stuck living in it forever. I just have a life estate. And then when I die, if I die and I still own this property, then it goes to whomever, or it goes to my trust more typically. We send it to the trust at that point. Um there's different strategies for that, right? If I have a, if I have an individual homeowner, not a not a married person, um, we'll put the house in the trust right away. Um, when we do have spouses, we'll often try to keep the beneficial ownership that a spouse has, or not the benefit, it's the beneficial type of ownership. It's called um uh a tenancy by the entireties that has liability protection built in. And so we will keep the tenancy by the entireties for the married couple and then we'll ladybird to the trust after death of the second person. So that's a long way of saying there are ways to do that through um deeds uh to avoid probate as well. And then, of course, the the last way to avoid probate that we're we're talking about that doesn't have to do or that you know includes a will, right, is a is a trust. So why wouldn't we just send all this money to whoever it needs to go to um through beneficiary designations or through a ladybird deed and call it a day? For some families, for some people, that is a fine choice.

SPEAKER_03: 22:34

Um I would start with the um, you know, kind of setting the table by saying we both work with clients where we feel like, you know, you as a professional and me as the observer who's been through it. Um yeah, uh totally makes sense to name your beneficiaries. I would I do not recommend the just let it fly with a will or no will. I really want you to title your accounts with that P-O-D-T-O-D. But for many people, that is absolutely appropriate. And a durable power of attorney can um overlay that so that while you're still living, if you are incapacitated, there is a way for people to act on your behalf. Absolutely.

SPEAKER_02: 23:18

So that's the thing about the durable power of attorney. If you again imagine all these pieces on the board, um, the durable power of attorney can step in when you cannot and actually manage those assets that are on the board. Um, they can also manage the assets that are, you know, have been designated as a as a beneficiary, you know, account, right? So uh POD, TOD, that sort of thing. They can manage those assets because they're still in your name, right, during your lifetime. So anything that's in your name, your power of attorney as agent can manage for you. Perfect.

SPEAKER_03: 23:54

Um so then let's get to the topic at hand because it we have as you can see, this is not this isn't just like, hey, read this article and go do what you're doing. Not intuitive. No. You need to, you know, there's some basic learning we need to do before we get there, but let's talk about who needs a trust. Right.

SPEAKER_02: 24:12

So who needs a trust? Well, you know, um, Melissa, you know a little bit better than I do that acting as a power of attorney, it's possible. It can also be very difficult. Yes, because banks do not like it when someone comes in and says I have a different name. Especially papers and I get, but let me manage this money that's in some in your client's name.

SPEAKER_03: 24:36

You know, the red tape is just flying at that moment. And it's often on one of your, you know, just a really difficult time. It's when, you know, someone you love needs extra help, they're going through it, and you're like, please help me out. I just need to pay the insurance, I need to write the mortgage bill out of their account for them.

SPEAKER_02: 24:58

Yeah. And that can be very hard to do, unfortunately. Very hard to do. So um, when we when we really think we're gonna have, you know, maybe we we we we may very well have an incapacity situation, right? So sometimes I'll give an example. I mean, if I have a widow coming in, or even an older couple or someone with some type of illness, right? And they're like, I'm worried, people are gonna have to take care of me. Um, maybe they have a very response, yeah, very responsible people in their lives who would love to help them. In that case, sometimes we put everything into a trust specifically for incapacity planning. So we would put all those bank accounts into the trust, we put the house into the trust, and now the trustee can manage those assets for the trust maker, right? And they can they can make sure that all the bills are paid, they can make sure the taxes are paid, they can fix the roof if it's leaking, and they can do those things much more easily as a trustee than as a power of attorney.

SPEAKER_03: 26:04

Yep. You still need the power of attorney for retirement accounts because the trustee is not going to be the retirement account owner. The trust is not the owner of your IRA or 401k, et cetera. Right. But we still have to have power of attorney. Yeah, for the bank accounts, especially, but then any investment accounts that are not retirement accounts, then you know, this is this is a very effective way to have more instructions and a friendlier engagement with the financial institution.

SPEAKER_02: 26:34

Absolutely. What I tell people is, you know, often because people are get confused about like who's the power of attorney, who's the trustee in in capacity. And I think about it as like a bit of a Venn diagram. You often we have the same person named, but it's just depends on which hat they're gonna put on. I for this account, I have to put on my power of attorney hat. You know, I'm gonna try to cancel the sexfinity. I need to wear my hat for a power of attorney. And then for my trust, I put my trustee hat to manage trust assets. Um, and so it just, you know, it's just which hat are you gonna wear um for that particular task? Right. And then when it comes to um after-death planning, uh, trust can be very helpful. First of all, everything that's in the trust already, either because we've already titled it in the trust during our lifetime, or because we have beneficiary designations that name the trust, everything that's in that trust is out of probate, right? It's it's all we're sort of imagine. I I like to imagine a trust box sitting on my board with all these pieces. I can put, I'm gonna put those assets in the trust box. I do not want to ask the judge to put those assets in the trust box. That's the last resort, right? Um, and so we always do have a pour over will when we have a trust plan. It's called a pour over will, because if there's something left out of the box, if there's something we forgot to do the beneficiary designation, or we acquired the asset, you know, at the end of our life and we didn't do that, um, then it's outside of the trust. And there's no way to get it in except through court. So we're gonna go into court with a pour over will and we're and the pour over will simply says, Judge, I made it, I made a trust. Just put anything that's in my probate estate into my trust and let my trustee handle it from there. So that's why we always have a will, just in case. Um, but we hopefully won't need it. One thing that people don't realize is that for um Medicaid payback purposes, only assets in your probate estate are touchable by the state. So assets that are in a trust uh already or after you know after you die, um, those are generally protected from payback rules. So that's just an aside. Um so who needs a trust after death? Well, we may not want to, let's say, you know, we may not want to just give this asset directly to the beneficiary. Maybe we're we're talking about minor children.

SPEAKER_03: 29:21

That's a biggie, and we both work with many families with minor children. And I, you know, first of all, there's from whatever age they are until their age of majority. 18 in Michigan. So, okay, I was not prepared for any amount of wealth to be managed at age 18 on my own. Absolutely not. Neither. And I don't know who has kids, even if they are the most responsible ever, um, who you expect, you know, that that would be appropriate if they are not at that age where for you to assess the circumstances.

SPEAKER_02: 29:59

So I like to tell people to think about their trustee as a financial parent for their for their minor children. And often families do get concerned about guardians as well. If both parents die, what you know, is this guardian going to be able to afford the lifestyle that we have and take care of all my kids' needs? Maybe the guardian you're picking has their own children as well, or they're on a fixed income, right? And so if you're leaving assets directly to a minor child, what happens is that those assets have to go into a conservatorship, which is court, which is court created and it's court supervised. Sometimes you need to get a court order to get any um distribution from that conservatorship, even if there's needs for the guardian to raise the children during their minority, there's going to be a cost and a trip to court to get those assets out. There's also like you have, you know, at least in Washtenaw County, no freedom in how you're going to invest those assets. They're they're all going to one particular bank. And um, and so it can be very, very hard and extra costly and stressful to have assets for minor children going through conservatorship when we know that our guardians and our children are going to need to access those assets before they turn 18, right?

SPEAKER_03: 31:26

Well, and I can mention like the trust that I, the original trust I drafted had one person listed as guardian and one person listed as trustee because we had family members that were more financially um savvy and family members that were more willing to and capable of caring for small children. Um and we also had provisions in there for hey, if somebody's taking care of our kids, we're not going to give them a big percent of our estate, but we're gonna pay them for costs as well as have provisions so that they can make adjustments to their family, knowing that they have two additional kids. Totally. As well as sometimes they might need to buy a van. Yeah. Or um move to a different house depending on the circumstances and how many kids are involved. Um, and sometimes people are just like, no, you know, like it's complicated. I'm just gonna leave my money to my brother, and then they'll take care of the kids. No, that isn't just like cringy from our perspective because both so many things can go wrong. It's dangerous. You don't know who, like, there's no, you know, kind of like um chain of custody that you can control after that happens. Even it's a tax obligation for them.

SPEAKER_02: 32:37

We could trust your brother to the cows come home and your brother that those assets are in his estate. If you leave them to him, they're in his estate. Guess what? They're accessible to creditors. If he crashes into a car and injures someone, the plaintiff attorney who comes after him is not gonna care that that's the money that you gave him for your kids. That's accessible to the to his creditor. It's also could become marital property and to be divided to an with an ex-spouse with a spouse upon divorce. So there are lots of reasons why you don't want to leave cash just to your brother to take care of your kids. It has to be protected in an account for your kids.

SPEAKER_03: 33:20

Um and so uh same goes for, I've also heard like, oh, we're just gonna leave it to the oldest child. They'll they'll figure it out because it's complicated, something like that. No, not not a good idea.

SPEAKER_02: 33:34

Right. And that oldest child is not obligated. I mean, you've irrevocably gifted this at given this asset to the oldest child. There's no legal obligation for them to share it.

SPEAKER_03: 33:44

Not only is there not a legal obligation, but there is an obligation for them to pay the taxes associated with whatever they've received. There's also an um, it's also there are limitations um excluding a gift tax return for you to for how much you can just randomly give. So Exactly. Take a pause. It's the you know, pause this episode and call your estate planning attorney or financial advisor if this has been the strategy that you have been employing.

SPEAKER_02: 34:14

Yes, yes, absolutely. Um yeah, I I you know, I I'm in the client services business, but I just have some rules in my practice that I'm I'm I'm just not going to set up an estate plan that that I can't put a train on a track for collision course. Um, I can't sleep at night if I to do that. So there's some some of those, and that is one, that's a big one, right? Leaving assets to someone in their own name to, you know, hopefully trickle down to other beneficiaries. No, we can't do that.

SPEAKER_03: 34:48

Let me um maybe I can do because we unfortunately, like I could talk about this for two hours, but I don't want the episode to go on too long. Can I just throw out some circumstances that I have um mentioned might be useful to have a trust and then you can comment and then add a few of your own. Sure. Um, one of them that comes top of mind, and I know you are very familiar with, is if someone has special needs. So let's say that you have um a family member who you're going to be responsible for, who is unlikely to be able to be independently managing their finances or money. Um, how can a trust address that?

SPEAKER_02: 35:29

So there's a couple of issues. One is they're unlikely to be able to independently manage their assets, and also they may be eligible for um government benefits, um, for needs-based government benefits. So um, if they have too many assets in their own name, they're actually gonna miss out on some very helpful benefits that will help them in the long run, right? So if we're gonna, if if someone has uh special needs and they're going to, you know, need support for 60 years or 50 years, no, it's very hard to have enough money to make it that far, right? Um, and so what we want to do is we want to be able to access Medicaid and access some of these other benefits that are very, very helpful, as well as having a pot of money to meet financial needs that are not met by the benefits, right? And so that's a special needs trust or a supplemental needs trust. And um, the trust can be designed and set up by parents or by third parties for the benefit of a person who is a special needs person. Um, and those trusts have to be very specifically designed. They have to have specific language in them to make sure that they work because the agencies who are the benefits agencies are going to be reading those trusts and making sure they're in compliance. And then we also want to make sure that we have trustees of those trusts that are sophisticated enough to manage those kinds of trusts. Um, but they are very helpful and crucial, really, um, for families who have kids with special needs. And it's also important, too, to tell other family members, right? That they you don't want them leaving money to your child uh with all the great intentions that they have um in their will, because those assets then will be in the child's name and now they're going to be a problem. Now there's going to have to be other more sophisticated and costly trusts set up. Or limitation of benefits that could be a potential outcome. They could lose the they could lose benefits for a while as well or a long time. So um there's lots of different solutions for that for families who don't have quite enough money to um put into a standalone special needs trust. There's actually pooled trust options uh that are wonderful. And there's then there's also the standalone trust options, but very, very helpful and critical.

SPEAKER_03: 38:02

Let's say that you're you have three kids that are independent and um everything's going swimmingly. Um maybe there's a kid that has substance abuse issue, you just don't know how the marriage is going, you don't want assets they inherit to be part of marital property for this beneficiary. Um maybe they're in a high-risk profession where they may be more likely to be um have liability um lawsuits, things like that. Talk to me about how you the use of a trust could assist in a case like that.

SPEAKER_02: 38:34

So trusts are uh magical arrangements in that I could have there's much, there's a pot of money that is for my benefit if I'm the beneficiary. But it's not technically mine. It's not in my estate. It's for my benefit, though. So I get to have distributions from that account, or I get to have that account pay certain bills for me, or maybe pay a dep, make a down payment out of my house. But that the those assets aren't in my own bank account in my own name, so that um they they don't become marital assets. They just don't. They're in a separate protected account. And if parents have concerns about the money that they're leaving to becoming in a marital asset, for whatever reason, people have their you know concerns, keeping it in a trust for their adult child will prevent that. And it will take away like the awkward situation of the child inheriting a big chunk of cash and saying, I'm gonna keep this in my own separate bank account. I'm gonna make a bank account with my own name on it, and I'm not sharing it, and I'm not putting it in a joint fund. Um, that can feel complicated in a marriage. So, so really the trust makers, the parents, can take away that complication by just making it a trust, you know, for um for their adult child and keeping it in trust. The other thing. Is that like you said, what if you are in a high risk profession and you may get sued? Those assets that are for your benefit are not yours. They are not accessible to your creditors if you get sued. It's really, really great way to protect them if you have a substance use disorder or you have some other type of financial incapacity, I call it, right? Where you're just like a spendrift. You're you're a gambler, maybe managing money. Money just doesn't maybe you're giving it all. We we use the example of uh gambling addiction, cult membership. People give their money away sometimes. Sometimes, and so this if they need protected protection from that, um, we've got a trustee and they can pay your bills, they can pay for substance abuse treatment, they can make sure that you're not on the street, but also not give you cash to to to um spend uh in a way that would not be wise. Absolutely.

SPEAKER_03: 41:01

I also think like I was just talking to a client today, we're talking about beneficiaries, and it was pretty simple to begin with. Mom first, sibling second, but then there's different numbers of kids in the siblings. Um, maybe we wouldn't want to get a little more complex if God forbid something happened to, you know, one or two of those first people. But to me, the more people involved, the more generations, the more tiers. It's a lot easier to write in rules based on, you know, further scenarios versus the standard TOD or beneficiary designation form.

SPEAKER_02: 41:40

Right, right. And you're and you're also again, you're you're sort of removing the responsibility for like somebody in the in the later generation to be generous or have a favoritism or do something that someone will perceive it perceive as unfair, you're fully removing that. And in that way, you can help to preserve those relationships.

SPEAKER_01: 42:01

Absolutely.

SPEAKER_02: 42:02

There, I always think about the psychological nature of money, right? Just how it's so psychological. And so if you have this bunch of cash that gets dumped into your checking account, we all have had, you know, maybe well, we don't know where that money went. We just spent it all, but we don't we don't even can't tell you what we spent it on, right? Having it in a separate and special account, um beneficiaries see that they know that that is the special account that is from my parents. And I'm gonna think about it really carefully. I'm gonna be really intentional. I'm not just gonna like, you know, um spend it four times over. I can't on Amazon in the middle of the night from that account, right? Yeah. Um, yeah.

SPEAKER_03: 42:43

So and then I also um think it's important to mention, even though we talked in the beginning, that trusts are for everyday people. A revocable living trust is really a change in account title and an instruction sheet that you get to personalize, along hopefully with the assistance of an attorney. Um, but when you are in a high wealth circumstance, yeah, um it definitely to me makes more sense. It's more complicated. There's more money at stake, privacy issues with when you go to court, and then other people could find out, you know, kind of what wealth is at stake here.

unknown: 43:17

Right.

SPEAKER_03: 43:17

A lot of different reasons. Um, but certainly to me, the higher higher net worth circumstances often lend me to say, hey, cost benefit wise, yeah, you're gonna pay a little bit more to draft a trust document. And maybe we can talk about those costs in a moment. Um, but you know, I when I look at the cost benefit, I mean it's definitely, definitely pushing up the price of probate process when you have more assets and money.

SPEAKER_02: 43:45

Oh, yes. And probate is public. Wills are public documents, probate proceedings are public, all the filings in probate are public, including an asset inventory where you list everything and the value of everything. It's all public information. Um and so people want to keep that private. And for people with higher net worth or special kinds of assets, um it trusts can be very helpful. So, one thing that you know, there are different ways to leave money to a beneficiary, right? You can leave assets to a beneficiary such that those assets will be counted in their estate at their death, for example. Um, you can leave assets to a beneficiary through a trust such that it will be part of their own estate during life. Um, but you can also leave assets to a beneficiary in a way that it will never be part of their estate. And so it doesn't increase the value of their estate at death, which would make, which may um, you know, depending on what the level of their wealth is and the estate tax exemption amount, that may also help their family save on estate taxes, right? So estate taxes are typically highest marginal tax rate, you know, almost 40% right now. But most families are not going to reach that threshold because right now the estate tax exemption amounts are very high.

SPEAKER_03: 45:12

Tell me, remind me what the threshold is in 2024 and five. Uh I think 13.9 something million. Almost 14 million for an individual. So 28 million for joint. And based on the outcome of the presidential election of 2024, it is likely that at least for the next two years, if not the next four years, that it's a very friendly government kind of stance when it comes to lowering that estate tax rate. At the beginning of my career, it was a million. So it's been all over the place. Right.

SPEAKER_02: 45:47

And that's the thing, is that part of that, you know, estate planners have no control over that. Right. So we're trying to um, to the best of our abilities, not overcomplicate plans because, you know, in anticipation of estate tax, estate taxes, but also put some, I call it post-death tax planning options in there so that if the family finds themselves subject to estate taxes, they will have some options to um to reduce those taxes. But some families who know they might have a, they're gonna have a taxable problem, they can make some plans. Um, or if they think they might have one, right? There's ways that you can plan proactively and keep those assets out of your beneficiary's estate. And again, it's like uh a pot of money that won't be um taxed at the beneficiary's death for the next generation.

SPEAKER_03: 46:44

So I hope this conversation for those listening is a conversation of possibilities, not it's not a prescription because every person is different. And I hope you hear in our conversation that a lot of thought goes into successful estate planning. One of the things when you were just mentioning, hey, you can there could be a possibility of receiving assets that would never be in your estate, not receiving, but having assets that are there for your benefit that would never be included in your your own probate estate or your own estate. Um but I loved what you said too, Ashley. You can get really complicated. You can get very complex, you can have multiple trusts and things like that. I love the balance of meeting your needs, but also not overcomplicating things. Right. Um, and so, and it I know you kind of take that approach as well of very much as a practitioner.

SPEAKER_02: 47:38

Things should only be the, you know, as complicated as they absolutely need to be and no more. So I'm not the lawyer who's I'm not trying to sell my clients more complex trusts or, you know, I don't charge extra for um within sort of within dirt certain bounds if people need more complex planning within like a revocable living trust. I don't charge extra for those things because I don't want to be incentivized to sell them. Uh, because they are they are tools that are not right for everyone. And so um we I'm very, very careful because I live in this community and I fully expect my families to come back to me with these trusts if something happens, if someone becomes incapacitated or dies. And I want to make sure that this is a trust that I'm proud to administer, right? That that doesn't, I don't want any angry widows coming to me and saying, why did you do this to me? Um, and so really, you know, the goal again is to um address all the concerns you know without without making anything more complicated, complicated than it needs to be.

SPEAKER_03: 48:49

Well, tell me as we're wrapping up. So if if someone's listening and is prompted to think, oh my gosh, I'm gonna make this a priority for 2025, which uh both of us love to hear. First of all, you're gonna be reaching out to someone who practices in the state that you live in. Um you can't just go to a Michigan attorney for a New Hampshire trust. Um, you it they could practice in multiple states, but that is something where and also I would strongly recommend don't go to the family friend who does all types of law. That um I hear that all the time too. Like we know a guy, I think they'll give me the family rate. Um but oftentimes that's a I frequently hear that you don't need it, you don't need a trust in those circumstances, and um and just ends up being maybe not ideal, potentially not ideal. This is this is something you don't really want to skimp on, I have not. Well, you know, hopefully you're not doing it every year. I mean, there are a few people who like to change things frequently, yeah. But for most people, this is not something that you would need to redo. So I think it's kind of like the purchase of a car. It's cost over time, it's not just the upfront cost. But talk to me how um attorneys like yourself, or you know, there's likely a variety of ways that you pay for estate planning. What, you know, how do you bring up what are the costs and what might you do? Okay. I'm I yeah, I think you were just asking about the cost.

SPEAKER_02: 50:24

Like how tell me about the cost. Okay. Um, so in my practice, I do mostly flat fee. And the reason why I do that is because after, you know, now four years of doing this, I know about how long it takes me and about how much it costs to create one of these plans. And so um clients really like the uh the predictability of a flat fee, and it's very uh helpful for us as well. And so um typically, if we're talking about an individual client, uh, they're going to be looking at somewhere in the ballpark of between three and five thousand dollars, probably to set up not just a trust, but what I call a comprehensive estate plan. So if they don't have an estate plan in place or if their plan is old or from another state, we would start completely over and make all new documents and make sure everything is up to date. Um and then for families, we're more in the, I would say, probably if there's minor children involved, probably in the five to six and could could go up higher than that depending on the family's needs. So that would be for like one revocable living trust and um and all of the other documents. When we have minor children, we do include a lot of additional support, including um what we call emergency documents for minor children. And that would be a power of attorney for um care and custody of the minor child during an emergency, as well as patient advocate for the minor minor child during an emergency. Um, you'd be surprised. It is hard to get medical care for children without a parent to consent. Um, and so having the emergency patient advocate for minors is very helpful. And we've now um seen at least one, maybe two situations locally where people have used them and they've been successful.

SPEAKER_03: 52:28

So that's when mom and dad go to Mexico for you know their anniversary trip and the kids stay home with somebody you trust in love.

SPEAKER_02: 52:35

Totally. And then they get and then they get a toothache or an earache. And now you know the pediatrician's not going to treat them unless they get some form from you, but you're in Mexico in a, you know, in a cavern somewhere doing a cruise. I don't know. But you know, I'll have to I have to give this example, Melissa, because it's hilarious. I had so many, you know, I can I have a very active and dark imagination doing estate planning. And so I've I there's so many scenarios in which this like emergency powers uh would be very, very helpful and um more dire than the one I'm about to describe. But in my particular family, we've used it once. Uh, and it wasn't because we were on vacation or we were in a car accident in another state or anything like that. It was because um my husband was out at a bar and didn't have his phone on. And I was literally laying in bed with my phone silenced, and my children were at their grandparents down the road in the next town, and my son had hit his head and was vomiting.

unknown: 53:40

Oh.

SPEAKER_02: 53:41

And so they were worried. They were worried he had a concussion and they want to take him in. So I missed like 20 calls from my mother-in-law, and finally, my father-in-law just took those emergency documents.

SPEAKER_01: 53:52

I'm laughing because it all worked out, I'm assuming.

SPEAKER_02: 53:55

And my son was fine. Good, he was totally fine, but they accepted those and gave him care when I was unavailable, which I I was, you know. Um, and so that's not that's not the typical use of the documents. That's not actually why I created this. But it worked and it's very, very helpful. Um, so they didn't even need, you know, to get in touch with me to to give access give care to my son.

SPEAKER_03: 54:21

Way to go, grandma and grandpa. That'd be very impressed that they grabbed the documents too. And that's, you know, I would note it's very helpful to share your executed documents with your financial planner because we can keep them one file. If you're, you know, um it might be a copy, but if you're in Mexico or, you know, not awake, you can be back up. Hey, contact Melissa's office. They they might have a copy too. As well as your own.

SPEAKER_02: 54:46

We always have a scanned copy. And the other thing that we do with all of our plans is we actually sign our families up for it's mandatory, we pay for it, um, for this service called Docubank. And it's basically an emergency wallet card. And the emergency wallet card has on it the name and contact information of the emergency contact, as well as like any information a first responder should know, like what medications you're on or what you know um medical issues you might have. It also says I minor children at home if you do. And then on the back, there is a pin, a login and a pin that a first responder can use to access your um medical documents and your emergency documents for kids. We upload those with the service for our clients. So when they get the document, when they get that um card in the mail, it's already loaded, locked, and loaded and ready to go. And we do that because why create emergency documents if they aren't accessible in the moment of need? And so we just want to make sure that we can figure out ways to make those accessible when needed.

SPEAKER_03: 55:50

Well, Ashley, if people have follow-up questions, how can they find you?

SPEAKER_02: 55:55

They can find me at treetownlaw.com. Um, and please reach out. We have um, I'll I'll give you the link for our contact page, but you can set up a 15-minute complimentary consult with me at your convenience. And I'd love to get on the phone and meet you. And we also, my my email address is Ashley at Treetownlaw.com. Our number is 734-224-3977.

SPEAKER_03: 56:23

Well, I know many listeners, they may even have an estate plan or a trust, but it's time to update it. And for so many people, it's on the to-do list, but it's it's complicated. It's not the most fun topic of like who do you trust? If something goes horribly wrong, um, you know, we can kind of have the gallows humor here, Ashley. Um, but for people that don't talk about this stuff all the time, it may not be as comfortable. But I would encourage those of you who know that you need to address some of these things with or without a trust to make that a you know intention for the new year to get things done. It's such a relief when you have something in place. And there's no perfect estate plan. I would encourage you to say, you know, uh progress over perfection when it comes to an estate plan, um, because it is so difficult and complex. Um, but please consider getting things updated. It's a gift to yourself and to those that love you. Absolutely, absolutely.

SPEAKER_02: 57:19

And, you know, if you're local to, if you're local to Ann Arbor, we we try very hard to make our office very cozy and welcoming. We know people are nervous when they come in and it's a heavy topic. And, you know, I would just say work with somebody who you trust and you feel comfortable with because um you're going to get to a better outcome if you can really be honest and go deep in this planning process.

SPEAKER_01: 57:47

Well, thank you so much, Ashley. Thank you. Thanks for having me.

SPEAKER_00: 58:02

Thank you for listening to the Women's Money Wisdom Podcast. If you found value in this episode, the best way that you can support the podcast is to forward an episode to a friend or leave a review. Go to ProPlan.com and the podcast link to get all the resources and links mentioned. This presentation by Pro Planning is intended for general information purposes only. No portion of this presentation serves as the receipt of or substitute for personal investment advice from Pro Planning or any other investment professional of your choosing. Copies of Pro Planning's current rent and disclosure brochure and form CRS discussing our advisory services and fees are available upon request or on our website platform at ProPlan.com. The information that we share is meant to educate and inspire, not serve as personalized financial advice. Everyone's situation is unique, so be sure to consult with your own financial professional for guidance that fits your life. And just so you know, the opinions shared in this podcast are Melissa's own and those of our guests. They don't necessarily represent any organizations with which Melissa is affiliated. For more important disclosures, please go to our webpage at proplan.com.