Ep 91 | Smart Trust & Estate Moves Before Retirement with Lauren Klein

Download the Retirement Readiness Checklist now to take the first step toward a clear and confident retirement plan!


In this episode, I interview Lauren Klein, a trust and estates attorney, to uncover the intricacies of estate planning. My favorite part of the episode was when she shared how to take action. I think we overcomplicate everything about estate planning. This episode is for you if you’ve been meaning to take action.

Tune into the episode for expert guidance on protecting and managing your assets effectively.

00:00 Introduction and Background

01:57 Common Misconceptions in Trusts and Estates Planning

04:34 Key Considerations for Setting Up a Trust

07:55 Choosing the Right Person for Estate Roles

12:17 Managing Financial Gaps and Debts

17:23 Avoiding Common Estate Planning Mistakes

20:15 Effective Communication with Family

23:53 How to Vet an Estate Planner and Getting Started

Next Steps:

Book Your Retirement Roadmap Session Today

Book A Free Confidence Kickstart Call to Chat

Or, grab one of my free resources to help you take the first step:

5 Must-Do Steps for Retirement Planning — A simple guide to help you prepare with purpose

Retirement Ready Checklist — Make sure you’re not missing a single step on the road to retirement

Transcript

  Welcome  Lauren. I'm so excited to chat with you today. Can you share a little bit about your background and what led you to specialize in trust estate and tax planning?  Absolutely. And thank you so much for having me on. I'm so excited for this conversation.  So I'm a trust and estates attorney, meaning I focus on estate planning and kind of, you know, going back in time to when I was an undergrad, kind of figuring out what I was going to do.

I was actually a finance major. So I was planning on going down on the finance track, but it was 2008, 2009. And we all know what was going on in the world then. And I was interning at, you know, one of the big brokerage houses and they said, Hey, You might want to do something else for a little while.

And I thought, well, I guess I'll go to law school. You know, bide my time. I had always thought that maybe I would go at some point. Started law school, wasn't sure what I was going to do, but I just knew that it would be a great experience and help me to really understand how to read laws and, you know, kind of understand contracts and things like that.

I ended up taking a tax class, of all things, and I really didn't want to take it, but the professor kind of Pushed me into it and I fell in love. I absolutely love the tax code, which sounds crazy, but it just the way my brain works. So, you know, finished law school, ended up getting what's known as an LLM in taxation.

So it's a master. So I'm a tax attorney that focuses on trusts and estates. And, you know, started my career and really fell in love with law and with trusts and estates because, you know, in both of our industries, we get to know the family and their businesses. And it's such a really, you know, personal type of relationship.

And I've been practicing now for 13 years and I really, really love what I do.  I love to hear how people pick a specialty and what clicks with them. Tax code is very interesting. I was encouraged by my mom, like, you can do it, you can learn it, and I did. 

All right.  What common misconceptions do people have about trusts and estates planning? Like, what are they getting hung up with? What is challenging them to take the step and get this done?  It's such a good question. And, you know, within our firm, we're having this conversation day in and day out because there are a lot of misconceptions out there.

And so when I started the firm that I currently co own with, with my dear friend and my law partner, Flourish Law Group, about a year and a half ago, we decided, okay, when we do our consultations or presentations for the community or webinars, What are we going to focus on? And what are we going to really kind of peel back the curtain and say, here's what most people think.

Is it accurate? So a lot of people think that you have to be, you know, elderly to need an estate plan, or you have to be very, very wealthy to need an estate plan things like that. Or, you know, maybe it's just going to be too scary or Too hard and, you know, just psychologically, we kind of tend to put it off and put it off.

But the reality is anyone who's 18 or over really should have something in place. You know, whether it's a power of attorney to name someone to make health care or, excuse me, financial or legal decisions on your behalf or health care documents to say, Hey, if I can't make a decision because I'm in surgery or I've been in an accident, Who will make those decisions for me?

Really any adult needs to do that, even if you're going into college, because once you become an adult, your parents no longer have the ability to make those decisions for you. So those are some of the most common misconceptions, but we tell people start with the basics. And as your life grows and your wealth grows and you start, you know, maybe getting married or having kids, then you can kind of be build from there.

And for our clients, when we're meeting with them, we're often helping them figure out, do I need a will or do I need a will and a trust? And it's really dependent on that client's goals, you know, their facts and circumstances.  But most people think, wow, a trust. I, you know, I don't have millions and millions of dollars. 

But if you have minor children or if you want to put guardrails in place or avoid probate, a trust is one of the ways to really help with all of those things.  Yeah. And before we jumped on and recorded, I was sharing with you, like, I had that paperwork for my parents and nobody wanted to look at it, but you were just saying that how.

Because I had that because I had the trust account set up like nobody was questioning anything. And so it made it very slick. I just want to say yes, it needs to be there. It makes your life  easier at a most difficult time. 

What are our top three things that individuals or couples should consider when setting up a trust?

Those over 40, those who, you know, most likely have kids, maybe not but they're older, they're, you know, into their career retirements, anywhere from probably 15 to 20 years away. What, what do they need to consider?  So for our clients who have minor children, we're thinking about, okay, what are we going to put in place?

You know, we always hope for the best, but we want to plan for the worst. So we say, okay, if something happened to me and my spouse, if I have one now, what would I want to happen? Who would I want to control the money? If something happened down the road, you know, do I want to make sure that. My children have guardrails in place, either if they get married and they get divorced, or, you know, maybe they're 20 years old, we really want a 20 year old inheriting assets, probably not, we would want there to be guardrails in place and say, Hey, maybe they can receive assets that they start a business or for, you know, education purposes or things like that.

Those are some of the things that we really start to talk about. And then making sure we go over with, you know, with their financial advisor, if they have on all of their assets.  owned? What type of asset is it? You know, is it real estate? Is it a retirement account, a brokerage account? How is it titled? Is it individually titled or jointly held?

Do you have beneficiary designations on those accounts? Because that's a great way to avoid probate. And maybe, you know, you're doing that in conjunction with a trust. Those are the things that we really start to think about with our clients and explore with them. And hopefully with their, if they have a financial advisor with their advisor, or if they don't, maybe we're recommending and connecting them with the right advisor.

Because I think one of the other, you know, kind of going back to the misconceptions is that estate planning is kind of in a vacuum, but it really is just an extension of your financial planning. You know, we work hard, we build businesses, we work hard at our jobs, and we don't really think about. Wow, you know, what happens if I become incapacitated?

Or what happens if I pass away? What's going to happen to those assets? Who are they going to go to? How is it going to get there? And is it going to get there in a way that does avoid probate? You know, like we were just talking about. And really making sure that if you're near retirement age, you know, you're you're thinking 

You know, if you have 401ks or IRAs or things like that, assets that might have, you know, certain tax implications of how they're inherited, required minimum distributions, there's been a lot of changes in the laws recently, making sure that we're really, you know, focusing on all of that in in a really holistic manner.

Those are a lot of the things. And also, you know, hey, if something happens to me, and I can't make a healthcare decision for myself, who's going to do that? Or, you know, If I'm not able to, you know, make a legal decision or a financial decision, even if I'm just not available, who's going to do that for me?

And we always kind of talk about things like the power of attorney, where you can name someone to make, like I said earlier, financial or legal decisions. It's kind of like life insurance, you know, when, when you need it, you can't get it. And so you don't want to wait until there's a situation where you're like, oh my gosh, you know, mom, mom has this bank account and now I can't do anything or I can't pay her bills or I can't contact her phone company or just, just things like that that maybe people don't think about when they hear estate planning.

Yeah, so true. So, power of attorney for, you have healthcare and then you have financial. Let's just talk like down that road, I know people probably get hung up on who do I choose, how do I choose, does it matter? And kind of how you guide your clients through making those decisions to have that in place because that is definitely needed. 

Yeah, yeah, and that's a big part of our we have a whole meeting that we call our estate plan design meeting where we look at their will and their trust and how they wanted all to work in the ancillary documents and we'll walk through with them. Okay, this is the document. This is, you know, the powers that the agent to the trustee, the personal representative, the healthcare surrogate, the financial agent will hold and,  you know, talk about exactly what that.

Looks like so they can kind of start to get their wheels turning on who would be the right person. Oftentimes, when someone's married, they're naming their spouse, but but not always. So sometimes that's kind of the easy question. And then it's like, okay, but if the spouse can't serve, then who are we going to have?

Are we going to have children, adult children serving? Maybe if there's multiple children serving together, either acting, you know, independently, or they must agree if they have family friends or other family members, you know, is that the right person to serve in that role and really kind of drilling down on that and getting deep into their family dynamics and what they want to accomplish?

And that's such a good question because that really shows, you know, the level of personalization that you would want your estate planning attorney to, to really give to you. So it's not, this is not cookie cutter. You know, this is very personal to each client. Right,  I know there's like a lot of,  I think there's a lot of belief that, oh, it has to be the oldest.

I know that was my thinking. And I hear other people say, oh, I named my oldest. And my parents actually chose number six of seven. 

So as people are, I know you say, you know, definitely not cookie cutter. What are some considerations to think about just for somebody to dig deeper in themselves? What are questions that they could ask themselves, you know, reflect on to start making that decision before they work with an estate planner? 

I love that question, and I think it really depends on each role. So let's say, you know, parents are trying to decide who would be the guardian of our minor Children. If something happened, God forbid, when our kids are young. Thinking about who has the value system that you would want, who has the financial and emotional ability to take over, you know, really being there, their parent to their guardian, you know, if an unexpected event occurred or if it's a trustee who's able to understand, you know, not necessarily.

complex, because you can always hire an attorney to help you through the process if need be, but do you understand money? Do you understand, you know, how it all works? And maybe even with clients will say, why don't we, if you feel comfortable, talk to the people you've named as the successor trustee and explain to them what actually goes into that process and what things they might need to look out for.

Will they understand, you know, how to read the document? Will they follow your wishes? You know, if it's either for you and you're incapacitated or If it's a spouse, maybe they're their own trustee or, you know, children down the road. We also talk a lot about if you want children to be their own trustees of their own trust in the future, at what age?

Is it 25? Is it 30? And a lot of our clients have really young kids, like I have a 3 and a 2 year old. I have no idea who they're going to be. So we say, you know, we meet with our clients every year free of charge and we say, Let's, let's Stay on top of that, because as these as the kids grow up, you'll start to figure out who they are and when they might be mature enough.

And then if it's things like health care, you know, who in the family maybe has a health care background, or maybe it's more compassionate or able to have some of those more soft skills  or power of attorney, at least in Florida, it's it's different in different states, our power of attorney is effective immediately for that first agent.

So whoever I name is my first agent already has powers. You don't have to show that I'm incapacitated. So who do you really trust? Because that is a powerful document. They could technically move real estate or going to the bank or do really, you know, big financial and legal decisions, make really big decisions.

So who do you trust, you know, to really have your best interests at heart? I know it's a different state to state, so people need to really learn what works within their state. So, how can estate planning help, like, manage and resolve financial gaps or debts?

I know, like, when somebody passes young, maybe they still have lots of debt just because that's the timing of life. Like, how does that work? What does that look like? What should maybe be in a trust? You know, that type of thing.  Yeah, so I think one of the biggest things when you sit down to do estate planning is it kind of forces you to look at all of your assets  and kind of have a snapshot.

And a lot of times it's like, Oh, I forgot about that account or, you know, this, this 401k or whatever it is. So that's like kind of the, the, you know, the foundation and starting. there. And it's just a good exercise. And if you have an advisor, having that advisor or even a CPA involved in that process, because they might be like, Hey, remember this over here, you kind of forgot about that, or, you know, you already have a beneficiary designation.

So that's a good way to kind of get started. And then, you know, also looking at what your net worth is, and what your assets and liabilities are and say, okay, if something did happen to me when I was young, Maybe I have a lot of debt. Maybe life insurance is a good option to make sure that if I do pass away young and unexpectedly and there still is debt because I'm in, you know, the career building phase of my life and the wealth accumulation phase of my life, making sure that There is sufficient insurance to account for those things, you know, maybe one spouse makes more money than the other spouse.

And so kind of thinking about that in the process, or, you know, maybe you have some money set aside for education for children, but you know, at least at this stage, it wouldn't be sufficient. Having insurance or other, you know, planning mechanisms in place can be really, really helpful. And then Thinking about, you know, trust planning for children, and I touched on a little bit before, but if you have assets staying in trust for those children, it can be really beneficial because it can help to create that generational wealth.

It does protect, at least in Florida, where I'm licensed, you know, if there is an asset held in trust for the child, it becomes irrevocable when the grantor The person who creates the trespasses. So there's creditor protection. If you have a child who might be in a high liability profession, like say a dentist, there's there's protection.

And that really does help to grow, you know, the wealth. And then if there's an estate tax, potentially, so right now in the U. S. Anyone who's a U. S. citizen or permanent resident can give away or die with about 13 million before you have to worry about estate and gift tax. And depending on in which state you reside, some states have state level,  estate tax as well.

But thinking about that, and if assets stay in trust for kids, even if I say, right now I don't have a tax on me, But that exemption might go down at the end of next year to about 7 million a person. And who knows what the laws could be over the years. If those assets stay in trust for children, then it stays outside of their estate tax base.

So it's another great way to create wealth for your family. And as you start to think about, hey, what assets might I want to put in the trust? And I mean, that's, you know, that can get very personalized as well. It depends on the type of asset and how it's used. You know, whether it's a residence or an investment property and things like that.

But walking through with an estate planning attorney, figuring out, okay, maybe I'm going to move a brokerage account that I own solely into my name, into my trust, and then my trust dictates what happens if my spouse survives me or if he predeceases me. And you know, if you're looking at, you know, we kind of touched on the required minimum distributions, making sure you're not maybe, you know, restricting and causing you know, there to be a certain timeline that those distributions need to be made for spouses because there's been changes in the law and it might not be the most tax efficient way to do things.

And sometimes we're not moving things into trust during life. We're naming a trust as a beneficiary. So for example, maybe you want assets to go out right to a spouse, but you would want them to stay in trust for children. So on certain assets, we might name the spouse. as the primary beneficiary, and then our revocable trust as the contingent beneficiary.

And then there's also irrevocable trust planning. So all the trusts I've been talking about so far are revocable trust, meaning I can amend, I can restate,  the IRS looks through the trust for tax purposes, everything flows to my tax return, creditors look Through it, at least while I'm alive, and the trust is revocable and it doesn't protect from that estate tax, but for clients who either have a taxable estate or could, there's other mechanisms you know, making completed gifts into irrevocable trust or owning life insurance in a certain type of life insurance trust, there's a lot of things that you can do if you're, if you're kind of more in that high net worth bracket, or you could be down the road. 

Yeah, yeah, so important to think about and I love how we started like you're like, just start with the basics, you know, and they kind of go from there. And so if you're in your 20s, your 30s, you have one, you know, and then in 40s, 50s, yeah, you're going to definitely be making more money or have accumulated more wealth and it, you It comes with different, you know,  situations and things you need to protect in a different way.

So what are some common estate planning mistakes that could negatively impact retirement plans and how can you best avoid that?  So one of the best ways to avoid issues in general with when it comes to estate planning is don't DIY. Don't, don't do it yourself. Just don't do it. I've seen so many things over the years, either in the better situation where a client is coming to us and they're alive and they have capacity and we're like,  Like we have a will really go show it to us.

It was never signed or it wasn't properly executed. And so it doesn't do anything. It's just a piece of paper. Or unfortunately, sometimes they have passed and we're seeing major issues. We've seen children accidentally disinherited or, or maybe there was a change in the law, you know, with retirement accounts, and they didn't know that they needed to change their trust.

That's the biggest thing, you know, meeting with a qualified estate planning attorney in your state. or even, you know, in more locally in your city. And a lot of estate planning attorneys like us will do, you know, free consultations and just see, just kind of get a sense of what it is you might need to do.

And even if you don't do something about it now, at least have a game plan. Maybe you'll, you know, set a reminder in six months or a year, Hey, let's focus on this because we have seen way too many people try to try to DIY and it can cause issues either Accidental disinheritance or maybe just it wasn't effective or or probate.

You know, there's a lot of ways to avoid probate. It doesn't even have to be a trust for a lot of our clients, especially if they either don't have Children or their Children are all adults. You know, you can avoid probate with beneficiary designations like transfers on death or payable on death on bank or brokerage accounts.

In Florida, we have this really neat kind of deed called an enhanced life estate deed. It's like a payable on death, but for real estate, not every state has it. But some other states do, and it's really great because you can say in the deed, if something happens to me, my asset automatic, my home or my investment property automatically goes to this person.

And I love that planning technique. There's, there's some pitfalls that we have to walk through with the client, but I love that planning technique because it's great. It's really economical and it's so effective, you know, it really, it really does work. So just kind of getting that understanding, you know, and talking to someone and then other easy things to do legacy contacts on, you know, iPhone or Android or your social media, having all of your assets and your documents and some sort of digital vault to make sure that if something happens, you know, your family, your loved ones know what you have and they know the passwords so they can get access.

You know, if you have crypto, they know, you know, how to, how to access it and you don't lose, you know, lots of money or other assets. And I think especially as the world becomes more digital, you have to be able to have everything in one place. So important.  So can we talk about, let's talk about communication, communicating with family, what you do, like what you suggest, what you've seen. I'll let you take this.  Yeah, I, all these questions are so good. And they're, they're so insightful because these are things that we do think about on a day to day basis. So we always offer to our clients, you know, Hey, if you're naming someone who's not a client, like often it's spouses.

So they're both in the meetings, but if you're naming say adult children or siblings or parents, you know, to serve in these roles, Do you want us to meet with them and explain what all of this means? And sometimes they take us up on it. Clients do. And sometimes they don't. And you know, it obviously depends on the family dynamics and  confidentiality and things like that.

But we love when the client says, let's explain everything now while everyone's alive and healthy. So everyone kind of knows what we, what we want to happen and what those. roles do entail, you know, especially when it's adult children, you know, it's, it's never fun to say, Hey, when, when we might die, you know, let, this is what's going to happen.

But while everyone's alive and able to ask questions, you know, even like you said, like, Hey, mom or dad, why did you name me? Or, or what do you want me to do in this instance? And so we're. Yeah. Hey, do you maybe want to name all of us together? You know, maybe that makes the most sense. And something else, this is a little bit outside of your question, but something else that we really recommend to a lot of clients that they try to start to maybe treat different children in a different way, maybe put more restrictions on one trust, you know, over another, we always kind of pull back and say, We, we understand why you might want to do that.

But do you think that by treating beneficiaries differently, it might cause, you know, some confusion or fighting or cause them to really feel like, hey, what did I do that mom or dad, you know, put these restrictions in place for me? for me and not for my, my sibling or siblings. And so maybe treating everyone the same might be the best way to do it.

And they, and they, you know, cause we've, we've done this for so long, you know, between my law partner and I over 20 years in trusts and estates myself, 13 years. I've seen a lot. It's like, you're like, did you think about this? And oftentimes they, they really hadn't thought that, you know, that far ahead.

Yeah, that's so key. I mean, because, you know, being black and white on a piece of paper can be so easy, but then once you add in people, personalities, you know, there becomes conflicts and things I think actually You know, trying to smooth that over the best you can. I think you're still going to have conflicts regardless.

That's just life. But yeah, communication is key. So the sooner the better and yeah, I'm speaking from experience. My parents did very well. I'm so grateful for them to have done that. And making decisions at very most difficult time was so clear to us because we already knew. So if you're somebody who doesn't have one that just, just realize that that makes that.

You know, that much easier for your Children. Yeah, I'm thinking in your example where, you know, you talked about how your parents had the trust and, and they're really, there was no probate required. You know, that, that is really the ideal because probates expensive, you know, in Florida, usually you have to hire an attorney.

It's not, it's not optional.  Everything becomes public information. Your beneficiaries, your assets, you know, there's a lot that then goes out there into the world. It can take years. For assets to be able to fully be moved over, and oftentimes it can be very easily avoided. Yeah, that's huge. 

 So before we close I have two questions. The first question, I'm going to ask them together though. The first question is, how does somebody best vet an estate planner for themselves?

You know, I know we talked about the free consultations,  so take us a little bit further with that. And then for somebody who is just starting out, what is one or two steps they can start doing or thinking about today?  So I think when it comes to picking and selecting an estate planning attorney, I would always recommend, you know, meeting with a few to see who you, who you like, because you're going to be much like when you're, you know, starting to work with a financial advisor, you're really going to be kind of showing them a lot of what's going on behind the scenes, your assets, your family, and you want someone who you get along with and who you feel understands you and it's really going to take the time to get to know you as well.

You also want to make sure that you're, you're picking an attorney or a firm that focuses on estate planning. You know, there's so many attorneys who are like, I do DUIs and I also do wills and it can get problematic because if you don't focus on an area of law, there might be things that you don't know to ask or things you might miss. 

or documents may not be properly done. And so it's really important to find someone, you know, who has experience in that area of law. And I think also finding a firm or an attorney who has really kind of modernized. So making sure that Do they have any sort of digital vault where assets can be stored?

Are they really making the process as easy as possible for you? And asking in that consult, you know, how do you charge? Do you charge flat fee? Do you charge hourly? For our clients who are high net worth or it's more complicated, we, we still have to do hourly because we really, it's hard to know from the outset exactly what's going to come out of the process.

But for our clients who are more, you know, the basic, Sighted of things or even for the high net worth who are doing their basic documents. First, we charge flat fee. So you know exactly what it is that you're going to pay. If you pick up the phone and call us, you're not like, Oh, God, I got to really talk fast.

That meter is running because that's just not conducive, in my opinion, for a great relationship between attorney and client. And, you know, Along that same line of who is someone that you like, do you see them, you know, being someone who will relate to your children, maybe not the same age group by any means, but will they take the time and talk to them and be patient and be compassionate if something, you know, does happen to you down the road.

And then as far as getting started, I think, you know, just, you know, Scheduling consults, reading, and, and really having, if you have a financial advisor, even talking to your advisor and saying, here's what I have in place right now. Do you have any thoughts? Do you have any recommendations on, on an attorney to, to meet with?

And like I said, those, the low hanging fruit of taking out your phone and putting a legacy contact, making sure all your passwords and your assets are in one place. Maybe it's an Excel spreadsheet for now, or maybe you get LastPass. You know, to make sure that all your passwords are stored somewhere. So those things don't get lost.

Those are things that are very either inexpensive or free that you can do to at least get the ball rolling. And I always tell people, do one thing and then you'll feel confident. And you'll be like, Oh, now I can do another thing. And start with the easy stuff. If, if you're kind of getting stalled out and you feel like I, I have this, you know, people say all the time, this has been on my list for years.

And that's so common, but just do something. And then that should help you to kind of. You know, get that ball rolling. I love that. Well, thank you for your time today. How can, anybody reach out to you if they have questions?

Maybe there were wanting further clarification  on a question. How do they reach you?  Absolutely. So there's a couple of ways they could reach us. Our website is flourishlawgroup. com and there's a way to contact us. Tact us on there. We're only licensed in Florida, meaning we work with people who live in Florida over Florida assets, but we have contacts across the country and outside of the country.

So if you reach out to us and we can't help you, we are more than happy to connect you with someone in, you know, the jurisdiction where you live. We also, my, my email is Lauren Klein at flourish law group. com. And you can also follow us. On Instagram, my personal handle, but I do a lot of, you know, estate planning related content is at lawyer Lauren Klein, and we're also at Flourish Law Group on there as well. 

All of those links down in the show notes for listeners to go grab that. And again, Lauren, thank you for the time today. Thank you so much for having me.