Good Neighbor Podcast: Bergen
Bringing together local businesses and neighbors of Bergen County
Good Neighbor Podcast: Bergen
Ep. # 107 Estate Planning Essentials: Protecting Your Assets Before Crisis Strikes
What happens when you need long-term care but haven't planned for it? Barbara Martin, elder law attorney at Beattie Padovano,, pulls back the curtain on the often overwhelming world of estate planning, revealing solutions most families discover too late.
The financial reality is sobering - assisted living in Bergen County costs up to $12,000 monthly, with memory care reaching $18,000. These expenses can rapidly deplete even substantial savings, especially since Medicare only covers short-term rehabilitation. Without proper planning, families face the painful process of spending down assets until qualifying for Medicaid. Barbara explains how the crucial "five-year lookback" period means planning must begin long before need arises - ideally in your 60s or early 70s.
Barbara demystifies the differences between various legal tools. Powers of attorney prevent the expensive court battles required when no one can access accounts during a health crisis. Revocable trusts help avoid probate but provide no asset protection, while irrevocable trusts can shield assets from creditors and assist with Medicaid planning - though they require surrendering permanent control of those assets.
Perhaps most fascinating are the creative approaches Barbara has implemented for clients concerned about wealth undermining their children's ambition. One client structured distributions to match their children's W-2 earnings - effectively doubling their income but only if they remained productively employed. This innovative strategy addresses Warren Buffett's famous concern about leaving children "enough money to do anything, but not enough to do nothing."
Whether your estate is modest or substantial, proper planning prevents family disputes, protects hard-earned assets, and ensures your wishes are honored when you can no longer advocate for yourself. Don't wait for a crisis to discover you're missing the original documents banks and courts require. Take action now - your future self and family will thank you.
Beattie Padovano, LLC
Barbara Martin
201-573-1810
200 Market Street, Suite 401
Montvale, NJ 07645
This is the Good Neighbor Podcast, the place where local businesses and neighbors come together. Here's your host, Doug Drohan.
Speaker 2:Hey everybody, welcome to another episode of the Good Neighbor Podcast coming to you live from Bergen County, brought to you by the Bergen Neighbors Media Group, based in Harrington Park, new Jersey. And just down the road. Basically you could jog there. You don't even have to be much of a runner to get to Haworth, new Jersey. And just down the road, basically you could jog there. You don't even have to be much of a runner to get to Haworth, new Jersey. We are joined by Barbara Martin of Beatty Padovano Law Firm. Welcome to the show.
Speaker 3:Oh, thanks, Doug. Thanks for having me on the show.
Speaker 2:Yeah, and I said Haworth, but obviously the firm is located in Montfail, which isn't too far from here either, but you have a connection to Haworth which we'll get into. So, Beatty Potivano, what kind of firm? What do you guys specialize in?
Speaker 3:So, beatty, it's a full service firm. They do a lot of land use, they do a lot of commercial deals and litigation, and my particular area, though, is elder law, trusts and estates, estate planning and administration.
Speaker 2:Got it, got it. So I have had a lot of senior care guests. You know, demographics of my town, you know kind of have a need for knowing who to trust when it comes to senior care, whether it's a senior care locator to help you find a home, or it's elder law to state planning, or it's Medicare, or it's dementia care, things like that. So what got you into? Like when you went to law school, did you from the get-go think I want to get into elder law and estates and trusts?
Speaker 3:From the get-go. I had a background in accounting so I had an interest in tax. So I was interested immediately in doing trusts for asset protection and dealing with issues like that.
Speaker 3:And as but more and more people started coming to me after law school with like crisis planning. You know, their parent was in the hospital, nobody had any documents, nobody could take charge of their health, their finances and deal with those things, and it kept happening their health, their finances and deal with those things and it kept happening. So I think a natural progression then was from trust to the estate planning to try to get it less of a crisis planning and get people to be more proactive.
Speaker 2:Right. So what was it that drew you to just the accounting and the trust side of things? Did you have any experience like people in your family, or was it just something that Did you have?
Speaker 3:any experience like people in your family, or was it just something that? No, in college I took the majority accounting classes and and tax classes. So, that's what I was doing all through college and right after so yeah just had a.
Speaker 2:So you mentioned crisis planning. The issue that I hear a lot of when it comes to senior care and elder law is that people don't plan very well for their next transition in their in their lives and therefore a lot's left to their, their family members and themselves to figure out. You know, whether it comes to Medicaid planning, you know a lot of people don't have long-term care insurance. You know who's the trustee, who's the executor. Do I have a? You know a lot of people don't have long term care insurance. You know who's the trustee, who's the executor. Do I have a? You know all these different directives. Have I done anything? Have I updated my will? And a lot of these issues come to the forefront. When somebody is faced with. You know whether they have dementia or you know they pass away. They have dementia or you know they pass away. It's, it's incredible. I would think that you know when people come to you, like you said, it is a time of crisis. So what do you do to try to?
Speaker 2:educate people to not wait until the 11th hour to to do it.
Speaker 3:So what I usually do is I'm talking to the sandwich generation, the people who are my age and maybe 10 years older, and they're taking care of kids and they're taking care of their parents. So go and ask parents these questions who is the power of attorney? Do they have one to make financial decisions if they go into a rehab or a hospital for a long time? Do they have any idea what it costs to be in assisted living? Because that number is stunning and a significant amount of people just have not planned for those kinds of numbers.
Speaker 2:Let's talk about those numbers, cause in Bergen County we're talking average of what? 6,000 a month.
Speaker 3:No, in Bergen County we're at like 10 to 12. And if you're in memory care, sometimes 18,000 a month.
Speaker 2:A month yeah.
Speaker 3:So these are significant numbers and Medicare only pays for a certain amount of days in assisted living facilities for rehabilitation efforts, mm-hmm. So the parents and the families find themselves on the doorstep of a really expensive proposition very quickly. So in order to, I'd say, you know, take a look at your assets, let's see if we can do some advanced planning to protect some assets. But you have to do it early. You have to start five years in advance of whenever you need it.
Speaker 2:It's called a five-year. Look back, right.
Speaker 3:Five-year look back. So we do that. Sometimes I have people who are in the hospital but they have no powers of attorney, so no one can get to those accounts, no one can make those financial decisions to even put them in a rehab or the medical what happens in that case, if there's no POA, what happens? If there's no POA and someone does not have authority over the account, the family has to move for a guardianship or a conservatorship over that person and their finances, and that's a very long and expensive proposition.
Speaker 2:So hire an attorney, and then you have to go before a judge.
Speaker 3:You have to submit it to the court, so it takes a long time, whereas if you do a little bit of advanced planning, it's inexpensive for a power of attorney, healthcare proxy and will and you can get everything you need and everyone designated that you need for a significantly less amount of expenditure.
Speaker 2:So, going back to the asset protection because we're in Bergen County, there are people with a lot of assets and correct me if I'm wrong but with Medicaid, Medicaid only pays for your senior care. Say, you're staying at Allegro or something like that. It doesn't kick in until you have no money left. So basically, you could save your entire life. You could have $2 million in your retirement account and now you have to spend $12,000 a month and that's where all your money's going. So forget about leaving money for your family. You need that $12,000 a month and that's where all your money's going. So forget about leaving money for your family. You need that $12,000 a month to pay for your senior care and the only one that's all exhausted. Will Medicaid kick in? Is that correct?
Speaker 3:Well, in a sense it's correct because there are things where they won't impoverish the spouse. The spouse will still get to live in the house. You know there's some deep in the weeds things, but if you want to plan for, you know, possibly becoming Medicaid eligible, you need to start doing it early in your 60s and early 70s. Not in my office when you're 90. But I have people at 95 come in and want to do this and I'm like we're probably not going to make that. Look back, you know it's something in the 60s you really need to think about.
Speaker 2:You know it's funny my parents are 90 and their will hasn't been updated since the 80s and I keep asking them to update it because my my brother, is in there. Well, my brother passed away 26 years ago okay and I'm like, yeah, we'll get, we'll get into it, we're getting.
Speaker 3:I'm like you're 90 years old, you know when are you going to get to it yeah, they should get to it, because you know what certain wills say if, even if a sibling passes away, then it goes to their children, the grandchildren right right. So it really depends what the will says, and that's the other thing. They need to think about the will, because if you don't have one, it just passes by operation of law and testate, which is not exactly how some people want their assets to be, distributed.
Speaker 2:And then you've got multiple kids, multiple kids.
Speaker 3:Right, you've got grandkids or you know you want someone to be the executor. If you don't have a will, then everybody else has to renounce. That's on the same uh line.
Speaker 2:All the siblings have to choose who's going to be the administrator right um or and we know where that could go sometimes, you know right that ends up in litigation sometimes.
Speaker 2:Yeah, so when it comes to things like that, there's certain kinds of trusts. You know there's irrevocable trust, revocable trust, family trust. So what do you recommend a family do Say they have three kids or four kids what do you recommend they do in terms of protecting their assets and do do things like that? Do you trust complex, complex trusts like that? If it is complex, are they a form of asset protection? And I would imagine they're also a form of litigation protection, because now you have clear, designated people involved in making decisions.
Speaker 3:Right, so you can have. So if you have just a revocable trust, that only goes to avoid probate, there is no asset protection associated. Okay, just keeps your assets private, avoids probate. But the irrevocable trust, you can place an asset in that and then there's an asset protection to them. A third party can't reach in and grab those assets because they're no longer owned by you. It's out of your authority but the caveat is difficult to get back in your authority. Can't change that trust.
Speaker 3:Can't change those beneficiaries, you need to be certainly sure that this is what and how you want your asset distributed as a falling out between a parent and their child.
Speaker 2:There's never been an example of siblings having, you know, issues with each other.
Speaker 3:So you have to be very certain that you're making that tradeoff asset protection for giving up your rights to change this trust.
Speaker 2:Got it, got it.
Speaker 3:So if you want to change it I mean there's complex ways of doing it, it costs a lot and they don't always work.
Speaker 2:Are there any other kind of trusts you can create that would fall under asset protection?
Speaker 3:Well, irrevocable is the large, you know, the umbrella that they all fall under. Then we have dynasty trusts that pass assets among generations. That pass assets among generations and they stay in the trust and the trust just disperses them to children, grandchildren, great-grandchildren, as it goes along. Family trusts do the same thing, sometimes on a wider to different siblings and then down through the generations, but they're generally under the irrevocable trust umbrella.
Speaker 2:Does a family trust, do any of these trusts protect you from liabilities? Say you get sued because somebody tripped in front of your house.
Speaker 3:So if you create the trust, right, yeah, you've placed the asset in the trust, so only the um assets in the trust will be protected and then if you have assets outside the trust if they sue you individually right they can reach those, those assets.
Speaker 2:But if you put your home, if you put your home in the trust, which is a big decision because, as you said, you're giving somebody the irrevocable, the trust, which is a big decision because, as you said, you're giving somebody the irrevocable right to your home, but it is protected in case of things like that.
Speaker 3:It is a big decision.
Speaker 2:And that's part of the five-year look-back. So if it's under someone else's ownership, we'll say, then that's not counted against you, I guess, for want of a better word After the five-year rights. After the five-year rent, after the five years, right yeah.
Speaker 3:So the trustee, it's a trustee in the name of the trust that is that owner at that time.
Speaker 2:Okay, Got it, Got it. So I mean, yeah, there's so much that goes into it, and I think maybe one of the reasons why a lot of people put it off like even the sandwich generation that you and I are part of is because it's a lot.
Speaker 1:It is a lot.
Speaker 2:And is there? I mean, is it very expensive to have a trust drawn up? I mean, I guess it depends on the complexity of it.
Speaker 3:It depends on the complexity. The revocable trusts are generally not too expensive. The irrevocable trust, it really depends how many assets are being transferred into it, whether the assets have to be retitled, like a house, or whether there's brokerage accounts that are easy to retitle and you don't need to record it you are going to have if you have multiple trustees or significant requirements for your beneficiaries to receive the money, like do they need to finish college? Do they need to have a job? The more complex it gets, the more money it costs.
Speaker 2:So there's this movie on Netflix. Don't ask me why I'm watching it, because I'm certainly not their key demographic, but what's the name of it? It's a story about a woman who has three kids. One of them is a daughter, and the woman knows she's dying of cancer, I guess, and in the will. She owns a company and she says in the will that her daughter, who is currently like the head of marketing, is no longer with the company. She's getting fired because her mother wants her to basically fulfill this list that she wrote when she was 13 to go off and live her life. Her mother feels like she's not living her best life, so as she completes these tasks, there's a DVD that her mom made of each stage to talk to her daughter beyond the grave, basically, but she left her all these things that she had to do in order to. Once she completes these, then she will inherit the money that was left for her. So I guess that's a Hollywood version of it.
Speaker 3:Yeah, I write incentive trust. They're called that's the name. And you incentivize the person to do all different things, and then they receive the money.
Speaker 2:And it's the job of you, as the lawyer, as the estate attorney, to make sure that they fulfill those.
Speaker 3:Well, you know what? We appoint a trustee. Whoever they appoint as the trustee, they're the one who makes sure they fulfill these things before the money gets dispersed. But I draft it as an incentive trust because people want to give their children enough money to have a good life or do something, but not too much so they can't do.
Speaker 2:So they don't do nothing right like warren buffett, I think he's right, right, so they incentivize them to do things right.
Speaker 3:Don't do nothing right like warren buffett, I think he's right, right, so they incentivize them to do things right right, because isn't there like a statistic like generational wealth it's, you know, by the third generation they've basically squandered it squandered it all yeah yeah, yeah so well, there's a saying that tough times uh make.
Speaker 2:Uh, how does it go? Tough people and tough people make good times and it go Tough people. Tough people and tough people make good times and good times make soft people and soft people make tough times.
Speaker 3:Exactly.
Speaker 2:So what is it so? Obviously you've been doing this a while and I'd imagine there's some cases are very standard and others, as we're talking about, are more complex. Is there any example of a client that you've had, without naming names, that just chumps out at you, of a special instance or experience?
Speaker 3:I did have a pretty wealthy client who wanted his children to receive money but work and work towards things they wanted. So we created a trust where they only got paid their distribution the amount that matched their W-2 for each year.
Speaker 2:Oh, wow.
Speaker 3:So their W-2 or their schedule say you know we work with them, so it incentivized them to work. So that they would get double the amount, but if they didn't work the next year, they didn't get anything wow so that was an interesting way to do it yeah, yeah because it was a significant, a significant uh estate and trust yeah and so so it grew.
Speaker 2:You give me some ideas. Not that I have a significant estate, but hey, you know, and I'd imagine, if you do that, if you have multiple children and you do that for each of them, some of them fulfill it and some of them don't.
Speaker 3:Some of them don't. Sometimes you know we have to. You know a trust is a good idea, because sometimes you have people get a whole lot of money all at one shot and then they either OD on drugs so it keeps that from happening because you hold the reins of the money or they just squandered on gambling or expensive.
Speaker 2:So so now what I, you know, I'm going to dig into like headlines or expensive. I'm going to dig into headlines. I guess that you read in the news the guy's married second, third time. He's got a ton of money. His third wife, who's like 30 years younger than him, who is as old or as young as the kids, is named in the will, right? I mean, I guess there's nothing the kids can do, right? I mean, if she's, if the guy's of sound mind and body, If he's of sound mind and body. Right.
Speaker 3:There's nothing they can do about the will. But they can speak with their father and say you know, there is a bank account or there's a brokerage account or the IRA. Maybe we should be the beneficiaries on it, because then that doesn't pass through the well.
Speaker 2:Yeah, okay.
Speaker 3:But I do have that a lot.
Speaker 2:Yeah, and I'd also. I've heard stories of how, because maybe the assets weren't protected, the third wife doesn't now. Her husband needs senior care, but she doesn't want to squander her inheritance on his care.
Speaker 3:Right right.
Speaker 2:So in.
Speaker 3:New Jersey we don't have a familial statue. Other states do.
Speaker 2:What is that?
Speaker 3:They say children and spouses have to shoulder the burden of the care of the person. But New Jersey doesn't have that.
Speaker 2:So what does that mean?
Speaker 3:they can just so that that means if that woman has, uh, you know, just her own money. She doesn't she, she would have to pay for his medical bills. But she doesn't necessarily have to pay, you know, for the nicest nursing facility or even where you know she could put them into a state run nursing home instead of uh she can move them out of state put them in a cheap yeah. Cause it's cheaper out of state mostly.
Speaker 2:Yeah. So, yeah, I mean there's so many. I mean there's so many intricacies and different scenarios that go into this. I could see why you were drawn to it and you know, I think in the most, in most of your cases, you're helping people and they walk away, you know, feeling better and fulfilled, and obviously there's some cases where there's some litigation involved.
Speaker 3:And for those cases we have a whole third floor full of litigators and for those cases we have a whole third floor full of litigators oh okay. The real contest and the trust contest and the wipe that you know, the third wipe that breezed in at the last minute and took all the money.
Speaker 2:Right, right, yeah, interesting, so. So let's get back to the firm for a minute. So, beatty Padovano, how long has the firm been around?
Speaker 3:About 55 years at this point Wow 55 years Okay. Yeah, so the 55 years they do a significant amount of land use and development in Montvale and Bergen County, and then we have a corporate law and commercial leasing department and an entire litigation floor for all types of litigation.
Speaker 2:Got it, got it OK, and and so I mentioned that you're down the road from Harrington Park, you're in Haworth, new Jersey, so you know your commute to Montfail isn't so bad.
Speaker 1:No, not too bad.
Speaker 2:Not too bad. So is there anything we didn't talk about? When it comes to elder care, elder law, sorry estate planning, is there anything like any advice that we didn't talk about? Because I think it's really important and when I talk to people like you, I usually pick up the phone and call my parents and say you know, you really got to do this, like who's who's the power of attorney.
Speaker 2:And there's three sisters and myself. I live in New Jersey, I have a sister in Long Island, where we grew up, and I have a sister in Myrtle beach and the sister in Florida where my parents live. So it could be a huge mess. So they own a house. They don't own a lot, but uh, you know, every time, like you know, when we're done here, I'm sure I'm calling them up and saying, hey, when are we going to do this?
Speaker 3:I'll pay for the, the attorney, to get your will updated, you know I think that if they, the first question is do you have a power of attorney? Because if one of them goes into the hospital and then no one can you know arrange their care and pay for, pay for, pay their taxes, pay their homeowner's insurance, then it's going to come out of every individual's personal pockets, it's going to come out of all the siblings' pockets. So that's number one. Number two if they live in Florida, they need to have a Florida attorney, do it?
Speaker 2:They may want to do a trust because probate is different in each state, so can you just educate what is probate.
Speaker 3:So probate is when we take the will to the court and they review the will and the death certificate and the petition and then I'll give you a formal order appointing someone the executor Okay. And then the executor can reach all the banks, get all the assets, pay all the taxes Okay. But in Florida most people have trust because probate is a really long process and in New York it's a really long process. So you have a trust New Jersey very quick. So wills work out just as well as a revocable trust.
Speaker 2:Got it. Now what if you had your will drawn up 30 years ago and you can't find it? Is that a problem? You actually can't find the paperwork. It's filed in the courts.
Speaker 3:No, it's not filed in the courts. So, usually people don't file an original will with any repository and you need the original one to go to probate, Otherwise you have to file a complaint with a copy of it.
Speaker 2:Oh.
Speaker 3:So you want to have the original, you want the original death certificate, the original will.
Speaker 2:I don't know where my will is. I need to go find it. You need to find it.
Speaker 3:I get that it's like I don't know where it is.
Speaker 2:I'm like then, and I know there's a little cottage industry of businesses, of people that will go help you do that. They'll look, they'll help you find all your. You know documents like that, your will and other things, so you know everything's in order. It's kind of like a home organizer, except they organize your your, your documents, right yeah, so you can see there's a need for it, you know, as long as you trust them.
Speaker 3:You need the original yeah, All right and the original power of attorney. You want to make sure you have that too, because a lot of banks aren't going to take a copy. So that's important to have. Yeah, so you want to make sure all that kind of thing is in order.
Speaker 2:And Barbara, do you do any speaking engagements to educate the communities like this?
Speaker 3:Sometimes I speak to the seniors groups, sometimes I hold them at the library, and that's about it. Yeah, okay.
Speaker 2:Well, you and I should talk offline, because I have some ideas.
Speaker 3:So, yeah. So yeah, I used to do a podcast 15-minute coffee break estates.
Speaker 2:Nice.
Speaker 3:Yeah, because it was during COVID and everyone had questions and everybody needed help ASAP. So it was a way to just get some information quickly out there.
Speaker 2:Yeah, that's good, that's smart.
Speaker 3:Yeah, so it was a practical way, bring that back maybe. Because I get calls all the time and people they don't know where the power of attorney is. They don't know where the will is. They can't get in touch with the banks and banks will not talk to you unless you have that on file.
Speaker 2:So making notes right now I gotta go find my will.
Speaker 3:So yeah, go find it. That's number one.
Speaker 2:Hopefully it's in the safe, but yeah, and your parents.
Speaker 3:You make sure they have one down in Florida.
Speaker 2:Yeah, well, like I said, they haven't updated it since the 80s.
Speaker 3:And it needs to be properly witnessed and notarized for the state they're in.
Speaker 2:Yeah, okay.
Speaker 3:Because it's different.
Speaker 2:Well, we could go on and on about this and we'll have a second episode. Yeah, barbara Martin, thank you very much for joining us today. Thank you for having me.
Speaker 1:Yeah, yeah, this is great and we're just gonna have chuck close this out and you and I'll be right back. Thank you for listening to the good neighbor podcast. To nominate your favorite local businesses to be featured on the show, go to gnpbergencom. That's gnpbergencom, or call 201-298-8325.