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The Elder Law Coach
Todd Whatley is a Certified Elder Law Attorney, practicing attorney and now the Elder Law Coach. His passion is to help attorneys become proficient Elder Law Attorneys. He still practices law with over 22 years of experience with offices in two states. He is the Past President of the National Elder Law Foundation, the ABA accredited certifying organization for the ABA. He LOVES working with new and experienced attorneys to help them have the best job in the world and help a great population. Visit him at www.TheElderLawCoach.com. This podcast was formally known as Elder Law in a Box.
The Elder Law Coach
Ep. 39. Spotting Trust Mistakes: Identifying Two Key Errors That Convert Clients
Do you have trouble getting people to hire you to amend their trust done by another attorney? Are you creating trusts with terms that are not in your client's best interest? Unlock the secrets to effective trust management and protect your clients' interests with insights from Todd Whatley, a veteran in elder law. Discover why Todd advocates for creating new trusts over amending old ones and learn how this approach can safeguard assets from bankruptcy, divorce, lawsuits, substance abuse, and in-laws. Gain practical tips on the benefits of testamentary trusts and the strategic appointment of trustees with limited powers. Our conversation will equip you with the tools to enhance your trust management practices and attract new clients by offering superior protection for their assets.
Navigate the complex terrain of transitioning power from an initial trustee to a successor trustee, especially in sensitive cases involving incapacitation due to dementia. Traditional methods often lead to family conflicts and legal battles, but Todd introduces an innovative procedure to ensure smoother transitions. This episode provides a step-by-step guide on incorporating provisions within trusts to allow for medical evaluations prompted by the successor trustee, preventing unnecessary complications and safeguarding the interests of all parties involved. Don’t miss this opportunity to refine your approach to trust management and offer exceptional service to your clients.
Check out our new website www.TheElderLawCoach.com.
Thank you. Specialized experience, Whether you're an established attorney looking to refine your expertise or an emerging lawyer seeking a successful foray into elder law, this is your masterclass. Now let's get started with the luminary in the field. Here's Todd Whatley.
Speaker 2:That's right. This is the Elder Law Coach. My name is Todd Whatley, and I appreciate you joining me. It's been a little while. I've been busy summer vacation, august, was a big push for coaching but now I'm back, and today I want to help you figure out.
Speaker 2:You know, how many times have you had someone come in with the trust and you're like you know it's OK, but you know and you might have a hard time convincing someone that they need to to have you redo their trust. Ok, and I'm not a huge fan of amendments I can draft a brand new trust typically quicker than I can do amendments, and so I also think it's better for the client. I think it's better for you to have a document that you've created start to finish, rather than jump in on someone else's document, but I know sometimes there's just very minor changes and amendments make sense. Today, though, I'm going to give you two specific issues that will help you be able to help clients more and get clients to sometimes leave their other attorney and come to you as their attorney, because you bring up some things that their attorney missed, and I hope you're not the attorney that I'm talking to, but if so, I don't know who you are. That's fine, but if you're doing these two things, I really encourage you to change. And if you are doing these two things correctly, today's podcast is going to give you some pointers on how to present this to the clients and say look, these are major issues and you need to let me redo your trust, which, to correct these two issues, is almost a complete amendment and restatement, so you get to redo everything. Okay, those two issues are one, how the client leaves the money to their beneficiaries, and number two, the transfer of power from initial trustee to successor trustee. Okay, those are the two points I want to cover.
Speaker 2:So let's talk about leaving money to the kids. Okay, in today's world, there is I cannot think of a good reason that you would not leave money to a child in a testamentary trust. All right, with today's software you know I use ILS, but wealth docs, elder docs they do a fantastic job of making sure that when you leave money to the children, you are leaving it in testamentary trust. There is no good reason not to do that. Okay, I want to be clear on that and that's the first thing that I see.
Speaker 2:In a lot of trust that I review, people bring in trust from other attorneys and that's one of the first things I go to is to say, oh, you're leaving your assets outright to your children and they're like, well, yeah, that's what I want to do. It's like, not exactly you want them to benefit from this money, but do you want them to be in total, absolute free control because of the big three, which is technically the big five. So the big three we're all familiar with is bankruptcy, divorce and lawsuits. All familiar with is bankruptcy, divorce and lawsuits. If you leave money outright to a child at the date of death of your client, the money now goes outright to that child and if they're going through bankruptcy, divorce or lawsuit, the money could be lost. A testamentary trust fixes that. You leave it in a trust name the trustee with the very limited powers of health, education, maintenance and support, and it gives them the protections to not have to write the checks for bankruptcy, divorce and lawsuits.
Speaker 2:The other two that I see sometimes come into play is substance abuse and in-laws. Okay, so in those two situations, okay, you may want to not have the child as the trustee, particularly in substance abuse. Sometimes you don't like the in-laws or the in-laws have tremendous power over the child, you may really want to not let that child be the trustee of those trusts and let someone else be the trustee those trusts and let someone else be the trustee, so the money will only be used for the benefit of your child and not be subject to drug abuse or the influence of the in-law, son-in-law, daughter-in-law. Okay, that situation right there has gotten me more trust revisions and brought more clients over to me. Because once you explain, hey, what your attorney did was basically what you told them to do. But that's not what you really want to do is to leave the money outright to this child. You want it to go into trust. There is no reason not to do that. There is no additional expense, particularly if they're the trustee of the trust, but you've just given them those protective powers of a trust so that it will not be lost to those five issues. Okay, so that's number one. Number two issue that I see. And if you've not done elder law much and if you're just in a state planner, I can kind of see how you would do this and it's what we were taught to do in law school and it's what all the forums do.
Speaker 2:But the concern is, how is the transfer of power between the initial trustee and the successor trustee. How does that happen? Typically three things. Number one the trustee can resign. That never happens. Number two it rarely happens. Number two a judge deems the person to be incapacitated. Well, that's guardianship. We're going to court and the whole purpose of the trust is to try to avoid court. And then number three is a physician must write a letter saying that the person is incapacitated and, god forbid, two physicians have to write that letter.
Speaker 2:So in each of those situations it could get ugly, and particularly if you've not dealt with dementia much. Here's how this works the person is early stages, no one knows it, but the family and things are fine, they're still functioning. They just forgot what they ate for breakfast, but everything's pretty much okay. As that disease progresses, the person becomes paranoid and they're an accusatory of the people who are typically closest to them, who may actually be named as the successor trustee. And so now this person has moderate to advanced dementia. They're making terrible decisions, they're being unduly influenced by outside parties and this person does not need to be the trustee anymore. And we need to get that successor trustee in to stop the abuse, the money you know splurging, whatever. Okay, we need this successor. And so, with those three things either, hey, mom, you need to go to the doctor, well, I'm not going to the doctor because you're stealing all my money and you're trying to throw me into a nursing home and it's the person they don't like most trying to get them to go to the doctor so they can get them deemed to be incapacitated, so they can now really take over. The person's not going, they refuse to go to the doctor, so therefore we end up with court. And the whole purpose of this is to not go to court. And if there was a way to fix this without going to court, wouldn't that be in the client's best interest? And the answer is yes. So how do you fix this? You do it with the following procedure In the trust allow the successor trustee.
Speaker 2:Once they deem the current trustee to be incapacitated, they simply issue a letter, and many times that letter goes to the attorney you who drafted the trust to say, hey, I think mom's incapacitated, I need to take over. Then that letter is presented to the trustee and they are told the trust says you are to go get evaluated and deemed not incapacitated within 30 days from the date of this letter. So one of three things happens. Number one the kid dies, overreacted, jumped in too early, mom's really not incapacitated, but they're just wanting to take control or steal money or do whatever. Well, if mom goes to the doctor and is deemed to not be incapacitated, then the successor trustee does not come into power. They are pushed back and mom continues to be the trustee. Okay, that rarely happens because in most situations the child doesn't overreact. They don't jump in too early, they do it when it's needed.
Speaker 2:So therefore, option number two is mom goes to the doctor. She truly is incapacitated. The doctor writes the letter and so now the trustee comes into power based on the letter from the physician. But you see, here we flip the requirement from the originally the successor trustee has to get mom to the doctor and if she refuses to go, we're stuck here. Mom has to go, and if she does go and is deemed incapacitated, the successor takes over.
Speaker 2:What typically happens is because with dementia you have short-term memory and nothing in the trust says you have to make sure mom gets to the doctor. You just say hey. Once you're given notice by letter, typically from the attorney, to say hey, ms Jones, your child thinks you're incapacitated. They just sent me a letter and, if you remember, in your trust, you have to go be seen by the doctor within 30 days to prove that you're not incapacitated. She's like hi and you know, she throws a fit and says all this stuff, but basically she either goes or she forgets about the phone call, which is typically what happens, and mom doesn't go to the doctor. And so now, 30 days later, the successor trustee is in control and I have had very good success from banks and different people recognizing this process. You have to have a letter dated on day one and you write an affidavit or something to say.
Speaker 2:I presented this to my client and here we are, 30 days later, we do not have a letter from the doctor. So therefore, the successor trustee takes over. Okay, or we do have a letter from the doctor and it says she's not, and so everything continues the same. Or we have a letter that says she is and the successor trustee takes over. So any one of those options does not involve court. It's what I call a bloodless coup. It just works Okay, and clients love this Once you bring it up to say, look, you don't want your kid dragging you into court or dragging you to the doctor.
Speaker 2:This has protections for you if you're truly not incapacitated and you remember to go to the doctor and we get a letter from your doctor saying that you're not incapacitated, things carry on the same. Okay, you might want to change the successor trustees, and you can, since your doctor said and that you truly can change that you may want to, but the other two options work. Also, she goes and is deemed incapacitated or she's she forgets to go. All right. So those two issues right.
Speaker 2:There are two big issues that when you're, when you've been asked to review someone's trust, jump to those sections and, to be honest, I don't think I've ever seen a trust from someone that I didn't know who does good, trust Other SEALAs, other estate planning attorneys who I know and trust they do this, estate planning attorneys who I know and trust they do this, but almost always from your general practice attorney who does a trust, and even from some estate planning attorneys who do this. I just don't see good reason to not address those two issues and do it the way that I said. Okay, so I hope this helps, I hope it gives you the opportunity to look at trust and I would market this. Okay, I would talk about this in meetings, I would do a blog post, I would do a video and say hey, if you have a trust, look at these two sections and it will get people in the door and it will get people to actually leave their attorney and come to you and let you do the work for them.
Speaker 2:All right, I love questions. I love comments. Please email me, todd, at TheElderLawCoachcom, and, as always, if you want to work with me directly and you want me to coach you into estate planning and elder law and have hours and hours of this, I would love to do it. Please email us. Also, email Tricia T-R-I-S-H-A at the elderlawcoachcom. She checks her email way more than I do, but please email us, let us know and thank you for subscribing and I will see you next time.
Speaker 1:Thank you for joining this episode of the Elder Law Coach podcast. For those eager to take their elder law practice to new heights and are interested in Todd's acclaimed coaching program, visit wwwtheelderlawcoachcom. With Todd Watley by your side, the journey to becoming an elder law authority has never been more achievable. Until next time, keep learning, keep growing and stay passionate about elder law.