Join Michael Bailey in this insightful episode as he delves into the multifaceted costs of estate planning. From understanding opportunity costs to deciphering the difference between wills and trusts, Michael sheds light on how to effectively plan your estate to avoid unexpected expenses. Discover why the dollars you spend today could potentially save time and effort for your beneficiaries in the future.
Welcome to Mobile Estate Planning with your host, Michael Bailey. Over a decade ago, attorney Michael Bailey turned his attention to estate law after he recognized the unacceptable number of adults without proper end of life planning. Michael recognizes that many of his clients have difficulty finding the time for making a proper estate plan. That’s why he became the Mobile Estate Planner. He will go to wherever you are to assist you with your estate planning, including writing wills, trusts, and giving you the information you need to avoid probate. Now, ATX, Ask the Experts, presents Mobile Estate Planning with your host, Michael Bailey.
SPEAKER 01 :
Good afternoon. Welcome to Mobile Estate Planning with Michael Bailey. So we can do something besides just leave your family alone. You are listening to KLZ 560 AM or 100.7 FM, possibly the KLZ 560 radio app. Phone number to talk to me on the air is 303-477-5600. And again, that’s 303-477-5600. And my direct line is 720-394-6887. Once again, that’s 720-394-6887. So, one of the questions that I frequently get, and it’s almost, a lot of times it’s the first question that I get, is how much does this cost? And the question of how much does it cost is definitely one that comes up all the time. And cost is not the only consideration, but it is definitely a consideration that we need to consider. and so but you know cost isn’t just always um is not just the dollar amount because there’s lots of costs that go into things and so the dollars that you would pay me as an estate planning attorney or what you would pay to do whatever things that’s part of the cost but it’s not the only cost and you know i you know the the concept of cost is an interesting one for me simply because I am. So one of my degrees that I got from in college was in economics. And in economics, we learned all about opportunity costs. And you know, what is that, you know, the saying, there’s no such thing as a free lunch. You know, even if you get a lunch and you don’t pay for it, then it’s free. But what did it cost you? And opportunity cost is what did you give? The concept is what did you give up to be able to do what you’re doing? So, for instance, I am on Friday going to fly to Kansas City where my daughter will play in a volleyball tournament this weekend. She’s going to, my wife and my daughter are going to be up and flying their flights at like 6 a.m. So I will get up and I will take them to the airport and I’ll drop them off early in the morning. I’ll come back. I’ll probably go to bed for another hour or so and then get up and take my son to school. And then after my son’s going to be at school, we’re going to go I’ll pick him up from school and we’ll go out to the airport. And then we will fly because they’re flying in the morning. We’re flying in the afternoon or evening. And so my wife was like, oh, we could take like an Uber or a taxi out to the airport. I’m like, no, I can just drive you. It’ll be fine. Like, well, we could just take two cars as well. And I’m like, we’re all kind of on the same flight on the way home. So I don’t know that we necessarily need to have that. two cars waiting for us at the airport because we don’t have those two cars at the airport. When we get back, we can go ahead and just drive back, and then we can all be together. We’re like, all right, well, that’s not the worst thing. It’s not a terrible thing. But it does mean that, I mean, so cost-wise, is it cheaper for me to drive her out? Probably from a dollar expense, yes. You know, am I going to be more tired on Friday, getting up to get them to the airport by four 30 or so? Probably that’ll probably be more tired. Yes. But I don’t know that we’re necessarily going to be… So we’re going to be kind of tired there. But I also know that I’m not going to have a whole lot of… We’re not going to have a whole lot of time. We’re not going to have a whole lot of things that… I’m not going to have so many… appointments on Friday that I’m going to be too tired so I can still take care of my clients that I have. But would it be that much more expensive to bring somebody? Not necessarily. But would it be that more expensive to have my wife get a ride out there? But I can do that. So cost-wise, will it be cheaper to drive one car out and back? Yes. But let’s say that I had a super busy day, and on Friday I had a very important meeting with somebody, and if I was sleepy, I could be not at my best, and then that could be problematic. That would be a cost. And so the cost of getting my kids, getting to and from the airport isn’t just the dollars there. It’s everything else that goes into it. And so, you know, and then, you know, we’re going to be there all weekend. So, you know, I don’t necessarily work on the weekends because I’m busy enough with what I’m doing now. But the cost of being gone for the weekend is that we’re not going to have our We’re not going to have all of our stuff, and we’re not going to be able to clean the house when we’re there. We’re not going to be able to go grocery shopping. So a couple of weeks ago, we had a weekend where we didn’t have a tournament. So I went and I cleaned all the bathrooms in the house. because they hadn’t been cleaned for several weeks because we always had tournaments. So we ended up with a less clean and well-maintained house because that was a cost of doing things. And so there’s different costs that are involved. Now, with estate planning, there’s a cost of the dollars that it takes to hire someone like me. I do charge for my services, so I understand that I’m not going to be able to I have the amount of dollars. So it’s one consideration. And when I talk to people, they’re like, oh, how much is this going to cost? I’m like, well, it depends on what we do. Well, what do you mean it depends on what we do? You should just be able to tell me what it’s going to cost. I’m like, okay. So if I give you a number… And you say, oh, but I’m going to be really simple. Then I’m like, well, then we have to talk about what it costs to be really simple as opposed to being more complex. Then everybody’s pretty sure that they’re really simple and that they don’t have much to do. And then I sit down with them and they’ve got three different rental properties, but you know, since they’re only leaving it to their three kids, they think they’re simple. i’m like yes but there’s more to do because each property has to be you know treated one way or another and so you know everything i mean i think sometimes when people say oh i’m really simple what they mean is you shouldn’t charge me very much and you know i i get that everybody wants to pay as little as possible you know as a business owner who’s trying to make my living i want to charge as much as possible And there’s another economics concept of supply and demand where they meet at a price point where we can agree upon things. And there’s always people who are going to think that everything is too expensive and every business owner is like, oh, well, but we want to charge more. Maybe not Walmart, but that’s a whole separate thing. But we figure we end up where we want to be. But the cost of doing an estate plan, is not just the dollars that you pay to an attorney or the dollars that you try to save by not paying an attorney and doing it on your own there are different costs involved so you are listening to mobile estate planning with michael bailey here on klz 560 am also heard on 100.7 fm or the KLZ 560 radio app. Phone number to talk to me on the air is 303-477-5600. And again, that’s 303-477-5600. And my direct line is 720-394-6887. And once again, 720-394-6887. So, and you know, cost becomes a question of sometimes when we were talking to people and they’re like, oh, well, you know, a will versus a trust. Like, well, why does a trust cost more? No, a trust is something that when you create a trust, you put everything together and what’s supposed to go into the trust and who’s supposed to get what. And then there’s the process of putting assets into the trust. Because a trust will only control assets that the trust owns when you die. So if you have a will, a will will control any of the assets that you have when you die. And just anything and everything that you own. And in answer to the question that always comes up, no, you don’t have to list all of the assets. For a trust, usually at the back of the trust, there’s a schedule, I call it a schedule A, where you keep track of what’s in the trust. But simply writing something on the back of a trust does not make it owned by the trust. There’s different ways and things you have to do to get assets into a trust. So for real estate, a house or a building or something like that, or even unimproved raw land, you have to… transfer ownership of the property via deed so you have you prepare a deed a real estate deed that transfers ownership from you personally to the trust now oftentimes when people want me to create a trust i will write them a deed that transfers ownership of their property And so I need a copy of the current deed from them. I can write it. And then I was then usually I give it to my clients to record with the county. And then that property will be in the trust. I tend not to be the one that records things most frequently. title companies and real estate people who do this all the time they’re set up to electronically record so they can transfer an electronic record to the county and the county can record it that way I’ve never done enough volume or been involved enough to get set up to be able to do electronic recording so I say hey here you go client you go ahead and go take this to the county record it and then you know that should transfer ownership of the property Now, so that’s what we do. And, you know, that’s how you transfer real estate. But then, here’s people who have bank accounts. Well, bank account, you can’t just be like, oh, well, you know, I’m going to put my bank account inside the trust and I’m going to say it’s in the trust and that’s great. Well, you have to actually talk to the bank. Because the bank, oddly enough, keeps track of whose account is whose and doesn’t want to give your money to somebody else. I mean, that’s… This would seem like it would be an obvious thing, but, you know, that Luke doesn’t have the ability to just come claim my money, and I don’t have the ability to go claim Luke’s money. I mean, if I could claim Luke’s money, then I’d be richer than I am. But, you know, since Luke is a closet trillionaire, you know, that’s just how it works. He has that offshore account that we don’t talk about, mostly because it doesn’t exist. But, yeah. And oddly enough, Luke doesn’t want me to come access his bank account and take his money, and I don’t want Luke to come access my bank account. It makes perfect sense. That’s just how it goes. So as you’ve got a bank account that’s in your own personal name, you just declare, well, this will now be part of a trust. Well, the bank may or may not know that I’m guessing with may not because the bank isn’t going to know that you created a trust unless you go tell them. And then with a bank account, there’s a couple of different ways you can do things. You can either change ownership of the account from you personally into the trust, or you can name the trust as a pay on death designee or a beneficiary of your bank account so that when you die, whatever’s left in the account can pay out to the trust. and people say, oh, well, which one’s better? It really depends on what you’re trying to do. Now, most of us have automatic deposits and automatic withdrawals that go into and out of our bank account. So I have a referral source that they will issue me electronic payments, goes right into my business bank account. I have some expenses like rent or advertising costs that I was set up to automatically pay out of my bank account just because I don’t want to have to try to remember to pay every single bill every single time. Like, nope, we’ll just set it up because this is automatic recurring and it goes in and out and I don’t have to worry about it. Well, if you put your bank account inside of the trust. then most banks, not all banks, but most banks will be kind enough to give you a new account number. And so all of those automatic things that you have going on, you then get to redo because you have a new account number. And anybody who’s ever had a credit card that was compromised that had automatic things knows that this can be annoying. The week or so before Christmas this year I got a text from a bank that said oh did you purchase this much at this place and I’m like nope don’t recognize that like oh well that’s probably fraud so we’ll go ahead and shut down the card and we’ll issue you a new one it should be there in 10 business days I’m like, well, 10 business days is after Christmas. So the planned Christmas shopping trip that was going to go on that credit card didn’t happen because we put it on a different credit card. We still went on the shopping trip, but it just didn’t get paid to this particular card. That’s just how it goes. But that card, we have our cell phone bill that hits it on an automatic basis, and our cable bill, and our water bill, and our subscription to Adobe Acrobat because we need that for all those type of things. So every single thing that’s automatic on there, we had to go switch around, and so… It used to be more obnoxious when that happened because we’d have to call and change things and do all of that. Now, most of them we can go and update the credit card information online. So you have to remember all of our logins for all of our accounts. And that’s its own special form of ridiculousness and difficulty now, isn’t it? Trying to figure out the… Which account is which? And remember all of your usernames and passwords. I mean, I would love to remember all of my usernames and passwords, but instead I have a list of all of them that I keep and have it password protected and stuff like that so that I just have to remember one password so that I can get in. And there’s programs that do that. that for you, I think there’s one called LastPass that I’ve heard of, just various things like that. Google is pretty good about saying, hey, we’ll remember this password for you. And as much as I’d love to break away from Google and not be connected to you know, a large company that gathers all sorts of information on me. I also kind of like it that I go to log into a credit card that I haven’t touched in several weeks. And I’m like, oh, good. Or several months. I’m like, oh, good. It remembered my password. That’s really nice. I actually saw a cartoon where someone was on the internet and like, oh, man, I don’t remember my password. And so this other character in Google content is like, oh, let me fill that up for you. I’m like, well, that’s kind of an invasion, isn’t it? And Google is like, well, should I stop? And the person’s like, no, please do that for me. Because we kind of rely on technology and things like that. And whether or not that’s good or bad or otherwise, that’s a whole separate question for a different day and certainly not a radio show about estate planning. That’s kind of a technical ethics type of thing. So we do that. And then, you know, even IRA or a 401k, you’re like, okay, well, maybe we can name the trust as a beneficiary. Okay, we can do that. Or we can, you know, an investment account. You can retitle the name of the trust or you can name a trust as beneficiary. And all of this, to do all of this takes time. And to, you know, I, you know, most of the time I will teach my clients how to do it. Say, okay, you can call the bank. You can call the investment company. You can, or you can go in or you can do this online. You can figure it all out. Because then I don’t have to take the time to go into the bank or call an investment company and sit on hold for an hour while they’re trying to figure out whether or not I’m the right person to talk to. Because, of course, even as an attorney… People just don’t believe me. I can’t just be like, oh, yes, I am Luke’s attorney. I need to be able to access all of his accounts. And Luke has instructed me that he needs to pay me all of the money in his accounts. They’re like, okay, cool. We believe you because you’re an attorney. I’m like, that’s not a good thing to do. You don’t want to just believe me because I’m an attorney. I mean, I think I believe it all because I tell the truth and I’m credible. But just guessing that I’m an attorney and that suddenly you should do everything I say, that’s not quite how it works because usually there’s an opposing party who also has an attorney and they may not view things the same way that we do. So there’s a time cost and there’s an extra work cost that goes into a trust, which translates to more legal fees because we’re doing the work on the front end as opposed to pushing it off on the back end and a will. So you are listening to Mobile Estate Planning with Michael Bailey. Here on KLZ 560 AM, also heard on 100.7 FM, or possibly the KLZ 560 radio app. Phone number is 303-477-5600 to talk to me on the air. And again, that number is 303-477-5600. And my direct line is 720-394-6887. And once again, 720-394-6887. So people will say, well, why does it cost $500 for a will and $2,000 for a trust? Because we’re doing all the work on the front end with the trust. You have a $500 will, you’re like, okay, cool. We’ve got that. Everything will go where we want it to go. Yep, cool. Set it up properly. And then you get to the back end when somebody dies. You go, oh, okay, well, you know, this will be great. We can do all this. We’ll take the will to the bank. We’ll take the will to the investment company, and they’ll just transfer everything over. And then you go to the bank, and the bank says, well, where’s your probate paperwork? What do you mean probate paperwork? We can’t just bring a will? No, you can’t. If you have a will, you need to go through the probate process, which means you take the will to the probate court, you apply for probate, and then you have to go through the proper steps. And the court will give you legal permission. in the form of a letter testamentary or a letter of administration that allows a person to access your assets. And without that, most banks or financial institutions aren’t going to simply come and tell you, they’re not going to simply believe you that you’re the one that’s authorized. Because the court and the probate process, part of the process is proving the will and showing that it was done properly and that the author the person who’s supposed to be in charge is properly authorized so probate process is not just oh hey we show up court gives you everything and you move on no the court wants to know they want to see they want the will they want to know who’s in charge of it they want to hear to fill out the proper paperwork to do so and then they’ll give you legal permission to train to go gather assets Well, then you have to tell the court what assets there are. The deceased person owned a house, and they had a bank account at First Tech Credit Union. They had a bank account at Bank of Colorado. And then they had an investment account with Robinhood, and they had another investment account with Fidelity. And they had a life insurance policy with Hartford. And they owned a whole bunch of really cool woodworking tools that they have out in the shed. So you inventory all of these assets and you tell the court what there is. Okay, cool. And they’ve got a form and a timeframe to do that in. So that all gets submitted to the court. The court says, okay. What debts do they have? So you have to find the debts and give notice to unknown creditors because not everybody just keeps a list on their front door of what creditors they owe. In my house, for instance, I purchased my house by using funds from one bank, and then I refinanced with a different bank, and then I refinanced again with yet a third bank and a different provider. So if you’re trying to figure out where in the world would you have to go to pay off my mortgage, do you find the first, second, or the third bank? And you call the second bank. They’re like, no, we don’t have a record. They’re like, cool. We don’t have to pay. And then suddenly the third bank comes in and says, hey, Sue, that house, you still owe $170,000 on it. So we kind of want to get paid. Oh, okay. Or, you know, credit cards and somebody has an unknown credit card or, you know, somebody was, you know, really enjoyed going and playing the, you know, the roulette up at, you know, the Monarch in Blackhawk. And so they had a $20,000 debt there. Well, you know, that needs to be paid. So you do that, and then as you go through the process, you’re like, okay, we have these assets, we have these debts, we’ve paid them off, and here’s our final, and then the court wants a final accounting of, here’s what we had, here’s what we paid off, here’s what’s left, and here’s where it’s supposed to go. Court says, all right, go ahead and make those distributions. All right, sweet, we will. But that whole process is kind of doing the same thing of putting assets into a trust. It’s just on the back end after somebody’s died, and it takes time, and it takes effort, And if you play an attorney, it takes money. Or if you do it yourself, it takes time away from your job and time away from your family. Not that you always have to check in with the court every single time, but there are benchmarks and times that you have to do, and you have to spend the time. If you go to the bank and you’re like, okay, here’s my – letter of testamentarium or letter of administration that shows I’m in charge. All right, cool. They’re like, okay, well, here you need to fill out these 10 pages of forms so that you can claim the assets of the deceased individual. And we’re going to need a death certificate and we’re going to need all these forms filled out. We’re going to need ID from you to make sure that you’re the same, you’re the right person. All of these things need to be done because banks are not super keen on paying out money to people who aren’t supposed to get it. Same thing with investment companies. They’re not super keen on paying out money that’s invested with their firm to somebody who’s not the proper beneficiary, not the proper recipient. Because if they do so, they pay out, say, an investment company, say, like Edward Jones. Edward Jones pays out $500,000 to the wrong person. Then the right person comes along, and they can prove they’re the right person, and they say, well, we need our $500,000. Edward Jones says, oh, well, we paid it out to the wrong person. And the person says, that’s great. I’m the right person. You still need to pay me the $500,000. So the Edward Jones or the bank will have to pay that right person, and then they can try to recover from the wrong person they paid it to. But that might be difficult, especially if the wrong person has disappeared. So there’s just work to be done, whether it’s on the front end or the back end. And either way, that work will take time and money to get it accomplished. It’s just a matter of where do we put the time and the money. Now, some people… They set up a will because they don’t have a whole lot of money to be paying to the person or to the attorney right now. And so because of that, they’re like, hey, I can’t afford to pay what a trust might be, but I’ll push it off on the back end and my kids can take that out of whatever’s in the trust. estate or the inheritance and that’s a perfectly viable option it’s just you have to think and plan ahead for what you want to do and so as you do that um you know you just look at the costs of dollars costs of time costs of um you know what’s going to take you away from your your family or from work for whoever’s in charge later on there’s just a whole bunch of different things that go on there that you have to consider as part of the cost of what you’re doing And if you set it up yourself, you’re probably saving some money. But are you saving time and effort and money down the road? Remains to be seen. So just all of those things go into the consideration of what is time and what is cost and what does it take to make an estate plan. So thank you so much for listening to Mobile Estate Planning with Michael Bailey. I’ll be back next week. But in the meantime, stay tuned for John Rush and Rush to Reason. And I will talk to you next week. Thanks and bye.
SPEAKER 02 :
Mobile estate planning with Michael Bailey will return to ATX next Wednesday at 2.30 here on KLZ 560, AM 560, FM 100.7, and online at klzradio.com.
