Are you prepared for your wishes to be carried out once you are no longer able to voice ’em? We’ll find out how to get your affairs in order … on the edition of Frank Relationships.
FRANK RELATIONSHIPS: ESTATE PLANNING WITH AIMEE GRIFFIN, ESQ.
Guests: Aimee Griffin
Date: February 1, 2016
Frank: Are you prepared for your wishes to be carried out once you’re no longer able to voice them? We’ll find out how to get your fears in order on this edition of Frank Relationships.
Yes. As always, those are my babies. Thanks again daddy’s daughter today.
Welcome to Frank Relationships where we provide a candid, fresh and frank look in the relationships with goals of acceptance, respect and flexibility. I’m Frank Love and you can find me, my blog and my various social media incarnations at franklove.com. you can also find me on ABC’s Good Morning Washington most Friday mornings during the 9 o’ clock hour.
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Greetings to my wonderful co-host, Nancy Goldring. She’s got the magic voice and a perspective to match. What’s up, Nancy?
Nancy: Well thank you, Frank. Hi, how are you?
Frank: I’m great. How are you doing?
Nancy: I’m great, way to get the show started.
Frank: We also have in the studio, my daughter today. She decided to hangout with daddy. It’s a snow day and she made [0:02:10.4 – unclear / shy men]. She’s got a daddy and a mommy and she may want her parents to do things the certain way as it pertains to their affair. So if she hears something that she wants to in or ask a question about, she has a mic and you might hear her voice. Good morning, baby girl.
Daughter: Good morning.
Frank: Good morning. Look at that—it’s an inside joke. Daddy messing up. Whatever.
Nancy: Alright, I’m listening. Yes.
Frank: What’s new in the world of relationships today? Anything in the news?
Nancy: Oh wow. Well, I was drawn to the fact that the documentary about Michael Brown as coming out. I think it’s called Ferguson cover up uncover—something like that—and the screening is happening this week. So I can’t imagine we’ll see something about a coming out and certainly as I looked at that or thought about that, I also saw a movie during the snow break called Fruitvale Station, which is the movie is a couple years old now and the incident happened in 2009 with Oscar Grant.
So when you think about these, sorts of incidences as it relates to relationship, I think about a relationship to the cultures, our relationship to authority especially at a time in the consciousness-slash-new age community where we’re being prompted, I want to say, to push the envelope on the boundaries. And so, how that might look to a young person is to buck authority and certainly that’s part of how we come of age—we challenge authority. And yet, that thing that is part of the coming-of-age process, the maturation process is being—
Frank: Can get you killed.
Nancy: —wild against—can get you killed—yes, yes. So if there was ever a way to [0:04:30.9 – unclear / carrel] the masses, if you will. It’s this issue. It looks like it’s just a black issue, a black male issue, a youth issue but it really isn’t. It really has incredibly far-reaching implications, I feel.
Frank: Yeah, yeah and even in relationships.
Frank: So the relationships between black and white,—
Frank: —the relationships between those individuals and their partners¬¬—
Frank: —I mean, black and white people marry. So it can run—
Frank: —pretty deep.
Frank: Yeah, absolutely. Absolutely.
Nancy: No question.
Frank: I was reading an article on Monday, January 25th about how some families—in the Washington Post—about how some families do not include the cause of death for their loved one in the obituary.
Frank: Because of maybe the stigma that might be attached so instead of saying that so and so died from liver cancer, they may just simply say “cancer” because there could be a stigma related to alcoholism, drinking and that sort of thing. Instead of saying something to the effect of that person died of lung cancer, they may say again “cancer” because it could be associated with smoking and these things make the person possibly look bad or look irresponsible once they’ve passed. We want them to look as good as possible. I mean, the interesting thing is that touches on today’s show ws we are discussing a state planning.
Frank: And it has everything to do with letting your wishes be known when you’re gone or when you’re unable to actually enforce or even necessarily communicate what you want. It’s an interesting piece. Do you have a feeling one way or another about how you would want your cause of death communicated?
Nancy: Well, as I’m listening to you I’m finding myself asking the question do you mean when the obituary is posted in the newspaper or the one that’s actually handed out at the funeral? In my experience, that’s a new thing to say how a person died. Usually they just say the person was born to you know, these parents and on this day they passed. It’s a new phenomenon and like I said in my experience, for the cause of death to even be an issue. The point once you get to that funeral is that this person is gone.
Frank: Is gone.
Nancy: And we love them and we want to do something to get closure for ourselves and cherish their memory.
Frank: You nailed that. You took that some place I hadn’t even thought about. When I think about the first funeral that I went to which was my grandfather’s—atleast that I can recall—in 1984.
Frank: It did not say how he died.
Frank: And he died of a brain aneurysm and so yeah. I can relate. That’s—
Nancy: Yeah, it’s very phenomenal.
Frank: The article even said that David Bowie and Allan Rickman—
Frank: —that their causes of death were not specifically noted what kind of cancer.
Nancy: Okay, okay. Interesting.
Frank: Yeah, interesting things that we play with these days.
Nancy: Yeah, this age of full disclosure.
Frank: Right, right. And is full disclosure even necessary as you—
Nancy: Oh once a person dies… In most instances for me unless it’s somebody really close to me, no.
Frank: I’ve played with the issue around in my head—I’ve played with it as to what if we didn’t know how someone died? What if—I mean even someone close to us, what if someone passed and all that we knew was that they passed? We had NO idea, NO clue, how, whether it was natural causes or at the hands of someone else—how would we function differently? Or would we function differently? And I—
Nancy: I think we would function differently. I’m only saying that because a couple of instances back in—wow, ’95 I think it was? My brother-in-law, ex-brother-in-law, I got a phone call from my ex-husband that his brother died and I noticed the first thing I wanted to know—
Frank: What happened?
Nancy: —was not only what happened, I wanted—I needed to know that no one killed him. I just needed to know that. And it turned out that he had been in a motorcycle accident and so he’s already gone, there’s nothing I can do about that but I noticed a visceral sense of relief to know that no one killed him. It was like if he had to go, atleast nobody took his life and not in a violent way.
So I think it leaves this sort of pregnant pause for you when you don’t know. And yet, you want to know because you do want to make some kind of assessment and I don’t know why the mind needs to do that.
Frank: Right, exactly. That’s kind of what I’m getting at.
Frank: There’s a feeling of needing more or needing more information when really I question whether we do.
Nancy: Yeah. The mind wants it. No question about it.
Frank: The mind wants it and the ego wants it in many ways.
Nancy: The ego wants it. Yes.
Frank: Because we want to be protected, we want to feel like this can’t happen to us or what can we do to avoid it if something occurs, but you know, yeah.
Nancy: On it. Yeah, I get. Because of course I went from thinking, “Oh I’m going to get my motorcycle license” once that happened to him. The aspiration went right out of the window.
Frank: Yeah, I understand.
Frank: Today’s guest works with individuals and families to create generational wealth retention strategies. She uses trust and estate planning to support families with minimizing taxation at building equity. So if you want to know what an estate plan is, who needs an estate plan, and what the greatest mistake that people make in completing an estate plan is, then stay tuned as your Frank Relationships team talks estate planning with Atty. Aimee Griffin.
Welcome to the show, counsellor.
Aimee: Thank you.
Frank: What advice can you give to a 25 year old couple that has a baby due in 2 months about estate planning?
Aimee: Wow, that’s a great start.
Frank: Ah, thank you.
Aimee: I simply tell people that I haven’t having walked this way a little while longer than many. [0:11:56.6 – unclear] Now you should have your first estate plan at the age of 18.
Frank: So that’s 17 years delinquent already?
Aimee: That’s 17 years delinquent already. Then you know, it’s a 1 year about to have a baby. You are really, really [0:12:11.8 – unclear]. Now when I say 18, it’s because the lawyers in all of our stories or most of our stories, from bad things that happen to other people. Now I realize it because of the challenge that happened to me. When my daughter went to college, she was in a car accident. The law says that no one can give you information. Where estate plan is more than just what happens when I die.
Frank: It’s safe to say your daughter was 18 or older when she went to college?
Aimee: Yes, she was 18 when she went to college.
Aimee: And as an 18 year old, you have the right to privacy. So we can’t get information baout our loved one legally, unless you have a written documentation giving your authority away. Does someone legally bound to hold it in.
Frank: I’m curious, do you think you have the relationship with your daughter or HAD the relationship with your daughter where she would have wanted you to have all access o her medical information and that sort of thing when she was 18? Or might some 18 year olds just be busting out of the house and want independence and not want their parents to have that level of access to their back story?
Aimee: Well, let me just say I was not one of the new [0:13:45.1 – unclear / age parents], where you have right to privacy [0:13:48.5 – unclear – there].
Nancy: I hear you Aimee.
Frank: I see a whole girl across the side of the table smiling right now.
Aimee: It wasn’t—and my role was and then I say, many of us should be mindful as long as I pay any bill for you.
Nancy: There you go.
Aimee: You need to— again, I wasn’t those new age parents. So there wasn’t a conversation but being mindful of those parents that are, what you need to support your children to know is if you’re in a car accident, I can’t help you. And that’s what happens where [0:14:27.5 – unclear]. So they want your help. They may not want you to know who they’re dating but they want you there in case of an emergency.
So if we talk about it and we express it in a way that is clearly, the statement is you know that you have children or young people fine that says “In case of emergency.” It’s just that I don’t want to walk through your stuff just to get your stuff but that every 18 year old and older person should have someone who has a power of an attorney and their financial stuff as well as their health care stuff.
Frank: Okay so I guess you’re opening the door for the first major question, what is the power of an attorney?
Aimee: A power of an attorney is it gives somebody the authority to act on your behalf. So it gave me the authority to challenge my child’s tuition bill or any other bill as well as to pay her bills.
Aimee: So let me just warn you that the power of an attorney is a powerful [0:15:40.2 – unclear].
Frank: And not to be taken lightly or drafted lightly.
Aimee: It is—I call that the signed blank check.
Frank: Yeah, okay.
Aimee: Because that means I could continually go into my—to whoever gave me their power of attorney and manage their money in a way that they haven’t given me approval for. So I say, when you do that who would you give a signed blank check to?
Frank: Is it possible to do a power of attorney for just a segment of life, such as your health or just your finances? Is that possible or is a power of attorney—is it basically what you said, a blank check that could be cashed for anything?
Aimee: So there are two categories of power of attorney. So there is the financial nusiness one and then there is the health care. The health care has a whole bunch of stuff that you would—now remember, the health care is restricted to only when you can’t speak for yourself.
Aimee: So financial is valid from the moment you signed it. So if you signed the durable power of attorney and it says the durable versus springing.
Frank: The durable versus what?
Aimee: The springing.
Aimee: Right, you can spring into action, you spring into action and so let me just tell you the difference between those two rights immediately. The durable power of attorney can become effective as in a date or as in immediately upon signing and it has no barrier on whether you’re not healthy, whether or not you can speak on your own. You can be right next to the person who’s speaking on your behalf and that person is called the attorney effect.
And then there is the [0:17:25.3 –unclear] that you have a springing power of attorney. That only springs to action when there’s certain conditions required such as you can say, when I am incapacitated and so two doctors must say that I am unable to speak for myself. Now I honestly recommend that people go for durable power of attorney that’s in effect because there are often times when you don’t have the will or the capacity—
Frank: To get two doctors.
Aimee: —to get all of those other things in order. Right. Now I don’t know if you know anybody who has dementia?
Frank: I do or did.
Aimee: There are sometimes—they are like as lucid as you and I are today and then with them a few more movements, they’re not.
Aimee: So getting them to two or three doctors, to prove that they’re not—may not be the way to go. Especially when you’re explaining to them that you’re one of the doctors to prove that they’re not incompetent.
Frank: Yeah, yeah.
Nancy: Yeah, yeah.
Aimee: People aren’t going to jump in line to hear that. So—
Frank: Even if it’s seemed like it’s in their best interest at that time.
Aimee: Well and the thing is, they won’t be thinking of it as their best interest because they believe that they are [0:18:34.5 – unclear / lose it].
Aimee: [0:18:36.3 0 – unclear].
Frank: Yeah, okay.
Aimee: So we could be really thoughtful about how we support people and how do we protect ourselves to have the most [0:18:47.9 – unclear] but we need to be clear about what we are letting go and what power we’re giving for whom.
Frank: And that’s—
Aimee: And you can’t put limitations on that.
Frank: Like what? What are some of the limitations?
Aimee: I’m sorry?
Frank: What are some of the limitations that could be imposed?
Aimee: Some of the limitations that can be imposed can things like you can’t sell any of my property, you can’t make loans from our property because mind you, this is such a sweeping huge power of attorney.
Aimee: Where you can restrict it to say—and it should always be the language and power of attorney should always be that’s in my full best interest. And you need to be asking in my full best interest.
Frank: And can that be questioned at some point by a judge, whether that person was acting in your soul best interest?
Aimee: I am actually litigating a case right now where that’s a question.
Aimee: So mind you, at $350,000 later.
Frank: And often, how can you possibly get that money back?
Aimee: That’s right. And so it is oftentimes there’s a whole bunch of litigation around the country going on about elder abuse and financial exploitation of elders. So we can sometimes, the people that we think should love and care for us the most are those who may take advantage of us when we’re the most vulnerable.
Frank: How does having five children factor into the conversation? My hand is up, that happens to be—
Nancy: Having more than one child, yeah.
Aimee: As in having one child. Let that be clear.
Aimee: Now, but I will say to you that we all have the same level of responsibility in propriety. When you have one child, you know your child and what is giving them all of your money, all of your assets at one time, it may not be in their best interest. There are sometimes that works out really well. We need to have multiple children. What I can guarantee you is hey will have difference of opinion. I have two biological children—and I say biological because we have others that we need to be mindful of. Because as a community, we often adopt without adopting other children.
Aimee: But I can tell you, I believe my daughter and my son think very differently and I believe that my daughter would have my help here, had me plugged in until there was no more electricity on the planet.
Aimee: And my son would say, “Mommy, doesn’t want to live that way.” And Courtney would say, “You killed my mother.” So—
Frank: Ooh. That’s a heck of a statement.
Aimee: We know. We’re the only—
Nancy: That’s serial.
Aimee: —family who don’t speak to each other. And we’re dead because of—
Frank: Things like that.
Aimee: —they did something that they didn’t agree with.
Frank: So how have YOU addressed that?
Aimee: What’s most important is I let my children know what MY wishes are.
Aimee: I think most of us know—have you heard of the name Terri Schiavo?
Aimee: The woman in Florida whose husband said—she was in a vegetative state when she was in our 20 and her husband said, “She doesn’t want to live this way.” Her mother said, “She will live as long as there is electricity.”
Aimee: And they took her to the Florida Supreme Court. No one wants that because everybody’s hurting.
Frank: Right. It’s a tough time for everybody. It can be an expensive experience.
Aimee: Absolutely being an expensive experience. Her cards—we’re not even talking about the legal cause.
Aimee: But in talking about how do we make the decisions—do we make the decisions that will afford us all of the legacy? I try to give as many talks around like the country on creating a legacy. What does that mean? We need to be thoughtful about how we plan. I want people when I consult with them to think of not just what happens when you die but what happens when you don’t die, and what is the position that you want to lead your family in?
Nancy: But Aimee I have to say the question for me is still open as to how you resolve the issue between your son and your daughter if for whatever reason, you become incapacitated. One of them says, ”Mommy doesn’t want to live this way,” and the other one says “Keep her plugged in until the electric blows.”
Frank: I think her answer on—I think her diplomatic answer was we worked it out.
Aimee: So the answer is not about what they want—
Nancy: It’s about what you want. Yeah, yeah.
Aimee: Right. And so in my estate planning is I need to be very clear and I have the papers to say “These are my wishes.”
Nancy: Got it. Okay.
Aimee: And so I create the framework that we should have these conversations regularly because it’s about what I want.
Aimee: It’s not about what either of them wants.
Nancy: Yes. Yes, I just feel like if I were listening, I would want closure around that so I wanted to get—
Frank: The closure is work, write it down.
Nancy: Write it down and keep talking about it.
Frank: Whatever your wishes are, write it down.
Aimee: And keep talking about it.
Nancy: And keep talking about it.
Aimee: You know, it’s what I felt at 30 isn’t the way I feel at 50, which will be the same with the way I feel at 70 or 80 or 90. So we need to be open. We don’t talk about this as a community.
Aimee: 35% of African-Americans have estate plans. I mean 65% don’t.
Aimee: And I will tell you, that 35%–and when we say 35%, some of them that I’ve looked at, I don’t think you should really [0:24:59.5 – unclear].
Frank: Now what about other communities? What’s the percentage on the number of people in other communities that have estate plans?
Aimee: So it is the African-American’s 35, white folks have 70%.
Frank: Okay. It’s a difference.
Aimee: There’s a huge difference and one of the things that I talk about is that estate planning is an economic development issue. We talk about it on level playing field all the time and if your two people come to college, one was a trust that will pay for your college tuition and the other one is going to go into debt. When they graduate, they’re still not going to be level.
Aimee: Because you come out with it and somebody comes out with being able to sign the course that they want.
Frank: Alright, let’s move right into—what is a trust?
Aimee: So a trust is what I call often as [0:26:03.9 – unclear]. There are hundred different kinds of trust but I look at them as—it’s a way to avoid probate which is the next conversation but—
Frank: Yeah, so cue up what is probate also after you get to what is a trust.
Aimee: Sure. A trust is a way of holding your asset so that you put it in a separate entity. So I’d write down let’s say I own my house, I own my car, I own my bank account. When I die, everything is froze but if I transfer everything, my house, my bank accounts however meager or however large my car, into a trust. When I die, the trust doesn’t die. So if somebody needs my bank account to bury me, they still have access. So the successor, I’m the trustee during my lifetime, the successor is my daughter so I stop writing the check but the bank account still exist and now Courtney can write the check on my behalf.
So there is no gap. Unfortunately, I have had the opportunity to support those people who literally and didn’t have estate plan and so when they pass away, we had to go through the legal process which is probate, which will determine who has the responsibility or the authority to act on their behalf. So when you have a will or without a will, you have to go to court to get permission to act on behalf of the person who died. So that is a legal process altogether.
So people think all the time that lie. I have the will, I don’t need to go on a probate. It’s just going to go smoothly. Yeah, but will it’s overtaking for the get to get permission.
Nancy: So going to court, activates the will? Is that what you—?
Aimee: It activates the will.
Aimee: It creates, it gets capacity to the will because otherwise, it’s just a piece of paper.
Nancy: Okay, and I think it’s fair to say also atleast I’m under the impression that the whole process can take quite a while.
Aimee: It can take—you know, again depends on what state you’re in—
Aimee: —they’re very interesting process between DC and Maryland, across the state. Some told me the processes are horrendous. DC gives you up to 3 years to probate and I have a friend right now who just had the added extension on beyond that time because of some of the details of the estate. So a lot of times you don’t know what you don’t know. And what I try to encourage people to do is avoid probate.
Frank: And that you can avoid probate through a trust?
Aimee: Through a trust.
Aimee: And most people think either “I don’t have enough money to have an estate,” “I don’t have money to have a trust.” I say if you have any property or if you have multiple people in your family that you need to fair it out who gets what, get a trust.
Frank: How do you define “property” in this respect? So you’re talking about the dishes, the china, that nana left us or you talking about—
Aimee: I’m talking about anything that has to be legally transferred.
Aimee: And that would include a house, a bank account, a car—those are the things that you have to go to court to get. If you have just a house full of stuff, most of the time [0:29:42.9 – unclear / folks don’t] going to take it but with a court, can create—
Frank: It’s own.
Aimee: —a huge family too.
Aimee: Let’ be really clear. That $47.50 can be the result of the [0:29:54.2 – unclear]. But if we are mindful about who you want distributed your [0:29:59.9 – unclear] like if I had only one child and no asset that are titled in my name, no car, no bank account, or no home then having the need to probate is [0:30:15.1 – unclear / minimalized; minimal].
Aimee: Or is everything I own is jointly owned with my spouse and we don’t die together then the need to probate is [0:30:25.6 – unclear / minimalized; minimal]. But let’s be clear about the fact that we should all have a will because you know what? In addition to your [0:30:32.0 – unclear / spouse; staff] you have legal authority.
So one of the things that needs—so if even if you need a trust, you need a will. Let’s say for example I was in a car accident and was killed. The will gives somebody authority to sue on my behalf.
Frank: Okay, alright.
Aimee: Those are the things that we don’t necessarily consider but we don’t necessarily know. But that’s which is why it’s part of my commitment to support people just like by doing seminars and having talks because we do better when we do better.
Frank: Can the court say no if you go to the court to have the will activated?
Frank: Why would they do that?
Aimee: Well because they’re big, there are some rules, there are some basic rules that you can’t disown your spouse.
Nancy: Dang. Not even in death.
Nancy: I’ve been trying to get rid of you!
Frank: When I die, you’re going to miss me.
Nancy: But not just off.
Nancy: Because that’s what I was in it for anyway baby.
Aimee: That’s right. That’s right.
Nancy: Telling you.
Frank: Oh Nancy, we’re seeing another side over here. I’m going to have to fix next week’s intro.
Nancy: I’m innocent, I’m innocent. Speaking of our great republic.
Nancy: Thank god I am not married so I do not have to explain those commentary [0:32:12.4 – unclear].
Frank: Not married right now but you now…
Aimee: But you know in any case, I have an aunt who has been married honestly I thought—I mean she didn’t marry as long as I can remember like 40, 50 years.
Aimee: Oh wait.
Frank: You thought she was married?
Aimee: I know this now. I know this now but the truth was, she has lived with her husband for the last 30 years.
Aimee: And so, what [0:32:40.8 – unclear]? So if indeed she passed away still married to this man—
Nancy: He gets everything.
Frank: Well does she care?
Frank: She does care.
Nancy: But that goes back to the state when you made earlier about how we just don’t approach these things and—
Aimee: That’s right.
Nancy: —as a community, and I know many, many, many people who were married and at sometime in their lives and a gazillion years goes by, the man passes and he maybe had lots of other relationships or certainly another significant one but he wasn’t married and he’s still married to the woman he hasn’t seen in—
Frank: 20 years?
Frank: Right, right.
Nancy: And here she comes right out of the black smoke.
Nancy: Yes, yes. That thing is real.
Aimee: And you know, 50% of folks don’t stay married to the person they first married.
Aimee: So we need to be thoughtful about how do we take care of—let’s say I was married, a second marriage and I died first and my husband gets my stuff. Those kids from the first marriage are out if we don’t plan.
Frank: That is an interesting point. You know I have two children from my first marriage and three in my current marriage and the oldest of the two in the first marriage—I reiterate—is sitting here in the studio and she may just have something to say. Is there anything you want—yes, you baby are put on the spot. I didn’t tell I was going to ask this at all but hey, you’re here. Is there anything you want to be considered? Do you have any thoughts about it period?
Daughter: I mean honestly I’m not sure because it’s not like I don’t live with you. I’m still under custody above you and mommy, so… I mean I don’t know what that entails.
Frank: Gotcha. And you’re 16—
Frank: —and you don’t necessarily like you just said, you don’t even know what it entails, you haven’t really thought about it and you expect your parents to be with you for a little while longer.
Frank: That’s about right?
Daughter: Pretty much.
Frank: Got it, got it. Well I certainly would like to be with you a little while.
Aimee: A lot longer.
Frank: Yeah, yeah. You talked about transferring property to a trust. So it’s not the property gets transferred when you die, it’s property gets transferred NOW and it’s there when you die. Is that accurate?
Aimee: Correct, correct. The key is that upon your death, you really want everything of value to be in the trust so that there is no hiccups. It’s just a dirt. They just change signatories.
Nancy: Okay but what about this phenomenon on my family atleast, it’s well I’m going to put your name on my account or I’m going to put your name on my house so that if anything happens, you don’t have to go through any changes. Is that enough?
Aimee: Yeah. That’s a problem.
Aimee: While there is—we’ve been doing that for years. Let me tell you the downside for doing that.
Frank: The liability?
Aimee: Well, right. So let’s say I’m going to just take—let’s say my son is on my property as well, right? And then the first thing I’m going to pick on is gets divorced. So his community asset or his asset are included my house. That’s number one.
Nancy: Got it.
Aimee: Number two, if he has creditor again, that attaches to my house. Number three, which is a part that I think people in the DC area needs to be really mindful of is what we call the tax-based.
Let’s say I bought my house back in the ‘60s, ‘70s when I wasn’t probably just a [0:37:00.0 – unclear] but conceptually. Like my next door neighbour bought their house for $30,000 right? The house is now worth $500,000, right? So if they sell the house now, the tax basis is the difference in the 30,000 that they bought it for and the $500,000 that they’re selling it for. That’s $470,000 tax-based, right?
Aimee: However, and let’s say add their child’s name to that and to this the child was part of buying it at the $30,000 rate.
Frank: Wow. Okay. Interest ignores.
Aimee: Right. So as opposed to when they transfer—let’s say they transferred it off to death, then it’s the kid bought it at the $500,000 rate. And so if they sold it then, it was the tax-base is that they sold it on the $500,000 as opposed—at saving $470,000 in capital case.
Frank: Is there a tax that that child would have to absorb if it’s transferred after death?
Aimee: After death, yeah that’s the $470,000—no, unless they sell it. Depending on how they sell it. Right. If they sold it with the $500,000 basis and they sold it for 600, that’s a difference.
Aimee: Now there is a thing called “estate pack.” If the estate is more than a million dollars that were transferred, right? With then, what’s your good estate planning tax attorney, you should be mindful of there are strategies to minimize the tax.
Frank: Yeah, you know I got to ask like what? I can’t leave the listeners in the lurch.
Aimee: There are different kinds of trust that you can put your property in that will not minimize your tax. How we transfer property, especially like for those folks who have investment property, I suggest people to create family limited liability company so that you’ll get a certain amount each year to minimize your taxation.
Nancy: Yeah, I was right when you say could you like stagger—can you stagger the giving in some way to minimize the tax or eliminate the tax actually.
Aimee: That’s it. The goal is to eliminate, absolutely. And a lot of folks, a lot of us, we have community, charitable organizations that we give to regularly.
Aimee: We can be strategic in that giving to minimize or eliminate tax as well.
Frank: We’re talking with Atty. Aimee Griffin. She helps individuals and families create generation of wealth retention strategies through the use of trust and estate plans.
Atty. Griffin, please tell our listeners how they can reach you and secure your counsel.
Aimee: Oh wonderful. My phone number is 202-379-4738. We are on the web at thegriffinfirm-pllc.com and we are on Facebook – The Griffin Firm.
Frank: And Griffin is G-R-I-F-F-I-N?
Nancy: And you said dash P?
Nancy: Got it, okay.
Frank: You said that there was a great mistake that people make when completing estate plans, what is that?
Aimee: The first mistake is that people just don’t do it.
Aimee: The second mistake is that people don’t say mindful of the estate laws that change. We think that once we’ve done it, we’ve done it for life. The laws change regularly and part of that, we could say, is for the benefit of those who have the greatest amount of money. Because we’re oftentimes want to go to Nolo or a Legalzoom to get our will, we don’t know what rules, what tricks of a train we can employ to increase our outcome.
Frank: And so…
Aimee: And a lot of time we just think that’s about dying not about living.
Frank: How often do you suggest contacting your attorney and reviewing the document?
Aimee: Well I think there are two things, there are a couple ways so one which is you should contact your attorney no later than, no less than—I mean, no greater than 3 years, right? Because a lot of us have people who’s circumstance change, our health circumstance change, there are people who we’ve appointed may to be appointable [0:41:55.1 – unclear / be we have no life in the world], we don’t trust them no more, we ain’t married no more. Those things we need to consider but being [0:42:03.4 – unclear] about our health circumstances may change.
Aimee: So with that, we need to be [0:42:08.9 – unclear] how do we position ourselves, long term care especially in the black community. We a lot of times move our [0:42:17.0 – unclear / properties] because of medicating. A lot of times our folks go into nursing homes and so we sign over the houses. Well we don’t have to do that if we strategically plan.
Frank: You raise an interesting issue because there’s something that goes on when you go into a nursing home, you basically can’t have a certain amount of money in your bank account if you want to get some type of a federal assistance, Medicaid, Medicare, something like that, could you speak on that if you’re familiar with that?
Frank: And how to address that and avoid those kind of complications?
Aimee: There are a number of strategies. What we know is Medicaid is a 5-year look back period so you can’t just write a check, sold my stuff because the rules are 2,000 or 25,000 depending what state you’re in accountable assets.
Aimee: So the strategy is to move your assets to be from countable to non-countable, right?
Frank: Non-countable would be in a trust?
Aimee: In an irrevocable trust.
Aimee: There’s months but it’s an irrevocable trust, right?
Aimee: Or a special needs trust. One of the things that we also know is that—I talked about the [0:43:36.3 – unclear] back but there’s an exemption for if your child’s name is one of the [0:43:41.2 – unclear] put your child’s name on your house is they can do a 2-year look back. If your child has lived with you for 2 years, that enable you to live in a community. Then your house is not a countable asset and they cannot put a [0:44:01.7 – unclear] on it and just needs it 2 years as opposed to the 5 years.
Frank: Wow, okay. Would you talk a little bit about what an irrevocable trust is or a special needs trust and what, I guess, non-irrevocable trust is?
Aimee: So what I first talked about was the revocable trust which means you can revoke it, you can change it anytime you want to because you are the owner and you have control. The irrevocable trust means you do relinquish ownership and control. This is a trust that has its own entity, its own purpose and that you are not the trustee. So while you can say all of the assets should be used for your benefit, you’ve relinquished control.
Frank: Okay. There’s another tool that’s often used these days that some of us are familiar with, some of us have used and that’s a reverse mortgage. Would you tell us what it is if you’re familiar with it? And make a recommendation on when you should or should not get one
Aimee: The reverse mortgage is a tax circumstance for me. Part of that is because I believe that we should, especially with the black people who own a property as much as possible. Property is one of the greatest sources of net wealth, net worth growing in our country, right? So the reverse mortgage is when an older person—you got to be 65 years or older—when they basically take an equity loan out of their property and don’t intend to pay it, don’t have to pay it back, right? And so upon their death, their family members can either pay the reverse mortgage which would be the amount that was lent to the borrower plus interest to pay that off or they relinquish the house.
Frank: And what happens to the house?
Aimee: The house is sold and if there is money left beyond which was owes to go to the estate.
Aimee: The challenge with that again with first and foremost is oftentimes it’s a huge asset that’s being [0:46:37.6 – unclear]. And it is rare that I supported but there have been two circumstances when I suggested a reverse mortgage. At one time, one of my clients was an 85 year old woman who was living in a nursing home and had no children and had a house that was worth between $600,000 – $700,000. It was her desire to go home and finish her days there. So I suggested that the reverse mortgage would take the money out of the house and enable her to live her days in her home. Save the money out to have 24-hour care in her home to pay for that because she had no children to live the house to and upon her death it was going to be sold.
And there was a second circumstance when a man was given a house that was in great disrepair. He was living in the most almost condemnable and I would suggest that—and he had no children—that he takes the equity out of the home because it was in Northwest DC so it was worth $700,000. It would have been once it was fixed up so take the money, have the house fixed up and let the balance of his days there. Again, there were no children to leave the property or to provide financial support to this man. So again, I am—based on the values that I have that we should try to keep as much property to increase our economic standing in the community, in any community. So I’m not pro-reverse mortgages but there are circumstances when it really is a good tool.
Frank: Sensible. Yes.
Nancy: So Aimee, as I’m listening to you, I’m thinking of a couple of people that I know who opted for the reverse mortgage and one woman in particular said why shouldn’t I increase the quality of my life while I’m living when my kids, they have their own homes and they don’t need my house and quite frankly, I don’t need to leave any more than is necessary for anybody to fight over. So why not get the cash, live a better quality or atleast feel more secure in my financial quality of life while I’m living and when I’m gone, the house is gone. Nothing for anybody to deal with, fight over,—
Frank: Think about.
Nancy: —figure out, tell so… whatever.
Aimee: And you know that goes back to the statement when I talked about—what your estate plans talked about what happens when I die, what happens when I don’t die and the third part is what position do I want to leave my family in.
Aimee: So if she don’t like—they’ve gotten what they need to get from me, that’s fine. I know circumstance situation or people say I want to leave my children in a better circumstance than they currently are.
Aimee: So with that in mind, we often to try to amass as much wealth for them to leave them in a better position or even not necessarily children but our children’s children. So we can—a lot of times I say to people, well why don’t we create a trust and put the house in the trust then make the house an income property.
Aimee: And so, nobody has to live there. A house in this area can make some money.
Frank: Yeah. That makes a whole lot of sense. Nancy?
Frank: Guess what?
Nancy: What, Frank?
Frank: We got a new segment.
Nancy: What? What does that mean?
Frank: Yup, next week’s guest Tamiko Overton of Miko’s Money Matters—
Nancy: Oh okay.
Frank: —is going to give us a few tips on managing our money better.
Nancy: Oh fabulous.
Frank: Tamiko, teach us something.
Tamiko: How to bounce back from the holiday spending. Congratulations, we all survived the pressure of the holiday season but some of us overindulge and I don’t mean just eating. We overspent and now we’re looking at our credit card balances or our bank statements and wondering, what were we thinking? If only we can rewind and do it over but we can’t. But here are 5 ways to help you get back on track:
First and most importantly, forgive yourself. Forgive yourself. You splurged, you overdid it and now you have a better refrain to step back. But please, don’t waste time and energy feeling ashamed of beating yourself up. Instead, take that same time and energy and harness emotions that will empower you and make you feel strong so you can attack this problem.
I want you to feel accountable, not ashamed. Be responsible, not embarrassed. Be honest with yourself, not evasive. Be courageous. Deal with his problem head on, not fearful. You have decided to make a different choice. You are the cadent of your own financial shift. Short a new financial course, a course of empowerment and self-determination.
Two, explore your spending choice and figure out the why. Take the time to review your mistakes. And write down why you spent and what you spent. Did you buy you some of the gaming system because you grew up poor and never had one? Or did you another expensive gift to overcompensate for working long hours? Did you buy a new furniture to impress guests? Whatever the reason, take the time to explore the why. Look at your choices. What were you feeling to make that choice?
So when these choices come up again, and that will, believe me we’re human, you can recognize the choices and more importantly the feelings behind them because you didn’t make that choice. So then you can avoid the financial trap.
Three, take corrective action. You figured out the why, now let’s plan the how. You know the problem, let’s figure out the solution. Create a detailed plan of action. Write it down. For example, you may say “Okay, I’m going to make extra payments on my credit cards, I’m going to deposit extra money towards my savings account” but I need you to be specific for your plan to work. So instead, you may say “I’m going to take $20 out of every pay period and put it towards my credit card statement” or “I’m going to take $30 every time I get pay and put it into my bank account.” Any small amount will help reduce your debt or increase your savings but most importantly, you will be moving forward and moving in the right direction. It will help you even mentally to see that you can do this, that you have control on your finances, that you are in control of your finances.
Four, track your progress. After 30 days, review your plan. Are you in track? If not, take the time to understand why. Are you tracking your money to ensure that you can make this additional payments or deposits? Are you remembering your plan at all?
If your plan is not working, investigate the why and change it. Whatever you do, just don’t give up. You got this, you can do this. Stay focused and commit it. I believe in you. You’re stronger than you think you are.
Five, if you’re still struggling and need additional support, I’m here to help. Let’s rescue your finance, your future together. Call me, Miko at 202-695-2404 or visit my website at mikosmoneymatters.com. It’s never too late to recoup your finance, your well-being.
As always, fabulously frugally yours, Miko.
Frank: Thanks, Miko. We’re talking to Atty. Aimee Griffin. She helps individuals and families create generational wealth retention strategies through the use of trust and estate plans. Atty. Griffin, one more time, please tell our listeners how they can reach you and secure your counsel.
Aimee: Our phone number is 202-379-4738 and our website is www.thegriffinfirm-pllc.com.
Frank: What can I expect to spend on drafting an estate plan and what can I expect to spend every time I touch-base with the attorney, whether it’s every year, every 3 years, whatever have you? And will it change if it’s yearly or 3 years?
Aimee: What I will say to you is one of the things we learned in law school is the answer is always “it depends.”
Aimee: So I would say to you that the basic estate plan atleast from my office where you get the durable power of attorney, the power of attorney in health care packets and the last will and testament is for just a single person is $700 and then you can start there. And then you can spend much more for trust depending on what your asset circumstances and situation is. So if you want to have a living trust, you can spend a revocable living trust. You can spend as little as $3,000. And you can spend for an irrevocable trust for $5,000—that’s on the bottom.
Now, let me be clear here though. One of the things that you need to be thoughtful about to is the cost of probating in the states. So when you have a trust, you avoid probates. So that’s the cost of $5,000 that you’re going to avoid.
Frank: And what could probating an estate or will or whatever you just said, what could that cost?
Aimee: So that should be $5,000 up to—now there are some places that say it’ll charge you a percentage of your estate, between 1% and 2% of your estate. So if your estate is a million dollars, it’s a hundred thousand dollars. I mean, it’s $10,000.
Nancy: It’s at $10,000. Yeah.
Aimee: So it can be as simple as the percentage and we know if you own a house in DC, you know, easily a half a million dollars.
Frank: Yeah and that’s 10% of that is real money.
Aimee: 1-2% is right.
Frank: Gotcha. Gotcha.
Aimee: Right. So not only just the cost, the financial cost but the time cost and the distress cost.
We’re talking with Atty. Aimee Griffin. She helps individuals and families create generational wealth retention strategies thorugh the use of trust and estate plans. Last time, Atty. Griffin, please tell our listeners how they can reach you and secure your counsel.
Aimee: Area code 202-379-4738 and our website is www.thegriffinfirm-pllc.com.
Frank: Along today’s journey, we’ve discussed trusts, probate and reverse mortgages. I hope you’ve had as much fun as I had learning about estate panning by way of the wisdom of our esteemed guest, Atty. Aimee Griffin.
Nancy: Thank you, Aimee.
Aimee: It’s a pleasure.
Frank: As always, it’s my wish for you to walk away from this conversation with a heaping, helping of useful information that I hope you create a relationship that’s as loving and accepting as possible. Let us know what you thought of today’s show with Facebook forward /RelationshipFLove, on Twitter @mrfranklove or at franklove.com. If you’re listening via Blog Talk Radio, please make sure you like us there and via iTunes, make sure you subscribe so that you can receive each week’s show.
This is Frank Love.
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