Let's get smart on The Talk--the one we need to have with our adult children--any maybe our parents--about how we want things to roll if/when we can't make decisions. We talk about how to start these conversations, the difference between a will and a trust and why my kids should keep my favorite spoon.
Debra: Hello and welcome to The Dareful Project. I'm Debra Hotaling. So the topic here comes from a conversation I had a couple of weeks ago with a girlfriend. We hadn't seen each other for a while. We decided to go out together, have a glass of wine. And while we're sitting together, we're talking about our goals for 2021. And then she turns to me and she says, you know what your goal needs to be: is your will up to date? That was not how I thought this conversation was going to go. But then I realized what a good friend she was for talking about something that's really important. Isn't really sexy and something we want to put off until we can't put it off anymore. So we're talking today about how to get smart fast on the conversations and documents we need to get under our belt as part of our life housekeeping. Debra: These are the conversations we need to have with our kids and with our parents and with each other. Joining us to help make us smart is Aletha Vassilakis, she's an attorney specializing in contracts, and has spent a lot of time serving as a mediator for couples and families. So she knows firsthand how it rolls f someone has these discussions and documents under their belt and how it can really go sideways when families and couples do not. She's also my daughter and we've been having these discussions about wills and trusts and what we need to talk about now that can make her life a little bit easier later on. And we know from talking with friends who did not have these conversations with their parents or kids, how complicated things can become. Before we get started a reminder that all the info we're talking about here is a conversation. It's education and should not be considered legal advice for any person or situation. Aletha. Welcome. Aletha: Hi, thank you for having me. Debra: So when we're talking about wills and trusts, what are we talking about here? Aletha: Yeah, so I think the terminology gives people a lot of power and comfort when they do ultimately need to go to an attorney and ask questions. It's a lot easier to have these conversations. So the first thing is what is a trust and what is a will and how do they differ? A trust is actually a fiduciary relationship where you give another party authority to handle your assets on behalf of the beneficiaries that you designate. And so that differs from a will, which is document that designates things like an executor beneficiaries instructions on your assets and importantly, guardians for minors. So when deciding whether you want to go through a trust or a will have one or both, those are a lot of conversations that are really customized to the type of assets that you have. Aletha: A trust is setting up authority for another human being, to take over, your assets and, and distribute them. A will is a document with instructions in general. I think the other important thing to know is what happens when you don't have a trust or a will in place, that's called dying intestate. That means that there are no instructions left to those who are still here with us on how you wanted your assets distributed, what you wanted done with your things, your belongings and any other instructions that you might've wanted to leave. The other big word that everyone gets very nervous about is probate. That's the legal process for settling in a state. And the other big piece of this that everyone's always worried about is taxes. So along with probate comes taxes, and that's one of the main reasons someone may choose a trust versus drafting a will is to assess the tax implications of both. These are the common words that we'll be using kind of throughout this conversation. Debra: So do you need to know whether you're going to go with a trust or a will before you start having the conversations with your kids or your parents? Aletha: No, I think it's more important to lay out first what you want. And then start having those conversations with whoever is going to be impacted by those decisions, and that will help inform whether a trust or a will is the right choice for you. It will also help an attorney help you draft those documents and also give you guidance on exactly what type of trust or will to set up because there are many different ways you could set up a trust and it really depends on what you want it to do. I think the real beauty in trusts and wills and this side of the law is it's very flexible. It's very much about the intent of the person who is setting it up. And the law is it's very humanizing. The whole point is to accurately distribute the assets and carry out the final wishes of whoever is setting this up. Debra: And what's being put into a will or a trust it's really about all of your wishes. So it can be not just money or a house, but also going to be about who's going to make decisions for you for healthcare or any other foreseen decisions. So it's really a whole directive. Aletha: Yeah, I think it's difficult for folks. Some people only look at it as a transactional document where your entire existence on earth has been reduced down to money. And you want it to be given a certain way and you know that it's going to cause conflict. So you're afraid to address the issue or people are very nervous about the death aspect. They don't want to think about the fact that someday you may need people to make health decisions for you, or you may need to tell people you have a do not resuscitate order or some of these other things. All these kind of things get lumped into the final wishes that you can put into your will. Aletha: And one thing to note, wills can kind of have two aspects to them. You can put language in them that is legally binding and people have to carry them out. I want this bank account ending in this number, to go to this person, or you could state it's with my hope that this person would take this money and do this specific thing with it. The court won't force someone to take a vacation with that money or put it towards your child's college fund. But this is a way to have these conversations and let your wishes be known. And this is your only opportunity from beyond the grave to kind of give that information back to someone. Debra: Ok so this is the moment where I'm going to tell you, don't throw that wooden rice spoon away. I got it in Hawaii and I really, really love it. And you're going to love it too. So don't throw that one away. I'll write it down. Aletha: Yeah. Family heirlooms. Anything quirky that you really want people to know about. This is this is your time to shine. It's your place to document, not only how you want very hard assets to be distributed, like money and land, but it's also that quilt that you love so much. You can leave it to someone with instructions on how you hope they'll use it. These are all things you can put in a will. It's a very unique document in that. Like a lot of things attorneys draft every day are very rigid. Wills have to have certain elements in them to make sure that they're valid, but it gives you a lot of freedom and flexibility to add all of this information that your family needs to know once you've passed. Debra: But it can be a hard conversation. Do you have some ideas on how you would start that conversation with your kids or with your parents? Aletha: Yeah, I think the toughest part is getting started, but once you get the dialogue going, it's so helpful. One of the things that's a real terrible surprise to people when a loved one has passed is finding out that they were named as an executor or trustee without ever knowing it. This is a big responsibility. It's something that you shouldn't toss on people in their moment of grief. They may not be prepared for it. It's something that you should check back on because if you drafted something 10 years ago, and now this child that you named has children or other responsibilities, I think it's an ongoing conversation. These are living documents that you want to keep up to date. As you acquire more assets or change your mind about things, you have that flexibility to do that in certain instances. So with certain types of trusts, you have to talk to your attorney because it may be harder to change certain things about it. Aletha: With a will, you can draft as many as you want and change your mind about how you want things distributed. But it is a big onus on someone to have to go through all of the items in your house and evaluate them to be sold. Or if you don't give instructions on how you want something done, people may just feel lost and not want to deal with it because it's too much. So I think having the conversation early and also giving everyone framework on how you expect this to work will make the reading of the will less of a surprise. Debra: Yeah. And you also have to think about the basics. I'm thinking about a friend that both you and I have, whose mom probably put her will in a super secret place that would be really, really safe. And indeed it ended up being so secret that no one ever found it. And so our friend had to go through all the steps without a will. And it was already a sad, difficult time, and this was so much more stressful. And so you kind of have to really break it down into basics. Like where are you going to put the document? Debra: You know, best laid plans. You could hire the best attorney in the world to help you draft the most beautiful document, but if it gets lost and no one knows where it is, how is the court ever going to know where, what the instructions were? I know a lot of people feel like this should be shrouded in secrecy, but I think you do need some level of transparency with your family on where the document is. And you know, if there are going to be some really unpleasant surprises, I think this is something people need to decide for themselves. You need to decide how much of this do you want to resolve during your life. And how much do you want to be duked out fist fighting style over your casket at your funeral. To each their own on how they want to deal with this, but if you want to preserve the family relationships, having unpleasant surprises, like being written out of a will come to light after you've passed and that person's going to have a lot harder time grieving you. Debra: So something to think about that this conversation is also, it's partially about you, but it's also about the people you're going to leave behind. Aletha: True because you're not going to be there to smooth things out. So it's all going to be kind of left to be sorted out. Debra: We've talked a little bit about this, but what do you think would surprise people about the process? Aletha: Drafting wills and trusts are something that you definitely need a legal hand in setting up. But the interesting thing about a will is that you can dictate to whoever's helping you draft it, or if you want to draft it yourself, it is possible. The rules do differ in California on how that happens and the elements that you need to have for validity. But it's a flexible document. People can help you draft things any way you want. One of my professors told us about a client who had a tortoise. And as you know, tortoises can live to be a hundred years old. So you do have to think about the care of these pets that will live beyond you. This person was very wealthy and they loved their tortoise. So they set up a trust in the name of the tortoise and they allocated something along the lines of $10,000 a month for lettuce to feed this tortoise. And he drafted it for them. I think you have a lot of autonomy over this process. It's just having to be brave enough to ask for that help. Debra: But you bring up a really good point, which we were talking about before we got on air here, which is pets, right? You may have pets who outlive you the tortoise friend and you've got to figure out, you know, what the care, not just the financial care, but daily care Aletha: Exactly. Yeah. And I think that's the big conversation you definitely need to have before. The fact you don't want this obligation dumped on someone who had no idea this was coming. Debra: [What do you do when either your kids or your parents don't want to engage? We have a family friend who is in her early nineties and assures us that when she gets old, we'll have the discussion. So that's a TBD in that friendship. So how do you get started? Aletha: I think the framework is to compare it to what happens if you pass away without any of this in place. If you're someone who doesn't really care about how these things get handled, the, the state will allocate them for you. It's called the right of intestate succession and each state it's slightly different, but there's a chart--a very fun chart that when you take the bar exam, you have to memorize--and it starts with whether you have children or not, and it's a yes or no chart, and it goes all the way to your step, grandkids, nephews and nieces as to who is the next in line to receive your assets. And if you don't have any of those in place, the money goes to the state. Aletha: So if you're cool with all of that, then by all means, just never have this conversation. Although when I pose that to people, I've never met someone who had an embraced that idea. Everyone has a really adverse reaction to that being the reality of the situation. I think the way that I've started this conversation, at least personally, is not talking about like bank accounts. It's asking, I really love that clock in our house, what's the backstory to it. For us personally, there's a beautiful clock that's been passed down and knowing the backstory to it, and having shown interest in saying, you know, I would love to take care of that thing. What do you want to have happen to it? Then you can work up to, what do you want done with the house? What do you want done with these other kinds of more, I don't know, less sentimental things that can pull back the conversation if that's where you start. Debra: And I really loved that you told me you loved the clock, I did not know that you love that clock that much. Aletha: It's cool. Debra: As you're telling me this, that was exactly the conversation I had with my grandma, because I love that clock too. And so I started asking her about it, and then she says, you know what, after I die, you can absolutely have that clock. And that just made me so happy. It was neat when you asked me about it because I did not know that you were that interested in it. So, you know, so that's going to be yours. Aletha: See, it becomes like a team caretaking of the things then, which I think is a lot less of a burden. At least having these verbal conversations about that stuff you'll know this person is also invested in taking care of whatever this thing is that you care about so much. Debra: And probably also having the honest conversation about what things you're thinking, oh, I'm saving this for my kids. And then you find out they don't really want it. Aleth: There was New York times article recently about the things parents think they want to leave to their children but millennials don't have the space to keep 12 different sets of china, one for each season, plus all the holidays. We really need to focus on, if your child is also of that millennial age and renting a home, what realistically do you want to leave to them? I've had friends...I think they vaguely knew they were left in a will of a family member, but didn't entirely know the details. And they also didn't know what state the house was in any of the assets and going item by item through the house and having to clean it out and decide where all these different things should be allocated to both the family and friends is a huge undertaking. Aletha: It could take years...just the sheer volume of stuff. A human has to sit there with each thing that you own right now, if you died tomorrow and think about where it should go. So if you can help them in any way, it's going to make a huge difference, especially too, because they're grieving you. I don't know that they want to sit in your house and waffle over whether this one spoon meant something to you or whether they could toss in the trash or sell it in a garage sale. Debra: I'm thinking about our friend again, who had to sit for pretty much a year on and off going through every single piece of paper...do I keep all of these letters? What about grandmother's letters? Having to go through every single scrap of paper was exhausting. So, you don't have to keep my pillow collection. But do keep that really good spoon. This is the better way to start a conversation. And then you can get into the other stuff maybe that maybe has never been talked about before. Aletha: And, at least for our family, what's come into to play also has to do with end of life decisions. How do you want to spend the last bit of your life? Do you really care about certain things and not others? And some of those conversations have been surprising. You may think you know what your friends and family want, but they may have changed their mind. And so being secretive about those decisions, it just increases the odds that your wishes won't be granted because people can't read your mind. And I think a lot of people feel weird about telling people about those types of wishes. But if you don't say it out loud, it's not written down somewhere where someone can find it and it's not documented, it's definitely not going to happen. So if you can, like at least get people closer to knowing what you want, they can fight for you and they can advocate for you. Debra: The first step though, is that you have to know what you want. You have to spend some time thinking about it yourself, of what, what the decision tree would need to be, or what, what do you think you might want in particular circumstances. Aletha: And the other thing to think about is you don't have the infinite time that you think you do. Making sure a will is valid means a person was of sound mind when they made those decisions. So if you keep kicking the can down the road, you're just increasing the odds that if you're in a nursing home and battling dementia, are your wishes going to be upheld when it may be harder to prove sound mind? Debra: And I think some of the, the tragic truth of COVID over the last year and a half is that we don't know. I have a colleague who lost parents early on and, you know, he's young and he's having to figure out all of this stuff. Aletha:
Yeah. And even if you are of sound mind, if you're intubated in a hospital, do you really want to be drafting documents? No. you need to be focused on your own health. You don't need this other nonsense. So it's not realistic. I think, to think that it works like in the movies where you're on your deathbed and your hand, like shakily writes out the last note and then you like, let go of the pen and die. It's not going to work that way. Debra: So, okay. So we’re all on board. We know if we haven't done it, we need to do it. And if we did it a long time ago, when the kids were little babies, we need to get that refreshed once we have adult kids. But it's still a big task. So is there one step we could do today that would sort of get us moving? What's the smallest step we can take right now? Aletha: Make a list of all the assets and things you want distributed. And people think, oh, that's super easy, but it's not. You have bank accounts, you have physical things in your home. You have your stocks, you have your bonds, you have cars, you, anything that is in your name, you need to figure out what to do with Aletha: Beneficiaries--that's an easy step. Just log into the accounts that you have on your retirement account or any other investment portfolios, anywhere and insurance, anywhere that you can, life insurance, anywhere you can name a beneficiary and put down the person that you want. You can also put down different percentages. It doesn't have to all go to one person. Aletha: And you can have multiple, if not this person, then that person. So you can even have a couple of folks just in case you need a B plan, Debra: Okay. I love this. So everybody in the Dareful tribe who is listening, if you haven't put this on your to-do list as a goal for 2021, let's all make a pinky promise together that this is what we're going to do. And we're going to get through 2021 with sorting out our financial and decision-making housekeeping all under our belt. And thank you for all my friends who have been giving this as a good suggestion for an episode. And Aletha, thank you for joining.