FINAL THINGS: Advance Planning

You don’t have to have a Last Will & Testament when you die. Your state of residence would likely prefer that you don’t. But your family will suffer the additional loss of a significant portion of your estate in addition to losing your presence in their lives.

Planning ahead is part of planning to help. Join us as we discuss avoiding probate and other strategies to most effectively help those you love.

Transcript

FINAL THINGS: Advance Planning
GUEST: Mike Shipman
Season 3, Episode 23

Ric Shields (00:00):

Welcome to the DoorWays® Ministry Network podcast.

(00:11):

Thank you for joining us on this podcast. I'm Ric Shields, your host and the director of the DoorWays® Ministry Network.

(00:18):

Several years ago, I served as a hospice chaplain and experienced profound ministry opportunities. I served patients and families in what was both an intimate and a holy time leading up to an often at the time of a loved one's death. It became obvious to me that there is a real lack of willingness or even understanding of how people can prepare themselves or their families for the day when we take our final breath and transition from this life into eternity.

(00:47):

And that's why for the next few weeks I'll be discussing the topic of final things with a number of professionals. We'll hear from a physician, a pastor, a funeral director, a hospice chaplain, and a grief counselor. Each will share a different topic and perspective to help us as we consider our mortality and make plans for our final days.

(01:10):

Today I'm speaking with Mike Shipman, a certified senior advisor, aftercare administrator, and benefits professional who has served in these roles for the past 40 years. Mike, your experience speaks well of you. Thanks for joining me.

Mike Shipman (01:26):

You're welcome. Glad to be on board.

Ric Shields (01:28):

Well, prior to recording this podcast, we discussed a number of topics we could address, and the truth is that we could talk together for a long time because there's a lot to consider.

(01:40):

Now, I want to quickly point out that neither of us are legal professionals, so I hope no one considers this to be legal advice. Our goal is to point people in the right direction and to the right people to help. So that's being said. Let's start with what may be, I think, the most important topic, and that's wills and trusts. Why are wills and trusts so important, Mike?

Mike Shipman (02:03):

Well, a trust will protect your assets from probate. And there, you know, a trust is very, very important. And when an attorney does a trust, they normally include a will with that trust, and it's called a poor over will, which means that once the trust is in place, if you go buy a new TV set for instance, it's automatically contained in the trust. And of course, a trust does not protect your assets against any Medicaid qualifications if you need to apply for, you know, assistance, whether it be medicine nursing home assistants and those kind of things. But it mainly points to the whole world, the trust does, points to the whole world what you want done with all of your things. It just makes things go a lot smoother, you know, when a death does occur.

Ric Shields (03:06):

That's good to know. I did not know that a trust does not, if you require Medicaid assistance, a trust is still discoverable. I know that it's not discoverable in or I've heard that it's not discoverable in the event of a lawsuit, but not the case with Medicaid.

Mike Shipman (03:24):

That is true. Now, however, you can have a, an attorney do what is called a Medicaid trust which is basically the same thing as a general revocable trust with the exception that that it protects your assets from having to be liquidated to pay the nursing home bill. However, there is a five year look back. So, if you for instance, became ill and knew that a nursing home was imminent and you went and had a Medicaid trust done, it won't be enforced with Medicaid for five years, you know, as we get older, that is one thing to consider there

Ric Shields (04:15):

Any limitations that exist if you have a Medicaid trust 10 years out, any limitations in the meanwhile that we should be aware of?

Mike Shipman (04:24):

No, not to my knowledge. There is not.

Ric Shields (04:28):

So, the difference between a will and a trust, you just said, a trust will typically include a will. But many people only have a will. What's the difference between the two?

Mike Shipman (04:38):

The difference is a will upon death goes through probate. Okay. Where a trust does not go through probate. And typically, if you have a will and pass away and your estate is probated, the minimum probate cost is about $5,000. Most attorneys will charge the $5,000 upfront and then there's add-on expenses like filing fees, notifications and all those kind of things.

(05:12):

The will, a probated will, typically takes a minimum of three months. Most of them are about six months to a year going through probate depending on the assets beneficiaries, so on so forth.

(05:28):

If you do a will and you say you have three kids and you leave one of them out, if that will goes to probate, it opens the will up for a lawsuit from the child left out the will. If you do a trust and leave a child out, it's a pretty clean cut ordeal where that child has no say. So now that child can sue and go to court, sue the trust, but I don't really know of any cases where the child has won. So a trust is more important, especially if it's a second marriage and there's two sets of kids, you know, say Mary has a couple kids and Johnny has a couple kids, and if you just have a will, it kind of makes things a little sticky where if you have a trust, it's pretty iron clad.

Ric Shields (06:33):

That's interesting. Now, there are some people who have neither a will nor a trust. Then what happens?

Mike Shipman (06:39):

Well, depending on the estate, you know, if it's a sizable estate, say there's a hundred thousand dollars cash in the bank accounts and several cars and a house, then the court will appoint somebody as a trustee and it may be somebody that you don't want to serve as a trustee. Court appointed trustee of the will will proceed as outlined by the court system. The court system will designate how much each child gets, so on so forth. If one of the children has pre-deceased you, then his children are entitled to receive his share. Where if you do a trust and one child passes away, you can modify that trust to keep x, y or keep surviving spouses and grandchildren from participating in the assets.

Ric Shields (07:42):

Now, there are also important items like general power of attorney, healthcare, power of attorney, advanced directives. Now these are often included in trust documents, is that correct?

Mike Shipman (07:53):

That is correct. They're often included and keep in mind down the road, those can always be changed.

Ric Shields (08:01):

What do you have to do to change them?

Mike Shipman (08:02):

You have to do a modification on the trust document.

Ric Shields (08:07):

You do need to go talk to your attorney who helped prepare that or can you do it yourself?

Mike Shipman (08:11):

No, you cannot do it yourself. Well, I suppose you probably could, but you're better off to go to an attorney, either the one that did the trust or any attorney can do a modification on the trust as long as the trustees are living. So, if John and Mary are still living with that trust and they want to change it, they can do so. However, if John passes away and Mary is the only one left, that trust becomes irrevocable as far as dispersing assets. It also becomes irrevocable for the surviving spouse to eliminate somebody or add somebody else.

Ric Shields (09:02):

So, it may be a revocable trust before one of the other passes, but after, after someone passes, it becomes irrevocable. Is that what you're saying?

Mike Shipman (09:10):

If they have a trust together before a death and one of them passes away, that trust becomes irrevocable and limits things that can be changed because the trust is trying to protect the deceased person also.

Ric Shields (09:26):

I'd like to mention that people die at many different stages of their lives. It's not just those who are senior citizens and not only those who die after long illness. Our daughter-in-law died tragically and unexpectedly a few years ago at 37-years-old. We learned from COVID that an incapacitating illness can come quite quickly. So, at what point do you recommend people consider preparing their final affairs?

Mike Shipman (09:56):

You know, in life growing up we planned for a lot of things. We planned to graduate from high school, we planned to go to college or trade school, we planned to get married, we planned to have kids. We plan our vacations and the odds of something happening like our house burning down or getting burglarized while we're on vacation is basically the industry says one in 80,000 on odds. We plan all those things. So why not plan down the road for what if something happens to one of us?

(10:35):

I recommend to people like passwords. Your phone password, your bank account passwords, your credit card passwords, write them down. Don't give them to the kids, but write it down and put that envelope in a safety deposit box or a safe place at home so that when a death occurs, the surviving spouse and or kids can open that up and access your passwords, your emails and things like that.

(11:09):

We see that so much where a death occurs and the surviving spouse has no clue. Like for instance, if my wife died, I would be lost. I don't know the passwords to the credit cards, the bank accounts and those kind of things, but she has written them down and they're in the safety deposit box.

(11:32):

If you own a home check the warranty deed, typically when you buy a house, the warranty deed will have what's called a right of survivorship. A right-of-survivorship means that on the death of one of them, the house will be become solely owned by the surviving spouse with a little bit of paperwork, you know, like a survivor joint tenant deed, those kind of things. If later on in life you kids have grown up, moved away and you decide to build a new house, you hire a builder to build that house. A lot of builders, when they issue the warranty deed, it is a single form that does not have right-of-survivorship. That being the case, if a death occurs on one of the owners, that house will have to be probated. Which, you know, you're going to spend, you know, five to $7,000 minimum to probate that house. I run across it a lot

Ric Shields (12:38):

And it's much less expensive. Go ahead and set up a trust in the first place than going through probate with just a will.

Mike Shipman (12:44):

That is true, and the average attorney will charge about $3,000 to do a trust. That is an upfront cost and there'll be some incidental filing fees, so on so forth to go along with it. So a trust is a lot better way to go. Now, if you are renting a house and you don't have a lot of assets, you know, you may not even need a trust, a will will take care of everything, but a trust will have included with in in it a poor over will, power of attorneys, and those kind of items.

Ric Shields (13:26):

So, I think when we spoke the other day, we talked about the fact of Oklahoma being a state (I forget what you called it) where if a spouse passes, you automatically own everything. Do I understand that correctly? You don't have to probate a will if there's a surviving spouse or not.

Mike Shipman (13:45):

That is correct. If you don't have a will or if you have a will and a death of a spouse happens, you know, Oklahoma's a joint tenancy state where everything that belonged to the husband and wife now belongs to the surviving spouse. However, it needs to be titled accordingly.

(14:06):

What I typically do on a lot of cases is I have the person get their warranty deed. I read through it, make sure it has a survivorship clause, and then I do what is called an affidavit of joint tenancy, and that removes the deceased from the real estate. Typically, what I do, I take it another step further, if there is no trust, I do what's called a transfer on debt deed, naming an individual to inherit the house upon the death of the second spouse.

(14:45):

To give you an example, I had a case recently where this gentleman passed away. He had a wife of 40 years. They had no children, they were only children and she wanted the house to go to the Tulsa Oklahoma Zoo Foundation. She was real active with the zoo. So, we did a transfer on death deed for her house that was worth three quarters of a million dollars that upon her death, the Tulsa Zoo Foundation would take possession of the house, and we kind of laughed. She said, they can sell the house and buy a new giraffe.

(15:25):

But you can name 1, 2, 3 kids. You can name grandkids. Another example quickly is I did one on a gentleman or for a gentlemen that we did a transfer on death deed naming his only son and his only daughter. He found out a couple years later that the daughter had stolen $30,000 out of one of his accounts, so we just did a new transfer on death deed naming the son only, and that transfer on death deed voided the first one. You could always change those kind of things.

Ric Shields (16:08):

You know, it occurs to me that some make plans for the end of their life but may not have made plans for what happens afterwards. I'm not talking about where you'll be buried or who will officiate or sing at your funeral. I'm talking about where you will spend eternity.

(16:23):

You may be familiar with Jesus' response to Nicodemus. He was a member of the Jewish Ruling Council. The stories found in John's Gospel, chapter three verses 1-15. Nicodemus was trying to understand what it meant to be born again, and Jesus told him, “Flesh gives birth to flesh, but the spirit gives birth to the spirit." The account finishes with Jesus simply saying, "everyone who believes may have eternal life in the Son of Man."

(16:51):

It isn't a physical thing, it's a spiritual thing. John continued the story by writing in verse 16: "For God so loved the world that he gave his one and only son, that whoever believes in him shall not perish, but have eternal life." You may plan for the end of your earthly existence and have riches to pass along to others yet be spiritually bankrupt or you can be financially bankrupt yet have untold eternal wealth.

(17:23):

Would you like to pass along something of imminent value to your family or your community? Let them know of your faith in Christ Jesus and his power to forgive sin and change your life. Now, how do you do it? The Apostle Paul told us this in his letter to the Romans chapter 10 verses 9-10. He wrote, "if you declare with your mouth Jesus is Lord, and believe in your heart that God raised them from the dead, you will be saved." It doesn't say you could be saved or should be saved or even might be if you had a whole bunch of other stuff to it. It simply says, "if you declare with your mouth Jesus is Lord, and believe in your heart that God raised him from the dead, you will be saved." In all of your planning and preparation for the end of your life, do what you need to do to prepare for your eternal life.

(18:14):

Would you pray this simple salvation poem with me? It's written by my friend Matthew McPherson, and it goes like this. "Jesus, You died upon a cross and rose again to save the lost. Forgive me now of all my sin, come be my savior, Lord and friend. Change my life and make it new and help me Lord, to live for you."

(18:39):

 It really is that simple. If you'd like more information about what it means to follow after Jesus, you can go online to salvation poem.com for free resources.

(18:50):

Next week we'll talk about pre-planning, not only about final expenses, but what your wishes may be concerning a memorial service or the final disposition of your remains. We'll chat about that and the importance of the assignment of beneficiaries. Drop me an email if you have questions or suggestions about this topic of final things. My address is info@doorways.cc.

(19:12):

Until next time, this is Rick Shields. Thanks for listening.