Estate planning is a topic most people don’t want to think about, but it shouldn’t be avoided. While it may seem daunting, it’s a crucial step for you and your loved ones.
“Appropriate estate planning is truly planning for your estate, meaning planning for the management and disposition of your property, both during your lifetime and upon your passing,” explains Christian Perrin.
In this episode of the Prosperous Doc®, our host Shane Tenny, CFP® welcomes esteemed attorneys Christian Perrin of Perrin Legal and Pete Benenati of Benenati Law Firm, P.C. The three discuss estate planning — what it means, why it is so important, and everything in between. The two attorneys also dive into the benefits of prenups beyond divorce preparation, the differences between executors and powers of attorney, and how to find the best help for you.
“Everybody thinks that just because they have kids or a surviving spouse, it's easy,” Pete explains about the need for estate planning. “It's not really, because there's something known as the termination of heirship. You have to actually prove who the heirs are. A court-appointed attorney has to do the history on the family to confirm what you're telling them. It adds cost, it adds time, it adds expense. And it adds a lot of frustration for people, even in the smaller, simple estates.”
Name: Christian Perrin, JD
What he does: As an attorney and owner at Perrin Legal in Charlotte, NC, Christian specializes in estate planning, asset protection, and litigating trust and estate disputes. He attributes much of his successful career and long-standing relationships to his passion for advocacy, honesty, and responsiveness to clients.
Company: Perrin Legal
Words of wisdom: “Estate planning is important. And once you start the process, it's important to stay focused on it because the alternative is really messy.”
Name: Pete Benenati, JD
What he does: As an attorney and owner at Benenati Law in Dallas, Texas, Pete mainly focuses on business, tax, and estate planning. Pete is passionate about community involvement and educating local groups on current and pending legal changes that might affect them.
Company: Benenati Law
Words of Wisdom: “Anytime you get a chance to avoid probate, to make the people you leave behind, their lives easier, you should do it. At least do a will.”
Top takeaways from this episode
★ Preparing now can make things so much simpler. Estate planning is something nobody wants to talk about. No one wants to think about their own mortality or negatively life-changing events. However, making a plan now will make things so much easier for the client and their loved ones in the event of a bad accident or death.
★ Cover all your bases. The terminology can be confusing and overwhelming. Hiring an estate planner can make the entire process easier to understand and less foreboding. Ensuring you have everything from a will to a financial power of attorney to a healthcare power of attorney is crucial in making everything flow as smoothly as possible.
★ Third party trustees are highly recommended. When a parent dies, they might leave one of their children as the trustee of an estate. This type of responsibility can affect not only the assigned child but their relationship with other family members as well. In this case, a third party financial institution or appointment might be the best decision so as not to add more stress and turmoil to an already grieving family.
[05:30] Make people’s lives simpler: Having at least a will can make things so much easier for those left behind after someone passes.
[07:26] Don’t leave the government to plan for you: Christian discusses how state legislators, depending on the jurisdiction, will step in if there is no will left behind, which will most likely not reflect the true wishes of the deceased.
[11:51] The big three: According to Pete, everyone should have a will, a financial power of attorney, and a healthcare power of attorney. This will make things easier, cheaper, and faster for the people in your life,
[20:13] Write a letter: Pete advises people to leave a handwritten letter of desire about healthcare, in which people can make more specific requests that are not always covered in the legal documents.
[22:45] Why a trust: Christian explains that trusts might be more preferable for certain clients — those who have a high net worth while they’re alive or when they pass, and those who value privacy. Trusts keep certain information private during the probate process.
[30:20] Prenups aren’t just for divorce: Pete goes over the ins and outs of prenups, from what they mean to how they operate. Prenups, he says, are not just plans in case of a divorce but plans for a death and the distribution of assets as well.
[36:13] Find someone within your state: Because each state has its own laws, procedures, and practices, it’s important to choose an attorney within your state to formulate your estate plan.
You worked hard to earn your white coat, but what happens if you get sick and can’t work? The truth is that during the course of your career, you are three and a half times more likely to be injured and need disability insurance than you are to die and need life insurance. But disability insurance is nuanced and complex.
Thankfully, the advisors at Spaugh Dameron Tenny have developed the Disability Insurance Guide for Physicians and Dentists, a free ebook outlining the key considerations, benefits, and misconceptions of disability insurance. Protect your family from the consequences of life’s events by protecting your income and securing peace of mind.
Disclaimer: Prosperous Doc podcast by Spaugh Dameron Tenny highlights real-life stories from doctors and dentists to encourage and inspire listeners through discussions of professional successes and failures in addition to personal stories and financial wellness advice. Spaugh Dameron Tenny is a comprehensive financial planning firm serving doctors and dentists in Charlotte, NC. To find out more about Spaugh Dameron Tenny, visit our website at www.sdtplanning.com. You can also connect with our host, Shane Tenny, CFP at firstname.lastname@example.org or on Twitter.
Compliance code: CRN202505-2305255
Appropriate estate planning is truly planning for your estate, meaning planning for the management and disposition of your property, both during your lifetime and upon your passing.Voiceover (:
From Spaugh Dameron Tenny, it's the Prosperous Doc podcast... real stories, real inspiration, real growth, a show for doctors who are ready to improve their overall wellness in every aspect of life. Now here's your host, Shane Tenny.Shane Tenny (:
Well, today's topic is estate planning. It's a topic that most of us try to avoid as long as we possibly can. In fact, year after year, there is research and surveys done, including Gallup's poll in 2021 showing that less than half of all Americans have drafted a will and most have almost no preparation at all for their eventual death. And yet we know it's important and we know it's a reality.Shane Tenny (:
Living through a global pandemic the last couple of years has brought death all too close. We know nearly a million Americans have passed away from COVID and many, many more are mourning the loss of their family members or friends.Shane Tenny (:
And so today I want to tackle the topic, not because it's fun, but because it's important. And my whole hope is that through the conversation I'm going to have with two esteemed colleagues, you will not only feel educated and empowered around a topic that is overwhelming, daunting or intimidating, but you will feel inspired and motivated to take action for the sake of your loved ones.Shane Tenny (:
Joining me today from the East Coast is Christian Perrin, a North Carolina board-certified specialist in estate planning and probate law. He has a law degree from the college football champion University of Georgia bulldogs and is licensed to practice law in Georgia, South Carolina, North Carolina. Christian represents beneficiaries and fiduciaries in trust and estate-related disputes. Christian's been chosen Super Lawyers list in the field of estate and trust litigation every year since 2015, and he currently serves on North Carolina Bar's Estate Planning and Fiduciary Law Council.Shane Tenny (:
It's great to have his expertise with us, but I also have, hailing from the Midwest, Pete Benenati from Dallas, Texas. Pete is licensed in Texas, Arkansas, New York and Nevada. He's got a law degree from Syracuse and a master's in taxation from New York University. He's spent decades helping his clients with business tax and estate planning issues and really enjoys educating and speaking to groups on current and pending changes to the law.Shane Tenny (:
Christian, Pete, thanks so much for joining me today for this important conversation.Christian Perrin (:
Good to be here.Pete Benenati (:
Nice to be here, Shane.Shane Tenny (:
Well, let me start with just the softball question around this topic of estate planning. What is estate planning? How do you describe it to the person sitting next to you on the plane when they lean over and say, so what do you do for a living? Christian, maybe I'll start with you on this one.Christian Perrin (:
Sure. Thanks Shane. So right out of the gate, when people initially think of estate planning, a lot of people's minds immediately go to a last will and testament or perhaps a trust. But the reality is that everybody, both living and deceased, has an estate at any given time. And an estate, at least on a high level, is basically a comprehensive summary of whatever your asset composition happens to be at any given time. So that could include things that people traditionally think of like cash or stocks or real estate, but could also extend to life insurance, mineral and oil interests, the furniture in your house. And when we talk about estate planning, appropriate estate planning is truly planning for your estate, meaning planning for the management and disposition of your property, both during your lifetime and upon your passing.Shane Tenny (:
And for physicians and dentists, we're including their practice. If they have ownership, accounts receivable, things like this, would also be rolled up into that total calculation, right?Christian Perrin (:
Yes. I mean, in most cases, the dentist or the physician will have an ownership interest in a practice or a professional limited-liability company or some type of entity that operates as the actual service provider. And then that entity, in turn, will have assets such as cash and accounts receivable, equipment, et cetera. So what they most likely will own is some type of interest in an LLC, some type of equity component in a small business. And then, in turn, that business will own the underlying assets of the company themself.Shane Tenny (:
So everyone has an estate. I guess some are just easier than others to tabulate or to value. But not everyone has an estate plan. Right, Pete?Pete Benenati (:
That is correct. Most people decide that they don't need to do one. They don't have much. They don't plan to die.Shane Tenny (:
Yeah. And year after year, I think there's surveys, I mean as I said in the intro, that approximately half of Americans just don't make a plan at all.Pete Benenati (:
No, they don't. Years ago, there was a Supreme Court justice, I can't remember his name, of the United States who died without a will, believe or not.Shane Tenny (:
Really?Pete Benenati (:
Yes.Shane Tenny (:
And how often does that come through your office? Do you end up meeting people or a family comes in or needs some help and there just was no planning? What happens then?Pete Benenati (:
Well, we have three right now, and it's been even more challenging with COVID trying to get court hearings. But when you die without a will, a state determines how your assets are distributed, and everybody thinks that just because they have kids or a surviving spouse, it's easy. It's not really because there's something known as determination of heirship. You have to actually prove who the heirs are. A court-appointed attorney has to do the history on the family, confirm what you are telling them. It adds cost, it adds time and it adds expense. And it adds a lot of frustration to people, even in the smaller simple estates. So anytime you get a chance to avoid probate, to make the people you leave behind, their lives easier, you should at least do a will.Shane Tenny (:
Yeah. I know just from experience within the financial planning practice that we run, from time to time we'll have clients or have clients' families where the presumption of, oh, if I die, everything will go to my spouse, but a lot of states actually include children as equal recipients to a spouse or things like that. Can you talk little bit about that scenario?Pete Benenati (:
Sure. Here in Texas, if you die with a surviving spouse and the children are only of that marriage, then the spouse will inherit everything. But if you have children from other relationships, then your estate does not go to the surviving spouse. Your estate goes to the children. Now, the surviving spouse would have a life estate in the homestead residence. She or he could not get kicked out, but it does create problems or unexpected expectations when somebody dies without a will.Shane Tenny (:
Yeah, definitely an undesirable circumstance. So with, I guess, what you both have laid out here, this notion that everybody has an estate, whether it's big or small, whether it's easy to tabulate or complicated, it includes everything including businesses, including life insurance needs to be added in there. I guess I made the comment that not everyone has an estate plan, but the truth is that whether you know your plan or not, you have a plan. Christian, what does it mean to die intestate? What does it mean to have the state's plan kick in for you?Christian Perrin (:
Sure. So every jurisdiction is different, but effectively, your state legislature and whatever jurisdiction you live in has a series of statutes that directs the disposition of your property to the extent that that property is not subject to a will or a trust when you pass away or beneficiary designation or any other form that property could be directed at death.Christian Perrin (:
So going to Pete's point, I think a lot of individuals assume that, well, if I pass away with a spouse, all my assets are going to go to my spouse; and if not, if I had children, they'll be equally divided amongst my children. But that's simply not the case. For example, in North Carolina, which is the jurisdiction that I practice in and that my primary practice is in really, both real estate and personal property are divided between a spouse and children. It doesn't automatically all go to your surviving spouse. It can go to your children, which could include minor children, which creates a whole new set of issues.Christian Perrin (:
And of course, if you don't have a spouse or children, the law looks to more distant relatives. There's basically a statutory family tree, and the statutes look to, well, see whether or not you have any other remote descendants, any grandchildren or great-grandchildren. And if you don't, then it goes back to the main trunk of the family tree and asks if your parents are alive and then looks to whether or not you have siblings or nieces and nephews, et cetera. And so there's, I think, at least seven or eight different layers that you have to get through in the analysis, at least North Carolina, before your property ends up reverting to the state. But ultimately, what it can result in is either distant relatives inheriting property, minor beneficiaries inheriting property, or minor heirs rather inheriting property that they really would be more appropriate to inherit in a more protected environment.Christian Perrin (:
And so going back to your point, Shane, if you do not have an estate plan that you have put in, don't worry because your trusted legislators do have an estate plan for you, although that may not accurately reflect your intent or what you truly want to see happen in the event of your passing.Shane Tenny (:
Right. I can't imagine there's many folks listening who are terribly fond of the planning that the government does for you in all aspects of life, so you certainly don't want to rest on it here.Christian Perrin (:
That's exactly right.Shane Tenny (:
And to the point you were making, Pete, even if it ends up getting to the right people, it's just an enormous waste of time and resources and complexity.Shane Tenny (:
Now, when we dive into this topic of estate planning, I know from conversations with people year after year after year, it's one that's just intimidating to people. They don't know where to start. They don't understand things. And of course, it's a world that has all of its own vocabulary. Two of the terms that are often used interchangeably or misunderstood is the difference between an executor and a power of attorney or an attorney in fact. Pete, can you unpack the difference between those two things a little bit?Pete Benenati (:
Sure. Power of attorney is somebody you name to take care of your affairs while you're alive. The moment you die, it terminates. So if you get into a car accident, or in this case, a client got into a motorcycle accident and was in the hospital and he was the only person on the bank account. The wife could not get access to it because he did not do a power of attorney. And so we had to go to court, get a court-appointed guardianship appoint by the judge to take care of his financial affairs, another expensive, time-consuming process. If there was a power of attorney, she would've been able to have access to that bank account, continue paying bills, take care of everything. And the executor is the person you name to deal with your affairs at your death under your will, who collects the assets, who pays the final bills, who makes sure the returns are done and who then makes sure the assets go to who you want them to go to. Very different positions.Shane Tenny (:
And so just to clarify, if somebody's gone online, they thought I'm going to save some money, I'm going to use one of the online services to draft a will and they think, okay, great, I got a will. I think to the point you're making, if you're only hurt in a motorcycle accident, you're not dead. And so a will is completely useless in that particular fact matter. Is that what you're driving at here?Pete Benenati (:
It's absolutely true. And the other document that you should always have done is something known as a healthcare power of attorney. Who makes healthcare decisions for you should you be unable to? Who is going to be dealing with the doctor, the hospitals, the transfers between nursing homes or from a hospital to a nursing home.Pete Benenati (:
So those are really the big three. You need to have at least a will, financial power of attorney, healthcare power of attorney. And that makes it much easier for the people you leave behind to take care of you should something happen.Shane Tenny (:
Great summary. Christian, in your practice, is there a scenario you've worked on with clients where there was either confusion between POA or executor or maybe they had one or not the other? Anything like that that comes to mind?Christian Perrin (:
Sure. So I can give a little bit of a background and a story about an individual that was in the process of estate planning but had not completed the process. So that's another big piece of it. Going to your point, Shane, I think some clients are intimidated by the process because of the new vocabulary. The other part of the reality is that it's not a very fun and exciting thing to think about. People don't naturally gravitate towards talking about their deaths or their hospitalization. And so it's easier to manage life on a day-to-day basis when you're not thinking about those eventualities, but that's part of the reason that I think people do have some delay associated with getting this type of work complete.Christian Perrin (:
Going to the heart of your question, I had a client that I was working with last year and we had prepared power of attorney and wills and trusts for this individual, had delivered the draft documents to the client for review and consideration and comment. We always give the draft for the documents over to the client so that they can review them closely and ask questions before actually executing them. In many jurisdictions, including my own, none of these documents are actually valid and in force until you actually sit down and you execute them. You have to sit down in front of a notary and witnesses, and we always do that in our office as part of our services.Christian Perrin (:
But this client had received the drafts of powers of attorney and will and trust and sat on them for over two months. And literally the day that the client was coming to our office to sign the documents, the client was diagnosed with COVID. So we postponed the signing and eventually the client had to go to the hospital and was hospitalized and actually had to be put into a medically-induced coma in order to stay on a ventilator or to be put on a ventilator. And believe it or not, the client has actually made a full recovery and is back home, thank God, and has signed the estate planning documents. But there was a period of time where the client had no powers of attorney, will, trust. Even though those had all been drafted, the client had not had the opportunity to execute them because of just life getting in the way. And by the time it was most important to have them done, they still weren't done.Christian Perrin (:
So in that case, because the client did not have a power of attorney signed, either a financial power of attorney or a healthcare power of attorney, we actually had to go through the process while the client was in the hospital in the medically-induced coma to have the court appoint a guardian for the client to make medical and healthcare decisions for the client when they were incapacitated.Christian Perrin (:
And so it just goes to show estate planning is important, and once you start the process, it's important to stay focused on it because the alternative is really messy. You typically have to get the courts involved on a pretty high level if you're incapacitated and need somebody appointed to manage your affairs. Sometimes there can be power struggles between family members or friends that are competing to be appointed by the court to manage your affairs. And so for that reason, it's always a sound practice to have all this mapped out and laid out in legally enforceable documents in advance.Shane Tenny (:
Yeah, it's a great point you make because basically if you've started the process or you have something from a lawyer with the word draft all over it, it doesn't count. So like insurance and auto insurance and life insurance and health insurance, the estate planning is something you need to do before you need it. Because if you wait till you think you need it, you may have waited a day too late.Shane Tenny (:
You bring up a topic though, and Pete, maybe I'll just ask you to clarify or if there's any other point you want to jump in on. You mentioned healthcare power of attorney, but what's the difference? Let's see, I asked you the difference between power of attorney and executor. What's the difference between healthcare power of attorney and living will? Because those are confused as well and important.Pete Benenati (:
They are very much confused. A healthcare power of attorney, as I said earlier, is a document in which you named a person, should you be unable to make your own healthcare decisions, to make the healthcare decisions for you. Who approves the surgery? Who approves the treatment? Who approves the do not resuscitate order under those circumstances? And by the way, do not ever sign a do not resuscitate order until you're ready. There is no qualified do not resuscitate order. If it's a mild heart attack, I want to be resuscitated. No, it's an absolute. And I get that question a lot. But that's the healthcare power. Who do you trust? Who's going to be your advocate to make sure you get the proper care?Pete Benenati (:
Very important when you're older in the nursing home, to make sure somebody's going to keep an eye on the nursing home. They do a great job, but if you're not there on a regular basis, let's just say sometimes services might get a little lax, excuse me. A directive to physician, or what you refer to as a living will, is the document that some clients affectionately refer to as pull the plug. That's the document that say in Texas, two doctors not in practice with each other determine that you're in a persistent vegetative state, brain dead, and that the only reason you're still alive are the machines are keeping you alive. Under those circumstances, you ask that the machines be turned off.Pete Benenati (:
It is not a power to terminate your life. It's only the right to turn off the machines. If you continue living, you continue living. It is not a suicide provision that some clients always worry about, and it is one the hospitals do not take lightly and they always talk to the family before they decide to initiate it. But the reason it's referred to as a living will, it's your last statement to the world of what you want done for yourself. That's why it's referred that way.Pete Benenati (:
After the Terri Schiavo case in Florida... and I don't know if you remember that case, but everybody got involved in it, the courts, the politicians... Texas added a second provision to their directive to physician document, which said that if you are permanently mentally incapacitated and terminally ill, which is defined as not more than six months to live, no matter what they do, you ask that all extraordinary measures be stopped, basically be put on hospice.Pete Benenati (:
The thing about six months is if you've ever dealt with doctors, they do not make that decision lightly. And the reality is when that decision is finally made, it is an end-of-life decision. I've had to deal with that once where at the very end of life, I did sign the do not resuscitate order for someone because at that point she was down to 85 pounds and it was end of life. To resuscitate her would've been more offensive than a good thing. So those are the differences.Shane Tenny (:
Yeah, really important. I know from my own conversations with folks that explaining that the living will, or the physician's directive, is really the one caveat the person who's making that saying my healthcare power of attorney is making all these healthcare-related decisions, except for this one. I've declared what I want in terms of mechanical support, and so that decision isn't left to the relative, the family member to have to make that very difficult decision.Pete Benenati (:
Yes. Can I bring up one other thing, Shane?Shane Tenny (:
For sure.Pete Benenati (:
All right. A lot of times along with that, I tell people to leave a handwritten letter of desire about the healthcare they want, still to help make sure. Because these are general documents, but what if you want the best nursing home? What if you have brain cancer and you just say stop the treatment? Whatever that is, tell the world what you want beyond what these legal documents give them a right. First, that helps your healthcare agent, which these are difficult decisions.Pete Benenati (:
So it helps them know what you want, but it also gives them a shield. If all of a sudden you're naming a spouse and it's a second spouse, now you don't have the kids from the first marriage challenging this husband or wife on the decisions they're making. He or she has this document that says this is what your mom or dad wanted. Here it is in their handwriting. So it avoids a lot of family conflicts a lot of times to leave that behind.Shane Tenny (:
Those of you wearing white coats to work every day, literally or figuratively, know how important your training, specialty and income are to your future. But what happens if you get sick or hurt and can't work? The truth is that during the course of your career, you are three and a half times more likely to be injured and need disability insurance than you are to die and need life insurance. Disability insurance is one of the most important pieces to protecting the progress you've already made and the future you're building. But it's also one of the most nuanced types of insurance.Shane Tenny (:
If disability insurance is something you'd like to be more knowledgeable about, check out the free guide available for download from our sponsor, Spaugh Dameron Tenny, at their website, sdtplanning.com. Click on the financial resources tab to download the free guide to understanding disability insurance. This and every episode of the Prosperous Doc podcast is sponsored by Spaugh Dameron Tenny, helping docs and dentists make smart decisions through comprehensive financial planning. Download the free guide to Understanding Disability Insurance at sdtplanning.com.Shane Tenny (:
Now in the narrative that you described, Christian, a minute ago with your client that had COVID, you mentioned that you drafted a will, power of attorney and a trust. So I'll springboard off your comment there with the trust, for our listeners, for those who are in medicine, in dentistry, in training, is a trust something that most of them should consider? Is that often appropriate for folks in medicine or dentistry?Christian Perrin (:
On a high level, I like to think that trusts are preferable to clients that either have a substantial net worth either while they're alive or when they pass away, whether it's through their earnings or an inheritance or through life insurance, and they're also for individuals that value privacy. I've just personally found that there's a significant number of professionals... and not just physicians and dentists, but also lawyers, CPAs, et cetera... that value privacy. And the reason that a trust would be appropriate for individuals that value privacy is that a revocable trust, if properly drafted, can mitigate the amount of information that's publicly available when you pass away.Christian Perrin (:
When people talk about the process of probate, probate is a public process, at least in the Carolina, by which your will is placed on public record, which triggers a process that can take several months and maybe even up to a year to walk through and to finalize the disposition of your estate. And so while that is part of almost every probate, the amount of information that's publicly disclosed throughout that process can be mitigated through the use of what's called a revocable living trust. The revocable living trust is typically the document that is used to shield from public record information as to where your assets went, how they're structured, who they're payable to, on what terms, are they going to be held in trust for a spouse or minor beneficiaries, et cetera.Christian Perrin (:
There are lots of other reasons for setting up a trust as well. You can set up trusts during your life for gift tax reasons or to mitigate federal or gift estate tax. You can set up trusts for special needs purposes, et cetera. But the most common use of trust amongst the general population is to mitigate the probate process and to shield certain information about the family and the disposition of assets from being available on public record.Shane Tenny (:
Now once we open this trust can of worms, I should issue the disclosure that there are lots of different kinds of trusts. So if you're listening to this, make sure to make careful note of the description that Christian provided there. A revocable living trust is the specific kind of trust that we're talking about here.Shane Tenny (:
Pete, I know for folks that are in medicine and dentistry, asset protection is often a big area of interest and concern. Can you expound a little bit on where a revocable living trust doesn't provide asset protection, but then where it does upon death and becomes irrevocable?Pete Benenati (:
Sure. A revocable living trust is known as a self-settle trust. So it's a trust created for yourself with your assets for your benefit, and that is not going to protect you from creditors. However, when one spouse dies or when it goes to the kids, if we have a irrevocable trust created for the surviving spouse, so let's say wife dies first... I'm being a little sexist here. Husband is the dentist and she dies first. She could leave her half of the estate in a trust for his benefit. He still has access to it. He's beneficiary of it. It's for him, but at that point, any future creditors of husband cannot get access to the assets in that trust. It's known as a spendthrift trust.Pete Benenati (:
Or when both husband and wife die and the assets go to the kids, I many times have to go to what's referred to as a lifetime trust for the kids. It's always for the kids' benefit, but it never terminates. And that trust is protected from their creditors. It is segregated from a marriage offering far greater protection in the case of divorce. And if it's a higher net worth estate, that trust can pass for multiple generations before it's ever subject to an estate tax. So it has massive benefits.Pete Benenati (:
The issue sometimes comes to parents don't want to see their child always having to go to some third party to ask for money. So at a certain age, we let that child become the trustee of that trust, which means they control the investment decisions, they control the distribution decisions, and they get to be as stupid or as smart as they want to be is how I describe it.Shane Tenny (:
Yeah, which brings up the concept of just a trustee. As you point out, a trust can last for a lifetime or more. So if a trust is lasting for a lifetime, there's got to be some trustee, somebody who's overseeing it. Talk a little bit about, I guess, the privileges and the responsibilities that come with that and where sometimes folks will consider using an independent trustee or a corporate trustee.Pete Benenati (:
Well, a trustee is a fiduciary, and that's a big word. But basically it means they have a high obligation to the beneficiary of that trust to be responsible in how those assets are managed and how they're used for that beneficiary, and it's one that I tell people not to take lightly. I serve as trustee on some trusts. I have to meet with the financial advisors at least once a year, and my larger ones, I might meet twice a year. I want to look at the asset allocation. I want to know how they're being managed. I just asked for one investment advisor, after talking with the family, to go to a more conservative, not very conservative but just a bit more conservative, investment allocation right now based on market, Shane, as you well know right now.Pete Benenati (:
So the whole goal is the reason I'm trustee is the family didn't have anybody else they trusted yet to do that, but their estate wasn't large enough to have a financial institution like a bank. So banks are what I call the best trustees in a lot of situations. If you have a family that's dysfunctional and doesn't play well, a bank is a... actually not a bank, a trust company, too, financial institution as trustee is phenomenal because their objective, their job is to look at the trust, make sure they oversee the investments, make sure they use it for the benefit of that beneficiary and not get into the personal issues.Pete Benenati (:
So a lot of times we have family wanting to name the older child as trustee for a younger child. That's a horrible idea because you're putting a sibling as a parent, and that affects the family relationship that they may never recover from. And so we always like third parties in those situations. Or if you have an estate that's larger... 10, 15, 20, 25 million... you might have great brothers and sisters. They may be phenomenal individuals, but they have no idea how to manage that kind of money. So it would be far better to have a third party financial institution as the trustee to oversee that wealth to make sure it's there for generations. That's the thing. And I will tell you, a lot of times people are worried about fees on a financial institution. They earn their keep. They do. And it's that simple.Shane Tenny (:
Yeah. You bring up a really good point. I've had conversations with many folks over the years. They say, well, I think I'll just let my brother be the trustee or whatever. And I say, well, would you be interested in having your brother manage all of your assets right now? Well, no, of course not. So you just help them realize just their own decision making and the best way to care for their family.Shane Tenny (:
Now, a couple of times through our conversation here, you've both brought up the complexity that's introduced to blended families where there's a second spouse or children from a prior marriage. And so I know one of the topics that a lot of folks have a lot of questions about... particularly those who are highly trained young professionals, those who are in residency or fellowship, or getting married as professionals... and there's a lot of curiosity or awareness around prenups. So Pete, maybe I'll just keep with you for a minute here. How does a prenup really work? And what sort of things can you protect for yourself? How does the calendar work in terms of what assets are considered marital or individual assets, things like that?Pete Benenati (:
Well, each state's a little different. Texas is unique because it says income on separate property is community property, which adds a little problem sometimes in dealing with it, and I won't get into it here. But a premarital agreement is basically a contract and it's just dictating the terms of what's going to happen upon death or divorce. In first marriages, people get a little bit more touchy with it and maybe I understand it a little bit. But at the end of the day, if you've already had a mature practice and you've worked hard and you're about to get married to this man, then you may say, I want to make sure I don't have to give half my business or half my income to him if we get a divorce.Pete Benenati (:
All you're doing is spelling out the rules. It's no different than a partnership agreement where people come together to form a business and they got the rules. What happens if somebody does something wrong? What happens if we have to break up? What happens? That's all that is. And it really shouldn't be more than that, but people take it personally. You're planning a divorce. No, I'm planning that if anything goes wrong, then we have rules as opposed to letting the lawyers get involved and drive it up to a hundred thousand dollars in legal fees.Pete Benenati (:
That's first marriages. And I'd like to bring up second marriages just for a second because I think they're even more important there because that's more about death than divorce, believe it or not. You got blended marriages, she dies, and now he's having to deal with her kids about what's community property, what's separate property. What are they entitled to because her estate plan says her estate goes to the kids? So when you do a prenup, you're not just trying to plan for say a divorce, you're also trying to plan for death and how the assets are distributed.Shane Tenny (:
So, so important. Christian, any other, I guess, perspective or experiences with prenups that might be helpful here?Christian Perrin (:
Nothing that hadn't already been said, but I will just note that a significant amount of the time, when it comes to first marriages, there's a lot of Kleenex involved with prenuptial agreements because it's a very emotional time. But usually when second marriages or third marriages occur and there's children from prior relationships, it's not as difficult of a conversation to relationally navigate.Christian Perrin (:
But a lot of the time, in my experience at least, the parties get it. Right? If you're going into a marriage and your fiance doesn't appreciate that you have children that you're trying to protect and ensure that things are going to be set up in an appropriate way for them if the marriage doesn't work out or if you suddenly pass away, it might be an opportunity to just revisit your overall decision to be engaged in my experience. Because I just feel like the conversation about premarital agreements is significantly more objective in the second and third marriages, and in the first it can be a much more emotional discussion.Shane Tenny (:
And I guess a quick follow-up here, for folks that are young, first marriage, they don't really have any assets maybe other than a bunch of student loans or things like that, is there any material reason to consider or discuss a prenup at that stage if you don't already have any assets of significance? Or is that a fact pattern where you say, yeah, there's not a lot of benefit there?Christian Perrin (:
When I find that younger, less affluent individuals are pursuing a premarital agreement, the fact that's eventually revealed, but it's not revealed immediately, is that there is a wealthy family member, whether it's a wealthy parent or a wealthy grandparent who is gently nudging them behind the scenes, or maybe forcefully nudging them behind the scenes, to get a premarital agreement as a belt and suspenders approach to protecting that individual's inheritance. Because you can do a significant amount of asset protection in the context of estate planning. So for example, I could set up my affairs so that if my children were to ever become divorced, the risk that those assets might go to their spouse could be mitigated. But at the same time, some individuals want, like I said, a belt and suspenders approach, want a premarital agreement for their descendants or their beneficiaries. That's a relatively common thing.Christian Perrin (:
And then the other piece is premarital agreements are typically one of those things, at least in my experience, where there's not a significant amount of negotiating that occurs between the lawyers. The lawyers educate their clients, and the parties are really the ones who are having the conversations behind the scenes at home, et cetera, to figure out how they want to set things up. So in my experience, unless somebody is coming from a particularly affluent background, if two parties are coming into the marriage without a significant amount of wealth, then they usually don't have those conversations and premarital agreements aren't really brought up.Shane Tenny (:
Yeah. You bring up a good point. I'll just take a second to highlight for anyone. If you're listening and you're engaged or might be engaged soon, it is important to realize that each of you need to have your own attorney. It's generally frowned upon or bad practice, at least from my outside perspective, for each fiance to be working with the same attorney. You need to have your own representative there.Shane Tenny (:
So I'm hoping, as I said in the intro here, that folks half an hour into this are a little bit more educated, maybe a little more comfortable with the topic of estate planning. So if we've successfully motivated someone to say, yeah, this is the year I'm going to get this done, I need to find an attorney, I need to take care of my family in this way, what are your tips on how to find a good lawyer in their area? And I guess I'll clarify. Do you need to find a lawyer in the state you're living in or can everybody who's listening call you guys? Pete, I'll leave that one at your doorstep here.Pete Benenati (:
All right. Well, you really should work with somebody from your state because each state has their own laws, their own procedures. I'm licensed in multiple states. I've had to learn multiple different state laws. But when I have a client who moves to California and wants to still have me do their work, I will have California counsel brought in because I don't know all the different California law. So you definitely want to work with somebody from your state and traditionally, it's like anything else. How do you find a good plumber, electrician, home repair handyman? First ask your friends, right? See who they've worked with, who they like. If you can't go there, then you go to the internet. And I'm going to leave for Christian about some of the things you could look for in a quality estate planning lawyer.Christian Perrin (:
In medicine, there's a number of specialties that physicians can obtain, whether it's podiatry or neurology or... Everybody's got their specialties or their subspecialties and it's really their niche. And in the same way, lawyers, especially lawyers in larger urban markets, have niches because that is the way that they hold themselves out. They develop expertise in a certain practice area. And so for that reason, having an attorney that is a board-certified specialist in the area that you are looking for is a very important first step.Christian Perrin (:
For example, the North Carolina Bar offers specialization in various parts of the law, including estate planning and probate law. So in North Carolina, there's about 20,000 lawyers licensed and that are practicing at any given time, and of those 20,000 lawyers, 140 of us are board-certified specialists in estate planning and probate law. So if you're living in an area or in a state that does offer any type of board-certified specialization, just like in medicine, it's important to choose your lawyer in the same way.Christian Perrin (:
I do think that generalists have a place in the law, especially in rural markets because that's just a function of how that market works. But for the most part, if you can find and identify a reputable lawyer that has a proven track record of focusing on trust and estate matters, that will most likely be your best bet.Shane Tenny (:
Excellent. Well, I hope that folks that are listening that need to tend to this issue will feel better able to find folks to help them.Shane Tenny (:
All right. Well, Christian, Pete, thanks so much for just your expertise, your insight, your time today. Really appreciate the conversation and just cracking an intimidating topic for our listeners here today.Pete Benenati (:
Shane, thanks for having me.Shane Tenny (:
Absolutely.Christian Perrin (:
Thank you, Shane.Shane Tenny (:
Yep. And thank you for giving us a half hour of your time today on the Prosperous Doc podcast. Whether you're working out, or running, or washing dishes or whatever, we appreciate the chance that you give us to come into your life. As always, if you have suggestions for guests or topics or things that would be helpful for us to put on the show, you can email me directly. It's email@example.com. Of course, we love your reviews on iTunes, Google Play, and we're on all social media channels. We'll look forward to seeing you back here next time.Voiceover (:
This episode of the Prosperous Doc podcast is over, but you're not alone on your journey. Spaugh Dameron Tenny has been helping physicians and dentists prosper through financial planning for over 60 years. To connect with us, visit sdtplanning.com today and take your financial wellness to new levels. Join us on the next episode of the Prosperous Doc podcast.