Lorenz Private Trustees Blog

Estate Planning is often challenging because there are so many issues to consider. We are often distracted by our fears of death, loss, and conflict. For more about what we are planning for, please see The Mystery of Estate Planning Revealed.

This post is more about the assumptions we make about our own family members, and how they will behave once our estate plan goes into action. We strongly recommend that you explore all of your options for who will serve as your successor trustee with your qualified estate planning attorney.

Natural Conflicts of Interest

It should be no surprise that your descendants have their own conflicts of interest where your wealth is concerned. As professional trustees, who serve as a neutral third party, we are never a beneficiary. We have seen the struggles for control amongst family members time, and time again. You may think your family is an exception, but to make sure you get the care you need as you age, and to be assured that your wishes will be followed after you pass, please read on.

The Only Child

You may have solved the question of “Who will be my successor trustee?” because you have just one child who will be your only beneficiary when you pass away. This is a good time to consider that you will likely be incapacitated for some period of time before you die, making your child the one fiduciary in charge of your tax, legal, financial, and medical decisions while you are alive. Be honest with your attorney about your feelings about being unable to participate in the decision making at this time of life.

Very few adult children have experience in accounting for expenses in the proper way as a successor trustee should. When an adult child is in charge of what you spend, the shift of power from parent to child can be quite uncomfortable, even though nothing is “wrong”. Because you have granted this power to your child, would you ever feel good about correcting anything your child does? If the child does not account to you, would you be ok with that? What if the child ends up in a bad financial situation and uses your funds without any benefit to you?

We have seen situations of miscommunication turn into toxic relationship, and then we have been asked to replace the child in the fiduciary roles. Few relationships heal after such missteps.

“Money may not buy love, but fighting about it will bankrupt your relationships”

When you have two, three, four, or more kids, are you expecting them to all happily work together when you are no longer capable of managing your Life alone? Might they have careers and demanding lives of their own? Do you feel closer to one child, and distant from others?

We have often seen two or three children work together for an elderly parent’s benefit until a difficult decision comes up, such as, it is time for Mom to move to an assisted living residence because her needs have changed so much. One child feels Mom should stay home (especially if that adult child lives with Mom). Another might feel that any care arrangement costs too much (thereby reducing their eventual inheritance). These are the same kids who used to fight over the front passenger seat, or the last piece of cake. This element of their relationship doesn’t go away as they age, and sometimes old wounds intensify with the addition of spouses and children of their own.

Talk with your attorney about what you enjoy in the relationships with your kids, and how to maintain the best aspects of your family togetherness. Giving your children responsibilities, such as your care, may put too much pressure on these relationships without saving you any money in the long run. In our experience, the legal fees are often much higher for families who want to do trust administration themselves. You can keep your family close and enjoy them more by having the “Business of Life” attended to by someone with experience and systems in place, who will treat all of your beneficiaries equally.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Once your estate planning documents are completed, there is still work to do. The word of art “Funding” describes the process of completing forms to change the title of asset ownership from your personal name to the name of your trust. This is not usually a taxable transfer as at this stage the tax identification used for your trust is still your own tax identification number.

Here is an example of funding:

Your household operating checking account is held at XYZ Bank. The Title of the account reads:

Jane and Jerry Jones

You take your original Trust Document with you to the bank, along with your spouse (especially if you are co-trustees), and you ask to have your account put into the name of your trust. The bank will likely have you fill out their “Certificate of Trust” form, and ask to see the trust document. The new account title will look something like:

Jones Family Trust, dated 10/10/2021

Jane Jones, Trustee

Jerry Jones, Trustee

Although there is no actual change in how you will use the account, the change in title means that when the time comes to “account” for trust assets, this particular asset will be included. This is true of your home, and any titled property you own. 

Any assets which are not funded into your trust may end up having to go through the court process known as “Probate”, so please get guidance from your attorney regarding ALL of your assets. This work will make sure that your trust operates properly when the time comes.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

For some, Incapacity is scarier than Death. Having worked with over 100 families, I can tell you that incapacity is unique to each individual. Here is an example to help you think about how you might like to prepare for your own incapacity. As always, I recommend that you discuss your concerns and feelings with your attorney, so that your documents reflect your wishes as accurately as possible.

Helen was a power house all of her professional life. She loved her work, and more than the work itself, she loved the energy she felt when moving the work along, following up with her team and clients, and reveling in the results of the solutions she offered. Retiring was far away for her, even at 75 years old, when she had a car accident. The accident wasn’t her fault, but it changed her life in profound ways.

Helen’s body was injured and required about six months to heal. She couldn’t drive, or work, because her head injury changed her eyesight and her temperament. She grew impatient, refusing physical therapy and pain medication. She didn’t want to go to the doctor anymore, “It’s always bad news”, and her enjoyment of life diminished.

Helen lived alone and stopped paying attention to bill paying, investments, or social engagements. When she missed her annual tax appointment, her CPA reached out to her and asked if she was ok. The CPA sought permission to contact her successor trustee. As someone who naturally plans ahead, Helen had her estate plan in place, but the last time it was updated was around her 65^th birthday. Now, ten years later, two of her listed successors had moved out of state and declined to serve.

Helen was still aware, and still knew who she was, what she had, and who she wanted as beneficiaries. Talking took a lot of effort for Helen, and she processed new information more slowly than in the past. With the CPA’s encouragement, Helen visited with her attorney to discuss next steps. She was not excited about having someone else pay her bills, or care for her, but she acknowledged that things had changed, and she needed help. This was a tough conversation! Her attorney suggested that she meet me and talk about working together.

When I met Helen, I wanted to learn what she considered to be a happy life. Her documents were well written, and she had plenty of assets, but there was something missing from her plan; How does Helen like to have fun? Helen showed me her home (stairs everywhere) and let me know how lonely she was. We decided together to set up a meeting with a professional care manager, and get some help in to assist Helen with day to day needs at home. Helen decided to name me as her Trustee, she resigned, and once I had the job, I went to work.

I received Helen’s permission to share my annual accountings with her attorney going forward, and to keep utilizing the services of her CPA. I knew from the care manager’s assessment that Helen’s capacity would diminish over time, and knowing she had her favorite professionals in her corner was comforting to both Helen and me. With Helen’s ok, we reached out to her former workmates and colleagues, and she had a regular string of visitors who kept her engaged.

Over the years, Helen’s cognition continued to change. With her agreement (and lots of tours), she and her care manager selected an assisted living residence, and she moved in. I sold her home, and invested the proceeds for her benefit. She made friends right away, and started to have some of her past energy. She developed aphasia (loss of ability to understand or express speech, caused by brain damage), and became more frustrated.  I continued to report to her, but after a few years, she didn’t want to see the accountings anymore. Eventually, instead of speaking, she would nod her head, or gesture.

I would visit Helen from time to time, and on our last visit, we held hands and listened to her favorite music, all conversation no longer necessary.

There is no way to predict exactly what you are going to need, or when you are going to need it. Your preferences are an important aspect of your estate plan. This is why planning ahead is so important! It’s never too soon to consider how you would like to be cared for, and what fun you want included in your everyday life, if you cannot fully express what you want in that moment. Whoever you have selected to serve as your Agent for Health Care should know about what you enjoy, and who is important to you. Please keep your Agent up to date as your life grows and changes.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Once having created a Trust of your own (with the help of a qualified estate planning attorney, of course) you become the “Trustor”, or Creator/Settlor/Grantor of that Trust. If you are married, you and your spouse are both Trustors. You may also be the first Trustee of your Trust, but this role is quite different. Think, Employer/Employee – Trustor/Trustee. There is the one who created the job, Employer, and the one who does the job, Employee.

There is a clear beginning and end to each Trusteeship. The beginning happens when the Trust is first created, then each time a Successor Trustee moves into the Trustee role. The triggering events for this transition are incapacity, resignation, and death.

Incapacity – there is typically language in your Trust document which describes how incapacity will be determined; for instance, two physicians will examine you and each will write a letter stating that you are no longer capable of managing your own affairs. The resulting letters (along with a copy of your Trust, or a Trust Certification) are then presented to the financial institutions, and other entities, by your selected Trustee, so that all can be accounted for and transacted upon. You may, or may not, be fully aware of this transition when it happens.

Resignation – Different from incapacity, in that, you are choosing to have your Successor Trustee step up into the role of Trustee. A formal letter of resignation is typically prepared by your attorney, and your signature is notarized. This document is used just like the doctors’ letters, giving your Trustee authority over your assets. Your Trustee should provide you with financial reports (annually is normal) as the Trust is administered for your benefit, until you pass away, and then the Trust is administered for the benefit of your beneficiaries.

Death – Just like incapacity and resignation, the resulting document, the Death Certificate, is utilized to grant authority to your chosen Trustee.

We strongly recommend that you have not only three successors listed in your Trust, but also an effective mechanism to choose another Trustee, if none of the three you selected are able to serve you. Such mechanisms might include going to court to appoint a trustee, or allowing the last Trustee to select another. Please discuss your options with your attorney, so that the office of Trustee is never vacant.

We also recommend that the same individuals named to serve on your Trust are named in the same order as your Durable Power of Attorney, and your Will. You might also want them on your Advance Health Care Directive, which is fine, and also very important to discuss with your attorney.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

If you have decided to name Marguerite, Clay, Noah, Joe and/or Ryan as your Successor Trustee (named as Marguerite C. Lorenz, followed by Clay B. Spiegel, followed by Noah B. Benton, followed by Joseph F. McMackin Jr., followed by Ryan J. Shumacher – or in any order you choose), please ask your attorney to send us a full set of the following documents:

• Trust
• Will
• Power of Attorney for Finance
• Advance Health Care Directive
• Certificate of Trust

We look forward to getting better acquainted, and as a result, we will be ready to serve whenever the need arises.

Suggested Trust Language: “If Marguerite C. Lorenz, Clay B. Spiegel, Noah B. Benton, Joseph F. McMackin Jr., and/or Ryan J. Shumacher are unable to act, then the President of Lorenz Fiduciary Services shall have the authority to appoint a successor trustee.”

We recognize that many clients who name us in their documents presently will not need us for many years to come. We certainly hope that’s how it works-out. Even so, several clients need us during their lifetimes due to incapacity or a desire to resign due to abrupt changes, such as grieving a deceased spouse, or a change in physical health. This is why it is so valuable for the professionals on the same team to get acquainted whenever possible.

If you are the client, or the drafting attorney, please consider introducing your successor trustees to the rest of the professional team. We have seen the benefit of the introductions over and over again as when the need comes, it is often immediate, and when the professionals are already acquainted, the information flows easily and efficiently.

You may also want to alert your family, friends, or neighbors that you have a plan, and that Lorenz will carry out that plan, so your loved ones know who to call, if, and when, you need us.

Rental income is a powerful way to build wealth. What will happen to all you have built if you were to become incapacitated, chose to resign, or died? Your estate plan will allow you to maintain control and avoid expensive chaos.

You handle the details of your business in your own way, and you likely think about your business all the time. As owners of our fiduciary firm, we think the way most entrepreneurs do; our business is our baby, and every detail is important.

Over the years, and with so much experience learned in every trust administration, we have developed a robust succession plan. Here are some questions for you to explore with your estate planning attorney, so that you, too, can have confidence in your future:

What matters most to you about your business? Is it interaction with the tenants? Is it knowing you are providing a safe place to live or conduct business? Are you excited that your descendants will also enjoy the income you are creating?

What are your greatest challenges? What do you want your successors to know, so that they will be successful in managing what you have built?

How do you want to be remembered by your family? By your tenants? By your colleagues?

Many of our wealthy clients consider themselves to be stewards of the future, and have planned not only what will be inherited by family, but also what will be left to charity, when the time comes. What causes are you most passionate about?

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

Having spoken with hundreds of people on the topic of estate planning, I have learned that many people are afraid of the estate planning process for various reasons. We will explore some of those reasons and make some suggestions to let go of the fear, which is quite natural, considering some of the topics involved in estate planning.

Fear of Death: Let’s get the “big one” out of the way. In my opinion, estate planning is not about death, as much as it is about staying in control, and being kind to your loved ones. We all know that everyone dies, and nothing lives forever. By planning ahead, your mortality can no longer limit you. You can be generous, loving, and leave the world better than you found it, no matter when, or how, you die, or become incapacitated. By planning ahead, you get to express your preferences (in general terms, or great detail, it’s up to you), and you avoid leaving a mess for your loved ones to figure out.

Someone recently told me that they hesitated to sign their completed documents because they worried that as soon as they sign and date the papers, they will die. Many attorneys I know feel a bit helpless when the documents are all done, and clients do not show up to get the paperwork signed. Of course, the documents don’t have much effect if they are not signed. It seems silly to pay an attorney to do this important work, and then not finish the job with your own signature, but fear is not a logical thing.

Here’s my suggestion: From the very beginning of your estate planning process, plan a nice reward for yourself upon completion, say six months out. This can be a beautiful vacation, an ice cream sundae, or anything else you would really enjoy. Stay focused on the reward, not the signing, and allow your attorney to be the “guide or “leader” to see you through to the end. Tell your attorney about your fear, and allow this practiced professional to help you through it.

Selecting An Attorney: Selecting the right professional to guide you through an emotional process will take a bit of work, but it is quite worth the effort. If this is the first blog entry of ours which you have seen, do scroll through our other posts, as there are some great suggestions as to how to find and work with an attorney who is right for you. Check out Questions for the Estate Planning Attorney or How to Find the Right Estate Planning Attorney for You

Your Spouse, or Partner, May Not Want What You Want: Whether you have only been married to this person, or this is a second marriage for you, working on an estate plan together can be challenging. If you are not married, estate planning is all the more important because a lot of assumptions are made about the transfer of wealth for married couples. This is not so for those who are co-habitating without any written agreement. Some believe not getting married makes things “easier” until there is a tax, legal, financial, or health crisis. A roommate has a lot less opportunity to be helpful than a named agent or successor in your estate plan.

I knew a couple where the wife really wanted to be sure that both she and her husband would be buried in her family plot, but the husband was very much afraid of being buried without being “entirely dead”. He wanted to be cremated, but also wanted to please his wife. I suggested that where he is concerned, when he dies, we could wait a week, or more, to be sure he was entirely dead before any burial was initiated, and he asked his attorney to add this to his Advance Health Care Directive!

By getting your plan into writing, you have more power than without having a plan. Thanks for getting your plan completed and signed!

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

There are so many great self-help books out there. Many have great ideas on how to move your life forward, but when it comes to actually putting those ideas into practice, many of us let ourselves down.

The Estate Planning process allows each of us to assess what we own, who we love, and the impact we want to make in the world. By using your estate plan, you can achieve so much, and give yourself a way to measure your success.

Our trustees implement the plans created by clients and their attorneys. As private professional trustees, we have read hundreds of estate plan documents, and we have handled easy administrations, and very challenging ones. In this article, we will focus on your estate planning opportunities, and how to make the most of your dynamic estate plan.

You are the expert on your own life

No one knows your life the way you do. Working with a knowledgeable attorney means that the attorney is going to focus on the law and the form of your documents. You will be asked lots of questions about your desires. The best part of using your estate plan in moving your life forward is that the whole process begins with an inventory of what you have now.

Here are some great questions to consider, before you meet with your attorney:

What do you love about your life?

What activities do you want to continue, if you can no longer drive or initiate those activities?

If someone who doesn’t know you personally becomes your Trustee, what would you want them to know about you?

What medical procedures would be ok with you? What procedures would you refuse, if you could?

How detailed do you want your successor to be when reporting your finances to you?

Assets

Your attorney will ask you to provide details of your assets. If you have bank or brokerage statements, provide them. Copies of title paperwork, and insurance may also be requested. Perhaps more importantly, you are going to be asked about the people and causes you love.

When I worked through my first estate plan, I didn’t have much in the way of assets, but I took the opportunity to plan as if I had a lot. I chose to have language in my trust which instructed what to do about my home in case I became incapacitated or died, and I did not yet own a home. Just a few years later, I bought my first home, and since I had a trust in place, titling my home correctly was easy!

Attorney Relationship Suggestion: I called my attorney before I purchased my home to get input on title, and to make sure the language in my trust was still what I wanted. I was billed for a fifteen minute call, and it was so worth it.

A Powerful Process

I began to see how powerful this process was for me. There are lots of “What Ifs” in estate planning that didn’t seem to apply to me at first. That initial estate plan was completed about 20 years ago, and I have updated my documents three times since then. My children grew up, and no longer needed a proposed guardian. I remarried. I am grateful to have a retirement account, now. Each time I have updated my documents, it has been an opportunity to see my progress toward my biggest goals.

Estate planning not only helps us get our “ducks in a row”, but also allows us to see all we have in one place. In the comments, please share what motivated you to get your estate plan done. What challenged you the most once you were in the process?

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

What does your attorney need to see? Here is a list typically requested (I have asked many of my attorney colleagues to contribute, and your attorney may ask for other items, that’s ok).

Current statements – bank, brokerage, retirement accounts – the values are just part of the information needed, so complete copies of these statements are needed. One month of statements is usually sufficient, but if the financial institution only provides statements on a quarterly basis, bring the most recent.

Copies of Titles – Own a home, a boat, a car, or anything with a title? Please bring a copy.

Legal Documents – Marriage Certificate, Death Certificate for a deceased spouse, Partnership Agreement, Pre or Post Nuptial Agreement – Your estate planning attorney needs to know about you and any legal obligations you have.

Insurance – Life, Homeowners, Renters, Health – If you could not file a claim, your successor should be able to, and will need this documentation.

List of Beneficiaries – Please provide the entire list of your children, even if you don’t plan to grant them an inheritance. If you plan to leave money to charity, please provide the exact name, address and tax identification number, so that the charity is listed correctly in your documents.

List of Successors and Agents – An estate plan must include those who will serve you when you become incapacitated, you resign, or you die. Having been in this work for over 18 years, I have seen family members really struggle with the relationships and with the work itself, so please be considerate of those you love and ask the attorney for recommendations of professionals who can serve you in the following roles:

Trust – Trustee – 1,2,3

Will – Executor – 1,2,3

Durable Power of Attorney (DPOA) – Agent – 1,2,3

Advance Health Care Directive (AHCD) – Agent – 1,2,3

You may have noticed the numbers after each listed role. These individual roles should be considered tools in one tool box, utilized by one person/entity. So, Person 1, is going to be your Trustee, and DPOA Agent, and your AHCD Agent, while you live, and will also serve as your Executor, after you die. If you want to, you can have one person serve as your AHCD Agent, and have the tax, legal, and financial roles fulfilled by another person. If Person 1 becomes incapacitated, resigns, or dies, then Person 2 will have the job, and so on.

I strongly recommend having at least three people listed, all at least 10 years younger than you, who have experience with deciding and managing tax, legal, financial, and major medical decisions. In California, there are licensed professional fiduciaries who do this work, Fiduciary.CA.gov

In other states, there isn’t yet licensing, however, you can still find qualified professionals who are bondable and likely to have insurance to do this work, TrusteeAlliance.com

If none of your chosen people can serve, then make sure there is a mechanism so that your family doesn’t have to go through a lengthy and expensive court process to get a replacement. My fiduciary firm offers this suggested language:

“If Marguerite C. Lorenz, Clay B. Spiegel, Noah B. Benton, Joseph F. McMackin Jr., and Ryan J. Shumacher are unable to act, then the President of Lorenz Fiduciary Services shall have the authority to appoint a successor trustee.”

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.

You’ve been careful with your finances. Your home is your sanctuary, and you know where everything is. You have made your life and your living space just the way you like it.

Who in your life knows why you have things set up the way you do? Would that person(s) be available to serve you, if you could no longer manage on your own? Will that person keep your privacy confidential, no matter what you have hidden in your home?

For many folks who have experienced a health crisis, privacy might be considered a luxury. This is why planning ahead is so important. Family is not always the right fit if you feel you would suffer from their judgement about how you do things.

Here is a thought experiment to see how you feel about this possible judgement: What makes you feel more independent; having a housekeeper clean your home, or your daughter clean your home? Most of our readers would say that a housekeeper (someone you have the power to fire, if you don’t like their work, or their attitude) makes them feel more independent. If this is true for you, consider who will serve and follow your estate plan, during your incapacity, resignation, or death.

Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.