Family Matters with REESELAW Podcast

Episode 6: Getting Divorced? Recently Divorced? How Does That Impact Your Estate Planning?

Andrea Weiss Bryk is an Estate Planning and Administration attorney focused on families, law enforcement, and veterans.

Transcript:

Catherine Reese: Hello, I'm Kate Reese, and you're joining us with Family Matters with ReeseLaw. We are a family law firm located primarily in Fairfax County. We do have an office in Prince William. We concentrate specifically on family law and today we will be talking with Andrea Bryk. She is a Trust and Estate Attorney and works with the office of Michelle H. Wright, P.L.C.. Welcome, Andrea.

Andrea Bryk: Thanks, Kate.

Catherine Reese: Certainly. Now, a law firm podcast, of course, has a disclaimer. So I do need to let you know that it is not offered, nor should it be construed as legal advice. It is for informational purposes only. You should not act or rely upon the information contained in these materials without first checking with counsel. So, Andrea, someone is contemplating a divorce or has received a final decree of divorce. What should they be doing to protect their interests?

Andrea Bryk: They should be planning for their estate. Estate planning is a passion of mine because the majority of people out there in the world don't understand that they need to have an estate plan. Having an estate plan gives them control over who they give their wealth to when they want and the way they want. And if this isn't planned for, there are going to be problems.

For starters, the laws of the state in which they live will decide to whom their wealth goes when it goes and how it goes. And number two, the value of what's left over to give to others will be greatly reduced. But before jumping into a list of things to do when you're getting divorced or contemplating it, I want to talk a little bit about what's in an estate plan and why everyone should have one.

So why everyone should have one Kate; because if you're over 18 and you own anything from close to a car, to a bank account, to a backpack, then you need an estate plan. Those things that you haveare belongings and belongings in estate planning are your wealth. That's what you have to transfer or at least deal with when you die. So you don't have to have a big house or big property or estate tax issues or even children. If you have belongings, that is your wealth and you need to plan for what happens to it when you die.

Catherine Reese: Well, let's say that you do have an estate plan. Then what?

Andrea Bryk: Well, if you have an estate plan, then if you've gotten divorced or contemplating divorce, you're probably going to need to change what that estate plan says. An estate plan comes with a couple of different items. There are essential items that you would use while you're still alive and that's a part a lot of people don't understand. You're going to have a general power of attorney that covers financial and household matters. How do you have those matters handled if you are for some reason unable to take care of it?

You need to assign an agent to manage those affairs for you. That's what a general power of attorney is for. So you would also have a medical power of attorney, also called a health care power of attorney and it differs from what we call an advanced health care directive or a living will because the medical power of attorney lets someone else make medical decisions for you if you're incapable of doing so. Let's say you fell off your bike while youre bike riding and youre called off to the E.R. and your family's been called in. They can answer any questions the doctor might have.

You're also going to have hopefully a HIPPA release that says those people able to make medical decisions for you can also see your medical record. My bet is that most people are like me, and when they go in for their annual checkup, they don't put anyone else's name down when they're filling out those HIPPA paperwork pieces, and they just sign their name and move on. With this big HIPPA release lets you have the power to think about who you want to have access to those records and give them the authority to have them.

You're also going to have a living will. A living will, or here in Virginia, it's called an advanced health care directive, lets you decide how you want the end of your life to go if you're unable to communicate that to anyone else. So if you're in a coma or a couple of other terminal situations and death is imminent it lets you take control of whether you want the plug pulled or not and a couple of other issues on how you like to spend your last days. We prepare those documents for people. And last but not least, are the documents everyone's really accustomed to thinking about in the state plan; and that's a will.

[00:05:02]

Do you have a last will and testament that lets you take control of who you share these belongings with after you pass, and more importantly, do you have a revocable living trust? And I think we'll talk about that a little bit more in a couple of minutes. Let me make a quick note, Kate, if you don't mind?

Catherine Reese: Well, go ahead.

Andrea Bryk: We've had people come into our practice saying that they have a power of attorney and I'm like, great, let's take a look at that and make sure it covers everything you want and all the people who are there. Well, it's unsigned. They've never signed it. A really essential point in estate planning is what we call executing the documents. If you haven't signed these documents, they are not in effect and they won't work for you. And I continue to be surprised at how many people have gone to the trouble of having them prepared and yet haven't filled them out or signed them. So that's a really big deal.

Catherine Reese: I understand some estate planning attorneys make a point of pre-Covid definitely insisting that the client come in for an appointment to sign to make sure that finality happens. Does that happen in your office?

Andrea Bryk: It absolutely does. But thanks for asking that question about Covid, because we've taken a new stance. We meet with clients via Zoom. We go through all the documents with them through Zoom and then to make sure that those documents are signed, we have them drive into our parking lot, put on a mask and roll down their windows. We bring the witnesses out to the car. Everyone's masked and gloved and we have a car signing in the parking lot. It's very well organized and you can sit in your car and we'll bring your final paperwork out to you and you can come back and pick it up in a day or two. But it's kind of a fun thing and I'm really glad that we're coming through winter because winter signings were not very much fun for anybody.

Catherine Reese: That makes sense. So update your powers of attorney, and if you don't have them, now is the time to get them. Do you want to update your will now also before the divorce is final, or are you just going to have to do it again? What's the benefit? When should you best do it? And does it make sense to do it twice while still married and then also once the divorce is final?

Andrea Bryk: That's a great question, Kate, and it's going to depend on a couple of factors. But overall, the general idea would be that it will let you decide to who your belongings transfer at your death. So you'll want to make sure that's updated to the people you want. Whether you're in the process of getting divorced or after the divorce, you can indicate who you want your belongings to go to through your will. The bigger question about timing has to do with clients who have a revocable living trust.

Catherine Reese: So, Andrea, tell me a bit more about living trusts and wills. I have had clients that did not understand that they were two different documents to different purposes, but they had both fully executed. Can you elaborate?

Andrea Bryk: Great question. That's a really great question. So let me start by explaining that there are three ways to die. You can die intestate. That means you don't have a will, you don't have a trust. You haven't done any estate planning whatsoever. You can die having a will or you can die having a will and a revocable living trust. If you pass and test it, you have not made any decision about to whom your belongings should go when you pass and the laws of the state will decide for you.

This is a really big problem for couples who one of whom is in a second marriage or there were children by a prior union. It catches a lot of people off guard because the laws in Virginia say that if there are children by a prior union and their parent is the parent and the couple that dies, they get two thirds of that parent's estate while the surviving spouse gets a third.

I've seen a lot of situations where that surviving spouse has figured they get half or all because they're the spouse and that's not how the law works. This is a very good reason why you need to estate plan and put at least a will in place to decide to whom your items go. But then there's the difference between a will and a trust. In a trust you also get to decide to whom your belongings go, but you get to decide how and when. So if you'll bear with me, I have a moving truck example I want think of a will and a trust in terms of this moving truck.

[00:10:00]

So let's say you die and you had a will. Someone is going to come to your house with a moving truck and they're going to pack up your house of all of its belongings, they're going to sell the house and they're going to drive that moving truck to the courthouse where they're going to unload it all on the front lawn and do a public inventory and a public accounting. Then they're going to pack it all back up into the truck and then they drive it to the house or houses of the people to whom you want those belongings to go.

That process is pretty expensive because you have to pay for the moving truck, the inventory, the accounting, and then moving it again. It's public. The records of probate are public and it takes time, usually nine months and sometimes quite a bit longer. If however, you have a revocable living trust, that moving truck has been sitting in your driveway the whole time while you're alive, you've put all your property in it already. It's already been assigned to that moving truck. Every piece of property has a spot so that when you die, your trustee comes in. They put down the door of the moving truck and they drive that moving truck directly to the homes of the people you want those items to go to. They unpack it and they're done. It's a super-fast process and there's no stopping at the courthouse for an accounting or an inventory.

So you have taken control of how you want your property to pass and a lot of people don't understand that. That's right. The other thing about a trust is through a trust, you can create generational wealth. What do I mean by that?

Catherine Reese: Exactly!

Andrea Bryk: Well, my children or my grandchildren might inherit my stuff. Sure. They're going to inherit a dollar amount outright or they might be getting your special mirror or cooking utensils. But if you have a trust, you can set up multiple trusts for future generations. And so resources aren't lost through the probate procedure of the courthouse. Time isn't lost. Your assets can be sold, converted into cash, placed in a fund and then managed, so that income and or principal, depending on what you want, is delivered to the next generation or the next generations, or if you want to, your next door neighbor. However you want to set it up, that's what estate planning attorneys do. They set it up to create that generational wealth.

The other thing about a trust is in that planning, if your estate and your belongings are valued at such a large amount that taxes apply to the estate, then you can talk about planning to minimize taxes through that passing of wealth. For most of us right now, that just doesn't apply because the limitation is over 11 million dollars. We want change in the near future to be a much smaller amount so that anyone living in Northern Virginia owning a home may be really needing to think about creating a living trust.

But you asked another question, and I know I'm doing a lot of talking, but why would someone have a trust and will? For a very good reason; sometimes people don't fully fund their trust. And what that means is they haven't assigned all of their belongings a space in that moving truck. So there's some extra stuff laying around. Maybe it's the famous baseball card collection, maybe it's a new stash account or something like that and we need to make sure that it gets into the trust so that it flows to the next generations as intended. What a will does in that case, we call to pour over Will. So anything that spilled out of the moving truck that belongs to you gets put back into the moving truck by the process of the will being in place.

Catherine Reese: So essentially, you should at least look at your documents annually and conceivably update, because I can see and have seen many people where their documents were good at the time, but no updating happened. And so when they acquired things, there's no mention of those particular things or something else has changed in the family structure and they've not addressed it. So much as we tell people in family law, your property settlement agreement or your final order know where it is and keep it close at hand because it is a reference point for you.

[00:15:05]

Is that similarly what your firm does with regard to; do you send out reminders or just hopes that people remember or how does that work?

Andrea Bryk: Absolutely. When we let them go out the door, we ask them to look at those documents every year. We give them a pretty binder because it's a lot of paper, because there are a lot of powers in there that they can put in a conspicuous place on the shelf. It's right there. Interestingly, at our firm, we also give people those medical powers of attorney and HIPPA release and stuff in a red folder that they're supposed to put by their front door because if you have to run out to the E.R take the red folder with you.

But you're absolutely right. We follow up with clients every three to five years to make sure there haven't been any lives changes that we would want to change in their documents. There are also tax laws, for good example, in 2025, at the end of 2025, the current estate tax exemption sunsets. So it's going to go back to a very low number, not the 11.7 million it is here in 2021. It's going to go back to a low number and we need to be aware of that. So we like these documents to last for 10 to 25 years. But there's always going to be changes in family dynamics of one form or another. There could be grandkids that come along. There could be accidents or addictions that need to be taken into consideration.

You can't create a supplemental needs trust or a special needs trust for someone in a will. But you can do that in a trust. Children under the age of 18 can't take cash outright from the death of someone; it has to be managed by someone that costs money. You can do that in a trust that's set up for the management of that money for those children under the age of 18 is already handled and it automatically goes into effect. And then what you can do is say, "Oh, I don't want that kid graduating from high school to get $10,000. They're going to blow it right away." Well, you don't have to give it to them at that age. Money can be released for health, education, welfare. Maybe you want to wait so they are 35 or 30 any combination of those or above before they could have a lump sum cash gift. That's one of the reasons to create a trust, is because you're addressing that generational passing of what you own converted to cash moving to them.

But let me say this; anyone over the age of 18 with belongings needs to plan for their estate because even if all you have is a one room studio or less, the laws of the state are still going to apply. It's going to decide to whom your belongings go. It's going to eat up the cost of those belongings, getting them sold and inventoried and accounted for. And does anyone really want that? Wouldn't it be nicer if you took a couple more minutes upfront now to make some decisions and get them put into place so that when you pass and your loved ones are mourning you, they're not trying to figure out all of these complex laws?

It's a really big deal. And you don't need to have a lot for estate planning to be something you need to consider, because it's not just the planning here. When you plan here and now you're planning for what we call estate administration and that's the thing that happens after you die. Like what is probate? What happens? Do we have to go to a courthouse? Really I have to do an inventory. What does that look like? It's every item of clothing. It's the Bible in the drawer. It's the silverware in the drawer. It's all those belongings of yours, plus your account. Does anyone even know where they are? Did you know that all states have a department of unclaimed assets? So for all of us, if someone couldn't find of yours, it ultimately goes to that department. Currently, there's two and a half million dollars in the Virginia Department of Unclaimed Assets. A lot of that has to do with assets people couldn't find on the death of someone else.

Catherine Reese: We try to check that every single year as a business just to see what's going on. And if we see any client names or whatever we can find;

[00:20:00]

Because of the state bank account that people just forget about, that they opened when they were 20 with maybe a few thousand bucks. But 40 years later, it's worth a lot more. But nobody remembers that it was before the marriage. The spouse doesn't even know. So that's an interesting tidbit that everybody should be mindful of that particular department. I understand that elder care can also be a part of the planning. Is there more that you can tell us about that?

Andrea Bryk: Another great question Kate. Elder care planning typically means in the legal field, planning for nursing home care and nursing home care is very expensive. One of the things that happen is if you have a married couple, one is healthy, one is not so healthy, that's the one that needs the nursing home care and together they don't have the assets to afford the nursing home care. The healthy spouse is going to have to live destitute in order to make that happen. So working with an estate planning attorney, we can talk about how to organize assets through trusts and other estate planning tools to keep the healthy spouse in their home and with their assets while being able to afford the nursing home care for the other partner and that might be through Medicaid.

So sometimes you'll hear of elder law or elder care planning also Medicaid planning. At our firm, we do elder care planning, we do veterans benefits. A lot of veterans out there don't understand how many benefits they really have access to because there's a lot of paperwork involved; we are here to help people with that paperwork.

There is another thing that happens with our elders. It's kind of a sad consequence. Say they've actually gone out and prepared a will. They made it 35 years ago. It still includes their child's spouse and that divorce is 10 or 15 years ago and they haven't updated that will and that spouse is still going to inherit from them. So it's a really sad situation when we come to the administration of that estate, the child is the executor of the estate and they are having to now deal with their spouse or their former spouse who is inheriting from their loved parent. It's a really tragic situation and so it's another reason why we encourage people or if you're the child, encourage them to work with their parent to review those documents and make sure that they're saying and going to do, that they are going to control how those belongings are managed. That's the whole thing about estate planning to whom you want, when you want, the way you want.

Catherine Reese: All right, let me see. I'm contemplating what other questions to ask you. What do you feel we haven't covered? We've talked a lot about the benefit of both the will and the trust and how they serve different purposes and I think you've been very clear about the fact that a lot of the documents that you would prepare as a trustee in the estate's attorney are things that can be active and necessary as soon as tomorrow, if not later today. So there's a lot in the package. I think sometimes people don't think of it as being as broad and offering as you have. And then we have, when the divorce is final. We spoke a little bit about that and the adjustments that might need to be made at that time. Anything else you'd like to share on this?

Andrea Bryk: So one item that really causes people to hesitate to come in and plan for their estate is not having anyone in their life that they feel or think could help them out as the agent, as their general power of attorney or medical power of attorney. Who are they going to need? Maybe they're single. Maybe they don't have a lot of friends. Maybe they feel estranged from their family. I would urge potential clients and people out there not to let that be the factor, keeping them from doing estate planning. As attorneys in this field, we have a lot of ideas about who they do have in their life that could take on these roles. Maybe it's an accountant, maybe it's the manager at a shelter or a restaurant where they go to all the time. Maybe it's a niece or a nephew. Instead of looking to your parents, you look down a generation.

[00:25:00]

Maybe it's a spiritual advisor, maybe it's a minister, and maybe it's an aunt. It could be any number of people. We've seen it all over the map. We find that our clients are most comfortable when the first agent, so the next person, the person to be making those decisions first is someone the client knows. A successor agent or sort of a backup, we also have other ideas, right? You can name any number of firms, attorneys, accountants, individuals who can act as backup. We can always change that if the time comes. But we are happy to work with people to identify someone in their life because everyone has someone in their life. But we just have to think outside the box a little bit and we're happy to help people do that.

Catherine Reese: Okay. Well, my one rule I always tell people is pick somebody who's younger than you because you're going into almost 60 here, my executor shouldn't be 75, even if they're my nearest and dearest, just because it seems to make sense to me.

Andrea Bryk: Well that is matter of individual health and comfort, when you're trying to name someone to be your backup for household and financial matters, or maybe identifying someone who would take care of your pet when you go; age sometimes isn't as much of a factor as trustability. Is that person good with money matters? Is that person pretty good with details and will pay the bills on time? When you're dealing with a medical power of attorney, then you might want someone different than you would have picked for your financial and household matters and age could play a role right now with Covid. I think it does. We need someone that we trust.

Catherine Reese: Thats the most important.

Andrea Bryk: Right, thats the most important thing.

Catherine Reese: Well, Andrea, thank you so much for joining us today on Family Matters. It's been a pleasure to have you. I think this information will be useful to people that visit our website at www.reeselawoffice.com and Andrea can be found at the law offices Michelle Wright. What's your phone number there Andrea?

Andrea Bryk: It's 703-917-0804. And I am awbryk@wrightlawstrategies.net.

Catherine Reese: Excellent. Thank you for joining us today. I appreciate it.

Andrea Bryk: Thanks, Kate.