Alex Hunt:
Today, I'm here with Bri Holcombe, an attorney with Hunt Law Firm. Thanks for joining me.
Bri Holcombe:
Thank you for having me today.
Alex Hunt:
And so, previously, we did a deeper dive into estate planning, particularly for 18 to 24 year olds. Today, we're going to be taking a little bit of a deeper dive for younger families, a little bit further on in their adulthood, maybe they've just gotten married, they've just gotten a new child, and some of the unique issues that relate to that demographic.
So, just as a reminder, this is for informational purposes. This doesn't create an attorney-client privilege, and it doesn't create an attorney-client relationship. But we're just out here trying to educate and decode and demystify some of the legalese that is prevalent in our work. So Bri, tell us just as an overview, just as a reminder, what is estate planning? What is an estate plan?
Bri Holcombe:
So estate planning is planning for not only your death, but your incapacity. You only die once, so you want to have a plan in place for when that happens, but there can be many instances where you become incapacitated and you need someone to make decisions for you. You can also gain capacitation back. So you want to have plans in place for if either of those things happen, that people are in charge and people are able to step in.
Alex Hunt:
And certainly if you don't have a plan in place, that's where we see, unfortunately, a lot of the calls coming into our office. There's no plan in place. There's family members that are scrambling. They don't know what to do. There's family members that are maybe squabbling over an estate. There's a contested probate process. And the estate planning process, no matter what area, whatever stage of life you're in, is going to be beneficial. From when you're an 18-year-old college student that's going off for the first time, whether you're a young family, you've just gotten married, you've got your first young child, whether you are approaching end of life, it's important to have an estate plan, not just for you and so that your wishes are accomplished, but for who you're leaving behind, for your family.
Bri Holcombe:
You minimize that family disruption and you take that pressure off of your loved ones, who are already grieving your loss, to make those decisions.
Alex Hunt:
So it's the responsible thing to do. A lot of people are intimidated by the process because it involves going to a lawyer, it involves complex terms like statutory durable power of attorney, things that we don't use in everyday ordinary language, and certainly there's a cost associated with it. So let's talk about each of those things. What does it look like from start to finish when you call our office or you email us or you reach out to us on the web? What does the process look like?
Bri Holcombe:
So the first step is just our intake process. So that's getting information about you, learning what size estate you may have, who the players are, and running a conflict check. We just want to make sure that all of our bases are covered and that we're checked and that we can represent you in the estate planning.
After that, we set up the initial consultation. That's when you'd meet with one of our estate planning attorneys to go over in detail, here's what my estate is comprised of, here's my probate property, here's my non-probate property. We walk you through what those things mean. We talk about each document in our estate plan and what those specific documents do, who the players involved in those documents will be. And then we talk about your family and decide who's going to be best for you in those certain situations.
What we do then, once we've got all the information from you, is we prepare drafts of your documents. We send you those drafts by email with a big draft watermark. You look them over and you let us know if you have any questions. We want you to know with 100% certainty what you're signing. There's going to be a lot of legalese, there's going to be a lot of things that you feel overwhelmed by, but that's what we're here for, is to walk you through and guide you through what these documents mean so that you're set up for success later.
Once you approve your drafts, we then bring you back into our office for our signing ceremony. We provide two witnesses, a notary. We try and make it as lighthearted and fun as possible. We sign your documents in the original form, and then we provide you with our estate planning binder that has all of your original documents as well as a USB that you can disseminate copies to.
Alex Hunt:
And I think that's certainly one of the things that sets us apart from places like LegalZoom or the other online aggregators. They're like TurboTax for wills. Is you know that you have the backing of a licensed attorney that is not only making sure that you have the right documents, but is able to explain it to you. You don't get that on LegalZoom.
Bri Holcombe:
No.
Alex Hunt:
You are going to get witnesses provided to you by our firm. You would have to find your own witnesses if you did something online.
Bri Holcombe:
Who are disinterested. And then that can create, "What is that?"
Alex Hunt:
Yeah, is it somebody that has a beneficial interest? And then that can cause issues after you're gone. You're going to have to find your own notary. And there's just nobody if you've got a question, which you should have questions during this process. There's nobody to ask those questions to. And it doesn't have to be something that is extraordinarily expensive or cumbersome or is a three or four month endeavor. It's something that can be accomplished pretty quickly. What does the process timeline look like when somebody comes to our office?
Bri Holcombe:
So when people come to our office, I typically like to have drafts turned around within three business days. So that's from the date that I have all the information from you. I don't think that you should wait for attorneys weeks and weeks to get drafts. This should be a process that moves. You took the step to come into an attorney, and we want to provide you with that service of giving you your documents as soon as we can, but knowing that they're right and that they're done correctly. So it can be a fast process. I've had clients in and out in two weeks. I've had others who really want to get into the nitty-gritty of what this document is and how it plays out once they're gone or once they're incapacitated. And we'll sit there and we will handhold and make sure that you feel comfortable with the information contained in the documents.
Alex Hunt:
So I think it's important to take a deeper dive on younger families, new marriages, new kids. Because I'll be perfectly honest, my wife and I, we didn't have an estate plan. We didn't have wills.
Bri Holcombe:
I thought you were going to say you didn't have a will and I was...
Alex Hunt:
No, no, no, we definitely have a will. And every time that we've added a new member to our family, we've updated the will. And that's a fairly easy process, too. But a lot of young people don't necessarily decide that they need a will until either they get married or, especially, they have a young family, a new child. And so if you just go based off of what you see on TV, the godparents are going to get your kids if you pass away, right?
Bri Holcombe:
That's not how it works.
Alex Hunt:
That's not the way it works in reality. One of the most important documents that a new parent can have is a declaration of who the guardian of their child is going to be in the event of their death or, you don't think about this, in the event of their incapacity. Say, God forbid, there is an accident or something happens and both you and your spouse or the other parent are incapacitated. You want to be the one that's making the decision about who is caring for your child. You don't want a court to be making that decision. You want to be helping make that decision, and a declaration of a guardian of your minor child is the way to make that happen and have your wishes heard, even if you're not able to voice those wishes in the moment.
Bri Holcombe:
Exactly.
Alex Hunt:
So, tell me a little bit about some of the unique aspects of estate planning for people that are part of a young family.
Bri Holcombe:
So I think, one, there's a lot of misconception that, "Oh, if I don't have children yet, that I don't need an estate plan." That's not the case. Most young professionals or younger families have started developing their estate. You may have bank accounts, you've got retirement accounts, you've got a home that you may have purchased. It may be a starter home and not worth millions of dollars, but you've got some property. You've got vehicles. You want to make sure that upon your death, those assets are easily transferable.
Two, one of the things that we have is, you think about when you've passed, who's going to be in charge of your children, who's going to manage their day-to-day care, but also, who's going to manage the estate that you leave them behind? That's something that we also want to take care of for you. And we include in our wills what are called testamentary trust, which is a trust that's created in the will and it's contingent upon certain events happening. You've got a trust that only creates if your children are under a certain age. So if you get this will done when you're a young family and you forget about it, and you pass 40 years later, that trust may not need to be created anymore because your children have grown. But when they're young and when they're little, we want to create something that is a fallback so that there are people in charge of your kids and we've taken care of your children from all aspects.
So we've got our trust, we also have our guardians that are appointed. They can be the same people, they can be different people. Sometimes people say, "I want a younger person to manage my child's day-to-day care, but I maybe want a grandparent to manage the money." These trusts are created for the health, education, and welfare of the children to make sure that they're taken care of in the long run.
Alex Hunt:
Okay. So let's say you do that. Again, knock on wood. God forbid something happens and you name somebody to be the guardian of your child but they have predeceased you, they've passed before you. What do you do in that situation?
Bri Holcombe:
So one of the things that we always talk about is appointing successor agents, appointing people who are the backups in case something happens, especially for young children. You never know. You could name grandparents and siblings and everybody unfortunately experiences an accident together. But we want to catch ourselves from going down the what-if rabbit hole, because you could what-if yourself into a situation that will never happen. But it's good things to think about. If you were to pass without a will, without naming someone as your guardian for your child, then you've got your family fighting over those children. And that's something everybody wants to avoid, is that turmoil. Because again, you're not there, they're grieving you, and they're fighting over these kids.
Alex Hunt:
Yeah. No, that's certainly the last thing that you want. So, in a bad situation, I can think of nothing that would make it worse than is if you do have a sizable estate and you don't have a plan in place or if you don't have a testamentary trust in place, and then say you've got kids, it would be detrimental to them to get your sizable estate as soon as they turn 18. What do you suggest for people that they have an estate, they're fortunate enough to have an estate and they want to make sure that their child doesn't on their 18th birthday just go crazy?
Bri Holcombe:
Well, so you don't have to have your trust end at 18. You can choose your age, which is something that we talk about in our consultation. I always give the example, you don't give a five-year-old $100,000. They'd buy Roblox and go crazy and rack up purchases on Apple.
Alex Hunt:
And you might not want to give an 18-year-old that much either.
Bri Holcombe:
Exactly. Or a 21-year-old. You've got to think about your children. When they're young, it's hard to do because you don't know who they're going to blossom into. But if you've got kids who are maybe 18 to 21 and you say, "I just don't think they're responsible." That trust can last a lot longer. It can go until they're 25, 28, 30, 35, 40. Whatever age you choose, you can do.
Alex Hunt:
So tell me, worst case scenario, if you don't have an estate plan, what happens?
Bri Holcombe:
So if you pass with children, there is a law, the Uniform Transfers to Minors Act, that allows for those assets that would go to a child to be held in trust. In Texas, the highest that it can terminate is 21. But then you're left with that situation, "What if I don't trust my 21-year-old? What if they'd spend all the money on booze?" That's not something that you would want. So it's very important to have the plan in place so that you plan for these situations. But if you do pass without a plan, the court system is the one who determines who's going to be in charge, and who's not only going to be in charge of your children but also their assets.
Alex Hunt:
And I think a lot of young parents that might be watching this or listening to this, they might be less concerned about the finances, more concerned about what's going to happen to my kids. And so that's why it's important just to demystify the myth that the godparents that were there at the christening or whatnot are going to automatically get the kids. There is a court process that would have to ensue to see who's going to get your kids. And it can either play out in the family courts, it can play out in the probate courts, but no matter what, there's going to have to be some sort of process.
Even if it's not contested, there's going to need to be some involvement with the court system, which is an unnecessary stress in an already very difficult time. It brings upon uncertainty about what's going to happen. And the reality is, and I say this as a family lawyer, as somebody who does estate planning, it's an unnecessary cost that you're bringing upon the folks that you're leaving behind to take care of your child.
So, what else? Tell us a little bit about the intestacy rules and how not having an estate plan would affect the other aspects of the family.
Bri Holcombe:
Absolutely. So if you were to pass and you have a spouse, automatically your spouse is going to be the one who inherits. But just because they inherit, doesn't mean that you snap your fingers and boom, they have the house that you own together. Things don't transfer easily like that, especially things with title designations. So you have to go to the court process in order to effectuate those transfers and do it legally. I think there's a lot of misconception again that, "Oh, my spouse died. I get everything." But that may not be the case if you have a blended family. If you've got kids from a prior marriage, it could be 50/50.
You want your wishes to be carried out, and so writing those wishes down are what's important. Too, with the intestate process, somebody has to go to the court and do those things for you. What if the person who's doing it is not someone that you wanted to be in charge? That's why a will is so important in having those wishes laid out.
Alex Hunt:
And that's why it's so important to just have these conversations now. Because if you do have a blended family and you're in maybe your second marriage and you have children with a previous spouse, there's also to consider the fact that if you are paying a child support obligation, that that child support obligation is still going to be owed to the parent, your first spouse. And having those conversations and being able to plan for it is so incredibly important. And these are things that you just don't think of. LegalZoom certainly doesn't prepare you for it. So having those conversations now is just so incredibly important.
Is there anything that you can do to avoid some of these things? You mentioned the house, maybe retirement accounts, insurance policies. How do we get around as much as possible that probate process, try to keep as much of this out of court as possible?
Bri Holcombe:
So the first thing to know is that there's probate and non-probate assets. Probate assets are things that have title designations. That's going to be your home, that's going to be vehicles, and then all of just the general stuff that you have. Non-probate assets are things like life insurance, retirement accounts, bank accounts, especially if they're payable on death or have a joint owner. Those items go directly to the beneficiaries that are set up on those accounts. Those are third-party contracts that you have with those specific financial institutions. And upon death and presentation of a death certificate, the transfer occurs. Meanwhile, the other probate assets have to have a workaround. It's also important to know too, that if for some reason your life insurance didn't have a beneficiary, your probate, it's going to fall into that probate category and act as a catch-all, and then will be dispersed in the manner of which your will says or in the manner of intestacy.
If you want to get around probate, there are certainly things that you can do. One option is a transfer on death deed. That is a document that is filed with the property records which houses the deeds that you have. It's a living document, so it can be revocable at any time. And it basically says, "When I die, my interest in the home is going to go to these individuals or this specific person." And what happens is because it's filed in the property records before the person has passed, all you have to do is take your death certificate down there and show the property records clerk, "This person has passed and now it's mine." And you can retitle that asset then in your name and avoid probate. It's important to know, though, if you've got kids, you're going to work through that probate process.
However, one thing to know is, what if you've got that blended family? Let's say that the mom passes and the dad is still alive. That dad now becomes the sole guardian, even if mom declared, "I want my brother to take care of the children." If they've divorced and they've got a court order naming them as joint managing conservators, dad then takes over and becomes essentially the one with all the exclusive rights to make decisions for those kids. It's important, though, for dad to know in that instance, to go and modify and make sure the court knows, "Now I'm no longer paying child support." Or, "Hey, we can stop her obligation." But you want to make sure that that dad has those rights and those duties to act now that the other parent isn't there.
Alex Hunt:
So tell me, you mentioned the transfer on death deed. I had a client tell me once, they had their first home, they were in their late 20s, and they told me, "It sounds like something older people need, not me." Is it something that you would recommend for younger families, just for older folks?
Bri Holcombe:
It really just depends. If you're going to stay in this home for a year, maybe not. It's not worth the time.
Alex Hunt:
Like it's a starter home?
Bri Holcombe:
Well, and not necessarily a starter home. Because you could be in a starter home for five years, and during five years something could happen. But that's the great thing about it is that it's revocable. So when you get ready to sell your home, you take it back, it goes away. Now, you got to make sure when you buy a new home that you do a new transfer on death deed, but it depends on your situation and what you want. I recommend it mostly for my clients that have children or they have this home that they know they're going to stay in for a while, just to make the process easier.
Alex Hunt:
Okay. So when you're a new parent, sometimes the last thing you're thinking about is doing estate planning. And certainly if there's a lot of cost, it's one of the last things you're thinking about. Holographic wills, tell me about that. Tell me what situation somebody should consider doing that.
Bri Holcombe:
So I really would want to avoid a holographic will for someone who's got a young family. And the reason for that is because you're going to just generally say on a piece of paper what it is that you want. Your wishes are not going to be specific enough, like a will is going to be. And two, there's a lot of key and important language that you want to make sure that is included in that holographic will, that our wills when drafted by an attorney contain. If you don't name a guardian for your child in your will or your holographic will, well then, what was the point of doing that? I typically only recommend holographic wills for people who have no estate or they're a young college student, young professional with no assets.
Alex Hunt:
And just to decode holographic will. It is not a hologram. It's a holographic will. And it's very simply just a handwritten, written on a piece of paper, heck, it could be written on the back of a napkin, and then signed just saying what your wishes are.
Bri Holcombe:
Correct.
Alex Hunt:
It's important, it can't be typewritten. It has to be handwritten, and then you have to actually physically sign it. Don't do anything on the computer. Get a legal pad, write it out, and then save it if you're going to do that.
In the absence of anything else, if it's doing a holographic will versus doing nothing at all, I would suggest doing a holographic will. Because it's definitely better than nothing, right?
Bri Holcombe:
Absolutely. I had a friend who, he just had a baby, and he said, "I don't have time and I don't have money to get an estate plan done. Can I write on the back of a napkin?" And I said, "Put it on a legal pad, but here's what you can do." And maybe it's that you want to have all your kids and then you want to get these things done, but you want something in place that defines your wishes.
Alex Hunt:
And so that's another good question is, "I'm a young family. We've had our first, we got our will done, now we're having our second. Oh my gosh, do I have to do this all over again and pay all the costs?" What do you do?
Bri Holcombe:
In those situations we try and, when we have young families, make sure that we cover those unborn children. We don't want you to just continually come back year after year after year and make amendments. So we want to try and capture the will and look at where you're going to be in a couple of years. So you can do a codicil or you could just come back and redo the will completely. If you decide, "Oh, I don't like my two-year-old right now and I want to disinherit them," and you want to take them out, let's just get a new will and do that. The process can look like whatever you want. Sometimes people want to have a fresh new will rather than an amendment or a codicil that's on the back of it.
Alex Hunt:
And that's all that a codicil is, and it can be as simple as a one or two page document just amending what you've already done so you don't have to do the whole process over again. The cost is not going to be the same as doing everything all over again. I think it's important, though, for people to know if you have one child, and you use our standard language that we use for young families, and you get a will done and then you put it in a drawer and then you have three other kids and then you pass, it isn't necessarily the case that your firstborn is going to get everything. It accounts for the unborn kids and they would still get an equitable portion, right?
Bri Holcombe:
Yeah, they get their share. Absolutely.
Alex Hunt:
Okay. What would a young family need to know or want to know that you think they should hear?
Bri Holcombe:
Yeah. I mean, really, I think the primary focus is your children, making sure that they're taken care of. Two, making sure your estate is taken care of. But three, young families, often like young professionals, they feel invincible. So having those documents for incapacitation is going to be important. Because you never know, one person could get into a car crash, and then you're incapacitated, you need to make decisions, and who's going to do that and who's going to have the ease to do that. So planning for those worst case scenarios. Planning for incapacity is also important, along with planning for death.
Alex Hunt:
And you could just get the documents we talked about, but there are some other documents, that at least that we include in our Simple Estate Planning package. It's very comprehensive. One that we didn't talk about is a HIPAA release. And you should be able to get some medical information without a HIPAA release on your spouse, but man, a HIPAA release is just going to make it so much easier, especially in the world that we're living in. Hospitals have to deal with a lot of laws, a lot of lawyers, a lot of bureaucracy. Having a HIPAA release is going to make sure that you get the information on your loved one should an accident happen. What else is in the full estate planning package? That if a young parent, a young person comes to us, what are they going to get?
Bri Holcombe:
So you're not only going to get a will, you're going to get an appointment of disposition of remains. That's a document that says, "Here's who's going to be in charge of my body when I pass."
Alex Hunt:
Which is the most morbid title of a document that we have.
Bri Holcombe:
I know. And it's one that nobody wants to think about.
Alex Hunt:
But it's necessary.
Bri Holcombe:
Yeah. Well, and it's necessary. I listen to a lot of murder podcasts and there are oftentimes spouses who unfortunately harm their other spouse. And in the podcast that I listen to, when that happens, they go and they turn around and they cremate the body so nobody knows. Their DNA isn't on it, and they get away with murder. Having that appointment of disposition of remains will kind of stop that and allow maybe somebody else to be in charge rather than your spouse. Or say, "Hey, I want to be buried instead of cremated." It's going to contain all of that information.
You've got your appointment of disposition of remains, your declaration of guardian, which is a document that says, "If guardianship," which is a legal lawsuit, "has to be established over me, and my rights have to be taken away because I've become a danger to myself, who's going to be in charge of my person in my estate." We've got our power of attorney or our financial power of attorney that says, "If I can't make decisions for myself financially, who's going to make those decisions for me." I think about that document often. My dad has a credit card that my mom's not on. Well, my mom can't call and get information on that credit card because it's not hers. She'd need that power of attorney to make sure he pays the bill on time.
You've got your medical power of attorney, which is a document that says, "These people can make medical decisions for me." Which goes hand-in-hand with the HIPAA release that says, "These people can have access to my medical records." And then of course, you've got your advanced directive, which is also a morbid one that people don't want to think about, which is, "If I have a terminal or an irreversible condition, do I want to remain on life-sustaining treatment?" Those are hard conversations to have, because spouses have different viewpoints on that. They have different philosophies on whether or not they'd want to remain on treatment, have their estate pay for them to be in some sort of state where they're not communicating, they're not able to express their opinions and their desires.
So we really try and think about, "Long-term, where do you need to be right now? What decisions need to be made?" And for those young people, for those young families, you do need everything.
Alex Hunt:
And that advanced directive, also called a living will. And like you mentioned, just to elaborate on that point, a lot of these are conversations that young families are just, "This is not at the forefront." I mean, they've got little ones, they're changing diapers, they're getting school lunches together. There's a lot of couples that don't have conversations about, "Should something happen to me, what should the funeral process look like? Where do I want to be interred? What do I want the service to look like?"
Bri Holcombe:
How much money are you willing to spend?
Alex Hunt:
Yeah. And those are conversations, even just like, "Who should take care of our kids?" And those are sometimes uncomfortable conversations, but they're necessary conversations, and you shouldn't have to wait until something happens and then you're in the midst of a crisis to have that conversation. Have it now, and make sure that the folks that are going to be the ones affected by that are aware of it and that they're going to have some responsibility. Even for your kids, for a trust, for finances, they need to know what your plans are as well.
Bri Holcombe:
Well, and I'll tell you this too, even if you've got a spouse who's dragging their feet and they don't want to make these decisions, you should go ahead and do it. Make those decisions for your family. Because if something happens to the both of you, at least one of you has got a plan. And so I think that that's important too. If you can't have those conversations with your spouse, then you just go out and you do it.
Alex Hunt:
Yeah. All right. Well, Bri, thanks so much for joining us. Until next time.
Bri Holcombe:
Thank you.