Estate Planning Done Right: How to Avoid Probate, Family Fights & Costly Mistakes | Aubrey Boswell

Speaker A: Well, welcome back to the Wealth Transfer podcast. Today, I'm excited to bring on the estate planning attorney Aubrey Boswell of Boswell pllc, and he has a boutique firm in Dallas serving the entire Texas market with estate planning matters. He, his firm specifically does estate planning, trust and probate only, and they have, I think, seven or eight attorneys. These could be a great conversation on what is happening in the estate planning world and specifically how attorneys can help you with planning for the future. So, Aubrey, tell us a little bit more about how you got into estate planning and became an attorney.

Speaker B: Well, first off, thanks for having me on, Matt. It's great to be here with you and on your show. So I got into estate planning kind of in a, a roundabout way. It wasn't something that I went into law school thinking about getting into. I actually don't have attorneys in my family, and so I came into law school thinking what lawyers do is what they do. Also on tv, they all practice in a courtroom. And if you do wills, you do it as like a general practice. There's no way you're ever going to be able to make a whole practice out of it. So that was my understanding going into law school. And I was in for quite a change of, of, uh, my whole reorientation as to what lawyers do. Most lawyers never set foot in a courtroom. Most of them work on deals. Contracts which involve real estate, oil and gas obviously is big here in Texas and M and A business work. And then there are those also that do practice in the courtroom. And so when I got out of law school, the year was 2009, and the job market was super swell at that time. And I'm, uh, being a little facetious because 2009, we obviously were right off the 2008 crash. And so the job market was pretty grim at that time. But what I did is I actually went to work for an accounting firm straight out of law school. I, my undergrad was in accounting, and so I went to work at an accounting firm. I feel like accounting's always a great degree to have because accounting firms seem to be always hiring. Up economy, down economy. They seem to always be hiring. And so I went to work for an accounting firm and I did that for about a year and a half, learned a lot. It actually helped me get my CPA license in addition to my law degree. And so, uh, it was, it was a big learning lesson, and I'm very grateful for that time. And about a year and a half in, I switched over to a law firm to do actually was Estate planning, probate and small business work. I was more interested in a small business. Death and dying did not sound interesting in the uh, least bit at the time. So I would estate planning was kind of like, yeah, I'll do it, but I'm kind of more interested in the, the small business work. My parents had always wanted to start a small business and I was like, oh, it'd be really cool to know like the legal mechanics around starting a business. And so that's what got me in. But my heart kind of shifted a little bit when I was there and was like, hey, well I'm actually estate ah, planning comes up quite a bit. I was actually seeing some things play out in my family. My grandparents were getting older and I was just like this, this is way more interesting and intriguing than I gave it credit for before. And so this was about you know, very early on in my career, the first couple of years and I was doing estate planning and it started small. And then lo and behold, I'm 17 years in now doing estate planning work and, and it's been, it's been a fun ride. Started my own firm about five years ago. But that's kind of the, the journey and the transition of getting into estate planning for me.

Speaker A: That's, that's a great story. I, I've been working with probate and trust attorneys for about 15 years doing various real estate work. And the more time I spend in estate planning, the more amazed I am by how many different strategies and uh, objectives and like it is one of the most interesting paths of law I think there is. And most of the time I think people just think a uh, will trust when you die, transfer it all in an estate, there's a probate or something. But there's so many other strategies and I am a little bit, I always say I'm a little bit of a tax geek. Both my parents were accountants and so I always think about like well we should be minimizing how much tax we're paying. And so estate planning can really, can, can come from a tax planning angle or even from a uh, just a smooth transfer of, of, of assets or of or of values even. But there's so much that goes into it. What, what are some of the things you guys see on a day to day basis? Like what, what kinds of documents, what kinds of strategies? What kinds of things do you work on that, that maybe people wouldn't even think about other than just ah, a will?

Speaker B: Yeah, absolutely. So a few things that we work on day to day. Obviously we do kind of your core estate planning, wills, ancillary documents, which for us that just means your medical power of attorney, financial power attorney, those sort of smaller documents that people normally think about. We also are big fans of using revocable trusts at our firm. So that's something we can talk about more as we get into things. But revocable trusts basically allow someone to avoid this probate process that may be at the end of their life that their family members would have to go through after the person had passed away. And so, so a lot of times we're drafting the will, the ancillaries and a revocable trust, we're doing those things and we refer to that generally as a person's core estate plan. And then as you mentioned, we can do things even beyond that, things that are a little bit more sophisticated, that people can add to their estate to, to do certain things. Like we always mention, you know, to clients, your core state plan, asset protection, estate, uh, taxes, those are things we want to hit on and that we will look at for every single client that comes in. And on top of that, we have recently started to look at legacy planning for a client. Legacy planning for us means are your values also going to pass on to your kids vis a vis your estate, uh, plan that you're handing over to them, which controls all your money and all your assets that you're leaving to them? Because for all of my career I've always focused on passing the most money with the least amount of taxes onto the next generation. Those are great objectives, but they leave out, does this uh, actually accomplish the client's values? Whenever they're leaving those to that Gen 2 or Gen 3 and many times they're not, they're completely non existent from the client documents. They don't say anything about, here's what my intentions are when you do receive this money. Or I would like to motivate my kids or my grandkids in a certain fashion to do certain things like start a business, or maybe you want them to go get married, or maybe you want them to go buy a home because you believe in home ownership, you can actually motivate them through your documents. And so this actually led to a larger quest for me about understanding psychological aspects about money. And it's huge. There's a whole world there about receiving money, having money, having wealth. And people that are founders or that generate wealth think about money differently than people that receive it or inherit it. And they're both important to understand those, those ideas and those philosophies and, and psychological underpinnings. Because money can be good for you or it can be bad for you. It can set you up for success or it can set you up for failure, whether you're the founder or whether you're the inheritor. And, and so it's helpful to be mindful as you're leaving money to the next generation. And so we're very thoughtful about that as we're engaging with our clients and having these discussions. It's never to us just a process of, um, hey, let's pull off the shelf this set of documents for you that they could probably, you know, go, go. These days you can generate very sophisticated documents off plugging something into ChatGPT. I would never recommend that you want to work with someone. It's just like, I'm not going to go order, you know, all the parts to assemble a vehicle from Amazon or some, you know, car website and then go try to assemble it myself. That would be nuts. So you want to work with someone that's, that's sophisticated. And so that's what we're doing day to day is we are working with clients to lead them through that process so they have a plan that matches what they're trying to accomplish. Like I said in those areas of core planning, asset, uh, protection, estate planning or estate tax planning. And then also your legacy plan.

Speaker A: That's great. And I do think, I mean we've seen maybe the results of not having legacy planning for 30 or 40 years and we see that where it's failed or where it's failed families and how, huh, that. And then. And you sort of see those that maybe didn't know about legacy planning but still did it. Well, in a way that they transferred those values and, and you see that carrying through the generations. And this psychology of money idea is really interesting to me because I do think the, the way you view money, if you earned it or if you built it or if you grew it, is definitely different than if you received it. Have you, what else have you learned around the psychology of money? For those that are receiving inheritance, is there anything you can do to make it where it's, it's a beneficial receipt or uh, that it doesn't potentially harm the receiver that hasn't built anything?

Speaker B: Yeah, absolutely. There's a ton of things you can do. And obviously your estate plan is not going to be a replacement for things that you've built into your kids or your family members during their lifetime. And sharing what your values are during your lifetime or how you lived your Life. But it can be a great way to, when, when you're gone, to have something that speaks for you. You know, this is, this is so fascinating. I mean, when, you know, somebody loses a parent or loved one, often they wonder, they, they ask themselves, how would they confront this situation? What would they do in this particular situation? There, you know, child's face with the decision, you know, should I buy this house? Should I not buy it? Or should I, you know, invest money here? Should I do this? You know, it is, it is so. I think it, uh, can be so incredibly helpful for a child or any loved one to receive an estate plan and say, I actually have some direction here. I actually have, you know, this is what was near and dear to my dad's heart, to my mom's heart, to this family member's heart that's. That I'm receiving it from. And it can kind of spur them into certain action. You know, it's always kind of learning the context of maybe how that money was generated or how the founder or the wealth generator wanted that money to be used. It's amazing that that can be that, that those receiving it can actually receive that guidance as well and incorporate that into how they're, how they're using it themselves. And we've seen it over and over again that you can transfer those values. Values are transferable to the next generation. And the psychology. I mean, here's, here's an example. You know, we have in this country depression. And, you know, it's, it's a huge epidemic. Tons of people struggle with depression. Now think of it. If you have a child or grandchild that's suffering with that and you leave them some money, is that money going to help them or hurt them? Now, most money on the surface can be neutral, but when you receive it, the things that you do with it could help you or hurt you. And I think, you know, trying to make sure that you're using money or that they're using money in a way that benefits them and sets them up for success. We are so keen on that. We are so just locked in on trying to make sure. If you have a family member that's struggling with a mental illness, tell your attorney about it. Tell them, because that can help in the planning. Maybe there's something that we can do in the plan that encourages some type of mental health or just some compassion in that area. And so, you know, and, and, and the list kind of goes on and on. There's tons of things that are going on in people's lives. That you want to be sensitive to as you're crafting these documents. And so, and I think for most of planning history, all lot of that has not been incorporated into planning. It's not even been looked at or on the table. It's just, hey, I need to, you know, divide up my estate a third, a third, a third between the kids. And that's the end of the, of the question. And so what we try to do is be more thoughtful along those lines.

Speaker A: I love that. Yeah. And we, we always say, we always talk about Gen 2 or Gen 3 and specifically thinking of the people at the estate Plan are Generation 1 and then Gen 2 are the kids and Gen 3 or their, their grandkids. And, and I've seen so many gen 2 and gen 3 people feel indecision around how to spend the money or what to invest it in. They just kind of get frozen in this. I don't know what they would have wanted or I don't know what to do with this or, or sometimes they're completely surprised by it. Right. It's, it's out of the blue, they had no idea. And they've never really learned how to, how to utilize resources. And so now they're, they're kind of like, I, I, I'm not even sure how to do this well. So I, I think that's a great point. And, and I often tell people, if you can, and this is probably similar to what you're doing with legacy planning. You can, if you can not only just make a document, but involve your kids to some degree in the conversation, you're making the decisions. But if you can, let them know, here's what we're planning to do, here's what we expect, here's how we want you to use this money in the future, here's kind of what this looks like, then you will often find that it'll be an easier transfer of those resources. And but one of the things that I find, and I always say it's around 70% if you don't have a good plan or you have a bunch of illiquid assets where the kids have to, or the grandkids have to make decisions together, you're going to get fighting, you're going to get infighting. And so I always ask attorneys, what are the strategies you have to help prevent Gen Gen 2 or Gen 3 fighting after mom or dad are gone or Grandma, grandpa are gone and they've left these resources. But now there's, you know, many decision makers or at least multiple people with an opinion that are potentially gonna ruin relationships for the rest of their lives if. If left to their own devices. How, how do you guys work through that? Or what do, what strategies do you give your clients?

Speaker B: Great question. And I think that is the million dollar question, both figuratively and non figuratively because people will spend so much money, inordinate amounts of money on legal fees after mom and dad are gone. Fighting over, you know, sometimes it's, it's just, sometimes it's small stuff and sometimes it's big stuff. And so I think any attorney that you're working with needs to be mindful of if at least have that on the horizon. Could you being asking questions. What's the relationship like between the kids? What's the relationship, the dynamics like in the family? Is there transparency around the wealth or money that you have that you're leaving behind them? Uh, and you also have to consider what is the cause of a lot of these frustration points or fighting points within the family. And there's a variety of reasons. I mean, I can list off several reasons that we see day in and day out, and some of those center around, well, mom or dad took care of brother or sister during mom or dad's lifetime, made them loans, and that should be taken out of their share whenever they're gone. Whenever mom and dad is gone. We see this over and over again. And here's, here's what I say about this is if you're going to leave mom or son or daughter money and it's not intended to be, or it is intended to be part of their share, meaning they have an obligation either to pay you back or it's going to come out of their share. You should document this, have a written documentation, and I would suggest to be a loan, a loan agreement between you and son or daughter that documents the amount when it's due and the interest rate, those three terms. Now obviously loan documents can, can incorporate a lot more, especially if you're loaning for a house and you want to take a security interest in the house. But here's the thing, when mom or dad is gone, brother, sister is watching that and they know, even though you may not think they know, they know that sister, brother got some money and they may not know how much it is. And this can immediately cause frustration because there may not be full transparency around it or why it was done or how it was done, or whether any of it was paid back. Document, document, document. Because that will help save some of the fighting and frustration. It's very tempting in a Family situation to not document, to do things informally. How many parents want to interact with their child with a loan document that both of them are sitting at the table having to sign and mom or dad had an attorney draw up? Not many of them, but do it because it will save this fighting situation from occurring later. That could happen and will likely happen. So that's one of them is the loaning money to one of the kids that's not on equal terms as one of the other kids. Another situation is who's in control of your estate when you're gone. Usually that person is designated as the executor or the trustee. Now, here's what I see a lot of parents do is they will name. They have multiple kids. They'll. They're tempted to name all of them as co trustees or co executors. I understand why they want to do it, but is that setting the kids up for success or failure? I think it's setting them up for a lot of people, a lot of cooks in the same kitchen that aren't going to be able to agree on things. And when there's lack of agreement, then comes standstill. And with standstill comes frustration because you're going to have one of the kids saying, look, I actually need my inheritance. I got to pay off some bills that I've got coming due. And the other one's saying, well, I don't need the monies. We could, we can take as long as we want. And then you've got them butting heads. And then one of them says, well, I want to use my own lawyer. This one says, well, I want to use mom and dad's lawyer. And then those lawyers start saying, well, I don't know that they accounted for everything properly. And this one says, well, I don't know that he accounted for everything properly. And it just goes on and on. And now you're just accruing fees and it's not a good situation. So I'm actually a big fan, even though this is a hard call. But name one of the kids to serve as the trustee or, uh, one of the kids to serve as executor and tell them, Tell all the kids. That's an uncomfortable conversation. But what you're doing, if you don't talk to them about it, you're punting that decision for after you're gone. They're gonna have to figure it out and surmise why you did what you did.

Speaker A: Totally. Uh, yeah. I often, I often tell people like I've been in those situations with co executors. And, and I mean, especially if you have, like I said, illiquid assets where you're trying to sell off real estate or you're trying to sell off a family farm or, or something like that, all of a sudden that all the decisions that have to go into that, the, the timeline, the frustrations, the, it all gets exacerbated. And, and I do think too, if you're thinking about selecting an executor, I'm obviously not an attorney. I, I would say pick the person that's the wisest and also the most trustworthy. And I always, I always tell executors, you, you have a fiduciary responsibility to the estate. And so your job is not to try to maximize. In fact, you need to make sure you're maximizing for your siblings, for all the heirs. You need to take care of everyone, not just your own interest. And so pick the trust, the wise one that's trustworthy, that you know, has, that's good at making decisions for the best of everyone. And the other thing that you, you remind me of, especially with the loans, is the more that you can set up the estate, not just with the documents, but even with what assets you're still holding prior to death. So that the, I mean you, there's certain assets that divide very easily, right? Obviously IRAs are uh, divide pretty easily. Delaware statutory trust, real estate, certain REITs divide. So there's, there's things that you can, can invest in that make it easier to split those things. The illiquid stuff is the stuff that tends to be more challenging because then they have to, they have to be, be in a business together or be in a, you know, owning the, the family cabin together or whatever the, you know, the choices are. And we often talk about in real estate, pre inheritance plans. So what are the things? Like if you do want to give a loan to somebody, that's great. Maybe it's not something that's a negative, maybe it's a positive that you're going to start letting them utilize your resources before you're gone. So you get to see them use it in a good way. Maybe it's for a business or for, to buy a home. We see a lot of people in their 20s, 30s and 40s that have never owned a home. But mom and dad have money that they might want to. Maybe they want to be the bank and loan the money for the house or maybe they want to gift the down payment or something. Right? And so let's put a document that's part of the pre inheritance and it's not a negative. Oh, you know, we're, I guess the negative is often like we're helping out so and so, but we're not helping. Maybe you offer that to all of the kids or maybe you give some different opportunities with these extra resources and make a pre inheritance plan where you can let your resources go to use ahead of time that I am an absolute advocate for. Just make a document even now, go to the, I think go to the attorney, have the attorney write it so you don't miss some key terms. But, but even if it's just I, I, we wrote it out and we both signed it with some basic terms at a minimum, the more that you can have it documented, the easier it'll be later when, when there's strife between siblings.

Speaker B: Absolutely.

Speaker A: And I cut you off. But are there any other things you see in these, in these sibling rivalry or sibling frustrations that can be solved ahead of time?

Speaker B: Yeah. No, I think, I think you make some excellent points because, you know, you really are, are dealing with a situation where your kids are trying to navigate these issues after you're gone. And you know, loaning money, you, uh, know, of course, you know, a lot of, a lot of our clients, they're building their estate because they want to be able to take care of their kids. They want to be able to provide for them. They want to be able to make that loan to them so they can buy that house or have their wedding or, you know, they want to treat their kids. You know, it's just that whenever you've got multiple kids that are sitting there and they're wondering, is mom or dad being fair? Are they being equitable? Is there equal treatment? Those things are things that sometimes it's hard to measure those. And the other child doesn't have perfect clarity as to mom or dad's thinking. And they may never have perfect clarity. But if you can sit down with the kids and help them understand it and help them talk about it, or if another kid raises a question, I think it's best to have that conversation with them. And I know this is way off kind of the estate planning path of documents that we're going to prepare for them, but this is, these are things that can help stave off some of that frustration or fighting that may occur later. And you know, one of the things that you mentioned was, you know, another area that comes into play is a child. As parents age, they may invite their kids in to help with them to manage their assets, maybe You've got a child that it comes from a financial background, their financial planner or their CPA or there's something that, that they're in the area that has a professional expertise. And so that parent invites them to be a signer on accounts or invites them to help manage some of their assets. They have to be careful because what could happen after mom or dad is gone is a claim from one of the other siblings could be made that there was self dealing involved because child was cooperating these accounts and, and may have not been properly accounting for or recording ins and outflows of these accounts whenever the child was on them. Those things. Once mom or dad is gone, you've got son or daughter who's on the account and the other one saying you didn't manage it properly. I've seen estates get drained over these accusations and then the son or daughter who was on the account who probably did nothing wrong, I mean they could have, there could be wrongdoing, but the one who didn't do anything wrong, they're left sitting there. Wait a second. I've got to now defend myself against these accusations and allegations. What can help in that situation is one, work with an attorney who's helping you to keep records of all of this to make sure that things are documented properly so that you're not setting them up for a fight that's later going to happen. So I think those are the things and then also providing for in your documents if you, in your trust agreement, if you are wanting son or daughter to help co manage these assets with you put in there, spell out, you know, what your plan is. I am naming them, um, son or daughter to co manage these assets with me. I do waive any claims of self dealing that may, you know, make may arise. I think those were things to think about. Again, not giving legal advice on this, but I think those are things to think about that could help a son or daughter kind of manage friction with a, uh, sibling of theirs later on. The last thing I think a parent wants to see is that their estate, and they wouldn't be around to even see it, is their estate gets spent down because the kids fighting over it and they're using mom or dad's money to pay their attorneys. The attorneys walk away with lots of money, but the kids don't. And so I think that's, I think that's a wonderful point. I'm glad that you raised that.

Speaker A: Yeah, I, I love that idea of, of disclaiming self dealing in the trust documents as well. Cause I I know even in my family it's very common for whether it's Gen 1 or Gen 2, dealing with Gen 3 or Gen 2 to, to want to give gifts to those that are helping. Right? Oh, you've been helping me with this. Oh, you've been doing like. And I, I would tell my grandmother all the time you we gotta put whatever, whatever gifting you wanna do, you just need to make it super documented because it's, it's very easy for it to look like, oh, you are influencing in a way that was pulling, pulling resources from the estate or pulling resources in a way, you know. And so yeah, it's super important to document those things and also to protect gen 2 or gen 3 from self dealing claims. I hadn't even thought of, I'm not an attorney, I didn't think of that. But that's a great, great strategy. Now I want to go back to trusts. You talked about using revocable trusts and obviously in Dallas county where the average probate is six months and uh, can be quite a hassle, revocable trusts are like a gift to your heirs to be able to use your assets and resources because I mean during those months if you don't have letters of testamentary, you're not doing anything with the estate, you're just kind of waiting. Right. If you're in probate and many times the houses and the bank accounts and other things are just kind of sitting. And so what are, what are your strategies or what explain revocable trust and maybe even you know what uh, irrevocable trust is, but what the usage of revocable trusts are. So we can have those definitions.

Speaker B: Yeah, absolutely. And six months is actually the, on a straightforward probate. So if there's any kind of non straightforwardness about the probate, it can extend a lot longer than that. So six months, straightforward probate. So. And I like to tell people the probate these days is not your granddaddy, your grandmom's probate. This, this is, these probates are much longer. When I got out of law school in 2009, I could do a probate in about 30 days. You can't do that anymore. It's about six months like you said. And so I think that's what people need to be aware of. It's one of the main selling reasons of why we do revocable trusts is to avoid probate. And what a revocable trust is, it's like a private contract that you're entering into with yourself that governs Your estate. And so traditionally when people think of estate planning, they think of a will and their state, their ancillary documents, their medical power of attorney, financial power of attorney, physician's directive, those smaller documents. Most people have not heard of a revocable trust. And a will is effective for dispersing your estate after you're gone. But a will has to go through the probate process to have any validity to it. Probate, which is another term for proving, it's a process of proving. This is the validation, last will and testament of the person who passed away. Because there may be multiple wills floating around there, the bank that you go to present that will to doesn't know if this is a valid will or not. So that's why you have to go through this probate process with a court takes about six months to go through, lots of legal fees as well. And so a trust comes in, and a trust is another document that sits alongside your will. You still want a will because let's say you don't fully fund or transfer assets to that trust. The will acts as a backup in your estate plan. But the trust, which is a revocable trust in most estates, is sort of like a container that you can put assets into. And when you initially set it up, that container is empty. There's nothing in it. So your job as the client is to fill up that bucket, that revocable trust, with your assets, whether that be your house, your bank accounts, your brokerage accounts, your investments, other non homestead real estate, uh, your personal effects, your business interests, you want to generally put all of those in that trust. And there's a certain few, uh, assets that I'll mention that you want to exclude generally. But generally all of your assets you want to put in that trust. Because that will, that trust, if set up properly, will allow those assets to avoid probate at your death. The assets that you don't put in that trust will pass under your will and will have to go through that probate process when you die. Now, the exceptions to that generally are IRAs, life insurance, 401ks, annuities. Those usually pass by a beneficiary designation. And so you can set up a beneficiary designation. And we always tell people that beneficiary designation is hugely important. If you named Tom or Becky down the street as your beneficiary, that's going to control, regardless of your estate planning documents, regardless of you naming whoever you named in your documents, if you named someone else in that beneficiary designation, that's Going to control over your documents. So it's hugely important to make sure those align with one another. And so we go through that process with, with our clients to, to work with them. But you know, and a uh, trust is not the only way to, to avoid probate. There are other non probate mechanisms that you can put on assets. Like, you know, you've, you've probably heard of a transfer on death deed for real estate where you can transfer a house or a piece of property automatically through, by virtue of this deed at death. That's uh, a possibility. The one kind of backdrop to that that I often mention with clients is, is you can set it up that way. But let's say the dominoes don't fall the way you think they will. Meaning you survive your kids. Uh, a child predeceases you. Well, if you had in that transfer on death deed, I'm leaving this to my, my child at my death. But they predecease you. Well now you have to remember I gotta go change that deed because this situation happened, which I never thought was gonna happen. And if you have all these different mechanisms set up like a payable on death bank account transfer on death deed, those m, all of those have to individually be updated to account for that situation that occurred versus if you have it all controlled by your trust, all you have to do is update that trust or that trust may already account for situations like that.

Speaker A: That's uh, that's awesome. Yeah, I, I, I, we deal with those sorts of situations and obviously a lot of people use transfer on death deeds. I think they're awesome. Especially if you have a small estate, get the biggest asset out of your estate. If you're, if you only have your home and some brokerage accounts or some bank accounts, move your, make your real estate, uh, transfer on death deed and depending on how much money you have left over at the end, may not even have to go through probate. It might be small.

Speaker B: Right.

Speaker A: But yeah, that's, that's a great strategy. And then you know, obviously irrevocable trusts are usually used for taxable estates. But, but oftentimes people don't know the difference between the two. What is, what's an irrevocable trust?

Speaker B: Yeah, so an irrevocable trust would be something that you would probably set up after you've got that initial revoke trust setup. So most people, you know, if you're coming in and you're saying I want a trust, almost always they're thinking of that first revocable trust which is part of a person's core estate plan. And you always kind of want to get that taken care of, make sure your core state plan is addressed first. Now, once that's addressed, you can move on to other issues for advanced planning. That's where something like an irrevocable trust will come into play. An irrevocable trust, excuse me, is the opposite of a revocable trust. An irrevocable trust is one that by its own terms, it cannot be amended, revoked, or changed, Unlike a revocable trust that can be amended, revoked, or canceled. So an irrevocable trust cannot be changed. Now, often attorneys will build in something into that trust so that there are backdoors to be able to make changes to those trusts using different mechanisms like a trust protector, or there's what's also called decanting that you can decant a trust to a new trust, and there's ins and outs to those. But an irrevocable trust is often used for advanced planning purposes, for things like an irrevocable life insurance trust or asset protection planning purposes, where you want to protect assets. And so you may go create an irrevocable trust for asset protection purposes. Now, Texas actually does not yet have what's called domestic asset protection trust laws. There are lots of other states that, that have laws like that, and here we're big fans of using those in Nevada and South Dakota, and there's a few other states that are considered very good states for those types of trusts. Texas does not yet have asset protection trusts. I hope that we add our name to that list very soon, because I think it would be a great planning tool that we as attorneys in Texas could utilize without having to go to another state to, uh, take advantage of their laws. There's. But with that being the case, you might see an irrevocable trust oftentimes in those situations, usually life insurance. Another situation would be, we refer to them at our firm as legacy gift trusts. Let's say a client comes in and they want to leave their assets to their kids or make a gift to a niece or nephew, but they don't want to wait until their death to leave that gift. They want to make a gift during their lifetime to child one, child two, or a niece or a nephew or someone else. A mechanism or a way that they can do that without directly giving cash to them is to place that money in a trust. And so oftentimes, we'll set that trust up as an irrevocable trust. And at our firm, our nomenclature is to call it a legacy gift trust, but other firms may call it something else. At the end of the day, it's an irrevocable trust gift trust. And there's lots of different features and nuances you can have to those trusts, such as making it what's called a grantor trust for income tax purposes or a non grantor trust for income tax purposes. The key is, is that with it being irrevocable, it removes it out of your estate. The person making the gift, called the donor, that removes it out of their estate, and oftentimes that same person is going to have to file a, a federal gift tax return whenever they make a gift to it, if the gift to that trust exceeds the annual exclusion amount, which this year is $19,000 per, uh, person. So let's say I want to set up a trust for my son and I want to put a hundred thousand dollars into it, But I don't want to, like I said, I don't want to give that money to him outright. I want to put it in the trust and I want to kind of monitor how he's going to use that money. That way I can see and I can gauge and test him. Is he applying some of the values we talked about about money, about investing? Is he being prudent with the money? Is he being judicious with it? You can gauge those things. I often encourage clients, if you can make gifts during your lifetime as opposed to at death, give it away during your lifetime as much as you can, because then you can see it put to use, you can watch the kids put it to use, and you can gauge and see are they using it well or are they not using it well. I love that. Rather than waiting till a time in the future when you're gone and you can't watch it, can't see it be used for good or for bad. And so a, uh, legacy gift trust is a great planning tool for a parent to utilize, or an aunt or uncle to use, or even a grandparent to use to make gifts to their son or daughter, grandchild. And so that's kind of the most situations that you'll see an irrevocable trust compared to a revocable trust.

Speaker A: In the legacy gift trust, like in that specific situation, are those generally for, uh, one individual beneficiary, or are they sometimes for multiple beneficiaries in one trust?

Speaker B: Yeah, great question. So you can actually set it up either way. We generally will set it up as a single beneficiary trust, but you can also set it up as what we call a common trust or a pooled trust, because you have multiple beneficiaries that are all drawing from the same bucket.

Speaker A: Those are.

Speaker B: They used to be more common to set trusts up that way decades ago. These days you mostly see single beneficiary trusts where there's one beneficiary of each trust and mom, dad or grandparent makes gifts to that. That trust for that particular individual.

Speaker A: That's perfect. Now, uh, the other thing I always like to ask our guests is like, what are some of the warnings or the red flags or things that you, that you tell people to avoid or that you've seen people. The m. Mistakes people have made? What are some of the things that you're, you know, maybe even a soapbox where you're like, be careful about this. What are some of the things that you're. That you always warn people of?

Speaker B: Yeah. So one of those topics is similar to what we talked about earlier, which is kind of being keen to whether there could be fights on the horizon between the kids, between the grandkids, among your siblings. Often this, uh, you know, I, whenever I ask my clients about this, they often have a pretty good indication about whether there will be fights later on. They usually have the inside scoop of whether there are dynamics at play that kids are going to fight or not. And if we can address that early on, like I said, if we can preempt that or stave it off in some manner or some way, let's do it. Just sticking in a provision called the no contest clause at the end of your document is not going to do that. In Texas, we actually have a law that says no contest clause. You can have them in your will or your trust, are called forfeiture clauses. But if a claim against your will, contesting your will is made in good faith by the person making that claim, then the forfeiture clause or the no contest clause has no applicability. So basically, there's not a lot of teeth to these, these no contest clauses. And, you know, a lot of, A lot of beneficiaries, if they're being confronted with a no contest clause, they look at it and they largely think, well, what am I risking? You're. If you're leaving me very little under the document. Like, you know, we've had some clients who say, well, I just want to. I'm going to leave them. I'm going to leave them $25,000 in there. They've got a multimillion dollar state. I'm going to leave them $25,000 if they had inherited by inheriting an equal part of your estate.

Speaker A: Ah.

Speaker B: And they would have gotten million or a couple million dollars, and you're leaving them 25,000. There's not a lot that they have to lose if they go and sue, because the upside is they, they come in and they get a couple million dollars if they win. The downside is, well, they might lose $25,000. So there's not a lot if you set it up that way, you're not, you're not really, you know, um, prohibiting fights among your, your beneficiaries.

Speaker A: Since you brought up new contest, I do have a question on that. I, I had a situation I was just curious about. It is, does. No, let's say that somebody is disputing that the executor is acting with impropriety. Is that, is that covered on the no. Under no contest, or is it just if you're disputing the will's validity or the will's specific terms?

Speaker B: Yeah, so it doesn't. A, uh, no contest clause does not cover breach of fiduciary duty or wrongful conduct by an executor or a trustee or malfeasance. It doesn't cover that. All it covers is a strict contest or challenge to the terms that were set up in that, that trust or that will.

Speaker A: That's great. Yeah. I often see, you know, people are frustrated with the way that things are being executed, not necessarily with how the will is set up and, but, uh, then they're afraid of that. The one thing, even if it has no legal teeth, the one thing the no contest clause does, is it causes people to be fearful of, you know, what, what being litigious could create. So it's interesting. So I cut you off.

Speaker B: It was a great point, what you just mentioned. It's a, it's a deterrence tool. I think that's, that's, you know, you know, people will set up outside their house these cameras. They actually sell cameras that are fake cameras. They don't record at all. And they've got them set up outside their house to help deter criminal activity or trespassers. I think a, uh, no contest clause in a lot of ways functions very similar to that. It doesn't have a lot of teeth to it because the way the legislature here has, has modified it. And so it can act as a deterrence tool. I mean, I, I have people that write into us all the time that say, well, I can't really take any action here because there's a no contest clause in mom or dad's will. And then we talk about it and realize that it actually doesn't apply at all. And that's that whole deterrence effect. I think it, it can have some ability to deter fights among the kids in that regard, but all it takes is for, uh, a child or beneficiary to call up an attorney, get advised or educated on it, and then that attorney is probably going to file a lawsuit, you know, if they think that there's, there's actionable conduct there. And so I think that, you know, it can, it can deter, but maybe not wholly and completely. And so I think that's where, as the client, you've really got to sit down and think about how can I have a more robust plan rather than just this cause in there that may not have any ability to deter at all, how can I have a more robust plan to deal with the fights that may occur on the horizon? And so, you know, there, there are lots of things that give rise to that, as I mentioned earlier, is, you know, trying to, trying to weed out some of that in advance and determine as, as the client, as the parent, what, you know, what, what things have occurred that, you know, that, that may give rise to different disputes. After I'm gone, sit down and have a conversation with your kids. May not be a great conversation. You know, some attorneys and some law firms like ourselves are starting to have, uh, conversations that we call family meetings where we'll get together with the family and talk through some of these issues, not in a confrontational manner, but more as a manner to help answer questions ahead of time. I think that can be very helpful to kids because they may have topics or thoughts on their mind, and it may be a good opportunity for mom or dad who, if, let's say this conversation were happening around the coffee table or the dinner table and the lawyer's not there, there may be a question posed, mom or dad, about their estate plan that they really just don't know the answer to. And so it often can be productive to have these conversations with your advisors right there at hand. So if questions come up, they can, they can be addressed and answered right there. Uh, you know, obviously the attorney is going to have to advise everyone, look, I'm here, I represent mom or dad in this setting. But they've, they've asked me to be here to help guide discussions, facilitate answer general questions. The attorney or the advisor doesn't want to get ahead of their client and what's being shipped, shared about the, the estate or what mom or dad is comfortable being shared with the kids. And we have clients like that, that, that are on both sides of the spectrum. Some are saying, I want full disclosure to the kids. And some say, I don't want any disclosure. And I think there's a right balance in the middle, as with most things in life, where you don't necessarily have to disclose every single thing, you know, because it can get to a point where you don't want your kids, like, micromanaging you or looking over your shoulder like, oh, you shouldn't have spent that money on, on this, this weekend. You kind of splurged a little bit. Mom or dad, you're spending my inheritance.

Speaker A: Right. Like you hear people say, and you're like, okay, well, it's still their money.

Speaker B: That's right. That's right. You know, it's okay for mom or dad to splurge and they earn the money. They built it up. And now if it's, if it's a, if someone's taking advantage of them, that's something else. And you, uh, know, obviously a child or grandchild would want to step in to help in those situations. But, but I think there's somewhere in the middle in terms of transparency with the kids and with the family, of trying to open the, the doors of conversation around what values you want to transfer on. And there are often objections that can come up, you know, from our clients that are kind of on the other end of the spectrum that say we don't want to share anything. There are common objections that say, well, we don't want to, we don't want to instill a, one, an entitlement to a certain amount of money. And we don't want to instill an expectation that they're going to get X amount of money when I'm gone. Because again, that can invite micromanaging of the parent or grandparent. Uh, and so, but you can have those conversations in certain ways so that you're, you're explaining that, you know, maybe that, hey, we do have money. You know, it's always surprising that, you know, sometimes we have, we have spouses that have no idea how much is in the bank accounts. Spouses. And, and I'm talking very, very wealthy families that if the, the husband or the spouse that manages, uh, wealth passes away, the surviving spouse has no idea what's there. They know that they're taken care of. They know they take nice vacations. They know the kids went to private school or whatnot, but they don't know how much they're actually worth. They don't know. If my spouse passes away, am I going to be taken care of? Are the bills going to continue to be paid? These are good conversations, not only just to have with your kids, but also your spouse. Make sure they're set up and prepared when you're gone so that they can have those conversations. And not saying that both spouses need to, uh, manage the finances, but I think it could be helpful to the, uh, to both spouses to kind of be on the same page generally about, hey, here's, here's where our money is. If something happens to me. One, I want to make sure you get it all. Not, you know, that it's hiding under a rock somewhere buried in the yard and never gets found. Which we have some interesting cases like that that happens. People do bury money in the yard time to time. Yeah. Maybe in your world with the real estate, like what was the, the episodes of, I think Antique Road show. Sometimes they look through these antiques and then they'd find like, it'd be like an old piano and then they'd lift up the, the top of the piano and then they'd find like a bunch of cash and fur.

Speaker A: Fur coats. Fur coats are notorious for having cash in them. Yeah. Well, I, I love the idea of the family meeting. We, we encourage that as well. We have a framework we use called property decisions and we'll, we'll walk people through. Sometimes you need to make the decisions ahead of time of what you're going to do with. And property can obviously go beyond real estate, all property. But sometimes you make the decisions and m. Sometimes you need to have the com. You need to have the conversation because the plan can be influenced by what the kids will want to do with it. Right. I think many Gen1 founders are shocked when they find out their kids don't want things that they've cherished their entire life. Right. So whether it's a hard asset or whether it's the business or whether it's a family cabin, there's different, different opinions and, and sometimes it's a split opinion. You have three kids and each one wants it differently. And you can build the plan around what, what. Which kid values which thing or doesn't value. And maybe you decide to start selling things off or making things easier to transfer once you know that. So part of the family meeting, I assume part of your, the way that you could do a family meeting is to also uncover what are the values and the priorities that Gen 2 or Gen 3 have that might be able to meld with Gen 1 if they were on the same page and understood what they were hoping to do. Right. But again without the entitlement, without the um, you know that like well when am I going to get my money? When am I go ahead and give it to me now. Right. I heard a story recently of a Gen 2 kind of threatening their parent with you know, you can't see the grandkids unless you give us some extra money. And you're like that's terrible. Like that's, I just can't even imagine. Right. But so obviously there are horror stories. But all that to say, all that to say. I love the idea of the family meeting and getting and converse and having a facilitated conversation where you can huh, bring some, some decisions that you share but also maybe ask some questions of the whole family so that they can talk through conversations that are death and dying is not a fun conversation to have. Most people don't. They do they naturally avoid it. But if you can bring it uh, to bear you, you all will have better lives Both until the Gen 1 passes and then beyond. Right. And so I, I think that's a, I think that honestly you know we think of the documents or the technical aspects of the plan and those things are the, are the deliverable but, but the real value is in the conversation and in the decisions and in the, in the planning. Right. Not just the document but even the decision making of what the plan is going to entail.

Speaker B: Yeah, absolutely. Very, very well said. And uh, you know I think I always, I always think you know and tell clients that you know, they're not putting off death by avoiding the conversation at the will. It's unfortunately it's built into life. But something you, you, you touched on is let's say there is a family cabin or a uh, lake property in the, in the state and mom or dad wants that to be able to pass on to the kids. This question actually comes up a lot and it, and it actually can lead to a lot of fighting because let's say you've got three kids or four kids and one of them wants that property when you're gone. But they want to pay, they don't want to pay an egregious price, they don't want to pay and the other kids don't want them to underpay for it. So I think if that's the scenario and you know as mom or dad or grandparent that you want that property to go to them, either one make it part of their share or allow them to buy it as part of their share. And of course the question becomes what to value it at so that it is valued as part of their share. And so maybe set some strictures or some rules around how to value that, that hey, the kids all have to get, you know, three different opinions of value or you've got to get two appraisals and we'll take the average of the two, maybe come up with something along those lines so that the kids aren't just going to Zillow. One of them going to Zillow finding either an overvalued price or an undervalued price and the other one going to the county appraisal district records, which is the one that wants to buy it and using that value because they know it's the lowest value. And then you've got this like fight and which probably could have been dealt with or handled if mom or dad had just said hey, here, here's what we're going to do. But mom or dad's not going to be there with when they're gone to, to make to to do what they normally do, which is hey son, son, we want y' all to agree I'm making a decision here. They can't do that anymore.

Speaker A: When we, we have multiple situations properties we're selling this year where it probably was the intention of Gen1 that the property would go to so and so like obviously it was used by this person. It seems like that was kind of the intention. It wasn't in documents. So but then the estate might give them the opportunity to buy it and then they can't afford it at today's prices. Right. So it's. And so then the estate's forced to sell a property that probably Gen one could have found a way to, to transfer in a way to, to a specific person without it, you know, being too much of a burden on them financially. And, and uh, so then, then everyone gets the liquid money but maybe they can't, they don't. They no longer own the property that they were enjoying. So yeah, it's definitely. And, and so I tell, I tell people this all the time, get ahead of it. Just have the conversation even to, to plan some of these things out and say like you said, put it on paper, get with an attorney, make an estate plan. There's something else you said that I wanted to. Oh. In some of these, in some of these disputes, can a well written revocable trust help avoid these, these disputes does is that the best path? Like I, I see a lot of Disputes around wills. Do trusts tend to avoid more disputes by being well written?

Speaker B: Yeah, so they certainly can. They, they may also not. It depends on what terms that they put into that trust that will actually govern how well it deals with disputes. The advantage with a trust, as opposed of dealing with those particular scenarios in a trust as opposed to a will, is that uh, it's going to take place outside of a court because the trust, unless somebody's fighting over those terms or how the terms were carried out in that trust, it's usually going to stay outside of court. But you can build in mechanisms and rules on how things will play out to avoid fights. If, if you're all under the will, the will is already in that probate court process. So that would play out generally in a court setting. So a trust kind of has a leg up or an advantage in that regard. Again, someone can still sue for breach of duties or some type of breach of the terms of that, that trust agreement. But generally that trust is going to take place and play outside of court and set. Here's what the terms are. I mean even if it goes before court, if the trust says these are the terms that we're going to follow, the court's not really going to be able to override that unless they were illegal terms, which is extremely rare. And so, you know, if you, if you want to provide in your trust that son or daughter can buy this lakefront property from the estate because I want to give it to them at a discount value because I want to keep it in the family and I want to insure sure that they can do it. I'm going to give them even a family note so they can do it because they may not have the assets to buy it or it's going to completely, you know, drain them. You can provide those terms that hey, uh, we're going to give. If one of this kids buys it, here's a fixed price that they can buy it for and we're going to Give. It'll be 10% or 20% off market of this price. You know, you can go ahead and spell it out clearly. The more clarity the better. If there's ambiguity again, you're going to create more fights over. So don't make it too complex. Just, just kind of state it succinctly and clearly what you want. Be specific. Um, again, work with an attorney to make sure you get it put in place properly. That's, that's the key. Work with, work with your advisors and

Speaker A: going a completely different direction. But another nuanced strategy I'm seeing and I'd love to know if you've heard of this or seen this at all. Uh, people with large ranch land or farmland are taking a portion of it and putting it in conservation easements so they can see that the property stays being utilized for agriculture for, for the indefinite future. Are you familiar at all with that idea or that concept of especially with these large pieces?

Speaker B: Yeah, certainly, because the ag exemption can provide a whole lot of value. I mean it's incredible what it can do to reduce property tax. So can be very of um, interest to and it can also even if the, if there's an ultimate goal of selling the property most buyers want to retain, if there's an ag exemption, they're going to want that ag exemption to continue on to them. So that can be key in, in making sure that's preserved. So you may want to build that into your document.

Speaker A: And then the other question I was going to ask you, do you recommend hiring professionals, professional executors or professional trustees for, for some of these, I, I, I know that many times depending on the size of the state, being an executor is a full time job for a year or two. Are you seeing people choosing to not have a family member do it and maybe hire a um, professional?

Speaker B: Yeah, I think that's probably the newer way to go is to have a non family member do it and actually a professional serve in that role. Because if you think about it, having your son or daughter or spouse uh, serve in that role especially let's even think make it one more step complicated and consider a blended family where you've got a step parent possibly serving or stepchildren in the mix. They're, you know, you're, you're inviting a lot of unease or tension into that situation by having one of them serve in that role. And so not to mention if you've got a decent size estate, well they may have to uh, managing those assets, especially to the standard they're held to as a fiduciary, can be a full time job. You know, think about the work that could have to go into that. Especially if you've got real estate that they've got to manage. Stock portfolio, mineral interests. You uh, know there's a lot that could be involved there. And not every family set up so they have a child that is you know, a financial professional or real estate professional. Many of them you uh, know it, it may be a big selling point to use someone outside the family. And I'm not talking about you know, going to an aunt or uncle. Because the problem there is now every time you get together for the holidays, you know, the conversation now is well, how are you doing in managing the property or how are you doing with the stock portfolio? How's the return coming? It completely changes the family dynamic and not necessarily in a good way. And so you uh, know. And that's where professional can come in. Obviously if you engage professional, you're gonna have to pay a commission and uh, some form of compensation. But I'm m a big fan. Even if you're a family member, compensate your family member. There's tons of wills and trusts that are written that if you're a family member, you get zero compensation. I don't understand the reason for that. You're leaving, you've got three kids, you're leaving a third. A third, A third. And you named one of them as the trustee to carry out the terms of this. But yet they can take no compensation. Their only form of compensation is they get an equal share to their siblings. Well, that doesn't sound very fair for them. And certainly whenever the sibling brings a lawsuit against them, it's. And they're taking, it's an uncompensated role, unthink, thankless role. Now they're defending themselves and they never took any compensation even for that role. So I'm not a big fan of the non compensation route. So even if it's a family member, I think you should compensate them anyways. But a lot of families are going the route of engaging trust companies or a professional independent executor or trustee. You know, I'm not saying every family has to go that way, but in a lot of situations it can, it can provide a lot of value to the family and making sure that things one, you've, you've got someone who's competent to manage those assets after you're gone and two, it keeps someone out of the, out of the family fray so that they're not, you know, not all the conversations now are about settling the estate.

Speaker A: Totally. Is is there anything else that I didn't hit on or that you, that you had in your notes that you want to make sure we, we hear or, or thoughts that you have as we're trying to wrap up. What, what other points that I maybe missed that you think would be valuable for the audience to hear?

Speaker B: Yeah, I think, I think the last thing I would mention, I mean obviously we've talked about a lot of things today that you know, may hit the edges of legal advice. I mean Nothing I'm conveying is legal advice, but the, the key point is, is to work with the right advisors, engage an attorney, treat them as an advisor. That's how we want to view ourselves with all of our clients, is really as an advisor at the table with them and not just someone that's just putting together a product. You can get products from lots of different places. And, and so certainly what we, the most value that we provide is that we've seen a lot of situations, we know how to handle a lot of different situations. And that advice can actually help you put together a well thought out plan. And so work with the right people, engage the right people. And I think that's probably one of the most important things that I would mention.

Speaker A: And how can people find your firm? Where, where online do you exist and how can they follow you?

Speaker B: Yeah, so we are findable online at our website, which is boswellplc.com that's b o s w e l l pllc.com they can also reach us. Our number is 469-518-9299. And so just feel free to reach out to us. We try to have a presence online that's reachable. We'd love to hear from anyone on your viewership and we really appreciate you having us on today.

Speaker A: That's awesome. Thanks, Aubrey. That's it for today's episode of the Wealth Transfer podcast. If you found value in this conversation, would you, would you leave us a review that would be just so honoring to us? We'd appreciate it. And if you know somebody who might need to listen to this because they're thinking about their next chapter, will you send them a link to this podcast or this video, uh, so they can listen more as well? For more episodes and expert insights, be sure to follow and subscribe. That means the most to us. Follow and subscribe. Please, please, please. And when you're ready to take action on your own real estate, real estate plan, or if you need help with wealth transfer planning, we know a number of experts in, in all the different spaces. We'd love to connect you with them. You can reach out to us via direct message or comment. You can email us. Matt Templeton. Real Estate. No dot com. Just Templeton Real Estate. And I'd be happy to connect you with an advisor. Thanks so much.