Family, Financial Independence, Financial Security, Must Have Documents, Podcast, Trust, Will
February 07, 2019
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In this episode, Suze tells a fascinating real-life story about choosing death over life and how your life is really in your owns hands.
Suze Orman here and I obviously caused quite the commotion with last Sunday's podcast because the emails that came in with all of your questions, you all had so many questions about wills, and trusts and why do you need this, and why do you need that? And so all right, I'm going to answer a few of them today. However, I want you to know that if you want to ask a question on the Women & Money podcast, all you have to do is go to firstname.lastname@example.org. And sometimes we will answer them on the air, you never know when I will actually get back to you with an email directly. Or if you want, you can also call 1-877-545-Suze. That's S-U-Z-E or 78931. One more thing. Before I get to these questions and answers is this, can you just do me a favor? Can you go to Apple podcast and can you review the Women & Money show, can you give it a star rating? Whatever it is that you feel it deserves, the more people that review it, the more stars that we get that are good stars, the more women will know about it. And this is a show. This is a show that women really, really need to know about. Because this is a show again that not only helps you financially, but it helps you personally. It helps you emotionally, it helps you psychologically and spiritually to be the smart, strong and secure women that I want each and every one of you to be. Right. Let me get out my paperwork here and read to you some of the questions that I got from the last Sunday's show which was really taking your future in your own hands. Do you have the must have documents? Do you have a will? Do you have a living revocable trust? Do you have an advanced directive and a durable power of attorney for healthcare? Do you even know what those are? If you don't, I suggest that you go back and listen to last week's podcast. But for now, here are the questions that you wanted to know. So Jamie wants to know Suze, why can't I just put my kid's name as a joint tenant with right of survivorship on my home to avoid probate? Why do I need to go through the trouble of creating a living revocable trust? Okay, interesting question. For those of you who don't know, joint tenancy with right of survivorship is when you own a piece of real estate and your name is on that piece of real estate as well as somebody else's. And you take title as joint tenants with right of survivorship, which means when you die it immediately, the title immediately transfers without probate. You don't need a will. You don't need a trust, you don't need anything. It immediately transfers to the other person's name that was on the title with you. So they have the rights of survivorship if something were to happen to you or if something was to happen to them. So that's a way that you can absolutely avoid probate. You absolutely are guaranteed that that home is going to pass to the person you wanted to in two seconds. No big deal at all. So why do I want you to have a living revocable trust leaving this to your child rather than having your child's name on the house as joint tenants with right of survivorship? Let me tell you why. When somebody's name is on a piece of real estate, on the title, that title is public record, which means anybody and everybody will know if they look in the public records that Jamie and her son own a home at X address, they can find out the value of the home. They can find out anything and everything they want. So now you've put your son's name or your daughter's name because all you said is your kid's name. So I don't know are they a woman or a man? What do I know anyway? You put your kid's name on the title, the kid isn't living with you, you're living in this house, you love this house and now your kid is in a car accident where they seriously hurt somebody, maybe they even kill somebody and now the lawyers get involved. How did this accident happen, whose fault was it? And let's just say it was your kid's fault, and now the lawyers start to do some research, and they find out that your kid owns a home. Maybe your kid doesn't have any other money. Maybe the only asset they have is. What? Is your home. And maybe the kid is underinsured or maybe there isn't a lot of money for them to get just from the kid. Guess what? They have the ability to possibly come after your home that you are living in. That's one of the reasons why you don't want to just put your kid's name on this house as joint tenants with right of survivorship. You should keep it in your own name, own it all by yourself, create a living revocable trust held for your benefit while you're alive and your kids benefit after you have died. That is the way, you should do it. You should also do it that way because let's just say you become incapacitated and you need to sell that house, you don't have a will, you don't have a trust. All you have is a house and joint tenancy with right of survivorship, but you haven't died. And now the house needs to be sold. For whatever reason if you have suffered an incapacity, a stroke and illness, who knows. You now don't have the ability to sign the deed, the title. How are you going to sell that house? How is your kid even gonna sell that house for you? A living revocable trust? And I keep repeating this, that has an incapacity clause in it, allows your kid or whoever you assign this to, to be able to sign for you in case there is an incapacity and you can sign for somebody else in case there's an incapacity. But these are things that you really have to look into. All right. Next we have Leslie and she asked, I own a home in joint tenancy with right of survivorship with my ex. And I've already explained to all of you what joint tenancy with right of survivorship is but she still owns it with her ex which obviously means she is divorced. It is still in both our names. Are you crazy Leslie? Anyway, let me just continue reading. All I have is a will and I have left the house to my kids from my first marriage. Why do I need a trust? All right Leslie, I need you to listen to me. You obviously got this home as part of the settlement and when you own a home in joint tenancy with right of survivorship, even if you had a living revocable trust and within the will and within the trust, let's say both of them separate. I don't care. You left it to your kids from a previous marriage and now you die. Will your kids inherit that house that you have? And the answer to that question is no, they will not. And why will they not? Because how you hold title to a home overrides the wishes of a trust and a will. If you still own this home in joint tenancy with right of survivorship, and you listen to me closely now. What will happen is upon your death, it will automatically pass to your ex. And if your exe’s will or trust says that upon his or her death, whoever your spouse is, it is to go to their children, then you have what you have disinherited your children. You have got to take the steps right now, Leslie listen to me. You've got to take the steps right now to get the title out of both of your names. It needs to be just in your name and your name alone. And the best way would be, and when it is in your name alone, you put it in a living revocable trust again held for your benefit while you're alive, your kids benefit after you have died, and therefore, remember a good trust has an incapacity clause in it as well. So that even if you don't die right away or who knows when that's gonna happen and you again become incapacitated or have a stroke, as you get older, your kids can sign for you and therefore you are taking care of you have somebody already set up to pay your bills, write your checks and to take care of your entire finances for you. So that's just something. But I at this point don't even care about a will, I don't even care about a trust for you. I care about you getting this house out of joint tenancy with right of survivorship with your ex. Are you kidding me? Now. This next one I thought was interesting. Why? Because it's from a man. From a man Brian, and Brian writes in and says, my wife of 25 years just had a stroke. Do you see? This is what I'm talking about everybody. Now. I understand that we don't want to talk about getting old, we want we don't want to talk about death and illness and those things, but this is a reality of life you are going to get older. Listen, I'm going off topic here, but that's alright and I've been on the ketogenic diet because everybody you hear is they're losing weight by eating fat and it's working for everybody and they're doing these things and I'm like, okay, I can try it. So now I'm eating meat, which I hadn't eaten in years, I'm now having butter, which I haven't had in years, I've always just used olive oil. Now I'm doing all of these things that I haven't done simply to lose weight. And while it's true I've lost some weight, I go to the doctor the other day for a physical and my cholesterol now is through the roof. I don't mind sharing this with you. My total cholesterol is almost 300. Are you kidding me? It hasn't been that high in forever, forever. And the doctor says to me, Suze Orman don't tell me that you're on the ketogenic diet because Suze, this cholesterol is way too high. You can't have this kind of cholesterol. You can have a stroke, you can have a heart attack, anything can happen to you. So now I'm back doing what I've always done my entire life. But think about it. Just this week, everybody just this week, I've had a good friend, you know who's in her younger sixties, who just had to have, you know, a stent put in. I have another friend in Hong Kong who's aorta had a six inch tear in it and they almost lost him twice on the operating table. Things happen everybody. Things happen. So it is very important that you really get your acts together. All right back to Brian. Brian says, my wife of 25 years just had a stroke and really is incapacitated, I need to sell the house, but I was told I can't since she can't sign. This is again exactly what I'm talking about everybody. If you become incapacitated in any form, you then cannot sign the title to the house. If you can't sign the title to the house, the house can't be sold. So now Brian, what are you going to do? You have to go down to probate court. You're not going to go down. A lawyer will go down and have your wife declared incompetent, and you then will get a conservatorship assigned for her so that you can sign for her since she can't sign for herself. Now let's just say, you're in the state of California. Do you know that in the state of California that's gonna cost you $5,000 to do that? If you simply had had a living revocable trust, again, that had an incapacity clause in it, you could have signed for your wife, your wife could have signed for you in case of an incapacity. And I know a lot of you say your lawyers say to you, you don't need that. All you need is a financial power of attorney. I need you to listen to me again. In most cases, a financial power of attorney, which is a power of attorney that allows you for finances and you dictate which finances you want somebody else to be able to sign for you. That a financial power of attorney in most cases become null and void the day that there is an incapacity. Now I realize that I am repeating a lot of last week's podcast, but I need to repeat this over and over and over again because these are the most important things that you can do to protect your money. And it's not just your money, it's not just your house. It's the misery that your family is going to go through or you're gonna go through. If something happens to you, if something happens to your spouse, if something happens to your kids, if something happens, you have to have that paperwork in place. Not just who's gonna get what if you die. It is not as simple as all you need. It is a will. You need far more than a will. I am telling you this, I am telling you this. I am telling you this and I need you to absolutely believe me. If you go the route of where you're going to have to have a conservatorship assigned to your wife or for your wife, it is possible that in many states, every year after that conservatorship is assigned, you're gonna have to go back down to the court and show the court what you have done with your spouse is half of the money to make sure that you are taking care of him or her. Are you kidding me? When all you had to do was a living revocable trust with an incapacity clause in it? Just saying. All right now, we have Tanya, I like that name. Tanya, she writes, Suze, I live in California and have a living revocable trust. Thank God Tonya, somebody's been listening to me after all these years. But besides that, she says, I now moved to Texas. Do I need to redo it? Listen to me closely. It is a fallacy out there people. It is a fallacy that every time you make a move from California to Texas, Texas to Florida, I don't care where you move. That you have to redo your trust for the state that you are living in. You do not. I used to live in California. My trust is from the state of California. And I would suggest all of you to think about getting a trust from the state of California, but I'll tell you why in a second. So I move from the state of California and I'm now a resident of Florida. Did I need to change my trust? Does Tanya need to change her trust to the state of residency? You do not think about this. You have a corporation and you decide to incorporate in Nevada and then you don't live in Nevada. Well, how is it possible that then you can incorporate in Nevada, but you want to incorporate in Nevada or Delaware or wherever it is because you like the corporate laws of that state. The same is true for a living revocable trust. You can choose which state you want the trust to be governed by. California has the most liberal trust laws of any state out there, that's why Suze Orman loves that her trust is governed by the state of California. Even though I'm a resident of Texas now, just remember if you buy a new piece of real estate in Texas or whatever it is, you have to put that into the trust so you can change what's in your trust. You can redo your trust, but you don't have to change the state that governs your trust. I just saw another one that I like from Judy. Suze. Why do you say that if you have a living revocable trust and you are married not to make the trust the primary beneficiary of your retirement account? Judy. I love this question. Here is what is very important to know. When you have a retirement account. All retirement accounts ask you to name a beneficiary. Your spouse has different rights than anybody else. When it comes to your retirement accounts, your spouse has the legal authority to take over your retirement account as if it was theirs. So they don't have to make distributions right away. They can do everything based on their own age and their own needs. So that is an important distinction between a spouse and other beneficiaries when it comes to a retirement account. If you leave your living revocable trust as a primary beneficiary of a retirement account and you are married, if you die the trust does not have the same rights as the spouse. So now distributions are going to have to start coming out even if your spouse did not want them to. So if you are married and you have a living revocable trust and you have any retirement accounts, your primary beneficiary is always your spouse. Your contingent beneficiary is always your trust. If you are not married, your primary beneficiary on your retirement accounts then is your living revocable trust. You need to know that. All right, one more for you Sissy cause I love that name Sissy. And I love this question by Sissy which she asks, I'm 30. Good somebody young is listening to my show. Anyway I'm 30. I don't own any real estate, just my bank accounts. Why do I need a trust? Well Sissy listen to me. If all you have, honest to God is your bank accounts, you can make every bank account what's known as a pay on death account. A POD account. And you can assign the name of the person that you want to inherit all that money that is in that bank account. If you do that, then upon your death it will pay them, so pay on death. It will bypass probate. It goes directly to them. Great. Perfect. If you have a retirement account, a 401k, a Roth IRA, whatever it may be, and you name a beneficiary, then it too will immediately go directly to that person without having to go to probate regardless of what even if you had a will and had a trust, it would be governed by your named beneficiary. The same is true on your life insurance policy. The only thing is it's not just about a living revocable trust, Sissy. Do you have an advanced directive and durable power of attorney for healthcare? Do you have those things in advance of you getting sick, Sissy? Do you have directions for your doctors to know what to do? Listen to last week's podcast? Because you need to be in control of your future. Do you want to resuscitate if you have a heart attack? Do you not? These are other decisions that you have to make. So it's not just about a will. It's not just about a trust. It's not just about an advanced directive and durable power of attorney for health care. It's about you having all of those documents if you need them. Now, in this particular situation, to see maybe you don't need the trust. Maybe you don't even need a will if you don't have kids because remember you need a will to assign a guardian for your minor children. That is done in a will. But you at least need those others as well. So that's something that's really, really important. Now I can go on and on because there are so many questions here. But I don't like these podcasts to go too long. But for now, here's what I want to leave you with. If you want to be smart, you want to be strong, you want to be secure, you have to get your financial affairs in order. You have got to have the documents today that protect your tomorrows. Now I understand these are things that you may not want. But I promise you, if you get these things, you will be so happy that you did. And if you're not happy, your family will be happy. So these are needs. Needs. Can you just do it, now?
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