Overview

In this episode of the Family Legacy Podcast, Michael Rutkowski dives into the next steps after creating an estate plan. From understanding how to securely store and update your documents to ensuring your plan remains effective through life’s changes, this conversation offers practical guidance for safeguarding your legacy. Michael also highlights the importance of trust funding and keeping key stakeholders informed about your estate plan.

Episode Summary

Michael Rutkowski provides a comprehensive guide to managing your estate plan after it’s signed. He explains the importance of maintaining original documents, how often updates are needed, and why triggers like life events or aging powers of attorney should prompt reviews. Michael emphasizes the critical step of properly funding your trust to avoid probate and discusses best practices for sharing your plan with trusted individuals or institutions.

Listeners will gain insights into keeping their estate plan relevant over time and practical advice on how to ensure their assets and wishes are protected. Whether you’re new to estate planning or revisiting an existing plan, this episode equips you with the knowledge to confidently manage your estate plan and prepare for the future.

Transcript

Kerry Guard [00:00:04]:
Welcome back to the show. How's it going? What's new?

Michael Rutkowski [00:00:08]:
Good seeing you, Carrie. How you been?

Kerry Guard [00:00:11]:
Pretty good, pretty good. Geared up for the holidays. I, I know people won't be listening to this until 2025, first week of 2025. But we are here on the brink.

Michael Rutkowski [00:00:22]:
Yeah, it's busy. So busy having kids, the ages that we have, it's so busy.

Kerry Guard [00:00:28]:
What's the Santa situation for you guys? Are you still deep in belief in terms of like this one kid know and the rest don't you kind of gotta keep secret.

Michael Rutkowski [00:00:37]:
Great question. So we got one in limbo. So we've got one that is totally nose and helps us with lots of things. That's our 13 year old, our 11, she's in fifth grade. There's lots of conversations at school right now about if, you know, they want to keep the magic, but like they're hearing whispers of their parents, said it's not real. And then, and so like we're, I think by the end of this year that's over. That game has played. And then my youngest daughter who is nine, third grade, she's like full blown, like Elf on the Shelf Santa, the whole thing.

Michael Rutkowski [00:01:13]:
So, so yeah, my fifth grader, she's helping us with Elf on the Shelf right now. She learned that that's something that parents do. So we'll see. I bet. December 26th, cats out of the bag and it's over for next year.

Kerry Guard [00:01:26]:
My kids are nine. I'm in the same boat. They are full on belief. I was like, when's the shoe going to drop?

Michael Rutkowski [00:01:33]:
Yeah. It's so sad that it happened. It usually happens at school. It's someone you know, someone they talk about it, whatever, but it's fine.

Kerry Guard [00:01:40]:
I'm dreading the day. I'm dreading the day. I mean, we have, we have easy proof of just showing them our Amazon list. But I'm going to, I'm going to keep the dream life. My husband is actually out right now buying an Elf on the shelf because we're worried this might be the last year of the magic. And we've been sort of holding off the Elf on the shelf. But we feel like if we're going to do it, it is now or never.

Michael Rutkowski [00:02:00]:
So now's the time. Now.

Kerry Guard [00:02:03]:
Going in. We're going all in. Awesome. Well, I'm excited for our show today. I have a lot of questions around. Once you have an estate plan, then what? Yeah.

Michael Rutkowski [00:02:14]:
So it's such a good question. It's such a good question. No one ever Talks about that like, you know, we sign some documents and then what happens? Right? Like what, what do I hold on to as the client? You know, like, where are my documents? Just, are they in the cloud? Do I keep a physical copy? So, good question. Maybe I start there with like, you know, you sign documents, you're in the office doing it or virtually or whatever, and then what happens? So I would say most estate planners are going to provide you with a binder of some sort that holds your documents, some, some way to keep them organized. But most times the clients hold the originals and the law firm is going to, you know, keep a digital copy, keep a backup copy in the event that something happens. So usually the client is going to hold the originals. If you do a full estate plan. Will trust powers of attorney.

Michael Rutkowski [00:03:04]:
There was a historical practice of law firms would hold on to wills because wills have to be probated. They would kind of hold on to those so that once someone passes, they have the copy so that they can submit it to the probate court. But if you're doing full blown trust planning, you're going to have all the originals.

Kerry Guard [00:03:19]:
Typically.

Michael Rutkowski [00:03:19]:
Does that make sense?

Kerry Guard [00:03:21]:
It does. And if I remember, you know, I've seen the binders being passed around. I mean, they are no joke in terms of how big they are. Is that pretty standard? Standard?

Michael Rutkowski [00:03:32]:
I would say you're looking at, if you're doing a full plan, you're looking at somewhere on a couple hundred pages. You know, a trust is going to be anywhere between 50 and 100, depending on the complexity and what kind you do. Then you got about 20 pages per other document. So yeah, you might even be upwards of 300 pages. So yeah, I mean, you're looking at a good stack of documents. Being that you have the originals, you're going to, you know, be mindful of where you're keeping this. Our recommendation is typically keep it somewhere safe where someone knows where it's located. So even if it's just the top shelf of your closet, that's absolutely fine.

Michael Rutkowski [00:04:08]:
I kind of recommend against like a safety deposit box at a bank because you never know if an emergency might happen outside of business hours or if it's going to be in a fire waterproof safe. Sometimes clients like to do that. Someone's got to know how to get in the safe. Like what's the, where's the key, what's the combination? So somewhere safe where someone knows where it's located is really important. Does that make sense? So you're gonna have to.

Kerry Guard [00:04:34]:
Yeah, you never know when you're gonna need this thing, unfortunately. In terms of copies, do you make copies? Is there only ever. Is there, is there one to rule them all? What sort of deal?

Michael Rutkowski [00:04:46]:
You know, you have the original that's kind of client driven of how many copies we make. We typically just give the clients the originals plus the PDF electronic versions that they can distribute as they want to. You know, my worry is we don't want a bunch of copies of this thing floating around out there, because as you make changes, you got to remember who's all got copies to give them the changes. So you know that it's the same reason why we only give banks a document called a certificate of trust versus the full trust, because then every time we make a change, we got to provide, you know, the full copy. So that's at the client's discretion as to what copies they're provided. What I'd rather do and prefer is have their kids involved or whoever's important in their life involved in the signing meeting to like go over all of this so that we're all on the same page. I love that stuff. But yeah, as far as copy goes, that's just kind of client preference as far as, you know who's going to have a copy.

Michael Rutkowski [00:05:48]:
And a lot of times just providing the name of the law firm they're working with can be very helpful so that if something happens, you know, they can reach out.

Kerry Guard [00:05:57]:
I think it's good to know what best practice is. So having one original copy and then some copies as a PDF that on a, like a thumb drive that you can hand out I think is great in terms of getting it updated. How often, you know, what's the ideal age of when you do this thing? And then assuming it's like 35, 40 when you're married and have kids. But then how often should you get that updated?

Michael Rutkowski [00:06:21]:
Yeah, you know, lots of pieces to unpack there. But you know, you should, as soon as you become an adult, you really should have something, even if it's just powers of attorney in place. But let's just talk about when do most people do estate planning? It's usually when they start having kids. So when you, when you start having kids, you're like, okay, what are the boxes I need to be checking now that I'm adulting? And one of those things is usually some estate plan that puts in place, you know, who's going to be the parents of my kids in the event that I can't be. That's the guardian. So some legal document that says who's going to be the guardian? And then a lot of times it's just a very simple form of a trust that says, hey, if I pass away early, I want to stagger the distribution and have it be available to, to them for the things that I would have provided had I been alive. That's. And usually that's funded by life insurance because most of us, when we're having kids, we don't have much.

Michael Rutkowski [00:07:16]:
So usually a good life insurance policy, simple trust in place, and then a guardianship appointment of who's going to be the parents of my kids. Does that make sense? So, so that's the, that's the age of when we start doing this. And then you're, you're maybe fifth question in all of that was how often should we update this? And you know, there's some kind of rule of thumb out there that I've heard people say a lot, like every three to five years, have it reviewed. I would say there's no law changes that typically happen within every couple years to require changes more. So we're looking at what has changed in your life that might require a change to your plan. Things like, have you had any more kids? Have you moved? And so more so when we look at an update of a plan, we're doing like a funding check, you know, are your assets all still the same? They were three to five years ago when we originally did the plan. Is everything still funded into the trust so that this is going to work when we get, you know, to that point where we're needing it? Another thing to really consider is financial institutions, hospitals, they really want these powers of attorney to be like no more than five years old. There's no rule that supports that.

Michael Rutkowski [00:08:37]:
There's no law, there's no nothing. It's just internal policies at banks, hospitals, investment places, they all want these financial medical powers of attorney. Just kind of like three to five years old is kind of the golden rule there. So, so as we're meeting with clients and maybe they were talking about some other life changes, if nothing's changed in their powers of attorney, we might just print off new ones with new dates and have them sign them. Does that make sense? Just so that when there's new dates on them, keep them fresh. Yeah, of course, if there's been any updates in the law, we're going to make those quick changes. But for the most part we're just getting those new dates on. It can be super helpful for the family.

Kerry Guard [00:09:18]:
So I'm hearing, just to recap, I'm hearing two things. One is triggers. So if anything major changes in your life, you might want to consider getting this updated. Whether that's more kids, whether that's you're moving, whether that's maybe something happened to one of your powers of attorney, you know, making that immediate change and then on the flip side just having it from a powers attorney standpoint, making sure that that paperwork is within range.

Michael Rutkowski [00:09:45]:
Yeah, I would say a very realistic timeline if we were to walk this through our life. And I've never done this out loud before, but I'll do it with you real quick. And I think this makes a ton of sense. Most people put in place an estate plan when they first have kids. Then from then until the kids become able to be appointed in the documents. So they're 18, 21, 25. Whenever they hit they're mature, they have to be at least 18 but usually they're not mature enough till their mid 20s and beyond. So that's really when we're making our first changes to the plan is when the kids are adults to like let's start looping them into these documents, make them our backup agents, successor trustees, those kinds of things.

Michael Rutkowski [00:10:28]:
But along the way every three to five years it's good to just have a quick check in with, with your estate planning attorney to okay, let's see if we're still properly funded if we change jobs. Is the new, you know, employer managed 401k in there. So like every three to five years it's great to just do like a funding check. But I would say the plan gets started when you have kids. It gets a re its first real update once the, once the kids are 18 or older, once they can be looped in and then we're continuing down that same path of like every three to five years. Let's make sure our assets are still in there. Maybe some subtle changes until you're getting on towards the age of retirement. When that's when people start looking at other kinds of trusts like asset protection trusts so that in the event they need long term care, that's covered.

Michael Rutkowski [00:11:16]:
That seems like a pretty common path forward for most people. Now there's going to be some other changes, you know, a windfall of some wealth, an inheritance from a parent or something could change things where we need to do some tax planning or something like that. But for the most part I think that's a pretty fair assessment is you do the plan when you have kids, you check in on it every three to five years. Your first real update is going to be once your kids are going to be involved in the plan. And then your next real huge update is once you're nearing retirement and we're planning for different things. Never said that out loud before.

Kerry Guard [00:11:55]:
Yeah, no, that makes, that is totally logical. It makes a ton of sense. And I think that really puts in perspective of people of like, you know, don't feel like you have to wait to have this thing until you're, you know, more in that retirement age. It's good to have it now. And then here's what that could look like in terms of keeping it up to date, some of the things that go into it. Is there anything I missed in regards. Regards to what people should know, like once you have this thing, what you should do with it?

Michael Rutkowski [00:12:20]:
Oh yeah. You know, some, some good things are like you're going to want to put it on file with like your nearest hospital. Right. And so as you're having. After you. Okay, so back to we've signed the plan. Now what? As you have doctor's appointments and hospital visits for whatever reason, make sure you're putting your health care power of attorney on file. You typically get asked for it.

Michael Rutkowski [00:12:43]:
That's actually a big triggering event of why people come see us because they've had 30 doctor appointments and every single time they're like, do you have a health care power attorney? Do you have a health care power attorney? Do you have a health care power of attorney? They're like, well, maybe I should probably get one of those.

Kerry Guard [00:12:58]:
I should get this thing.

Michael Rutkowski [00:12:59]:
So typically providing it to your, you know, your primary care doctor puts it in the system or the network of which your primary care is part of and that usually gets it in the hospital system too. But it's great to like, you know, if you're there, provide a copy, put it on your file. That way it's on file. Same thing goes with, you know, for funding, you know, with our law firm, you're going to take the next step and work with us to get all your assets in the trust. But if you weren't working with us, and you're listening to this, either you're going to end up doing the legwork or you can employ my other company, trustfunding.com. that's cool. Love that little plug there. But in, you're going to sign your plan and then you got to get all your assets into the trust.

Michael Rutkowski [00:13:42]:
That is imperative or else none of this is going to work. So you're going to be doing that kind of for the next couple of months.

Kerry Guard [00:13:49]:
That's A huge misstep often, isn't it, where like everybody thinks the estate plan is done, but there's nothing actually in the trust.

Michael Rutkowski [00:13:57]:
Yeah, 90 plus percent of people don't fund their trust properly. It's what most attorneys will do. All the, you know, the fantastic legal work, they'll put it together, great documents for you that say what's going to happen and when you pass and all that. But then they say, okay, now my job is done. Clients, you need to go to all your banks and institutions and fund your trust. Meaning change beneficiary designations, retitle accounts. All depends on what style of trust you have as to like what the next steps are for that.

Kerry Guard [00:14:30]:
Gosh, that sounds daunting. What happens if you don't have anything in the trust? Then it's worthless, it's useless.

Michael Rutkowski [00:14:36]:
It becomes a very expensive will. So it ends up. Everything goes through probate. You can submit the trust as evidence of what your wishes were. A lot of times you have something called a pour over will, which says that if I pass away with assets in my name personally, they go over to the trust, but it takes the probate process to get them into the trust to divide according to the trust plan. So back to what I originally said, it's just a very expensive will.

Kerry Guard [00:15:05]:
Yeah, I think the whole point of this process is to avoid probate at all costs.

Michael Rutkowski [00:15:09]:
So, yeah, it's usually why families are typically calling initially as they want to. You know, they have some personal experience with the probate process and they're like, I never want to do that, so how can I avoid that? And we, you know, do that by setting this all up. But unless you properly fund the trust, it's not gonna work.

Kerry Guard [00:15:26]:
I might be opening a can of worms here into entirely new show. And if that's the case, then, you know, we'll, we'll sprinkle the dust here of breadcrumbs towards the next one. But what if you're on the re. What if you're on the end of something happen to a family member and then you have to take the estate? Like then, then what do you do as the beneficiary with, with it? Like.

Michael Rutkowski [00:15:50]:
Yeah, you just. We're going to do three shows on that we're going to do. Yes.

Kerry Guard [00:15:58]:
Okay, let's lay them out. What are the three shows?

Michael Rutkowski [00:16:00]:
Yeah, so what you're talking about is trust administration. So now, you know, essentially we just talked for the last 20 minutes or so on. You sign the plan. Now what? Now this is the. Okay, I've Passed away. Now what? You know, like the person who. The grand tour, which is just remember a fancy name for who created the trust. When that person passes, there's usually a section in the trust called administration.

Michael Rutkowski [00:16:23]:
After the grantor passes or dies and after the death of the grantor. And so now what do I need to do? And this is all things like consolidating assets and, you know, getting everything into a trust account, looking at the residual distributions, see, you know, when am I able to pay those out? There's a notice to creditors, period. There's a whole thing on trust administration.

Kerry Guard [00:16:46]:
Great. I'm taking notes.

Michael Rutkowski [00:16:48]:
Yeah, it is relatively. Now it is relatively straightforward. There's just a methodical process to do it.

Kerry Guard [00:16:55]:
Yeah.

Michael Rutkowski [00:16:55]:
And it should.

Kerry Guard [00:16:56]:
I think it'll be really helpful for people to know what that is, and I think it would be good, too, to compare it to what happens if you don't have it and what the probate process might look like versus this. We might actually already have a show on that, but I'll go. I'll go. Look, if we don't, we'll make sure you have both.

Michael Rutkowski [00:17:11]:
That would be a good one. Yeah. Because it's important. I mean, you know, most families will have. Their family will have a meeting with us. We'll walk them through what needs to be done. Done. And they can tackle it themselves.

Michael Rutkowski [00:17:23]:
You know, I would say 10% of families hire us, but not because of the complexity of trust administration, but more so because they just don't have the time to do it.

Kerry Guard [00:17:33]:
You know, they just want to. Yeah. There's other matters at hand than admin work. As we know. As we know. I'm so grateful for this conversation, Michael. Thank you for taking me on that journey. And to all of our listeners, we got seven.

Kerry Guard [00:17:44]:
Well, we got two weeks here before we reconnect and the holidays, you know, brewing. What's one thing you are most looking forward to at the end of the year?

Michael Rutkowski [00:17:56]:
Downtime. Just, you know, it's. It's great to have everyone, you know, like, across the board, everyone slows down a little bit, and I'm just really looking forward to that.

Kerry Guard [00:18:09]:
Same. Right there with you. Right there with you. Well, I'm so grateful. Thank you so much. I'll see you next time.

Michael Rutkowski [00:18:15]:
All right, Kerry, Great seeing.