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Mark D. Holmes on the History of Trusts and their modern usefulness –
I talked a couple of weeks earlier about estate plans. Estate plans are really essential for people who have stuff. I don’t know if you understand the history of trusts. I like history, always have. I became a lawyer because I loved history. Trusts started in the Middle Ages when you had Crusaders who were leaving for the Crusades, actually French Crusaders…interesting. But anyway, they had all these people who were Knights and Lords and so-forth, they were going to run off to the Middle East and fight in these wars, right? And the problem was, there was a high chance some of them wouldn’t come back through various means, fall in battle, disease, just get lost, who knows? But what they did is, they wanted to devise some sort of system that would allow all of their stuff to be taken care of in their absence, or ultimately, if they never came back.
So what they did is, they found a person, almost always in those days a guy, that they could trust. And said, “You’re in charge of all of my stuff,” and, basically at that time, also, “All of the animals, and people, and everything else that I control. So take care of them. See you later…or not.” And, at some point if the “or not” occurred, things transferred basically through this rule book that was set up through this person that could be trusted, to make sure all of these things carried on. Because otherwise there would be a complete collapse of the entire country, because you have to imagine in these times everybody said, “Okay, let’s run off to the Middle East.” And everybody goes, “Okay, well who’s going to take care of stuff while you’re gone?” “Well, that’s your deal. Relax, it’s going to all be good.” No, it wasn’t good, because there was absolute mayhem when people weren’t taking care of all of these things. Everything fell apart. So that’s really the whole history behind Trusts.
And when you think about it, that’s pretty much what we need in the modern world, but in a different context. Because we always have to deal with one, what’s going to happen as you get older? We have this huge blessing that people are living a really, really long time. The real curse is that people keep living, even though their brains aren’t working anymore. And at some point, you wake up and you look at Grandma and say, “Grandma, what day is it?” And they go, “Is it D-Day?” It’s like, “No, it’s not D-Day. Okay. We need to help Grandma.” The question is, what do you do to help Grandma when you don’t have anything in place? And that’s usually when the mayhem begins.
Everybody who’s ever had siblings know that you have wonderful siblings that you would trust to death, and you have siblings that, basically as soon as the…I guess the ties that bind are off, they run amuck. Kathy [SP] knows this, and probably some insurance people know this, is that, sometimes people just lose their minds. When someone either is in charge for a long time, and then they’re not, either because they have Alzheimer’s, or dementia, or they die. I’ve actually seen fist fights, in the front yards while someone’s laying dead right in the house. It’s terrible, right? And it’s really avoidable, and that’s why we use the estate plan mechanism.
There are a couple things…we talked briefly about pour-over wills. Pour-over wills are basically part of the trust system. Pour-over wills basically say, “We’re going to just make it clear that all stuff not in the trust, is dumped into the trust. Just make it easier, and why do you want to do that? Because you want to avoid probate in the state of California. If you look on my little handout there’s a reference to the ninth circle. Anybody understand what I mean by the ninth circle? Dante’s Inferno, yeah the ninth circle of hell.
If you don’t have this thing rigged up right in California, it really is the ninth circle of hell. You’re talking as much as one-third, to even as in some cases, one-half of all the assets of the deceased person going into things like costs and fees and, I mean, attorney’s fees. I won’t say that we’re not guilty in this whole enterprise, so if you want to avoid all of that nonsense for you or your loved one, you definitely want to set this thing up.
The other thing is a financial power of attorney. You want to have a financial power of attorney in case Grandma wakes up and says, “Yes, it’s D-Day.” And you realize that Grandma really can’t take care of anything that Grandma used to take care of. And you need to be able to go to the bank, you need to be able to go to utilities, and all these other things that have contractual relationships with this person, and say, “I have a power of attorney, she’s no longer able to do stuff that she needs to do, so I’m stepping in and I’m doing it,” and that helps you do it. It helps you do it quickly and seamlessly, without much fuss, it’s a very valuable tool. Why? Because, otherwise mortgages don’t get paid, utility bills don’t get paid, phone bills don’t get paid, and all of a sudden all the lights go off. All these things happen. Yeah, and believe me, it has a ripple effect, it’s just really…it becomes a disaster, so you need to get that in place.
And then finally we have to talk about health care power of attorney. California, even if you don’t do anything else, you can go online and get a California health care power of attorney. It’s a form. I actually use a modified version of it because it’s so straightforward, and you basically go through and check the boxes, and then sign it and get it notarized, and provide it to your health care providers. And it really does help make decisions for you, because you don’t want to be in a situation where you’re unconscious and you don’t have somebody around who can make that decision for you.
Hospitals frequently try to put something under your nose, or under some loved-one’s nose at an inauspicious time, like when they can’t think straight, and try to get you to make decisions. It’s usually the wrong one, I can just tell you that. It’s usually the wrong one. I’ve had so many people basically sign off and they say, “I want you to do everything possible to prolong my life.” And of course, doctors take that seriously, and believe me, when you see what they can do to prolong your life, it’s amazing. It’s also horrifying. So those are the things you need to sit down with somebody and talk about. And that’s really what I’m here to try to present to you, as to how I practice. My favorite thing to do is to sit down with somebody, have a cup of coffee or some pastry or something, and talk about these things in a rational, friendly manner. Talk about all the options, talk about all the issues.
I dress like this in the office, I don’t like to wear a suit. Most people don’t appreciate it when I wear a suit, they just get uncomfortable. They go, “Gosh, should I have worn a suit? Am I formal enough?” No, no it’s not about you at all, it’s about me. How do I make you feel? I want to make you feel comfortable. Why? Because, you’re going to talk about some really, really tough stuff at some point. Things like, “Well, do I want them to pull the plug? What happens when I die? Do I want to be cremated? Do I want to be buried? Do I want to be shot out of a rocket, like Mark Holmes? I don’t know.” Interesting! You can do that, and I can tell you in detail because it’s in my trust. I’m going to be shot out of a freaking rocket, it’s going to be great.
So, see those are things you really don’t think about, but when you sit down and think about it you go, “Wow, that’s really cool.” And I’ve had more than a couple of clients say, “I’ve got to really look into that, that sounds so awesome.” But there are other things, like for instance, if you have children, loved ones, various sorts like cousins and so forth, you can sit down and make provision for them. And here’s the other…the flipside, or not. That’s the really cool thing.
I have people walk in my office and say, “I’m really worried about so-and-so, because if I pass they’re just going to raise hell. They’re going to intimidate and try to do all this stuff.” And I just go, “Hmm, I think we can fix that.” They go, “How?” And then I tell them. Then they walk out and go, “That is such a load off.” Because that’s exactly what the trust and the estate plan mechanism is for, to avoid that. Those people that you think are really going to do bad things once you’re gone, we can deal with that. And one of the people sometimes appointed to deal with that is a guy like me, I’m friendly, I’m a cuddly kind of guy most of the time. Until I’m your lawyer. Then, I’m not so cuddly. So, that could be dealt with.
Other fun things that we can deal with, is what you really, really want to do through all of your assets and abilities and so forth. I’ve had conversations with clients, and we get down to the final final, and I say, “What is really important to you? What do you want to really make sure is taken care of?” And I’ve had people tell me, “You know what? I’m ashamed to say this, but it’s really about our dog. We’re really worried about our dog.” And I go, “Really?” They go, “Yeah, our kids are fine, they’re going to be fine.” But no, they really said, “If we were in a sinking boat, we’d save the dog.” All right! “We’re going to save the dog!” And so they’ve actually set up a trust for the taking care of the dog, including housing, and people to take care of him, feed him, groom him, all this sort of stuff. And you know what? They feel very good afterwards, because they were really worried about their dog. Some people love their dogs, and their cats and other animals, sometimes more than they love their kids. It’s an odd situation, but there it is.
And you know what? That’s really what the whole process is all about, is getting you to where you want to go and where you want to be, right? And here’s the fun part, once you get it all set up, about every two, three, even five years, you can come in and say, “You know what, I want to make some changes.” And you can do that. And you can do that for the rest of your life, and that’s a really cool thing, too. Because everybody knows, the difference between your life at age 50 and your life at age 80 may be dramatic. And the relationships you have at age 50 and the relationships you have at age 80, they can be dramatically different. And so, you can change all of your documents if you want at some point to adjust for that.
I’ve had people come in when they are in their 80s and they say, “Look, we’ve learned a lot in the last 20 years.” “Okay so tell me what you learned.” “Well, we learned that one of our kids is just absolutely useless at taking care of anything. Actually, should not even have a debit card.” And I go, “Wow.” So we have to set up what they call a “spendthrift trust” to take care of him. And this will astonish you, these people are sometimes 60, 62 years old, and they still cannot take care of themselves. But God love these people, they take care of their kids, even though they’re in their 80s and they realize that once they pass, yeah, these particular people need help, and they’re going to make sure that they get that help, no matter what. And that’s really sweet, I think. But, you see if they had left their trust the way it was when they were at age 60, then that wouldn’t have happened. And if they would have passed, all this money would have gone to this kid, and this kid would have blown it, probably within a month. This is a person that goes to, basically Las Vegas, and blows $10,000 $15,000 at a whack. So you see, these are the things you can accomplish by sitting down and having a little chat with me.
So why do you want to have a chat with me? Well, let’s talk about very important stuff, been doing this a long time. Most people don’t realize, I think Ron eluded to it, most of what I do is not fun. Most of my practice is pretty nasty stuff. So, when I get to do something like this, and other transactional stuff, I think it’s fun, I think it’s creative, I think it’s uplifting. It really makes me feel fulfilled when I can help people. And it’s a real respite from what I do most of the time.
The second thing is, is that it’s not a large part of my practice. Most of the money I make is through litigation, which I don’t like but that’s how you make money. And this is something that I like to develop relationships with, and usually long-term relationships. So I always charge, for these types of services and other services, a flat fee, so you know exactly what it’s going to cost you. And even if it goes a little long on how much we have to work on it doesn’t matter because it’s worth it to me to get that relationship.
And then finally, I’m a person who likes to save everything. I have top of the line technology, where we put everything on a server that’s put on another server, and another server. The best example I can give you is that a guy called me, and he did a trust, about, 15 years ago, and he goes “Do you still have that?” And I emailed it to him within 30 seconds. Why? Because it’s all stored, and we save everything. So, that’s a good reason to come and chat with me, and figure out whether or not I could be of some assistance with your estate plan, and if so, I’d be extremely honored. And I think we’d have a good time, have a lot of fun. Thank you so much.