Stephanie McCullough (00:06):

Welcome to Take Back Retirement, the show for women 50 and better, facing a financial future on their own. I’m Stephanie McCullough, and along with my fellow financial planner, Kevin Gaines, we’re going to tackle the myths and mysteries of “Retirement,” so you can make wise decisions toward a sustainable financial future. Through conversations and interviews, you’ll get the information and motivation you need, to move forward with confidence. And we’ll be sure to have some fun along the way. We’re so glad you’re here. Let’s dive in.

(00:39):

Coming to you semi-live from the beautiful Westlakes Office Park in suburban Philadelphia, this is Stephanie McCullough and Kevin Gaines of Sofia Financial and American Financial Management Group. Say hello, Kevin.

Kevin Gaines (00:49):

Hello, Kevin.

Stephanie McCullough (00:50):

In our continuing series on divorce, today we’re talking to an attorney, but perhaps not the type of attorney you might imagine. We’re talking to an estate planning attorney. Our idea with this series was to present different professionals who could/should be part of your team if you’re going through divorce. And estate planning, as you’ll hear, is a really important piece of the puzzle.

(01:13):

So our guest today is Rebecca Sallen. She founded her own law firm in 2011 to do estate planning and estate administration. She serves families and individuals in Pennsylvania and New Jersey. She provides individualized wills and trusts to try to decrease the costs and headaches of estate administration. But what I love about Rebecca most is that she also teaches estate and tax law to other attorneys, accountants and professionals. She’s been published in quite a few legal journals and she’s very active in her local bar association. She really keeps on top of this stuff, which is why we wanted to have her here today. So let’s dive in.

(01:53):

Rebecca Sallen, welcome to Take Back Retirement.

Rebecca Sallen (01:56):

Thank you so much for having me.

Stephanie McCullough (01:58):

So I’m really excited for this conversation because I think it’s not what people expect, right? We’re talking about this whole series about divorce and the various experts that people should probably consult with around divorce. Why would you say that an estate planning attorney is someone that people going through divorce should talk to?

Rebecca Sallen (02:18):

That is such a great question, Stephanie. So there’s many reasons to talk to an estate planner. The first is that the law will do what the law will do in terms of your assets unless you proactively change those flows in terms of beneficiary designations and how things are handled. If you do not talk to someone about that, it will go to your children if you have children, or it’ll go to how the laws of intestacy work. That can be very problematic and it can raise a lot of questions and concerns that could be avoided with a simple conversation.

Stephanie McCullough (02:57):

And what does intestacy mean?

Rebecca Sallen (02:59):

Of course, intestacy is what happens when a person dies without a will.

Stephanie McCullough (03:05):

And it’s important to point out that these rules are all state by state, right?

Rebecca Sallen (03:09):

You’re absolutely right. Yes, a lot of states are similar in terms of how things work, but every state or common law is different.

Stephanie McCullough (03:17):

So one of the things we’ve mentioned before on this series is that a lot of people when they’re in the romance phase and the excitement phase of getting married and they’re picking out flowers and dresses and things from the caterer, they’re not thinking about all the legal ramifications. But marriage is a complicated legal contract. And when it ends, there’s a lot of complicated legal things to untangle.

Rebecca Sallen (03:42):

Oh, absolutely. Absolutely. No one ever goes in thinking that they’re going to get divorced. We all go into it thinking that it’s going to be wonderful. And like you said, you focus on the wedding and you focus on the dress and the flowers and all your friends and family being there to celebrate you, and sometimes unfortunately it doesn’t work out.

Kevin Gaines (04:05):

So what are some of the things that after a divorce becomes final, let’s keep it simple, let’s not worry about it the in-betweens, but after the divorce is done and the client happens to say to you, “Hey, I just got divorced,” what are some of the first things you say?

Rebecca Sallen (04:23):

Well, first I say, “Congratulations, it’s a hard thing to go through. I have done it myself. While it’s, again, no one ever wants to get divorced in the beginning, it is a hard thing to go through and you should be proud of yourself for being able to go through that process.” Then I say, “Well, we need to automatically update certain documents” because when you do get divorced, the law will assume that your then-spouse has pre-deceased you in terms of certain things, so the ability to make healthcare decisions, ability to make certain financial decisions, ability to be an officiant on things.

(05:03):

Now I do have clients who get along with their ex-spouse and they say, “Look, we have a kid together. We didn’t work out, but we’re on the same page. I trust this person to make good decisions for me.” Well, if we don’t update those documents, then the document that was valid prior to divorce being finalized is no longer valid, so that’s an automatic thing.

Stephanie McCullough (05:27):

So you’re talking like my healthcare power of attorney, right? If I get bonked on the head, can’t make medical decisions I want, in some scenarios, I trust my ex-spouse to be making those decisions for me, but unless the document’s updated post-divorce, the court assumes that it’s no longer your intention?

Rebecca Sallen (05:45):

Yes. So the healthcare stuff as well as the life insurance, I’ve had cases where people say, “I’m going to maintain a policy on my ex-spouse. I’m going to be the beneficiary because minors cannot inherit property.” So it happens, the person passes away, they say, “Okay, well I’m going to get it.” Well, the company says, “No, it was not redone after the divorce.” And then it ended up going actually to the decedent’s sister.

Stephanie McCullough (06:15):

Oh, my gosh.

Rebecca Sallen (06:17):

Oh, it was definitely not what anyone wanted. But that’s a perfect example of things that you never would think of that need to be addressed.

Stephanie McCullough (06:28):

So redo all your documents, such as?

Rebecca Sallen (06:31):

Yeah, so you have your healthcare, powers of attorney, living will, all of those things, financial power of attorney. I really recommend, especially for people who are going through the divorce process or who have finalized their documents, that they need to have a trust if they have children.

Stephanie McCullough (06:50):

Talk about that.

Rebecca Sallen (06:50):

Yeah. So that is really important because if you have a minor child and you pass away, most times the other parent will be what’s called the guardian of the person. They’re going to be able to take care of that person because they are the natural guardian, they’re the other parent. Then there is that issue of who gets the money, who’s going to be managing the money for the child. That’s called the guardian of the estate.

(07:21):

So if there’s nothing set up, one, you’re going to have to be relying on the court. So you have to petition the court, spend money at doing that to say who should do it. Now, who should be managing the finances can be a really sensitive issue, especially for people who are no longer together. Even for children who are not minors, they may be under the influence of the other parent, which can be a very tricky thing.

(07:51):

I also really like a trust because you can say that, “This is what I want my money to be used.” For example, when you have minor children, you’re going to want them to not just have their daily living expenses which you would hope the other parent would provide, but the trust can provide for maybe vacations and trips to your side of the family to do summer camps, things that you would’ve done if you were alive, and it has to do it that way. And then also when the child gets older, you can specify how the money is used.

(08:25):

Now, one of the things that even my married clients say is that, “I want the money to be used for things like education or setting up their own business, but I don’t want the mind to be used for a wedding,” which is a big one to say that, “If they want to have a really fancy fairytale wedding, go for it. They can use their own money. What I worked for is not going to be used for those purposes.”

(08:52):

One of the great things about trust also is that once you pass away, it becomes irrevocable. Meaning that the money that’s in trust is not owned by the child. They have access to it as a beneficiary, but it’s not owned by them. So if the child gets married and then divorced, as long as it’s in trust, it’s not part of a property settlement agreement, which is a really great thing to do to give that sense of security.

Stephanie McCullough (09:21):

So it’s not just if you have minor children, right? This could be even if they’re nearing the age of majority or beyond.

Rebecca Sallen (09:27):

Yeah, absolutely.

Kevin Gaines (09:30):

Well, and plus there’s also the other simple reason you might want to use a trust is, do you really want your 21-year-old getting $500,000 dropped into his lap? I actually had this conversation with a client that we were setting up the beneficiaries and doing certain elections and simple question is, “I don’t want my grandkids to get this money even at 21 without some sort of guardrails in place.”

Stephanie McCullough (09:57):

Do you mean when you were 21, Kevin, you weren’t that responsible with money?

Kevin Gaines (10:01):

I was, but as we’ve established, I’m an outlier on so many different levels.

Rebecca Sallen (10:06):

He’s heard stories of other people.

Stephanie McCullough (10:09):

Right. Right.

Kevin Gaines (10:09):

Yeah. I’m just asking for a friend.

Rebecca Sallen (10:12):

Exactly. But that is a really important thing. One of the things that I like to ask my clients is that if your child gets married, do you want to say that if you want to be a beneficiary of the trust, that they should have a prenuptial agreement to always protect the money, and that way the child always has first a safety net to fall back on and things get tough. But also to say, “This was set up in place before you met your future spouse. So it has nothing to do with how we feel about them whatsoever. We’re doing it because we worked really hard and we want to make sure that the people who are benefiting from it are people who are our children, grandchildren and so on down the line.”

Stephanie McCullough (10:59):

I hear so many attorneys talking about the wisdom of a prenup, and yet very few people in the throes of love getting married want to do a prenup. So that’s an interesting way. If the trust specifies that you must get a prenup, then you can say, “Hey, spouse, to be, It’s not my fault. I trust you, of course. It’s in the trust.”

Rebecca Sallen (11:20):

Oh, absolutely. To go on from that, one of the things that I talked to some of my clients about, they say, “Well, what if I get remarried? I want to make sure that the money is going to be for my kids. I don’t want to have any undue influence or pressure.” And to have things in there to say, “Well, if I become married, what happens? Am I still the trustee? Am I not the trustee? Is a prenup a valid reason to go around that? What type of access am I going to have to that?” And that kind of… You’re having the conversation ahead of time and it takes it off the table, which is very, very powerful.

Rebecca Sallen (12:01):

And I always say that a prenup is a floor, it’s not a ceiling.

Stephanie McCullough (12:07):

Ooh, what does that mean?

Rebecca Sallen (12:08):

So meaning that you can say in the prenup, “I’m only going to give you X if we get divorced.” But you have a good relationship with the person or you forget to do these things, you can either agree or sometimes you get kind of, I say voluntold to give your spouse more, but it does at least create some type of protections. And as long as you do treat the trust the way it is intended, that there are those protections within it.

Stephanie McCullough (12:43):

So one of the things I’ve been hearing about a lot lately, and partly because I’ve been impaneled on a federal grand jury that happens to be a fraud grand jury, so I’ve been here about lots of fraud and scams lately, and also recently heard a high exec from Fidelity talking about scams and fraud that happen when people have cognitive decline or even just older, maybe lonely adults. Are there ways to think about your own longevity and protect yourself in this type of way as well?

Rebecca Sallen (13:13):

Oh, I love this. That is so good. No, that is so good because a lot of times people think about, “Well, when I die.” Well, sometimes when you die, that’s like the easy part, but-

Stephanie McCullough (13:25):

Clear cut.

Rebecca Sallen (13:25):

Yeah. But disability can be, one, take a long time in terms of the beginning to your eventual end, but there’s all these shades of gray especially when we’re talking about things like Alzheimer’s and dementia, and they’re just on the rise. If you do not have certain documents in place, what ends up happening is someone on your behalf has to file for a guardianship saying they’re not able to act for themselves. They have to get a medical expert report. You have to pay for the lawyers, you have to pay for the fees, you have to go through the dodges. The people go through all of this stuff. Meanwhile, the person’s still going to be able to have access to their money. So maybe they’re sending money to those nice Nigerian princess who-

Stephanie McCullough (14:17):

Exactly.

Rebecca Sallen (14:18):

… are doing things. And that can be very problematic. So one of the things that I like to do in my trust is to create what’s called a disability panel. So with the disability panel, you get to choose people who know you. So maybe it is your siblings, a parent, a friend, a coworker who knows you, who says that, “Rebecca’s just not acting like herself. Maybe it may not meet the court definition of disabled, which is a very, very high bar because of how strict the outcomes are, but she really just should not be doing this right now. She should not be writing her own checks.”

(15:05):

So the disability panel is able to remove the grantor as the trustee, and then whoever is named as the successor trustee is able to come in to, again, take care of the grantor, take care of the dependents that they have, and then you can actually say what you want to have those standards, like, “I want to make sure that I’m able to stay at home as long as possible. I want to make sure that certain expenses are always paid.” And the trustee has a fiduciary responsibility to make sure that those things happen as opposed to a fiduciary responsibility under a power of attorney, which is just reasonable. Is it reasonable to spend this money on this thing? Right?

(15:52):

And for a guardianship, it’s still reasonable but you have to pay for not only the hearing, but you have to do these reports every year to say, “This is what’s going on with the court.” And the court only allows access to a certain amount of the income and not the principal and then you have to ask permission for certain things. It really ties your hands, and this money that was really supposed to be used for you and for your care is not going to be used that way.

Stephanie McCullough (16:19):

So you can avoid guardianship by having these things set up at a time?

Rebecca Sallen (16:23):

Absolutely.

Stephanie McCullough (16:24):

And to be clear, all people should have these documents. We’re just using divorce kind of as the stepping-off point for saying, “Hey, update your documents and re-look at them.”

Rebecca Sallen (16:34):

Oh, absolutely. I have a client now who’s 48 years old, had a stroke out of nowhere and she’s disabled. Disability, the great thing about also the disability panel is that we can talk about short-term disability versus long-term disability. Maybe something happened in the short term and we expect a full recovery. But in the interim, you should not be making decisions. When you go through a guardianship proceeding, you really want it to be long-term because of the expense, the time, and then you have to reapply and then say, “Okay, we need to remove this guardianship,” which is another hearing, which is time and money that could have been used for your care.

Stephanie McCullough (17:15):

Well, didn’t we all hear a lot about guardianship with Britney Spears, right? That’s what she was under. That was so strict and limiting and it was really hard to undo it.

Rebecca Sallen (17:23):

Oh yeah, absolutely.

Kevin Gaines (17:26):

Speaking of death, both of the marriage and of the miserable SOB, what happens if said miserable SOB kicks in the middle of the divorce? Things aren’t separated, things aren’t finalized, but things are trying to be unsevered. Are there any complications? Are there any steps that should have been taken ahead of time once you decide, “Okay, we’re going to separate, but is there anything that needs to be done in case?”

Rebecca Sallen (17:59):

In case. I’m sure people wish they were only so lucky, right?

Kevin Gaines (18:06):

Yes, we’re talking about death natural or otherwise.

Rebecca Sallen (18:12):

So as long as the grounds for divorce have been established, meaning that they have been separated for 90 days or certain things have been filed, you are able to go through the property settlement even if the other person is not with us anymore. So the executor is able to divide the assets. But I think that it is really important to realize that it is not a clear-cut thing of, “We’re intending to get divorced,” three months go by. Now it happens. Divorce can take a long, long time, especially to untie things and if you have business interests and other things where things are just prolonged and stretched out.

Kevin Gaines (19:03):

So basically that’s just one more way to just make this thing a royal mess. This is what we’re hearing, right? It’s just…

Rebecca Sallen (19:13):

Do you know what? I think the most important thing that I realized in going through my own divorce is that it is so important to have a team around you.

Stephanie McCullough (19:23):

Say more about that.

Rebecca Sallen (19:24):

That it is really important to you as the person to focus on yourself, to focus on if you have children, but to put yourself in a place that’s a good place. And that’s why people hire attorneys to do the legal aspect, where they need financial advisors to help make sure that their financial picture is in order so that they’re going to be able to have a certain lifestyle, to have an attorney to go through all these things. And by relying on this community of support, you are going to be taken care of in a very holistic manner. You don’t have to do everything yourself. I think it takes a certain amount of humility to realize that.

(20:02):

The people that I’ve seen be the most successful, not just financially, but also the emotional help going through divorce, realize that I have a team of support around me that, “When I don’t know what to do, they’re going to guide me. And whenever I question myself, they’re going to be the ones who are reinforcing, ‘This is why we’re doing it. This is what the goals are and these are the steps we have to take’.”

Stephanie McCullough (20:26):

Right. And we even talked to a divorce coach earlier in the series, and she even plays a similar role. Someone, she said, called her a doula of divorce, right?

Rebecca Sallen (20:35):

I love that.

Stephanie McCullough (20:36):

Right. You come up with your plan, you know how to pivot if the plan doesn’t go the way you wanted, but someone to kind of help you stay on track and deal with that part. I think a therapist can be very helpful oftentimes too.

Rebecca Sallen (20:54):

Absolutely. Absolutely. I love that. I love the divorce doula. I’ve never heard of that. Great.

Kevin Gaines (20:58):

But now you’re not going to forget it.

Rebecca Sallen (20:58):

Never.

Stephanie McCullough (21:04):

So talk to us a little bit about the difference between family court and Orphans’ court and why that matters.

Rebecca Sallen (21:12):

Oh my gosh, great question. So family court, which is where you would file the divorce papers, where you would have custody for the children determined under which you would maybe even have spousal support and child support determined is what’s called a court of equity. Meaning it sounds fair. “It sounds fair that this should happen. This person made more money than that person. Yeah, there is a formula, but that’s kind of like a rough guideline.” So they do what they think would be equal to make the parties equal.

Stephanie McCullough (21:49):

So there’s some discretion involved?

Rebecca Sallen (21:51):

There’s a lot of discretion involved.

Stephanie McCullough (21:52):

Okay.

Rebecca Sallen (21:52):

A lot, yeah. Orphans’ court is a division of civil court and we have rules. We have laws. We have, “This is what has to happen. You have to follow the bouncing ball. If you don’t follow the bouncing ball, then you can’t get to the end of the song.”

(22:12):

So why this becomes so important is that my clients who want to make sure that their money is going to be used for their children when they pass, we set up these trusts and they will be governed under orphaned court rules. So if we name someone as the trustee and then the other parent comes and says, “But I’m the parent and I take care of that person. I should be the trustee. I should be the one who has access to this money, or I should be a partial beneficiary because I’m doing these things,” Orphans’ court says, “That’s not how the rules work. I don’t care if it sounds fair. This is what has to happen. This was the testator’s intent and the trust must be followed.”

(23:07):

That can be very powerful for people who’ve gone through the court system and realize how scary it is to have the judge just have total discretion and say, “But we had this document, she signed it. We were supposed to have this happen.” And they said, “Yeah, but you didn’t do this so we’re going to kind of undermine that document and still distribute the assets this way.” Orphans’ court does not do that.

Stephanie McCullough (23:38):

And to be clear, Orphans’ court covers trusts or what falls under Orphans’ court jurisdictions?

Rebecca Sallen (23:45):

It’s a horrible name. So it covers minors, it covers estates, and trusts.

Stephanie McCullough (23:49):

Uh-huh. Got it. So a lot of your world?

Rebecca Sallen (23:53):

That is my world. But I always think that my job is to stay out of court. Our job is to make sure that my clients never have to go to court because we’ve thought about everything and the trust is so crystal clear as to what has to happen in every situation. I often joke that my trusts are a very interesting create-your-own adventure. Do you remember those stories?

Stephanie McCullough (24:19):

Yes.

Rebecca Sallen (24:22):

That was my favorite genre.

Stephanie McCullough (24:23):

Turn to page 17.

Rebecca Sallen (24:26):

Exactly. Exactly. If the beneficiary becomes part of a litigation, what happens? Yeah.

Kevin Gaines (24:34):

So since we’re talking about these weird one-offs that you need to account for, what else have you seen in divorces specifically, but in general that makes you say, “Yeah, it sounds like a nuisance, but you really want to do this. Otherwise, boom, it all blows up, puts you on the spot”?

Rebecca Sallen (24:57):

Gosh, what have I seen going through both my clients through their divorce process? I think that one of the things that I’ve noticed the most is that depending on the type of assets, assets flow differently depending on what type they are. And to really take into account all of those things, you before mentioned like 401(k)s and there’s life insurance policies and maybe there’s the marital home, what happens with that, to determine, “Well, this is the only home that the child’s lived in, so what would happen if I die? Could someone else come in here to make sure that the child can finish the year in school, for example? So it’s not as traumatic.”

(25:43):

One of my clients did and I said, “Oh, that’s brilliant, I’m going to talk to everyone about that,” is to mandate therapy as part of the trust. When the trust distribution is that if certain things happen that we want the trustee to be proactive and to say, “This is a really big thing you’ve gone through. Here’s money for the divorce” and not wait for the beneficiary to come to them.

Stephanie McCullough (26:09):

To ask for mental health support?

Rebecca Sallen (26:12):

Yeah, which I think that that’s very powerful.

Stephanie McCullough (26:15):

Mm-hmm.

Kevin Gaines (26:16):

No, that’s interesting.

Rebecca Sallen (26:17):

Yeah. Like I said, the life insurance piece I think is very important because the beneficiary designations, but also to keep it separate and apart from the other aspects of your estate, not just for the purposes of protecting your beneficiaries, but also for tax purposes. Like Kevin said, you don’t want your child getting a million-dollar life insurance policy all in one go, but to slowly pass it out. That way you can have control, but you also are able to avoid the taxes that can be associated with putting money into trust.

Kevin Gaines (26:53):

We’re talking wills and beneficiary forms and we all know there’s a difference. We’ve mentioned this before on this podcast, but the will is not the only document you have to worry about because beneficiary forms are separate. So is there anything people can do as they’re getting divorced and they’re saying, “Listen, I don’t have time to go through all this paperwork. I’m juggling everything else. Can I just change my will and somehow have it impact retirement accounts, insurance policies, and other stuff that passes through beneficiary forms?” Because I mean there’s a long case law through the tax courts of people saying, “Yeah, my mom and dad got divorced and she wasn’t supposed to get the money. I was.” Or, “He got remarried and now she’s keeping the money for her kids.” And it’s just a huge mess because people don’t change beneficiary forms.

Rebecca Sallen (27:54):

It’s so important. Oh my gosh. Yeah, so like I said, certain beneficiary forms, if they are not updated, would be considered to be null and void upon a divorce being finalized.

Stephanie McCullough (28:08):

And so in that case, if I had named my spouse and were no longer married, who is the court going to give the money to?

Rebecca Sallen (28:15):

Your kids.

Stephanie McCullough (28:17):

Okay.

Rebecca Sallen (28:17):

So if there’s no secondary beneficiary, and that’s where the biggest problem is, people say, “Oh, I’m going to have a life insurance policy. It’s going to be my spouse. And if not my spouse, it’s going to be my sibling because they’re going to take care of my kid,” right?

Stephanie McCullough (28:30):

Right.

Rebecca Sallen (28:31):

By having them as the beneficiary, that’s their money. They can choose-

Stephanie McCullough (28:37):

They can do anything.

Rebecca Sallen (28:39):

They can choose to do a deed. They have to pay taxes on what they receive, right? And as we know through the SECURE Act, if you have a spousal beneficiary, there can be big tax implications in terms of the forced distributions, especially of retirement assets. Now, if you have minor children having that, at least if there is more of a delay in terms of what has to go out. And as much as I wish that there was this crystal ball or this magic key to really have one thing cover the most, every asset really is different. When you have beneficiary designations, it flows by operation of law. So therefore it doesn’t go into the probate proceeding.

(29:25):

Now you can do something that’s called a pour-over will, which says that “Anything that’s not in my trust upon my passing will be going into my trust once I die,” but that’s only going to cover things that don’t have beneficiary designations or things that have a joint title.

Stephanie McCullough (29:46):

So I think a lot of people… I mean, again, like Kevin said, we’ve mentioned this before but we’re going to keep saying it, right? Your will only covers the things that don’t have a beneficiary form. So I mean, I’ve heard stories of people who’ve been divorced for ages and remarried for ages and forgot that one life insurance policy and then the ex gets a big old chunk of money that the new wife was counting on. It’s busy work and it’s annoying and it must be done.

Rebecca Sallen (30:14):

Exactly. It has to be done. And that’s kind of going back to what I was saying about Orphans’ court, is that you have to follow the bouncing ball. And if you don’t do that, you’re not going to get the result that you want. And so it’s so important to have an attorney that really concentrates their practice in this area because there are so many different nuances. I always say that all I do is estate planning and estate administration. I don’t do anything else because within this very small area of law, there’s so much to actually know.

Stephanie McCullough (30:47):

Right. It’s way more complex than people believe.

Kevin Gaines (30:51):

And as you were saying earlier, because you can never anticipate exactly how things are going to play out, you do have to be flexible.

(30:59):

Dear listeners, you may or may not know this, but the three of us have talked before. At the end of 2019, since somebody decided to bring up the SECURE Act, we put out this wonderful video series talking about this wonderful new change to the retirement tax code called The SECURE Act. And in this video, late ’19, late 2019 when we recorded these, we said this is probably going to be the big news of 2020. Yeah, how did that work out?

Stephanie McCullough (31:28):

Huh. Something superseded it. Yeah.

Rebecca Sallen (31:33):

Man makes plans and God laughs.

Kevin Gaines (31:36):

Exactly.

Stephanie McCullough (31:38):

So let’s say someone’s listening and they got divorced, I don’t know, eight years ago and have not visited an estate planning attorney, and maybe their estate planning attorney has retired or was best friends with their ex, or they never have one in the first place. How do you go about finding someone?

Rebecca Sallen (31:56):

I think that it’s really important to do your due diligence to talk to people who you trust to talk to your financial advisor, maybe your accountant, people who wouldn’t be connected to people like myself. The different bar associations have lists of probate and tax attorneys. I am very active in my county bar probate tax committee. So that’s very important. Again, you really want to have someone who knows this area of law very well. So you do not want to have… No offense to my family law attorneys out there. You do not want to have your family law attorney do your estate plan. Because as simple as you can think it may be, I consistently correct and fix those types of documents and sometimes it’s too late where the person passed away and the family law attorney’s, “Oh, I’ll just do this as an add on for a couple of bucks” but it was never properly notarized. It was never properly witnessed.

(33:03):

I’ve seen two cases in the last year where the family law attorney thought, “Oh, it’s a great way for me to make $1,500 more” and they used the wrong language and they cited the wrong rules. One of them had actually ended up disowning one of the children because they have special needs and like, “Oh, this way it doesn’t get them in problems with their government benefits” not realizing that no, the person who has special needs probably needs the money more than anyone else and what they really needed was a special needs trust. But that is not even discussed because that attorney just doesn’t practice this area of law.

Stephanie McCullough (33:46):

Oh, that’s hard.

Kevin Gaines (33:48):

And even more interesting are the do-it-yourselves. Just…

Rebecca Sallen (33:54):

What could possibly go wrong? So I often talk to my insurance carrier like, “How could I lower my premiums?” Because estate planners have some of the highest premiums of any practice area.

Stephanie McCullough (34:06):

For malpractice insurance?

Rebecca Sallen (34:07):

For malpractice insurance. Exactly. And the reason why is that you don’t know what problem is going to happen until you die. And then once you die, there’s no way to fix it, right? In any other area of law, any other contract, you can say, “Okay, well we’re going to do a mediation-arbitration.” No, no, no. Once you die, it’s set in stone that’s what has to happen. So you can’t fix an attorney’s errors. You can’t go back and say, “Oh, what mom or dad really wanted to do was this.” Well, they didn’t say that, this is what the document says. There’s a lot of estate litigation around that. So knowing what could possibly happen and being able to see those red flags and address them is so critical.

Stephanie McCullough (34:58):

So I’m going to ask you this because you also do estate administration. Many of our listeners are in the phase where they’re becoming executors for their parents. Any quick tips for that group? I know it’s totally not on topic, but I’m going to ask you because we’ve got you here.

Rebecca Sallen (35:14):

Oh no, I’m happy to do that. With estate administration, I think it’s really important to realize that the person who named you did that because they trust in your ability to get it done. You do not need to do everything. Just like I don’t file my own taxes, I hire an accountant to do that, do not be afraid if you are an executor or an executrix to hire people to help you. There are people who clear out houses, who do auctions, who do the estate administration, who do the taxes, who do all of those things. It’s your responsibility to make sure everything’s done, but you don’t have to drive yourself crazy.

(35:57):

One of the things that is so sad to see at times is when someone just lost a loved one, and especially if they were the caretaker of that person. That their life, depending on how long the end of life was, was really put on hold. They had to sometimes take a step back from work or their own family commits to take care of this person, and an estate administration can just seem like a prolonged experience of that. It doesn’t have to be. So to bring in people to say, “I’m going to help you so that you can actually focus on the grieving piece.” And with the mindset that, “This will get done. It will get done properly and it will be done efficiently,” I think that that is a very valuable thing.

Stephanie McCullough (36:45):

That is a good point because I think a lot of people feel like, “Yeah, they did trust me. They wanted me to do it.” But yeah, like you said, they wanted you to make sure it got done, and hiring professionals is often the most responsible thing to do.

Rebecca Sallen (36:59):

Yeah.

Stephanie McCullough (37:00):

Excellent. So, Rebecca, it seems like we could talk about this for hours. You really enjoy this topic, don’t you?

Rebecca Sallen (37:07):

I love this. This is really a passion of mine. I think it’s in many ways, like my calling.

Stephanie McCullough (37:13):

And honestly, we can tell.

Kevin Gaines (37:15):

Interesting calling.

Stephanie McCullough (37:17):

Hey, it’s all inevitable, right?

Rebecca Sallen (37:20):

It is all inevitable, but there’s a really great piece knowing that this is going to happen. We all are going to die. There are going to have to be taxes paid, but I can choose to say, “What happens when I die? How am I going to be cared for at the end of life? What type of taxes am I going to be paying? What type of legacy am I going to be leaving my loved ones?” And the ability to provide very clear plans. Stephanie has seen some of my documents, they are thick, like 70 pages long. But to provide clarity to say, “We’ve talked about anything and everything that could happen.” And you don’t have to do this every year. I do always suggest that you revise it and look back because life can change, but you’ve taken the step to say, “This is how I’m going to ever be remembered.” I think that’s a very powerful thing and I think it’s a very loving act to give someone to say, “I’ve thought about all this so you don’t have to.”

Stephanie McCullough (38:28):

It’s a gift really to those who you leave behind.

Rebecca Sallen (38:31):

It really is.

Kevin Gaines (38:31):

Well, plus let’s face it, likely you spent several years working with your retirement planners to devise the perfect setup to do while your beneficiary’s right. And how many times have we seen this, Stephanie? They come in and they just blow the plan up because all of a sudden they want to do something different. Setting up the estate documents is that final way to guarantee that the young punks don’t screw it up.

Rebecca Sallen (39:02):

Do you know what I love to do with my documents? Just one last thing to add on is that I like to put an intent, a statement of intent in my document. “I’m creating this document because this is what I want to happen and these are the guidelines that when the trustee is making decisions I want them to have in mind.” And so it’s really nice to remind the beneficiary sometimes to say, “No, I don’t want you to blow it up.” And also it’s something to give the trustee in terms of saying, “That’s not what mom and dad wanted. Knock it off.”

Stephanie McCullough (39:40):

Or you can say, “What was grandma thinking?” You know, you can say what you were thinking.

Rebecca Sallen (39:44):

Exactly. Exactly.

Stephanie McCullough (39:46):

Yeah, that’s lovely. I really like that. Well, Rebecca, if people want to check out what you’re doing in this world, how can they learn more?

Rebecca Sallen (39:54):

Of course. So they’re happy to call me, and my number is 215-992-9662 or they can connect with me online. My website is sallenlawfirm.com.

Stephanie McCullough (40:07):

And you are licensed in which states?

Rebecca Sallen (40:09):

I am licensed in Pennsylvania as well as New Jersey.

Stephanie McCullough (40:12):

All right. Thanks so much for being with us today.

Rebecca Sallen (40:14):

Thank you.

Kevin Gaines (40:15):

Appreciate it. Thank you.

(40:20):

So once again, where do we start unpacking everything that we just covered, Stephanie? I’ll say, and we even said that we were belaboring the point, so let’s do it again. Wills versus beneficiary forms. Please understand there is a difference between the two. What’s the old saying? East is east and west is west, and never the twain shall meet?

Stephanie McCullough (40:45):

Yep.

Kevin Gaines (40:46):

Same situation here. Please understand, changing your will does not impact your beneficiary forms.

Stephanie McCullough (40:53):

It’s perfectly okay to ask, “Wait, how does this asset pass when I die? Does it pass by will? Does it pass by beneficiary form?” Right? It’s okay if you don’t know. Ask the question.

Kevin Gaines (41:03):

It could be confusing. Absolutely.

Stephanie McCullough (41:05):

Yeah. Yep.

Kevin Gaines (41:06):

What’d you think, Steph?

Stephanie McCullough (41:08):

Well, it was so interesting. To me, I really was not aware of this division between family court and Orphans’ court. And when we had talked, Rebecca and I before the episode, that was my big aha moment like, “Oh, so in family court, the judge does have discretion and then they can judge things this way or that way. But in Orphans’ court, you’ve got to follow the rules, you’ve got to follow the legal documents if there are some.”

(41:35):

So I think that points again, to the value of thinking about at least having a trust. And you might remember longtime listeners, in episode 31, we had the lovely Shannon Evans on talking about trusts. So here comes the topic again and the purpose that they could serve.

(41:53):

And it’s not about, “Oh, my family members will think I don’t trust them.” That’s not it. Again, I think Rebecca had a nice way of spinning it, right? Like, putting your intent in there, “This is why I am setting up this document.” While you’re living, you can change it for the most part, right? But then once you’re gone, “This is how it’s going to be.”

Kevin Gaines (42:15):

Yeah. I mean, at the end of the day, the trust is about protecting the assets and the people who the assets are supposed to benefit. So special needs trusts are designed to protect people that need something along those lines. Likewise, if you think you’re future in-law, son-in-law, daughter-in-law, is maybe a little shifty, or it’s like even God forbid your own child might be a little flighty when it comes to long-term commitments and it’s like, “Yeah, I don’t want this in a divorce and half the assets going to somebody else” or protecting your children in case your spouse remarries. There’s lots of reasons that you want to set these things up and it’s not this control freak or want to just rule the world from beyond the grave or anything like that. They serve a purpose.

Stephanie McCullough (43:14):

And to get back to the basics again, why should you think about your estate planning once you’re divorced or while you’re going through a divorce? It’s because even if let’s assume you did set up your will and your documents after you got married, presumably you named your spouse as all the things as the beneficiary, as the power of attorney, as the guardian. Things might have changed, right? So there’s certain things you can change before the divorce is final, certain things you can change after, but you want to revisit all those things. And then her explanation that even if you still want to name ex-spouse in any of those roles, you got to redo the documents and have them dated after the divorce. Because if not, the insurance company court, fill in the blank, will assume that you just forgot, and that wasn’t your intention. That was interesting.

Kevin Gaines (44:04):

That’s because till like 10, 15 years ago, if you forgot to change the beneficiary, tough. It’s still going to your ex-spouse. But then there was these series of laws, each state started to say, “Hey, wait a second, this is happening too often” and now it’s gone the other way that they assume you don’t want your ex. So that’s yet another good reason to periodically revisit your beneficiary forms and your wills and just get a fresh date on your intent.

Stephanie McCullough (44:38):

Yeah. Yeah.

Kevin Gaines (44:39):

It makes it harder to challenge.

Stephanie McCullough (44:40):

Right. Again, the value of hiring a professional who knows their stuff versus using kind of the do-it-yourself type stuff. If you’re leaving on a big trip tomorrow and you don’t have anything, okay, maybe do-it-yourself or to fill in the meantime, but get your legal documents done. It costs money, it’s an investment. It is a gift to your loved ones if you’re gone or if you’re around but incapacitated like she was talking about in the case of disability.

Kevin Gaines (44:07):

I mean, think of it this way. On top of everything else, your spouse, ex-spouse, kids have to be dealing with, do you really want them figuring out all these little details that you could have just easily kept care of with a single document?

Stephanie McCullough (45:23):

Yeah. Or not a single document, but…

Kevin Gaines (45:26):

A series of documents. Right.

Stephanie McCullough (45:28):

But a good estate and planning attorney will walk you through all of them. Well, again, I hope you’re enjoying this divorce series. Thanks so much for being with us. We’ll talk to you next time. It’s goodbye from me.

Kevin Gaines (45:39):

And it’s goodbye from her.

Stephanie McCullough (45:43):

Be sure to subscribe to the show and please share it with your friends. Show notes and more information available at takebackretirement.com. Huge thanks for the original music by the one and only Raymond Loewy through New Math in New York. See you next time.

Disclaimer (45:57):

Investment advice offered through Private Advisor Group, LLC, a registered investment advisor. Private Advisor Group, American Financial Management Group, and Sofia Financial are separate entities. The opinions voiced in this material, are for general information only and are not intended to provide specific advice, or recommendations for any individual security. To determine which investments may be appropriate for you, consult your financial advisor, prior to investing. This information is not intended to be substitute for individualized tax advice. Please consult your tax advisor regarding your specific situation.