Transcript
Jeb Butler:
Today we'll talk with my friend Kim Hoipkemier. I've known Kim for a long time. We were in law school together and she's married to a good friend of mine and Kim does estate planning work. So her firm is Georgia Estate Planning and Probate and Kim is the planning part of that. She writes wills, financial powers of attorney, medical directives, and all these other documents that have to do with death that we don't really want to think about but all really need. Kim's very good at it. She did the will for me and my wife and a lot of my family members. We're looking forward to talking with her today. Her practice area is a little bit different from mine, so I learned a lot and hope you will too.
I'm Jeb Butler and I'm here with Kim Hoipkemier-
Kim Hoipkemier:
Hello.
Jeb Butler:
... a friend of mine for a long time, married to another good friend of mine and Kim helps us prepare for the unthinkable.
Tell us what you do, Kim.
Kim Hoipkemier:
I do. I am an estate planning attorney, so I plan for the inevitable passing of us all, hopefully to handle it in a peaceful and organized fashion.
Jeb Butler:
Tell us the name of your law firm.
Kim Hoipkemier:
Our firm is Georgia Estate Planning and Probate. I am the planning side of our firm and my partner Cassandra is the probate side.
Jeb Butler:
I think you told me one time that most of what you deal with is death and taxes.
Kim Hoipkemier:
Yes.
Jeb Butler:
Is that fair?
Kim Hoipkemier:
As awkward, funny, I don't know as that sounds, death and taxes is what I do. If you're asking me my elevator speech or my cocktail introduction, I do death and taxes, yes.
Jeb Butler:
Okay, well we're all going to deal with them.
Kim Hoipkemier:
We've all got to deal with them.
Jeb Butler:
Tell us who most of your clients are.
Kim Hoipkemier:
Okay.
Jeb Butler:
Who do you help?
Kim Hoipkemier:
Good question. I will start with everybody needs a will, right? The will is going to allocate your assets when you pass. Everybody needs powers of attorney and everybody needs healthcare directives. My typical clients are families that-
Jeb Butler:
Run that back slowly. A will. You said two other things.
Kim Hoipkemier:
A will disposes of your assets when you pass. It would also name a guardian if you have minor children, a financial power of attorney, and a healthcare directive. Now those latter two documents are what we call incapacity planning documents. For our clients that are older may have Alzheimer's or dementia, there's an incident, an accident that causes you to be unable to manage your affairs, you're going to want those two documents in place. Most of my clients, most people we see are young families who are starting to think about getting these things organized.
Jeb Butler:
Okay. Okay. Let's see. Let's pretend I want to put myself in some scenarios and see where you might come in because as you know, our firm gets calls and if we don't handle it, something like this, we refer them to you. Sometimes we'll get a call like, "My relative's in the hospital, they're not doing well and we don't have anything planned. Can you help with this?"
Kim Hoipkemier:
Sure. Absolutely. We do get that call with some frequency, unfortunately. We like to see folks when they're have all of their wits about them and can really make an estate plan but there's certainly things that we can do even at that moment in time. First of all, we're going to look at the assets. How are the assets titled, any beneficiary designations. We're going to look at the family, is the client married? Are there minor children, adult children? Because all the answers to all of those questions really drive what we should do and what we can do at the last minute. Capacity is another issue if we've got folks in the hospital, but those are our drivers. We can certainly get documents done in a hurry if we need to, but really the phone call is there to make sure everything is organized and we try our best to meet the client's wishes. If they're going to pass, we want their assets and their family to be taken care of.
Jeb Butler:
You mentioned how assets are titled, What does that mean?
Kim Hoipkemier:
Big misconception actually.
Jeb Butler:
Okay.
Kim Hoipkemier:
Assets, so under Georgia law, if you have a jointly held account at Bank of America, your day-to-day checking account is jointly titled, by default, that account is a rights of survivorship account. If just one account owner passes, it immediately becomes owned by the surviving account owner.
Jeb Butler:
That sounds right.
Kim Hoipkemier:
Sure. As for a husband and wife, that's often correct.
Jeb Butler:
Mm-hmm.
Kim Hoipkemier:
Okay, but what if mom is well into her eighties and she still has her capacity, but one of her adult children helps her pay bills, take care of things so she adds her to the account? Mom dies. That account is the sole property of that one child and so if there are some other siblings out there, they may be a little upset.
Jeb Butler:
I see, so that's why you get the will. So instead of going to the one child it goes to ...
Kim Hoipkemier:
That's correct or we correct the titling at the bank and we clarify if Mom intends for that entire account to go to the adult child or if Mom intends for that account to be split among all of her children.
Jeb Butler:
Yeah.
Kim Hoipkemier:
That's the time that you can make that clarification is when Mom is there to say that because post death adult child said, "Well I paid all the bills, I earned this."
Siblings may say, "No, no. Her will says all things are four ways."
Jeb Butler:
Uh-huh.
Kim Hoipkemier:
Does that make sense?
Jeb Butler:
Yeah, yeah.
Kim Hoipkemier:
Account titling is one, joint with rights of survivorship real estate is another. Most closing attorneys in Georgia now when you buy a primary residence are going to list your home jointly with rights of survivorship, meaning it passes to the survivor, which is again generally a good thing between husband and wives.
Then beneficiary designated assets. That is the other big hole.
Jeb Butler:
Beneficiary ...
Kim Hoipkemier:
Beneficiary designated assets.
Jeb Butler:
What does that mean?
Kim Hoipkemier:
If you think of most Americans, a retirement plan is part of their net worth. A 401k, an IRA, a 403b, a tax deferred retirement plan that they've been saving for it is a beneficiary designated asset. There is a document on file with whoever maintains that account as to where that account's going to pay when they pass away and that document supersedes the will.
Jeb Butler:
It controls instead of the will?
Kim Hoipkemier:
It controls as it pertains to that particular account.
Jeb Butler:
Okay.
Kim Hoipkemier:
Okay? If you've got half a million dollars in a 401k and you name so and so on the beneficiary form, but your will says something different, the 401K form is going to control. Our job as the planner is to make sure the will coordinates with the beneficiary designation, coordinates with the asset titling so that everybody gets what they think they're going to get and that Mom and Dad's wishes are achieved.
Jeb Butler:
Right. This makes sense. You did my will, me and my wife's will.
Kim Hoipkemier:
I sure did.
Jeb Butler:
Then you had me go back and title things to where the beneficiary was like marital trust under article one of the last will and testament.
Kim Hoipkemier:
I sure did. I got very specific, didn't I?
Jeb Butler:
Yes, I copied it and pasted it.
Kim Hoipkemier:
Yes.
Jeb Butler:
In lots and lots and lost of places.
Kim Hoipkemier:
Spouses have you a little bit better income tax advantages to inheriting tax-deferred retirement accounts. Spouses get their own special rules. Non-spouse beneficiaries have a little bit more restrictive rules, so we're very particular about non-spouse beneficiary designations. Layer on top of that a minor child. If something happened to you and your wife, we have munchkins to receive the assets. They can't receive it directly so your will creates a trust for their benefit and that's where trust planning comes in.
Jeb Butler:
I see. A trust holds the assets so they can be distributed to our kids.
Kim Hoipkemier:
That's right, and you're naming somebody to govern the trust.
Jeb Butler:
Yeah. Okay. I thought about this and the scenario of I've got a relative, they're not doing well, we've done no planning, I need help. Maybe estate planning isn't my favorite thing to think about. Why not I just put this all to the last minute? Any problem in doing that? She laughs. I think that was a no. Yes, there was a problem. I don't know, you tell me.
Kim Hoipkemier:
Well I'll tell you this.
Jeb Butler:
Okay, because you mentioned capacity.
Kim Hoipkemier:
I mentioned capacity. Capacity is a prerequisite to being able to draft an estate plan. You have to know-
Jeb Butler:
What does capacity mean
Kim Hoipkemier:
As it's defined for estate planning purposes is slightly different than as it's defined for the ability to enter into a contract. You have to know yourself a bit about your assets, not super specifics, know your natural heirs, so who's in your family? Who are the natural ones that are going to take if things were going to happen? Can you form a rational thought? Do you understand more or less what you're doing? If you are waiting till the last minute, you may or may not have all of your faculties. You may not have capacity to sign a document. You may not be able to clearly articulate your wishes, your family. Don't wait till the last minute.
Jeb Butler:
Because if I did, the relative or me might be out of my head and then-
Kim Hoipkemier:
That's right.
Jeb Butler:
... I can't sign a will.
Kim Hoipkemier:
That's right.
Jeb Butler:
It's too late.
Kim Hoipkemier:
We're all living longer than we used to and capacity's not a light switch. It's not like you have it one day and the next day you don't. It is a gray area where it comes in and out and how am I, the attorney, to know, it's my job to analyze whether or not you have capacity or whether or not this ne'er-do-well is whispering in your ear when you are most at risk for being influenced in a manner that you're not necessarily intending to be.
The other maybe more practical thing is sometimes we have difficulty getting into hospitals. If you were in the hospital-
Jeb Butler:
Because COVID-
Kim Hoipkemier:
... COVID locked us out. We do a fair number of signings for folks that are in the hospital, because that, like you said, is something when people think about dying. The nurses are not real keen on serving as witnesses to these documents. Planning ahead is ...
Jeb Butler:
That's right.
Kim Hoipkemier:
It's a gift to your family. That's the way you got to think about it.
Jeb Butler:
How about this, Kim? I'm feeling cheap today. I think what I'm going to do is I'm just going to write down what I want to happen with my money on this legal pad, sign it, and put it in a safe then I don't need to hire you, right?
Kim Hoipkemier:
It is just as good as firewood.
Jeb Butler:
Okay, tell me why.
Kim Hoipkemier:
Because Georgia law says that your will must be, it cannot be handwritten, it has to be signed by you in the presence of two independent witnesses.
Jeb Butler:
Okay.
Kim Hoipkemier:
It should also be self proved, which means you have a notary attest to the fact that the test dater signed it in the presence of two witnesses and that everybody was over the age of 14 and that you were of sound mind at the time you signed your will.
Jeb Butler:
If I did it on my own, I would have basically zero chance of making all my accounts and the titling of assets coordinating.
Kim Hoipkemier:
Correct.
Jeb Butler:
With it.
Kim Hoipkemier:
Plus you're going to miss some pretty significant, Georgia is a relatively nice state to pass away in. Again, that goes back to death and taxes. Who says that?
Jeb Butler:
Good.
Kim Hoipkemier:
I do.
Jeb Butler:
It's great.
Kim Hoipkemier:
Georgia's a relatively nice state to pass away in.
Jeb Butler:
Okay.
Kim Hoipkemier:
Our probate process is generally considered to be one of the friendliest and simplest in the country as long as you have the proper language in your will.
Jeb Butler:
Mm-hmm. Okay, another scenario. My wife and I are about to leave town, we're going down to Mexico, we're going to have some good time but I'm leaving the kids with my mom and I'm feel a little nervous. What happens if they need medical attention or something while I'm gone or if the cartel takes me and Anne out while we're in Tijuana. Can you help us plan for this?
Kim Hoipkemier:
Yes, we get this call frequently as you can imagine. My husband, my spouse, my wife and I are traveling abroad or even domestically leaving the kids behind. First of all, we want to make sure all your documents are in order in case the worst happens but we also have a medical power of attorney or a consent for medical treatment for a minor child. I filled one out, gave it to my parents, it's signed and notarized, you list the pediatrician, allergies, that sort of thing. But that way if your child gets sick, then Grandma and Grandpa can take them to where they need to be seen and have the ability to get them help.
Jeb Butler:
I honestly did not know that that was the thing, but I should have.
Kim Hoipkemier:
That's right.
Jeb Butler:
Thank you. Okay. All right. Another scenario. Let's pretend it maybe I'm a little older and my spouse just passed away and really she handled all the money. I'm not too clear on what's going on here. I sure hope everything's in order, but it might not be. Can I call you?
Kim Hoipkemier:
Absolutely.
Jeb Butler:
What you going to do?
Kim Hoipkemier:
These are the kind of calls that we get frequently because people just don't know. Hopefully only one time in your life does your spouse die.
Jeb Butler:
Yeah, right, right.
Kim Hoipkemier:
generally speaking, your checking account is going to be joint and so we see a lot that the surviving spouse just carries on because things are working, the bills are being paid, there's money there. At some point in time though, it's time to update the surviving spouse's documents and make sure everything is cleaned up from the deceased spouse. If there were any assets that were just in the deceased spouse name, it's time to probate those. It's time to get those transferred.
Jeb Butler:
Okay. Okay. I got another question now. I don't know if you've been to my website, but I have the greatest dog that ever was.
Kim Hoipkemier:
You do have the greatest dog.
Jeb Butler:
You know Lou.
Kim Hoipkemier:
Second to Riley.
Jeb Butler:
Well, about the relative marriage of our dog but that's another podcast.
Kim Hoipkemier:
Okay.
Jeb Butler:
Purpose of this one, can you help Anne and I take care of Lou, our dog?
Kim Hoipkemier:
Yes, yes, and you know Lou needs some good care-
Jeb Butler:
She does.
Kim Hoipkemier:
... if something that happened to you guys. Georgia codified pet trust, I think it was 2010. A pet trust, pet is a personal property so we don't usually think about trust for personal property, but you can have a pet trust. You can name a trustee and a guardian caretaker for your pet. You can allocate some funds for your pet's care. You can leave instructions for what your dog likes to do, how often it should be groomed, et cetera, et cetera, and then the trust will give directions for the remainder of any funds if your pet passes and leaving some assets behind. I see a fair number of pet trusts in our documents now.
Jeb Butler:
Yeah.
Kim Hoipkemier:
Folks are taking good care of their pets.
Jeb Butler:
After the dog, we can think about my children.
Kim Hoipkemier:
After the dog, you go with kids, yes.
Jeb Butler:
Yeah. Let's suppose that my wife and I die at the same time. How are we going to designate who does what?
Kim Hoipkemier:
Yep. How are you going to designate it? You're going to designate it in your will.
Jeb Butler:
Okay.
Kim Hoipkemier:
You're going to designate a guardian who would have physical custody and parental rights over your minor child. Guardianship lasts from infancy to the age of 18 and then it ends under Georgia law. You're also going to name a trustee. The trustee is the person who will collect the assets that you leave behind, your life insurance, the remainder of your 401k, what's in your bank account, and distribute those assets according to your wishes to your kids over time. Our general distribution standard is health of the child, education of the child, maintenance and support of the child, whatever it means to maintain and support your child in his or her accustomed manner of living. But you can be very specific with that if you'd like. I have a lot of parents who were really detailed with what their kid should receive over time, what schools they should go to, summer camps, travel. Then I have other clients who say, "My guardian, my trustee, they know us very well. They know the type of parents we are. They know what we expect from our kids so I trust them."
Jeb Butler:
Okay. Can guardian, trustee, can they be the same person? Should they be?
Kim Hoipkemier:
They sure can. Quite often they are. If they're not. I would like there to be a good specific articulated reason for that and they need to get along well together because if you think about it, you've got a minor child living in the home of a guardian, you've got the trustee managing the money, they need to be able to coordinate pretty well.
Jeb Butler:
Yeah. Okay. Got two more things I wanted to ask you about. I heard that the government going to try to take all this money soon as I die or the person I want you to write a will for dies. Can you help me out with that?
Kim Hoipkemier:
We can help out with that. We do have a significant number of clients, higher net worth clients is really how I'm defining them. We are in a very taxpayer friendly environment as far as estate taxes go. Estate taxes are not death taxes, those which are assessed at death by the IRS. The state of Georgia does not have a death tax so don't worry about Georgia. We're only worried about the IRS and at this moment in time, we are only worried about the IRS taking a piece of your estate if your net worth is over $12 million.
Jeb Butler:
Okay.
Kim Hoipkemier:
Per person so for a married couple, your net worth has to exceed $24 million before you become a taxable client. It's portable between spouses, meaning it doesn't matter which spouse has the assets and who dies first, but here's the big asterisk, the big star. The estate tax exemption is what we call it, is something that our folks in Washington play political football with. Every election you hear it brought up.
Jeb Butler:
Yeah.
Kim Hoipkemier:
The Republicans want a higher exemption, the Dems want a lower exemption. It just goes back and forth.
Jeb Butler:
The exemption's that $12 million.
Kim Hoipkemier:
The exemption is that $12 million threshold. The way the tax code is currently written as of 12/31/2025, the exemption will be cut in half. It's a sunset provision back to the 2010 law indexed for inflation. The 2010 law was $5 million indexed for inflation so as of 1/1/2026, we'll be looking at a roughly $6.5 million dollar exemption per person, so 13 or so for a married couple. If you're looking at a net worth that exceeds that $12 million, you need to be doing planning in the next few years.
Jeb Butler:
Oh, so you could plan earlier and then get locked in to the better rate. I don't have to die before the law completes.
Kim Hoipkemier:
No. No, no, we're not encouraging that at all.
Jeb Butler:
If this were relevant.
Kim Hoipkemier:
Yeah, it is a use it or lose it exemption. Right now you have the ability to use your estate tax exemptions from unified credit before it goes away in 2026.
Jeb Butler:
Okay.
Kim Hoipkemier:
There's a significant number of-
Jeb Butler:
Where you can still live past 2026.
Kim Hoipkemier:
and you can still live past 2026 with the assets.
Jeb Butler:
Okay.
Kim Hoipkemier:
Still not far away.
Jeb Butler:
Okay. Last question our topic. All right. What happens if I do none of this, I die without a will? Who's in charge then?
Kim Hoipkemier:
The state of Georgia. The state of Georgia has written a number of laws, a number of statutes as to where your assets will go if you don't have a will.
Jeb Butler:
Do I have any control over that?
Kim Hoipkemier:
No, not unless you write a will.
Jeb Butler:
And that's what she does.
Kim Hoipkemier:
We'll write your will. Write a will, get it organized. It's a gift to your family. It's peace of mind.
Jeb Butler:
Yeah. Thank you.
Kim Hoipkemier:
You're very welcome. Thank you for having me.
Jeb Butler:
Thanks for coming.
