Real Estate with Renee Featuring Ged Law / Heights Title Services

Good morning, Southwest Florida, to those near and far. I have always prided myself, Renee Han with William Ravitz Real Estate, of being really transparent and authentic. And so I'll be transparent that David did an amazing intro for about 5 seconds before I realized that it hadn't gone live. So David has been a great guest already and being flexible with, you know, with errors at the start of the new year. This is a segment I call Real Estate Connections. I started this back when COVID hit as an opportunity to connect businesses with people in the area. And while doors might've been physically shut, we could still keep those local businesses top of mind. As we've progressed in Southwest Florida and Naples in particular to allow those business to start doing open business again. I selfishly hijacked this, this segment to be able to showcase more specifically those that I get to work with in the real estate industry. And so today we have David Jed with Jed Law Heights Title, which you can see over his head very clearly, and he's going to talk to us today about estates. It's a topic that I find as a real estate agent is one that's probably most, most ill-informed, confusing, complicated. And so he's going to give us some information just to help the palate start to absorb some of these. So honored to have David Judd. I have done a lot of work with him and his firm, and I, I can't speak high enough about them. They are just a phenomenal group, but that we can talk about longer later. What I'd rather do is David start with allowing you to give a brief introduction about yourself and your business before we get into the topic at hand.

Thank you, Renee, and good morning and happy New Year. My name is David Jed. I am the managing attorney of Jed Law and co-founder of Heights Title Services with my brother Gene. We have two locations, Naples and Estero. Jed Law focuses on real estate matters, estate planning, and business law. So if you have any questions post-interview, please do not hesitate to call me. Thank you.

I love it. And, and one of the things that you didn't mention, but I will, because again, this is about, um, you know, being transparent. David and his team do a great job at real estate law and at making sure that the closings go smooth. But I will tell you, he is also a very active participant in the community. I've had occasion to work with him through Naples Area Board of Realtors. So I see their firm as so much more than just the services they provide. And, and David as an individual, haven't got to spend as much time with Gene, although I heard he's always the, the smarter, better looking, you know, all of those things. But I've spent a lot of time with, with David and is just a, uh, salt of the earth, a great, great person. So David, again, I'm, I'm honored to have you here to talk about the topic at hand. So let's start with a high level because trusts apply to much more than just real estate. We're going to talk about it in the real estate context, but talk at a high level. What's the purpose of a trust? Tell us a little bit more about trust at an umbrella level.

Well, let me start in simple terms. So in law, a trust is really a relationship where property or other assets are held by one party for the benefit of another. In simple terms, the settlor or grantor sets the trust up. It's a written agreement, nominates a trustee, and also lists the beneficiaries within the trust. So the trustee technically administers the trust at the bequest of the grantor. Now, there are many different types of trusts. So the main differences are the living trust versus the testamentary trust. A testamentary trust is one that's created by will after the grantor's death. There's the revocable versus the irrevocable trust, and those can wear many hats. There's the funded or unfunded trusts, which is just that— some trusts are funded during the grantor's lifetime. Some are funded after their death. And then one unique thing that Florida, along with, I believe, 8 other states by statute, create the Florida Land Trust. And we're going to talk a little bit more about the land trust further on in the interview. So that's the high-level definition of a trust.

No, that's perfect. And, you know, I talked earlier in my introduction about trusts being one of those areas that people may present company included, may know a little bit about and make a lot of assumptions about. And it gets thrown around pretty lightly, you know, should I put this property in a trust? Shouldn't I put this property in a trust? What are some of those, you know, guiding principles for how and why someone would, would use a trust in a real estate situation where they are going to or currently own property, developed or undeveloped? Talk a little bit about when that would come into play.

Certainly. So I oftentimes get the question, I need a trust. Do I need a trust or a will? So a trust, think of it as a will substitute. Okay. However, everybody should have a trust and what they call a pour-over will. They work in conjunction with each other. So oftentimes people buy real estate and say they need to put it in a trust. And of course I say, well, why do you think you need to put it in a trust? Well, I want asset protection. A trust, a revocable living trust, does not really provide any asset protection. It's as if it's your alter ego. Okay, it becomes irrevocable when you die, but while you're alive, you can do anything you want to that trust, amend it, revoke it, change it based on circumstances in your life. There are some benefits to a revocable living trust. And we're going to talk about the difference between homestead and non-homestead, but it does avoid probate if properly drafted. OK, that's the number one benefit. It's private in that if you die with a will and don't have a trust and have to probate that will, your life then becomes public, both personal matters and financial matters. It avoids the imposition of a guardianship if one becomes incapacitated without a trust and owns property. The court then will appoint a guardian to govern that asset, whereas within a trust you have a successor trustee. If one becomes incapacitated, that successor trustee will, will govern that asset. So that's a, that's a huge factor. It also gives full control over the distribution of assets after your death. You can dictate how property is to be used, who it's to be distributed to, when it's to be distributed. So it gives the grantor full control of those assets post-death.

Well, and real quick, David, there, before you go on to the next point, I've heard a lot that trusts are used, for example, if, if, if parents want to trust— pass on physical items, whether it's property or otherwise, but maybe their children haven't reached a certain age to that they feel like would be appropriate for them to fully have that just outright. It's a good way to put some— I call them qualifiers is probably a more appropriate name in there for how those, those things are managed. And you can get that granular in the trust. Is that correct?

That's correct. You can custom, customize the trust in a way that those assets are administered by the trustee, the successor trustee, for the benefit of the beneficiary. So if you have minors, there can be a provision that a trust be set up for the minors within the trust itself. You could dictate what age or ages those assets will be distributed. You can— that's the beauty of it. You can customize a distribution scheme any way you see fit based on your circumstances.

Perfect. And I know you were going on to some other points, so please do.

Well, just to wrap up some of the other benefits, if you have a special needs child, the trust is a unique way to protect assets for that child if they're receiving Medicaid. And the other thing is, it— like I said, asset protection— it does not really protect the assets, although the beneficiaries of the trust typically are not disclosed. So there's a limited amount of protection in that regard. Um, but again, the main purpose that I hear people want trust for is to avoid probate. They do not want their heirs to have the expense, the delay, and the cumbersome process of probating their assets upon their death. A trust allows assets to be distributed immediately upon death if properly drafted.

And if I understand, David, just like I suppose you could update a will with iterations as life changes, as possessions change, once you set up the trust, I believe you can take things out of, put them in. You were alluding to that earlier. So it's not a one and done. It can be a very fluid. And the reason I bring that up is I often hear I'm not ready to set it up because I don't have everything. So some people think it's this end state. You acquire everything you want, and then you set up the trust, but it can be fluid, correct? And modify.

That's the, that's the beauty of the revocable living trust. As long as you're competent, you can amend that trust as many times as needed by virtue of an amendment. It's a simple process. So it is a constantly moving vehicle, if you will, depending on one's circumstances.

Great. Are there any times when you find maybe somebody's come because they don't fully appreciate and understand a trust have come to you and said, we, we need to set one up. And as you've gone down the path of exploring that more, you've said, you know what, I don't know that a trust is going to add a lot of value for you. It may be an unnecessary thing. What would that— some of those circumstances be?

So a lot of times people think because they own property, they moved here from another jurisdiction, that they, they need to have a trust to administer their estate. If they're a one-property owner, it's their homestead property here in Florida. Oftentimes you can simplify that process and meet the objective of avoiding probate by using something we call an enhanced life estate deed, which is simply a deed conveying the property to themselves for their lifetime. Uh, but upon their deaths, the property passes to the named beneficiaries in the deed. It meets the same objective as the trust. Without the need for a complicated trust agreement. So it really depends on everybody's circumstances. Oftentimes we get people here in Florida that own property in other jurisdictions, and they either have a trust from another jurisdiction or want a trust to be set up so that they can hold property in other states. That's a very valid purpose because we can establish a Florida Revocable Living Trust that can own their Florida property. And also own their property in Michigan, say, and then you avoid probate in both states to upon their deaths to distribute those assets.

Now, that's a perfect example. I, in full disclosure, have been starting to have discussions with David about such a scenario myself with a second property out of state. So perfect. How difficult, David, is it to set up a trust if somebody is interested in pursuing that further? What do they do? What are the first steps? What does that entail on their behalf?

Well, I, I think they really need to come to terms with what their objectives are. So if oftentimes there's, there's second marriages and there's children from the first marriage and understand that they want to be protected, and the way to do that is through the trust distribution scheme. So I think the most important thing is to understand their objectives, then sit down and talk with an attorney. The trust itself is not all that difficult to draft depending on how complicated their situation is. Usually I engage the clients for maybe an hour and then draft the trust for them to review, come back in and sign, and it's all done within a couple of weeks.

Okay, that's very helpful. I almost— in my simple mind, I see 3 key things, right? First is defining what the assets are, right? What you're interested in putting into the trust so that someone like David could guide you through whether those fit in a trust or not or are appropriate. The second is who are the people that you want to have to consider passing things on to? And the third is are there any special criteria by which how you want those distributed or not distributed? So, um, you know, those are some things I would think, 3 things that would probably make sense they would get refined, I'm sure, by discussions with you. But at least having some thought put into that before sitting down to draw it up. Is that fair?

And one thing that I need to mention is the difference between homestead property and non-homestead property. Homestead property in Florida is what we call devise restricted. It's governed by statute. So if you die with a spouse or minor children, they technically get the property. The minor child has an interest in that property. So sometimes, depending on the homestead situation, it would not be advisable to convey that homestead property to a trust, but rather hold it as tenants by the entirety until the second— until the first to die occurs, and then the surviving spouse can create a trust for the benefit of the minor children. So those are the sort of things that we would flush out during a consultation. And advise whether or not it would be in their best interest to convey their homestead property into trust. Non-homestead property, not an issue in terms of devise.

And David, could we— I know your expertise is certainly in real estate, but you also set these trusts up. Could you just throw a couple of examples of non-real estate related assets that, that you've seen get thrown into a trust? Just as people are starting to think about what You know, what are those other things that I might perhaps put into a trust?

Oftentimes I see IRAs or investment accounts, bank accounts, anything, any asset that is titled in your name can technically be conveyed to the trust. Personal property, tangible property, not so much. That's typically included in your will. But there's really any, any financial account can be conveyed to a trust, any interest in an LLC. Can be conveyed to the trust, or corporation can be the owner of the shareholder in a corporation. So it's really any asset that's titled in your name can be conveyed to a trust. Whether or not it's advisable depends on the circumstances, of course.

Sure. And, and, and always keep in mind there are some financial investments that may have their own distribution guidelines. You know, I think about my pension as an example. I worked for GE for 17 years. I have an executive pension. It doesn't matter what I would do with the trust that defines how that as part of the plan guidelines is distributed. So there, there could be some things that, um, to David's point, don't make sense to fit into a trust because the governing authority isn't there. Um, so good, good. What, um, what are some additional considerations for homeowners about when thinking about trusts and real estate?

Well, As I mentioned earlier, sometimes the trust is what we call overkill, and you can simplify the, the process by using an enhanced life estate deed as an estate planning tool for, for simple estates. The other consideration is a land trust. So if you are an investor or it's going to be a homestead property, a land trust is a unique vehicle that you hear about but never really saw it in play. It's a, it's a great tool for confidentiality and privacy in that the beneficial owners, the beneficiaries of the land trust, are never disclosed. The trustee is the person who facilitates transfers and conveyances at the direction of the beneficiaries, unlike a revocable living trust where the trustee has the control. The land trust is a little different than that. So a land trust is a unique vehicle to own real estate, and it can be your homestead property. So depending on your situation, if confidentiality is something that you're concerned about, uh, a land trust might be an appropriate vehicle. Now the other consideration is the distribution scheme. Um, these multi-dimensional families with stepchildren, half-children, full children, um, you really can customize that and include or exclude heirs in that trust. So that oftentimes works well in a complicated family situation where we use a revocable living trust to make sure that the assets get conveyed to the intended beneficiaries.

Now, that's a good example, and I've heard that, David. I hate to bring in, in this kind of context, this is how I've heard of it. You know, your, your children get married and I've heard of people concerned about the, the assets going on to the spouse, particularly if, you know, God forbid, down the road there's a divorce involved. They intend for those assets to go to their birth child, not to be given out during a divorce. And those are unfortunately some of the considerations that come into play.

I hear that all the time, unfortunately.

Especially after COVID, right, as people are spending so much time together.

Especially of late. I also hear about disinherited children. And that's also something that can be done in a trust and a pour-over will. But to your point, I can advise people on how, if you were to inherit property, how to keep that separate and not, not commingle that with marital assets so as to protect that inheritance in the event of divorce. So there are some other tricks, if you will, to protect that. Or we simply qualify that in the distribution scheme within the trust.

Yeah, well, David, I can't thank you enough. This has been really helpful, and, and they are quite involved, and there's a lot to learn about them. And we're not intending to make everyone as knowledgeable as an attorney is, but I'm hoping by today's segment we at least give some things for people to think about. Just like like if I had a real serious medical condition, I'm probably not going to go to WebMD. If you are interested in making sure that you have a good sound estate or trust that is set up how you want it, I'm probably not going to go to LegalZoom. So my hope is that we've stimulated a little bit of thought around this. I, I can tell you in a real estate capacity, since I see so many of the sales contracts, there are a lot of trusts set up here and there's a lot of different purposes for them. Um, so I'd encourage you, if you are thinking about, again, whether it's real estate related or broader, and you've got some assets that you've accumulated through your life that you want to make sure in your passing get handed over just the way you'd like them to, it's worth reaching out to someone like David Jett, having a conversation about what the circumstances are, what those assets are and, and discussing whether it's the right time for you to pursue setting up a trust. One question, David, and I know I didn't prepare you for this one, but could you give 2 seconds— some people will also set up a property in an LLC versus a trust, and that's another one I see get confused, that people use them interchangeably and they're not.

So first of all, if it's homestead property, you cannot avail yourself of the homestead exemption if it's in an LLC. So right away, if it's going to be your primary residence, never put it in an LLC. If it's an investment property, the limited liability company does just that— limits your liability. So oftentimes rental property is put into an LLC for that purpose. A trust, again, has limited asset protection, whereas an LLC has certainly more asset protection than a trust. Again, it depends on the circumstances and the, the intent or the objective of, of your distribution upon your death as to whether or not an LLC and a trust. Sometimes we, we use both. We make the revocable living trust the member of the LLC. Which is a unique way to avoid probate, yet own the property in a limited liability capacity.

Perfect. Well, I hope that this has been helpful to those of you who are either currently actively thinking about trusts and how you might use them. And actually, this may even stimulate some thoughts about people that already have a trust, and maybe they're questioning whether they set it up the right way. So David is an awesome, awesome resource. He's local. He's accessible, he's knowledgeable, and, and I've always— the things I admire about you, David, is you really do put yourself in your client's shoes to give guidance. And there are times I have full confidence that if David doesn't think that something is the right thing for you to pursue, he'll let you know that, even if that means he doesn't end up with as much business as he might otherwise by just letting you go forward with the plan that you had. So highly recommend David. And then if you've got a real estate transaction you're looking to close, his team at Heights Title is equally as talented and committed to those they serve. So David, any parting thoughts today before we, we finish up here?

Generally, everybody, please be safe. Let's hope that 2021 is a little bit different than 2020. The real estate market in Southwest Florida, as Renee knows and has experienced, is booming. If you're interested in buying a property, call Renee, call me, we'll navigate you through the process.

Yes, it is a good time. And contrary to, you know, there's no question it's a seller's market right now. Things have tipped in favor of the sellers just because there's a high demand and low inventory, but that does not mean it's not a good time to buy. So if you're interested in having any of those discussions with anyone, here. And again, David, thank you so much for joining us, and everyone have a great 2021.

Thank you, Renee. Have a great day, everyone.