SAM Investor Webinar : Estate Planning 101

Hello and welcome. I'm Austin Root and on behalf of all of us at SAM, thanks for joining. With me today are two exceptional experts in their fields. From SAM, we have Senior Wealth Manager and Certified Financial Planner, Ryan Walker. And from law firm Hunter McClain, we have Distinguished Attorney, Alan Brown. Gentlemen, thanks for joining. Thank you so much, Austin. We're very happy to be here today. Absolutely. Welcome. Delighted to be here. Thank you for the opportunity. Absolutely. And you at home might be wondering why do we have these gurus presenting with Austin today? Well, the fact is we have a great slate of topics. And when we cover those topics that are a little bit of far afield from investing topics, we wanted to bring in the big guns. So with that, let's get started. Joel斯rika Aurestil. Here's the roadmap for what we're going to cover today. And then for the meat of our presentation, I'm going to hand it over to these two gentlemen, Brian's going to talk about a little bit some of the wealth management topics that we think are are most important today, and then help lead the discussion with Alan. Alan will be leading a great presentation, which is really a 101 or introduction to some of the most important topics of our related to estate planning. At this point, I'm happy to introduce, for those of our clients who don't yet know Ryan, Ryan Walker. Thank you so much, Austin, for the informative presentation. We really appreciate your perspective on the market, on the political landscape, the environment as we're looking ahead into 2025, 2026, and beyond. And also, thank you so much to those who have logged in to learn a little bit more about our thoughts on the environment today, our financial planning services that are available here at SAM. We're really excited to share with you what we have planned here today and then also in the future as we're looking ahead. Before transitioning into the next portion of the webinar presentation, I'd like to share with you a little bit about my background and my experience. I am a senior wealth manager here at Stansberry Asset Management. I am part of the wealth management team and I am a certified financial planner. I've been in the industry for over 15 years. And over that time, I have developed dozens, if not hundreds of personalized financial plans for the clients that I've worked with. And me, alongside the other wealth managers here at SAM, look forward to developing hundreds more for future SAM clients, including prospective clients, hopefully those who are logging in today to learn a little bit more about us as a firm. If you're not already a client of SAM. If you're not already a client of SAM, you may be somewhat unfamiliar about what's involved in the financial planning process. So I'd like to start off with providing a high-level overview of what process is involved in financial planning, which is, of course, a bit outside and more inclusive of just the scope of investment management. The next slide provides an overview of the financial planning process. It relates to step two of what Austin highlighted a few moments ago, step two of the five steps of financial success. And that's really taking an assessment of your current financial situation. So it's of utmost importance to understand where you are now before you can determine where you want to go in the future. That includes understanding your balance sheet. So assets versus liabilities, your inflows and outflows, so household income versus expenses, as well as your health status, longevity, and time horizon expectations. So step one of the financial planning process is just simply defining the scope, the scope of work between the client and the planner. which is a discussion together to determine your primary financial planning goals. The next step in the financial planning process is simply to gather the client's financial information. That could be in the form of statements, social security benefits, budgeting information. All this data can be uploaded to SAM in a secure fashion to our financial planning portal, which is then analyzed by your wealth manager, which is then analyzed by your wealth manager, which is the third step of the financial planning process to determine your overall financial situation. At that point, we move along to the fourth step of the planning process, and that's developing the financial plan, including the plan presentation, which includes actionable recommendations or specific action items, that are presented in terms of priorities that are presented in terms of priorities. So very specific action items that a client and planner can work together to achieve that would have a material impact on the outcome or direction of the overall probability of success of the plan. The next step is applying the recommendations that are agreed to by the client. And then finally would be an annual realignment between the client and the planner to understand any financial changes that may have occurred over the prior year that could impact the outcome of the plan. Those changes could be goal-oriented, risk tolerance-oriented, overall balance sheet changes, financial market changes that could have an overall impact on the outcome of the plan. So an annual review. So an annual review. In other words, it could just be a checkpoint throughout the year that allows us to reassess the overall probabilities of the outcome of the plan. The overall financial planning process typically takes between two to three separate and distinct meetings between the client and the planner, but every situation is a little bit different. So speak with your wealth manager about your specific situation, and they can give you a better idea of the time commitments and the number of the time commitments and the number of meetings that might be expected to complete the overall financial planning process. To complement our one-on-one and personalized financial planning services, we're also very excited to announce a brand new resource here at Stansbury Asset Management, and that's the launch of our Wealth Planning Video Series. These video series is education tailored to our clients' unique needs. We'll be doing all of the heavy lifting, including the financial planning research so that you don't have to. We'll be cutting through the mainstream media's broad-based advice and boiling it down into bite-sized modules that are much easier to understand. The modules will be hosted by our Wealth Planning Team, and they may include some special guests and subject matter experts from time to time. So we're really excited about these video series. So we're really excited about these video series. I bet some of you are wondering what some of the topics may be. So the next slide here gives us a little glimpse in terms of what topics we have planned in the near future to cover in these forthcoming video series. Today's topic, as we mentioned, is focused on estate planning. December's topic, we're really excited to announce, is going to be focused on charitable gifting strategies. And then some of the topics that we have planned for 2025 are on the schedule to the right-hand side of the slide. I'm personally really excited about the family and couple wealth management. that topic is really important. It focuses on involving both spouses or partners in the financial conversations where sometimes we find that one partner or spouse may be generally disinterested or disengaged in financial planning type conversations with their wealth manager. So it's really how to gauge and introduce these conversations to someone who will be less interested in financial -based conversations off the bat or more naturally. So different ways to increase engagement. And then also business succession planning is another topic that I'm personally excited for because I work with a lot of small to mid-sized business owners. So I think that'll be a really valuable topic that's coming up here in April. And then also strategies to maximize social security benefits that's coming up here in July of 2025. That's coming up here in July of 2025. We'll be following a really structured flow with regularly scheduled educational financial planning videos. Our goal at the end of the day is to deepen our clients' understanding of these fairly complex financial planning topics and to foster deeper conversations with their wealth managers. We really hope that some of these topics appear to be of interest interest to you and we hope to see you and we hope to see you logging in at a future session. So with that, I'm really excited as well to kick off tonight's topic on estate planning and to introduce today's special guest, Alan Brown, who's sharing his knowledge on estate planning topics and strategies available today to help reduce risk and hopefully taxes as well. So with that, it's my pleasure to pass the presentation on to Alan Allen Allen, who will introduce himself and begin the estate planning portion of the webinar today. So enjoy. Thank you, Ryan. I'm Allen Brown. I'm an attorney with 40 years of experience. I trained at the largest law firms in Chicago. And then as many of my clients sadly have left Chicago, I followed them to the southeast. And I'm now at the terrific mid-sized firm Hunter McLean in Savannah, Georgia. But I continue to work with clients throughout the country. I think our focus today is going to be on some basic ideas about estate planning. We're going to cover some income tax concepts and we're going to cover some estate tax concepts. So the first question everyone should look at is how are my assets titled today? Because that's going to determine who gets what what at the client's death. So in order, if you own something in joint tenancy with right of survivorship, when you die, your survivor automatically is the owner. If you have something that has a beneficiary designation, life insurance, IRAs, 401ks, and other employee benefit plans, transfer on death accounts, well, the beneficiary you have designated is going to receive those assets. If you have a will, you're going to receive those assets. If you have a will, you're going to receive those assets. If you have a will, you're going to go through the probate process. Your family will go through the probate process. And the person named in your will becomes the owner. You don't have to have a will. But if you don't, the state in which you die will write a will for you. And the rules in the law will determine who is going to get those assets. We're going to spend some time on trusts. And trust, you will have already transferred the title to a your trust during your lifetime. So what's critically important is no probate. You did not own it in your own name at death. So at your death, there's nothing to do. Your trust already owns that assets. The next easy question is, well, but what about estate taxes? We're going to conclude with an update on what's happening with the estate taxes, but let's just check. No matter how much assets you have, they're still a check. Does this person have at death enough assets that federal estate taxes are due? So that's called your gross estate. What's in your gross estate? Well, if you own something in a joint tenancy, it's based on your percentage ownership. If you own it in joint tenancy with your spouse, it's automatically 50-50. If it's one of those assets, IRA, 401k, life insurance, it's TOD, it is whatever was the value of the account. So that's 100% in. Anything you own in your own name, 100% in your gross estate. Your personal revocable trust, that is really part of your personal estate plan who gets my assets at my death. Same as in your own name, 100% in your gross estate. We're going to talk about a different kind of trust that I call an asset protection trust. That is no longer in your name, and you no longer have unilateral control. So that's zero. That's nothing. So we're going to talk about some people like to create asset protection trusts, mostly for the creditor protection. But when you get creditor protection, guess who one of your creditors are? The IRS for estate taxes. So you took care of that at the same time. So asset protection. What's protected from your creditors? Well, if it's in your own name, obviously you own it. Your creditors can take anything you own. Your personal revocable trust, that's part of your will. Who gets what at my death? Again, you have unilateral control. Your creditors can get any asset that you can control. An asset protection trust, you have set it up that you do not have unilateral control. So that is 100% protected from creditors. Now, whose creditors? Well, you don't control it. So your creditors can't touch it. Every person listed as a beneficiary, those creditors can't touch it. Every person who acts as a trustee, those creditors can't touch it. So it is truly protected from all relevant creditors. I mean, this is a powerful force field that your asset protection trust. It gets different words. I like force field. I've heard family vault. I've heard family bank. I've heard fortress. So yes, I like force field. We'll use force field today. So what's an asset protection trust look like? Well, the person who created, I'm going to call the founder. The founder creates the trust, makes a gift to that trust, and then steps back. So the founder does not have control. Trustees and beneficiaries. Every trust has a trustee, at least one. That person has the right to sign contracts. Every trust has at least one beneficiary. Beneficiaries are the one who can enjoy the benefits, get distributions, have assets purchased for them. For example, the trust buys a house and the beneficiary lives in the house. And then we have all of those assets are exempt from what I call the federal transfer taxes. If you make a gift during your lifetime, we have to check for gift tax. If you make a gift at your death, we have to check for estate tax. Not everyone focuses on if you make a gift directly to a grandchild, two generations down, either during life or at death, you have to check again for something called the generation skipping transfer tax. It's not that you skipped a generation for benefit. It's that you tried to skip a generation for a tax. So you actually get double taxed. A direct gift during life or at death gets both a gift or an estate tax and a generation skipping or GST tax. So obviously we're going to plan so that family never, no family of mine has ever paid a GST tax. And the last issue is different states have different periods of time on how long a trust can last. Coming from English law, the typical period is about 100 years. But there's now something of a race to the bottom. I joke that first it was, you know, 200 years, 300 years. I think Nevada is now 1000 years. Illinois went all the way to the bottom and said, there will never, ever be an end to a trust. So where you decide to have your trust, if that's important to you, you would want to pick a state that had a very long lead time on your trust. Seems like there are a lot of advantages here, Alan. Clearly, the founder making a completed gift reduces that founder's involvement in directing how those trust assets can be used. But trustees and beneficiaries have the ability to make adjustments. Also some tax advantages, clearly. And then the maximum time permitted by state law. Lots of advantages here. Absolutely. So let's go through three different periods of time, really, on different kinds of asset protection trusts. So we're going to, for fun, look at the history of the estate and gift tax exemption. It started out small. It's today quite large. But in the early years of my career. But in the early years of my career, I could go to a family, a husband or a wife and say, let's create an asset protection trust. And can I have $1 million? And the answer typically was yes. So the most basic kind of trust is typically a parent creates a trust for children and grandchildren. The next kind of trust is if you're following the current assets, we're now at $13 million. per person, per person, per couple. If I walked into that same family in 2024 and said, may I please have $26 million that you don't have any control over. I think they'd throw a piece of furniture at me. So that's not the question today. The question today is, would you like to set up trust for each other? So a husband can set up a tax free trust for spouse of $13 million. A wife can set up a tax-free trust for husband for $13 million. Between the two of them, they've moved $26 million out of their estate for federal estate tax purposes. But between the two of them, they still have control. A couple of important issues. You can't have those two trusts be identical. So on my slide, I've asked the family, who's going to die first? Not a fun question, but an important question. And in this case, they told me that the husband is going to die first. So that's why the wife is the beneficiary of one trust, and both husband and children are beneficiary of the other trust, different. And the time at which those trusts combine and are divided into trust for children is the death of the second to die of the two of them. So if we guessed correct that the wife is going to die second, then they have access to both trusts for their combined lifetimes. And only after both of them are deceased do we divide those into children's trusts. The last opportunity is, well, I don't have a spouse. Well, do you have a brother or a sister or a mother or a father who has at least $5,000? And the answer is, this is a different kind of trust. This is called a beneficiary trust rather than a founder trust, where after a parent or sibling puts in that $5,000, you get to be the trustee, a co-trustee. We always want someone acting with a family member. Whoever the lead beneficiary is can be the number one co-trustee, but I always need a second non-family member as a co-trustee. Just to make sure we're following all the rules. So I've got the person who wanted this trust is the co-trustee and the beneficiary and can rewrite that trust as many times as they want, all based on that initial $5,000 gift. But that person now has to sell assets into the trust. So I get my asset protection, but my client took back a note. So we still have to deal with the note for federal estate tax purposes. But the simplest trust, one parent took for the children, has now been replaced by husband for wife, wife for husband. Or if you don't have a spouse, we've been using parents and siblings to create that asset protection trust. So different flavors for different families based on different family circumstances. But anyone can have an asset protection trust. Why is it this $5,000 figure, Alan? That comes from the 5-in-5 rule in the Internal Revenue Code that says if someone has a power of withdrawal that's limited to $5,000, when that power lapses, that is a non-taxable event. So I needed to limit it so once that right to withdraw lapses, there's no taxable event either back to the founder or to my client beneficiary. Good question. Thank you. Thank you. Thank you. Great. So so long as I, as the founder, trust my trustees and beneficiaries, this is highly flexible and the best way to go. Right. So so let's just focus. There are two things that are incredibly powerful that the founder has to think about. Who am I going to pick as trustee? Because I'm going to give that person the checkbook. And who am I going to give a power to a point? Because I'm giving that person the power to rewrite the trust agreement. So these are really, really important decisions and deserve much, much discussion. So if someone were to come to me and say, can you create an asset protection trust for me and fund it in a week? The answer is absolutely no. That's not a reasonable period of time for the family to as a group discuss these very important decisions. Because we're talking about trust that at least on paper can last hundreds of years. What is that? Eight generations, 10 generations, 10 generations. So we need to build in the flexibility, but we need to make really good decisions on the front end. Good. Great. Alan, what what type of ideal household or family would an asset protection trust be most applicable for? If you could describe the like the key points. The key point is an individual or a family who have assets that they want to protect and they expect will be around for, you know, so two groups. One is just high quality investment assets. Well, wouldn't I really like all the growth of those investment assets? Because the day they go into the asset protection trust, all further growth is protected from creditors. All further growth is protected from estate tax. So take a group of high quality investment assets. I don't know, like a SAM portfolio. And that would be an ideal thing to put into an asset protection trust. The other is the obvious. There is a family vacation house that's been in the family for three generations and they wanted to be in there for generations more. Terrific. A family business. We typically have a family business. We typically have a family business. We typically have the founder keep the voting stock, but we will create non-voting stock or non-voting interest in a partnership. We'll move those into an asset protection trust. I say to my client, the matriarch or the patriarch, I won't mess with your cash flow. I won't mess with your control, but please let me move the rest of your best assets into an asset protection trust. So I am open to any individual or any family telling me, yes, I would like an asset protection trust. I would like an asset protection trust and here's why. That's for the client to decide. Great. Thank you, Alan. Shall we move on to the next slide? I think so. We're going to talk about what's happening on taxes. So we're going to do income taxes first and estate taxes second. So you should be up to date that what we refer to as the Trump tax cuts. We're going to talk about there were actually some pluses and minuses. In that group. We're only allowed to run for 10 years under the rules of the Senate at that time. So if there is no change, we're going to get a lot of tax provisions that are going to automatically expire at the end of 2025. And beginning in 2026, we're going to go back to the 10 year ago rules. My caveat is we don't know who's going to be the president. We don't know who's going to control the Senate and the House. So if there is a sweep, if it's 100 percent, all three of those are Republican, we might see the Trump tax rules just extended without change. If we see 100 percent Democrat, we might see the Democrat scrap not only what's on this sheet, but they might scrap something else they don't like. At least according to the lobbyists that I hear. I get to sit through a lot of lobbyist meetings with my clients. The prediction is the House and Senate will continue to be split so that we should expect that there will be some compromise changes, but there will not be wholesale changes either towards the Republican side or the Democratic side. So let's assume that nothing gets done, that there is not only a block, but there's a there's their House and Senate can't even agree on any compromise tax bill. Let's just run through a couple of the important things that are going to happen. The top marginal tax rate is going to go from our current 37 percent to almost 40 percent. That's usually considered negative. The 20 percent deduction for qualified business income. The idea was if you're in a corporation, you get taxed once and then comes to the individual. But any pass through, any partnership, any S corporation, that felt like it was getting an unfair tax burden compared to what C corporations were allowed to do. So when that hit your personal tax return, as long as you didn't have too large of an income, you got a 20 percent. automatic haircut. That has been very, very popular. That would be gone. One that was viewed as highly negative. You know, the reports say this was really aimed at the big cities because they were largely Democratic. So if you live in a city that has high local taxes and you live in a state that has high income taxes, you know that you've been paying a lot more taxes than $10,000, but you've only been able to deduct $10,000. So there was a $10,000 cap. I think anybody living in those states would actually like to see that go. Let's go to the other side. A tradeoff on that is we had itemized deductions, things like attorney's fees and accounting fees. And I've even seen safe deposit box fees deducted as miscellaneous deductions. As long as those are over 2 percent of your adjusted gross income, those were fully deductible. So that cap is gone. You get to deduct all those things again. But there was a limit. If you were a very high income person, there was a limit on how much miscellaneous deductions you could have. So that limit. So you get to deduct it all, but the limit comes back. Mortgage interest. If you had an old mortgage, it didn't change. If you had a new mortgage, you were limited to $750,000. You could only deduct the interest to up to the first $750,000 of your mortgage. And home equity debt is no longer deductible. This is new debt since the law changed 10 years ago. That would go back to the old rules where it's $1 million, not $750,000, and up to $100,000 of home equity debt would be fully deductible. So positive. Now let's go to the negative. There was a special 10 percent bonus. If you made a cash donation to a public charity, you got to have at least, you could deductible. You got to Ventra. And not very close. we're waiting to see, because it's a new program, we're waiting to see if they really built all the things they said they were built and really did do for disadvantaged communities what they were supposed to do. But it was an absolutely wonderful deduction because you immediately deferred any tax on that capital gain. And under certain circumstances, you didn't pay any gain at all. So as of 2026, unless they renew that program, can't make that, let's call it preferential investment in opportunity zones. Lots of puts and takes there. Feels like for the most part, these expiring would be net negative for most Americans. Yes, absolutely. It appears for most of the clients I work with, perhaps the only slight positive would be the elimination of the 10,000 deduction cap for state and local taxes, depending on what primary residence they own and property taxes that are applied to that residence, if that may put them in excess of the 10,000. But it's certainly... But if you're a truly high net, if you're truly high income person, congratulations, you get to deduct your real estate taxes, but now you're paying almost 40% as a maximum rate. I'm pretty sure that doesn't wash. Exactly. This is very helpful. Thank you. And of course, as we look ahead over the next year or so, we'll understand a bit more from Congress and from the president in terms of what areas of the state. tax reform might become more realistic might become more realistic as we look ahead into 2026. Right. My understanding is both parties, not knowing who's winning, already has their wish list tax bill on the word processor. And every new president, and we are going to get a new president no matter who is elected, has a 100-day plan. So the expectation is within the first 100 days after the president is inaugurated in January, we will see a very detailed tax bill, let's call it the winning party, the winning party's tax bill. And then the question will be, do they have the votes to pass it by themselves, or are they going to have to compromise with the other party to get it passed? So I'm going to say February and March of 2025 are going to be very exciting for tax lawyers. Thank you, Alan. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. it 27 per couple. We are going to get one more inflation adjustment automatically under current law. So I've rounded to that. It's going to be 14 million and change, but let's just call it 14 million. So double that, that's $28 million per couple, assuming that there is no change in Congress. And what we're hearing is there are so few people that even 14 million applies to, there are just not enough voters to worry about. So we are predicting that all of the fighting in 2025 is going to be on the income tax side and everybody is going to simply ignore the estate tax side. So I think the best prediction is we are going to get a drop in half, call that as of 2026, 7 million per person, 14 million per couple. So let me circle back to the very beginning where we were talking about how do you own your assets? How, what happens to at death? Who has to protect them from estate taxes? I think even at seven times two or 14 million per couple, that's not that many of my clients. So I actually am not hammering on estate taxes. I'm hammering on asset protection. Because if you think of yourself, you may think, well, I don't expect to have an asset protection problem during my lifetime. I'm a safe driver. I don't enter into contracts with, you know, unusual people who might sue me. But remember, these are multiple generations, 100 years, 200 years, even 300 years. So ask yourself the question, if you have children, what are the statistical chances that at least one of your children will get divorced? I'm sorry, pretty good. You're going to have grandchildren, we hope. What are the statistical chances that at least one of your grandchildren will get divorced? I'm sorry, pretty good. So the biggest power of the asset protection system is number one, you protect the current assets and all future growth. And who are you really protecting them from? You're protecting them for children, because now now these are divorce proof documents. These are divorce proof assets. And grandchildren and great grandchildren. These are all divorce proof documents. I'm sorry, divorce proof assets under your documents, your asset protection trust. I do need to put a footnote in states do not like starving spouses and starving children. So in some but not all states, if you have a court order that you are supposed to pay support to a court order that you are supposed to pay support to a divorced spouse, or you're supposed to be paying support to a child, and you are not doing that, and you do not have any other assets, but you are a beneficiary of an asset protection trust, in a handful of states, the states have had as a matter of public policy, that that's the one time where a creditor can get in under court order only can get to that trust. Now they can't take money. Now they can't take assets away, but they can give that trustee an order that says something like, please make this payment or you go to jail for contempt of court, which is usually fairly effective. So they can pierce that force field just a little bit, Alan. Right. And I'm sorry, I'm actually on the side of public. You know, if you entered into a divorce decree, and you're a deadbeat, you're not making your payments, I'm sorry, I'm not on your side. So here's one place where I think it's appropriate that those, those asset protection trusts ought to make that payment. But of course, none of our clients, whatever themselves or their children or their grandchildren ever have deadbeat ex-spouses or deadbeat dads and moms. So hopefully that never applies to anybody. Ryan, Ryan, we have talked in getting ready for this that you had some clients who had, I thought, some excellent questions about how the where does money go questions matches up with, hey, I have a Sam account. How do those two things work together? And I believe you've worked on some slides with Austin that help answer those, I think, really important questions. Yeah, that's right. We've had the opportunity to communicate with the other wealth managers and come up with some pretty consistent questions that we're receiving from clients across the board, particularly as they think more long term end of life planning, what happens to their wealth after death. And of course, the primary concerns are to ensure that a surviving spouse or children are well taken care of. So a lot of these questions, we chose the top three, relate to the administrative process of what actually happens after an individual passes away, depending on account type. So let me move forward to the first slide here. So what happens, Alan, in your experience when an account owner passes away, depending on the three different account types that we see listed here? So we're going to do trust next. So this is no trust involved. So if an account owner owns the account himself or herself, there's going to be a probate administration. A probate court is going to get involved in the county in which the account owner died. And I'm sorry, and I'm sorry, and I'm sorry, we're going to have to sit around and wait. And whether that's a couple of weeks or a couple of months depends on the county. But when we get a court order telling us who is going to be the executor, personal representative, same name, different states use different names, we're going to have brand new owner account documents. You got to go to the IRS and get a brand new IRS taxpayer identification number if it's going to be an entity. Or the new owner's social security number. Or the new owner's social security number. But yes, that process works. But I just got to be clear. It's not fast and it's not cheap. Fast and cheap are the other two choices. If it was joint tenancy with right of survivorship, then the survivor is the automatic owner. You've already got the name of the account. It probably the account owner was using his or her social security number. So the one thing we need to update is now we need to put the survivor's social security number on the account. But that's quick transfer on death. You've got those papers in your office. You know who the next owner is. You just got to contact the owner. And we need the new owners, obviously, sign new account papers. And then if it's an entity, taxpayer identification number. If it's an individual, a social security number. Great. Thank you, Alan. And in terms of the estate planning process, if a client that we're working with has an individual account, they're the sole owner, would it be suggested to consult with an estate planning attorney before re-registering assets, perhaps into joint tenancy with rights of survivorship or naming a TOD transfer on death beneficiary? Obviously, if you're doing something complicated, you should consult an attorney and or an accountant. If you're doing something simple, then I'm saying this is do-it-yourself. These documents are pretty simple. And I would really, you know, rather than leave it in your own name, any TOD, I'm sorry, anything is better than going through probate. So I'm going to talk about why I like trust. But if you're not ready for a trust, at the very least, get a TOD, transfer on death, in Sam's paperwork, because it really is going to save somebody a lot of headache. And I know a lot of our clients do that, but this is a great reminder for wealth managers maybe to talk to them about that, if they don't have the trust that you're talking about set up. Well, and potentially it could be a short-term registration change as they work through the estate planning process, because that, as you said, it can take a bit of time to form legal documents. So having in the interim, either a jointly registered or TOD type account until the estate planning process is complete and then revisit that registration after the fact. Right. Absolutely. That would make sense. Great. Thank you. So speaking of trust, you know, sort of a similar question, but what would happen in the case where a trust founder passes away? Okay. So let's take our revocable trust first and describe it. From English law to American law, we had a will, and the will said, at my death, here's who gets my money. And as probate became more difficult and more expensive, we basically took that will and split it into two pieces. We now have a very short will. We now have a longer personal revocable trust that together do exactly what an old style will says. Now we call this a pour over will. It simply says at my death, pour over into my revocable trust, anything where I didn't get the title changed into my trust at my, during my lifetime. And then the trust is sitting there already with the key assets. So what happens when the founder dies? As to the trust, absolutely nothing. The trust is not dependent on the founder being alive or deceased. It keeps chugging along. So I do have a question about who is the trustee. If the founder was the only trustee, then I need to get with the family and have them tell me what did that trust agreement say? Who is the next trustee? So I need new account papers and the name of the name of that trustee. And a revocable trust, personal revocable trust, because you can change it at any time. The IRS has asked politely, please do not file a tax return for that. Please do not get a TIN. Please use your personal social security number. So now that my founder is deceased, I am going to need a taxpayer identification number because now my trust is a separate taxpayer. Now, if my founder was co-trustee with someone, very typically a spouse, well, great. I know who the trustee is. All I have to do is update the account documents to say who my now sole trustee is. And of course, again, I can't use the founder's social security number anymore because he or she is deceased. I need a new IRS taxpayer identification number. And just a footnote, the IRS has made it incredibly easy. If you go to IRS.gov, there is a portal where in about five minutes, anybody can tap in, answer a few questions, hit go and get a brand new taxpayer identification number for a trust. It's very easy. Now, let's go to our asset protection trust. This is an irrevocable trust. The founder has stepped away. So the founder is not a trustee. The founder is not a beneficiary. So politely, the founder's death means absolutely nothing. The trust may have different rules. During the founder's lifetime, distributions can only be made to my children. But after the founder's death, distributions can be made to any of my children and any of my grandchildren. So there might be some changes within the trust agreement based on the death of the founder. But as to the trust as a legal entity, absolutely nothing happens. It keeps going. So therefore, you don't need new owner account, you don't need a new taxpayer identification number, you've already got it from when the trust was originally founded. So I'm obviously pro trust, because I like the flexibility of it's already there. You don't have to have the delay or cost of probate. I automatically know who's in charge. I just read the trust agreement. Who's the next trustee? Great. Very informative. Thank you, Alan. The next question is involving beneficiaries. Oftentimes, I receive questions from clients about whether or not it may make sense to list out individuals as beneficiaries of IRAs or other employee benefit accounts, or if they have a revocable trust already in existence, if it would be more appropriate to name the trust expressly as that beneficiary. Could you walk us through the advantages and disadvantages of those two choices? Absolutely. And just to suggest that the rules on rollover and inherited IRAs are now so hopelessly complicated that in 2025 or 2026, you can do a whole program on it. So I'm going to greatly simplify. Simple rule number one, if you name your spouse as an individual as your first beneficiary, at your death, your spouse can. It's called rollover the account. That becomes a spousal rollover IRA. And that IRA is treated as if the spouse was the original founder of that IRA and has all the benefits as you did when you set it up. So assuming a typical progression, I'd like it to go to my spouse first, my kids second, my grandkids third. I do like to see my spouse first. My spouse named as the first beneficiary. But who's the second beneficiary. I'll take my family. For example, I've got five kids and five grandkids. That's a fairly complicated family situation. For me to write down every possibility. What if one child dies early? What if two children die early? What if a child died with no grandchildren? Children, my grandchildren. What if a child died with children, my grandchildren? It's really just about impossible to write in all of those different possibilities in a beneficiary designation. But if you have a revocable trust, and if you haven't seen a revocable trust, they're going to be somewhere between 25 and 40 pages long. I have to admit, trust lawyers are very paranoid. We want to write in every single rule and every single power that a trustee might ever need in the next 300 years. No matter what state they're living in or working in. So I'm sorry, these things are long. We write really long documents. But the beauty of having everything in the trust agreement is it actually covers every possible permutation of who dies in what order. And it's far more complex than I can put in a beneficiary designation. So if my primary is my spouse if living and my personal revocable trust is my secondary, then if my spouse does predecease me or if we die together, then I know it goes into the trust and I know all of the rules that I need are in the trust. And just to be clear, some of those rules are it can be distributed through the trust to an individual named as an inherited trust. I'm sorry, an inherited IRA. So let me be the child. My parents pass away, it was payable to their personal revocable trust. And it said in equal shares to Alan, his brother and his sister. But if the amount is under so much, distribute it, pass through, it's now called a pass through trust to Alan and make it Alan's personal inherited trust as if the trust was, I'm sorry, Alan's personal inherited IRA account as if the trust was. So I like the fact that the revocable trust is completely flexible. The owner of that, the founder of that can change it as many times as he or she wants. So I would rather have the IRA or other employee benefit account beneficiary be simple, primary my spouse, secondary my trust, and then write that trust as many times as you need as as circumstances change. Meanwhile, you never have to go back to the IRA custodian or the 401k custodian and rewrite that beneficiary designation. So that was a bit of a long explanation, but it is unfortunately an incredibly complex area of income tax law right now. So, as you said, trust lawyers like to prepare for every contingency. It sounds that there's other things that they're like based on their being decanting trust, pour over trust. They might like a good bottle of wine every once in a while too while they're writing these documents. Absolutely. Thank you, Austin. Now, this is fantastic. You know, I think, let me ask a practical question. I think Ryan asked something similar to this, but I'm just kind of curious to get your take. If you have, if someone has a lot of assets, it's clearly, and in the tens of millions, it's clearly you're going to recommend an asset protection, a revocable trust for that person and their family. I'm just curious, do you have a ballpark level at which you, I would assume much lower given all these other benefits? What level of wealth do you start working with clients and say, I still think this will be, you may only have an estate of three or 4 million, but it might still be worth your time. Is that true? I would probably round that up for 5 million, but the other question is, what does that 3 or 4 million consist of? I can't tell you the name of the company or I can't tell you the name of the client, but he, for 2 million, ended up with a significant percentage of a company that has blown up. And he just called me to say he'll be selling his interest next year for $40 million. So, so I'm, I am neutral. I don't know what a family needs. I don't know what's happening to their assets. So in your example, if this is a $4 million family and 2 million of it is a startup or options or something else that could blow up into something big. Well, guess what? He and I worked together 10 years ago and it's in an asset protection trust. And guess what? $40 million is going to be estate tax-free and creditor protected for a couple of hundred years. My joke was his family ought to, ought to make a plaque or an oil painting or a statue to him because he's done something really terrific for the next several generations of his family. That's great. Yeah. And we talk about building generational wealth over time and identifying what assets were working with clients on that may not even need to be working for their own lifetimes, but for the future generations. And it sounds like that may be part of the conversation, the assessment, determining what portion of a client's capital they need to have access to during their lifetime. For liquidity reasons for liquidity reasons, for spending reasons, end of life planning, et cetera. But then identifying what portion of assets could be an appropriate fit for the asset protection trust. Right. Absolutely. Let's go back to that $3 million couple. Let's decide that all they want is personal revocable trusts for the good reasons, avoid probate, you know, easy access after someone passes. But let's talk about what that trust says. That trust says at the death of mom and dad, trusts are created for children. Those are asset protection trusts. So they are doing asset protection. They're just doing it beginning at generation two. So let's not minimize that. That's incredibly powerful for children and grandchildren. And they did not have to set up an asset protection trust during their lifetime, but they provided for it in their personal revocable trust. Fantastic. Fantastic. Well, this has been wonderful. Any closing remarks, Ryan, from your side? I mean, this has, I think, been really helpful from my perspective. And I know our clients will feel the same way. I'd like to thank you so much for attending today's webinar. 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