March 4, 2025 • 29 mins
What role do trusts play in securing a future for your loved ones?
Andy Dziedzic, joined by co-host Megan LeBarron and guest Ashley Han, an esteemed trust professional from High Point Law Offices, delves into the significance of trusts in estate planning. With over 20 years of legal experience, Ashley offers invaluable insights into the world of trusts and how they can protect and manage your assets effectively.
Listen as Andy, Megan and Ashley discuss:
The basics of trusts and their role in estate planning
Why testamentary trusts are crucial for managing inheritances
The differences between revocable and irrevocable trusts, and how they function
Strategies for using trusts to minimize taxes and protect assets
The benefits of charitable remainder trusts for legacy planning
And more!
Resources:
HighPoint Law Offices Blog
HighPoint Law Offices Newsletter
HighPoint Law Offices Videos
Get in Touch:
Connect with Andy
Book a call with Andy
Visit our website
Connect with Ashley Han:
LinkedIn: Ashley Han
LinkedIn: HighPoint Law Offices, P.C.
Website: HighPoint Law Offices PC
Instagram: highpointlawoffices
Facebook: HighPoint Law Offices
YouTube: HighPoint Law Offices, PC
About Our Guest:
Ashley Han’s practice focuses on representing clients in estate planning and representing executors and trustees in estate administration. She joined HighPoint Law Offices in early 2022. She began her career as a judicial law clerk in Northampton County, Pennsylvania, and served as an Assistant District Attorney for Philadelphia. Before joining the firm, Ashley was a U.S. Department of Justice trial attorney.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
As part of an ongoing quest to find
the best solution for the widow community,
Andy Dziedzic and his team have given the
financial services and many other industries industries a
failing grade.
Spurred by personal experience and frustration
with lackluster
industry standards,
Andy has made it his mission to pursue
(00:23):
the best possible solution to the unique challenges
widows face
amidst life after loss.
Tune in to the widow empowerment project and
join Andy
on his mission to forge a clear path
where no widow walks their financial journey alone.
Welcome to the widow empowerment
(00:43):
Project podcast.
I am your host, Andy Ziedzic, and I
am here with my co host, Megan LeBaron.
Welcome back, Megan. Thanks, Andy. Good to be
back. How are you?
Fantastic.
We also have somebody coming back on the
podcast that joined us earlier,
Ashley Hahn.
And,
(01:04):
for those who don't know Ashley yet, Ashley
has over twenty years
of experience in practicing law.
And she specializes
in trusts
at High Point Law Offices,
where she's very involved in
overall estate planning for her clients.
Thanks for joining us, Ashley.
(01:25):
Thank you so much for having me again,
Andy and Megan. It's great to be back.
One of the reasons why we wanted to
have you back because
there was a whole breakout session that we
kind of briefly mentioned in one of our
other calls
about trusts.
And with your expertise in that area,
it'd be really good for you to at
(01:46):
least start
by just giving our guests an overview of
maybe explaining the generalities
of a trust.
Sure. Absolutely.
Trusts are a really
valuable and important
estate planning tool that we use all the
time for clients.
(02:07):
A lot of people get
overwhelmed or might misunderstand them. It's really pretty
simple. They're a way of owning property. So
you can own property as an individual,
as a couple, you and a spouse,
or a trust can own property. So it's
really a legal arrangement
where assets are held by a trustee,
(02:30):
a person who manages the property, the home,
the
investments. There are a lot of different things
that can be owned by trusts
for the benefit of another person who's typically
called the beneficiary.
They're useful for asset protection,
for tax planning,
asset management,
(02:51):
and to control how your assets are ultimately
distributed
upon your death.
There are different types of trusts, a lot
of different types of trusts,
and they serve different purposes.
And they're used at different times,
during your life
or after
you're deceased. And that really depends on
(03:14):
your needs and your different circumstances.
Ashley, I think that's great. I'm I'm hoping
you can dive a little bit more into
sort of what different kinds of trusts are
out there and then when
might be a good situation
to use a particular type of trust.
Sure. Well, I'll start with testamentary
(03:37):
trusts. And
that me that's the type of trust that
is incorporated
protecting someone's inheritance.
(03:57):
There are a lot of people that should
not, for
a variety of reasons, inherit outright,
minor children, for example.
You know, I always use the example,
Andy could relate to this. Think of all
the expensive baseball
bats our boys could buy
if they inherited a large sum of money.
So
(04:18):
children's
if, you know, in the unlikely and unfortunate
event that their parents would die while they're
minors, their inheritance,
one way to protect it is to hold
it in a trust, have it managed by
grandparents,
aunts, and uncles so that it can be
used for certain things,
their education, their health, that type of thing,
their basic needs,
(04:40):
but they're not getting it's I mean, it's
actually illegal for them to get a large
sum of money.
Special needs individuals
are another,
type of person who, you know,
a trust is very useful because they can
maintain government benefits,
have someone else manage the money for them,
a role that they may not be able
(05:01):
to do themselves.
Also, individuals
with addiction
or
careers like a surgeon that's more prone to
lawsuits. So if
clients come to us and say, you know,
they have this beneficiary
that falls into one of these categories,
we will likely recommend that their
(05:24):
inheritance,
it's still
theirs, but it's,
they get it in they don't get it
outright. They get it by whatever terms the
trust would dictate
after the clients die.
Another class of people would be someone my
colleague gives the example
of a colleague that once said, my daughter
(05:46):
married an idiot. So once that once
that daughter would inherit,
right,
you know,
the your inheritance is marital is marital property.
Right. So in that in that
instance of divorce, it would be cut in
half, but you could protect that it would
be just for
(06:06):
her
that client's particular daughter, not the idiot,
if it was held in a trust. So
those are testamentary
trusts. So they come into play
after someone dies. Now, there's also trust that
are created and
own property while you're living. They're both revocable
and irrevocable trust. Those are two broad categories.
(06:30):
That's
really helpful.
I'm wondering now if my mother said the
same thing about my ex husband when I
got married.
But those are some great use cases for
when a testamentary
trust might be
beneficial. So maybe dig a little bit deeper
into the difference between revocable and irrevocable
(06:53):
trusts.
Sure. So a revocable living trust is another
way to own property,
but it's created while you're alive. There are
no new taxes. You have control.
The value to it is really privacy,
efficiency,
a way of managing your assets,
(07:14):
lower cost of estate administration,
which is settling the estate.
And it also
a revocable living trust
sets a way for your assets to be
managed in the event you become incapacitated.
So,
you might remember I talked about financial powers
of attorney when I was on before, and
(07:35):
that's a time where you name somebody
to manage your assets if you become incapacitated.
Well, a revocable living trust does it the
same way, and you don't even need that
power of attorney.
Just by being named as a trustee,
in the event the other trustee becomes incapacitated,
incapacitated, it really provides for that smooth
management of your assets.
(07:57):
One,
circumstance we always recommend or almost always recommend
a trust and
often a revocable living trust is if you
own property
in different states. So if you have your
house here in Pennsylvania
or in one state and then, you know,
a property at the beach or a condo
in Florida or something like that, well, upon
(08:18):
your death, that's three different probates in that
situation or two if it's here in the
Jersey Shore.
And
probate
is not I talked about before, isn't
might not be overly cumbersome in one state,
but in two states, you know, you're really
kinda adding on a lot of work for
your
(08:39):
executor, your
family. And so
having your assets owned by a revocable living
trust, they pass immediately to your Right.
And
(09:00):
Right. And there's really no because a lot
of people ask me, oh, trusts are only
for uber wealthy people
or really complicated
estates. And,
just in your situation, I know a lot
of people that have multiple pieces of real
estate
that, you know, if they had to go
through probate in each one of the states,
(09:21):
the beneficiaries certainly wouldn't be happy having to
travel to a state, you know, and and
go through courthouse
documents and things like that. So Yeah. There's
I'm sorry to interrupt. There's a cost associated
with probate too, that the trust saves that,
those probate fees. Yeah. Because the the line
I always
use is, do you want 100% of your
(09:44):
assets going to your beneficiaries, or do you
want a portion of it going to the
courthouse
or even perhaps the state, you know, that
you're going to end up paying unnecessary inheritance
tax depending on the type of planning that
that you're going with? So I just wanted
to make sure that that is, you know,
a part of the message is that trusts
aren't just for uber complicated financial situations.
(10:08):
Trust can come in handy in a lot
of family situations.
Right. And speaking of family situations, one that
I also wanted to mention was,
the situation of a blended family.
K. So we have this situation a lot.
A trust is really beneficial because,
upon the first spouse
(10:30):
to pass away in a traditional will plan,
you know, it's two separate documents, a will
for husband, a will for wife, or both
spouses.
And then upon the first spouse to die,
the other spouse, they may have said,
okay. Between us, we have five kids. Yours
two from your first marriage, my three from
my first marriage. Now we're together. We have
(10:50):
the five. Everything goes
equally, you know, one fifth, one fifth to
the well, then
one spouse dies and the other spouse thinks,
well,
actually, those kids from his marriage, like, you
know, do do I really want to give
my stuff to them or do I want
to just give it to my three?
So a trust avoids that situation. So or
(11:11):
you can avoid it.
You know, the trust could provide
income to the second spouse,
but the remainder
of what's left after
his or her death could then go to
the children from the first
marriage. So there's just different ways of
structuring that. So you don't have
(11:33):
that situation
where
your portion of the blended family could be
cut out.
You know, even though we all you may
hope that that's not gonna happen. You just
don't know
what the future holds. So to kind of
protect your children from
you know, that might not be the children
(11:56):
that you're
of the spouse that you're with now, that's
a a really
beneficial way to
kind of meet everyone's needs.
Mhmm. And I I think knowing the difference
between the revocable and irrevocable
has has to do with control of the
assets. But also
the the revocable piece is like at least
(12:17):
you're getting language that you want to go
with now,
knowing that later on down the road, if
you need to change it,
that can be changed. So at least that
has a lot more flexibility
where the irrevocable
may not have as much flexibility.
That's that's the the con. The pro is
that the irrevocable truss has a lot higher
(12:40):
layer
of protection.
So maybe,
if if you could expand on the differences
there of, you know, just
the the control differences and the pros, cons.
Absolutely. So you got it just right. A
revocable living trust has a lot of flexibility.
You can
amend it. You can add property. You can
(13:00):
take things out. I mean, it's really just
one of the most flexible
documents or estate planning tools. You're in complete
control.
An irrevocable
trust
is a little bit different because
a concept
I like to think or like to use
is that you're essentially
almost giving it away.
(13:22):
That that can be kind of scary. So
let me explain that you still have control,
but you're sort of giving it away to
get the protection.
Two main reasons
people use these. There are a lot of
reasons, but these are the main ones and
they're at opposite ends of the spectrum, sort
of The federal estate tax, so which right
(13:42):
now is $13,900,000,
it's a lot of money. But if you
you can take money out of your
estate by putting it in an irrevocable trust,
then it's not counted
for that federal estate when you die.
A more common one in our practice right
now because of the huge cost of long
(14:05):
term care, and I'm talking about skilled nursing
home care, which right now runs people an
average of $15,000
a month. So people are living longer
and, you know, they're looking at,
wow, if I got sick and needed that
skilled nursing,
it would really
decrease
my
(14:26):
savings, my nest egg that I've saved for
and worked for really quickly.
And what about this my spouse and making
sure they're taken care of and also
my children and beneficiaries?
So we do what we call a it's
called a Medicaid asset protection trust. And what
that
does is you're still in control of your
(14:48):
assets and that one is actually still part
of your estate
after you die. But for Medicaid purposes,
after five years,
you've essentially given away those assets, and they
can't be used to pay for skilled nursing
home care. So if you apply to get
on Medicaid at some point,
(15:08):
those assets that are owned by the trust,
the most common is a house or real
property.
They're not
part of what you would use
to pay for nursing home care. You can
get qualified for Medicaid and they're off the
table.
They really offer peace of mind that, you
know, even if you never need
(15:30):
skilled nursing homes, a lot of our clients
do these when they're healthy, but they just
think, you know, okay. Five years, we'll get
through that, and those things are safe. And,
you know, my spouse will have that. My
beneficiaries
will have that.
So it really kind of preserves a nest
egg
for your family.
Ashley, you're you're blowing my mind here. This
(15:52):
is so much information to take in, so
many different advantages
available to people to avoid
sort of inheritance tax, to avoid
giving away their legacy
to Medicaid.
What other trust options
do we have available to us and sort
(16:14):
of you know,
what about folks who wanna maybe maximize their
tax savings today?
Are there any options
related to sort of charitable giving or
legacy giving,
anything like that? Yeah.
The charitable remainder trust is a really,
(16:34):
popular one, and that's can be done. We
I talked at the beginning about,
testamentary
trusts and
trusts that come into play while you're living.
So they're funded, meaning
they own property
assets while you're alive. The charitable remainder trust
can be either one.
Meaning right now, you could fund it with
(16:56):
assets,
and then you get the charitable deduction, the
income tax deduction. It's as if you've made
a charitable gift.
And
how that works is
over a period of years,
it could also be we do these as
testamentary
trust, like I said, which are sometimes over
(17:17):
the period of a of,
a lifetime.
They give a beneficiary
a portion, usually, like, 5%
of what the trust owns,
and then the charity gets the remainder.
So I have one right now where a
beneficiary
will get 5%
for the rest of her life.
(17:37):
And then at the end of her life,
whatever is left, that which is called the
remainder, will go to a charity.
So that's a really,
great way to kind of
get some tax savings
for people who have a charitable,
you know, that's important to them to be
(17:58):
able to do that. Also provide,
you know, 5%
of a trust can be a lot of
it's a steady stream of income over a
period of years or a lifetime.
So that's a great way
to to get the best of both worlds,
and that's another
kind of trust. In all of these, really,
you know, I talked about if charitable giving
(18:20):
is important to you. It really is about
the client and what their goals are and
what they wanna achieve and their family situation
and their financial situation. And so there's really
no it's hard to say one is better
or it's really what works for the individual
client.
I think sort of what I was saying
with,
(18:41):
the last
time I was on here with the estate
planning documents,
you know, that's really
and trust, there's so many different options and
there's so many, whether it's protecting assets,
charitable giving, protecting your beneficiary
because
they just are in, you know,
career that's subject to lawsuits. You wanna protect
(19:03):
that inheritance from lawsuits, or they're a minor,
or they have special needs. I mean, there
are all these different situations,
a blended family. So it's really
the key is kind of understanding
client goals and
what would work best for them and then,
you know, crafting
(19:23):
deciding which trust or combination of trust and
kind of crafting the right plan for them.
With the charitable remainder trust, what's
fascinating about that, there there are a lot
of,
pivotal moments in people's lives where they have
maybe spikes in income. If they're selling a
business, selling a piece of real estate,
got huge stock options or something like that,
(19:44):
where
that
strategy a lot of times really screams out
like, hey, if if we're gonna do it,
this this may be a really advantageous
year for you to consider it. That way,
you've filled
a large portion of your charitable bucket and
then you've spread out
the tax burden
of that income over a really long period
(20:04):
of time.
There's there's a lot of positives that can
be done around that. That that is definitely
a lot of these things you talked about
are not a do it yourself
type of program.
The testamentary trust,
revocable, irrevocable, charitable remainder,
that do not do any of this stuff
on your own because there's a lot of
(20:26):
very careful balancing,
planning, wording that needs to be come through
by professional, you know, like Ashley and the
High Point Law Offices.
Right. And there's other situations. We've had clients
say, you know, we just want my son
to keep working, like, have a job. I'm
afraid if they get this inheritance, they're just
gonna, you know, retire and hang out. And
(20:47):
so,
you know, then you can write in a
trust that they have to show the trustee
a pay stub, and then they get a
distribution. You know, there's so much that
can be done. Like, you know, these aren't
there's creativity that can be built in. They're
not just black and white.
Obviously, there are legal requirements and things like
(21:08):
that to make them work, especially the asset
protection
trust. But there are also a lot of
flexibility and a lot of creativity that we
can use given
anyone's unique situation.
The testamentary trust in particular sound like a
great way to sort of extend your the
control of your legacy sort of beyond your
(21:29):
living years. So that's a huge benefit to,
really, anyone.
Yeah. And, also, the charitable
remainder trust too is another way of really,
leaving that legacy to, you know, whatever charity
is important to you.
And I like that you mentioned that you
can use a combination of trusts
(21:50):
as well. So you're not it sounds like
you're not just limited to,
you know, one option here, one option there.
You can use the various,
types of trust to target different objectives. Yes?
Exactly. Like, sometimes,
you know,
just thinking of the situation, somebody has a
house here and a house at the Jersey
Shore. Well, then we wanna do a revocable
(22:12):
living trust because
well, possibly. I mean, we wanna do a
trust to avoid those multiple probates, but then
also, you know, they have a special needs
child or, you know, another reason to do
testamentary, or they have a blended family. So
oftentimes, it's a trust within a trust, if
that makes sense.
So it's a trust that they establish and
(22:35):
fund while they're living, but then
the inheritance is gonna stay in another trust.
So,
yeah,
I have one right now that's
a will with a charitable remainder trust with
a special needs trust. So but that was
right for this client. It makes sense when
you figure it out.
So,
(22:55):
yeah, it's all about
kind of doing the right,
finding the right scheme
again based on a client's individual needs, goals,
and they can change, you know, nothing.
You know, some of these an irrevocable trust
is a little bit is more difficult to
(23:15):
change,
can require court approval or can require all
beneficiaries
to agree. But
a revocable living trust,
and the testamentary
trust too, they can also
be changed given circumstances.
But,
yeah, certainly, any number can be used together
or alone just depending on you know, the
(23:38):
important thing is that it works for the
client.
Well, Andy, I think that's why you said
this is not a do it yourself
type of task.
No. And even so in in the show
notes
for
this episode,
we're gonna make sure that
we provide some some resources to just help
break down some of the major bullet points
(23:58):
that we talked about.
Also,
you know, how to get a hold
of Ashley and her firm, just so that
if
you are thinking
about how to protect your assets and haven't
had that thorough conversation either, you know, with
your,
advisor, financial advisor,
you know, at least, you know, start the
(24:20):
conversation and eventually
you you really have to get in contact
with
a a state planning
attorney that really knows how to draw these
documents and have have the right wording and
implementation
as well.
Absolutely. And so for,
anyone listening or watching today, Ashley, how can
folks get in touch with you,
(24:42):
if they're interested in learning more?
Go to our website.
I think that's the easiest way, highpointlawoffices.com.
You can get in touch with us that
way. Our phone number,
email addresses,
yeah, just give us a call. We love
meeting new people and educating them and learning
and,
(25:03):
helping them learn about these different options. And
maybe they're right for you and maybe they're
not,
but there are certainly
there's a lot to consider
and a lot that I think the average
person does not know. I mean, just understanding
what a trust is,
at the outset, that can be, I mean,
(25:23):
overwhelming. But then all the different things it
can do,
you know, also, it it takes some time
to to digest. And we'd like to spend
that time and,
also be educated by potential clients with what
their goals are and, you know, what how
we can potentially help them. Right. Right. And
(25:44):
and that's the goal of this podcast too
is to really,
provide that education, provide those resources,
help make
difficult topics like these digestible.
And so,
please, you know,
follow us on social media. Follow Prepared Retirement
Institute and the Widow Empowerment Project.
I know High Point is also on social
(26:05):
media, so
like, subscribe.
Check out our website for the resources that
Andy mentioned. And, Ashley, we're so grateful to
have you on the show.
Thank you again for coming back for a
second episode. I hope we can wrangle you
back in for a third.
And we usually close out with,
(26:27):
just a summary from
Andy about the major takeaways of this discussion
today. There's there's a lot to unpack,
as usual with you, Ashley. We're we're just
so grateful to have you here. Thank you.
Thank you. Yes. Thank thank you again, Ashley.
And,
I'll close it out with three bullet points.
It's just time,
(26:48):
stress
and cost. So with time,
if you have ever
even gone through settling in a state for
someone or I'm sure you've had to have
heard a story of someone going through settling
in a state
that there's some mess that was created. There
wasn't proper
proper communication,
proper messaging, proper documents.
(27:09):
This this is the type of
podcast episode that we want you to absorb
and really understand the importance of
taking the time now to establish your wishes,
figure out all the different areas of protection
and maybe estate tax
savings
that,
you can really take advantage of while you're
(27:30):
here.
And then, of course, the stress. With all
of that extra time,
the people that are the executors of your
estate, they're already dealing with grieving, trying to
make sure that,
you know, they're they're
close with the family. Everyone's trying trying to
get through a really tough time. The last
thing you wanna do is
add more stress to the situation by not
(27:52):
being prepared and
laying out your wishes as clear as possible
in a protective manner.
And then finally,
the
the the cost of
of all of this is,
upfront. Of course, there's a cost to everything
to have a professional walk through it with
you. But I can assure you on the
(28:13):
back end,
the amount of cost savings by doing all
of this upfront
is a multiple.
You know, sometimes it's two, five, 10 times
multiple of the amount that you're paying, and
it won't be a waste of your time
going through this exercise for sure. So thank
you for listening to this episode, and we
look forward to having you on our next
(28:36):
podcast. Thank you for tuning in to the
Widow Empowerment Project. If you found value in
today's conversation,
help spread the knowledge and support by sharing
this podcast with someone who could benefit from
it.
Don't forget to hit the follow button and
leave a review.
Your feedback fuels the momentum of this movement.
(29:00):
For additional information on becoming a part of
the Prepared Retirement Institute community,
check out the website at preparedretirementinstitute.com.
And always remember,
you're not alone,
you're not defined by your challenges,
and your spouse would want you to continue
preserving what you built together.
(29:21):
Until next time,
take care.
As part of an ongoing quest to find
the best solution for the widow community,
Andy Dziedzic and his team have given the
financial services and many other industries industries a
failing grade.
Spurred by personal experience and frustration
with lackluster
industry standards,
Andy has made it his mission to pursue
(00:23):
the best possible solution to the unique challenges
widows face
amidst life after loss.
Tune in to the widow empowerment project and
join Andy
on his mission to forge a clear path
where no widow walks their financial journey alone.
Welcome to the widow empowerment
(00:43):
Project podcast.
I am your host, Andy Ziedzic, and I
am here with my co host, Megan LeBaron.
Welcome back, Megan. Thanks, Andy. Good to be
back. How are you?
Fantastic.
We also have somebody coming back on the
podcast that joined us earlier,
Ashley Hahn.
And,
(01:04):
for those who don't know Ashley yet, Ashley
has over twenty years
of experience in practicing law.
And she specializes
in trusts
at High Point Law Offices,
where she's very involved in
overall estate planning for her clients.
Thanks for joining us, Ashley.
(01:25):
Thank you so much for having me again,
Andy and Megan. It's great to be back.
One of the reasons why we wanted to
have you back because
there was a whole breakout session that we
kind of briefly mentioned in one of our
other calls
about trusts.
And with your expertise in that area,
it'd be really good for you to at
(01:46):
least start
by just giving our guests an overview of
maybe explaining the generalities
of a trust.
Sure. Absolutely.
Trusts are a really
valuable and important
estate planning tool that we use all the
time for clients.
(02:07):
A lot of people get
overwhelmed or might misunderstand them. It's really pretty
simple. They're a way of owning property. So
you can own property as an individual,
as a couple, you and a spouse,
or a trust can own property. So it's
really a legal arrangement
where assets are held by a trustee,
(02:30):
a person who manages the property, the home,
the
investments. There are a lot of different things
that can be owned by trusts
for the benefit of another person who's typically
called the beneficiary.
They're useful for asset protection,
for tax planning,
asset management,
(02:51):
and to control how your assets are ultimately
distributed
upon your death.
There are different types of trusts, a lot
of different types of trusts,
and they serve different purposes.
And they're used at different times,
during your life
or after
you're deceased. And that really depends on
(03:14):
your needs and your different circumstances.
Ashley, I think that's great. I'm I'm hoping
you can dive a little bit more into
sort of what different kinds of trusts are
out there and then when
might be a good situation
to use a particular type of trust.
Sure. Well, I'll start with testamentary
(03:37):
trusts. And
that me that's the type of trust that
is incorporated
protecting someone's inheritance.
(03:57):
There are a lot of people that should
not, for
a variety of reasons, inherit outright,
minor children, for example.
You know, I always use the example,
Andy could relate to this. Think of all
the expensive baseball
bats our boys could buy
if they inherited a large sum of money.
So
(04:18):
children's
if, you know, in the unlikely and unfortunate
event that their parents would die while they're
minors, their inheritance,
one way to protect it is to hold
it in a trust, have it managed by
grandparents,
aunts, and uncles so that it can be
used for certain things,
their education, their health, that type of thing,
their basic needs,
(04:40):
but they're not getting it's I mean, it's
actually illegal for them to get a large
sum of money.
Special needs individuals
are another,
type of person who, you know,
a trust is very useful because they can
maintain government benefits,
have someone else manage the money for them,
a role that they may not be able
(05:01):
to do themselves.
Also, individuals
with addiction
or
careers like a surgeon that's more prone to
lawsuits. So if
clients come to us and say, you know,
they have this beneficiary
that falls into one of these categories,
we will likely recommend that their
(05:24):
inheritance,
it's still
theirs, but it's,
they get it in they don't get it
outright. They get it by whatever terms the
trust would dictate
after the clients die.
Another class of people would be someone my
colleague gives the example
of a colleague that once said, my daughter
(05:46):
married an idiot. So once that once
that daughter would inherit,
right,
you know,
the your inheritance is marital is marital property.
Right. So in that in that
instance of divorce, it would be cut in
half, but you could protect that it would
be just for
(06:06):
her
that client's particular daughter, not the idiot,
if it was held in a trust. So
those are testamentary
trusts. So they come into play
after someone dies. Now, there's also trust that
are created and
own property while you're living. They're both revocable
and irrevocable trust. Those are two broad categories.
(06:30):
That's
really helpful.
I'm wondering now if my mother said the
same thing about my ex husband when I
got married.
But those are some great use cases for
when a testamentary
trust might be
beneficial. So maybe dig a little bit deeper
into the difference between revocable and irrevocable
(06:53):
trusts.
Sure. So a revocable living trust is another
way to own property,
but it's created while you're alive. There are
no new taxes. You have control.
The value to it is really privacy,
efficiency,
a way of managing your assets,
(07:14):
lower cost of estate administration,
which is settling the estate.
And it also
a revocable living trust
sets a way for your assets to be
managed in the event you become incapacitated.
So,
you might remember I talked about financial powers
of attorney when I was on before, and
(07:35):
that's a time where you name somebody
to manage your assets if you become incapacitated.
Well, a revocable living trust does it the
same way, and you don't even need that
power of attorney.
Just by being named as a trustee,
in the event the other trustee becomes incapacitated,
incapacitated, it really provides for that smooth
management of your assets.
(07:57):
One,
circumstance we always recommend or almost always recommend
a trust and
often a revocable living trust is if you
own property
in different states. So if you have your
house here in Pennsylvania
or in one state and then, you know,
a property at the beach or a condo
in Florida or something like that, well, upon
(08:18):
your death, that's three different probates in that
situation or two if it's here in the
Jersey Shore.
And
probate
is not I talked about before, isn't
might not be overly cumbersome in one state,
but in two states, you know, you're really
kinda adding on a lot of work for
your
(08:39):
executor, your
family. And so
having your assets owned by a revocable living
trust, they pass immediately to your Right.
And
(09:00):
Right. And there's really no because a lot
of people ask me, oh, trusts are only
for uber wealthy people
or really complicated
estates. And,
just in your situation, I know a lot
of people that have multiple pieces of real
estate
that, you know, if they had to go
through probate in each one of the states,
(09:21):
the beneficiaries certainly wouldn't be happy having to
travel to a state, you know, and and
go through courthouse
documents and things like that. So Yeah. There's
I'm sorry to interrupt. There's a cost associated
with probate too, that the trust saves that,
those probate fees. Yeah. Because the the line
I always
use is, do you want 100% of your
(09:44):
assets going to your beneficiaries, or do you
want a portion of it going to the
courthouse
or even perhaps the state, you know, that
you're going to end up paying unnecessary inheritance
tax depending on the type of planning that
that you're going with? So I just wanted
to make sure that that is, you know,
a part of the message is that trusts
aren't just for uber complicated financial situations.
(10:08):
Trust can come in handy in a lot
of family situations.
Right. And speaking of family situations, one that
I also wanted to mention was,
the situation of a blended family.
K. So we have this situation a lot.
A trust is really beneficial because,
upon the first spouse
(10:30):
to pass away in a traditional will plan,
you know, it's two separate documents, a will
for husband, a will for wife, or both
spouses.
And then upon the first spouse to die,
the other spouse, they may have said,
okay. Between us, we have five kids. Yours
two from your first marriage, my three from
my first marriage. Now we're together. We have
(10:50):
the five. Everything goes
equally, you know, one fifth, one fifth to
the well, then
one spouse dies and the other spouse thinks,
well,
actually, those kids from his marriage, like, you
know, do do I really want to give
my stuff to them or do I want
to just give it to my three?
So a trust avoids that situation. So or
(11:11):
you can avoid it.
You know, the trust could provide
income to the second spouse,
but the remainder
of what's left after
his or her death could then go to
the children from the first
marriage. So there's just different ways of
structuring that. So you don't have
(11:33):
that situation
where
your portion of the blended family could be
cut out.
You know, even though we all you may
hope that that's not gonna happen. You just
don't know
what the future holds. So to kind of
protect your children from
you know, that might not be the children
(11:56):
that you're
of the spouse that you're with now, that's
a a really
beneficial way to
kind of meet everyone's needs.
Mhmm. And I I think knowing the difference
between the revocable and irrevocable
has has to do with control of the
assets. But also
the the revocable piece is like at least
(12:17):
you're getting language that you want to go
with now,
knowing that later on down the road, if
you need to change it,
that can be changed. So at least that
has a lot more flexibility
where the irrevocable
may not have as much flexibility.
That's that's the the con. The pro is
that the irrevocable truss has a lot higher
(12:40):
layer
of protection.
So maybe,
if if you could expand on the differences
there of, you know, just
the the control differences and the pros, cons.
Absolutely. So you got it just right. A
revocable living trust has a lot of flexibility.
You can
amend it. You can add property. You can
(13:00):
take things out. I mean, it's really just
one of the most flexible
documents or estate planning tools. You're in complete
control.
An irrevocable
trust
is a little bit different because
a concept
I like to think or like to use
is that you're essentially
almost giving it away.
(13:22):
That that can be kind of scary. So
let me explain that you still have control,
but you're sort of giving it away to
get the protection.
Two main reasons
people use these. There are a lot of
reasons, but these are the main ones and
they're at opposite ends of the spectrum, sort
of The federal estate tax, so which right
(13:42):
now is $13,900,000,
it's a lot of money. But if you
you can take money out of your
estate by putting it in an irrevocable trust,
then it's not counted
for that federal estate when you die.
A more common one in our practice right
now because of the huge cost of long
(14:05):
term care, and I'm talking about skilled nursing
home care, which right now runs people an
average of $15,000
a month. So people are living longer
and, you know, they're looking at,
wow, if I got sick and needed that
skilled nursing,
it would really
decrease
my
(14:26):
savings, my nest egg that I've saved for
and worked for really quickly.
And what about this my spouse and making
sure they're taken care of and also
my children and beneficiaries?
So we do what we call a it's
called a Medicaid asset protection trust. And what
that
does is you're still in control of your
(14:48):
assets and that one is actually still part
of your estate
after you die. But for Medicaid purposes,
after five years,
you've essentially given away those assets, and they
can't be used to pay for skilled nursing
home care. So if you apply to get
on Medicaid at some point,
(15:08):
those assets that are owned by the trust,
the most common is a house or real
property.
They're not
part of what you would use
to pay for nursing home care. You can
get qualified for Medicaid and they're off the
table.
They really offer peace of mind that, you
know, even if you never need
(15:30):
skilled nursing homes, a lot of our clients
do these when they're healthy, but they just
think, you know, okay. Five years, we'll get
through that, and those things are safe. And,
you know, my spouse will have that. My
beneficiaries
will have that.
So it really kind of preserves a nest
egg
for your family.
Ashley, you're you're blowing my mind here. This
(15:52):
is so much information to take in, so
many different advantages
available to people to avoid
sort of inheritance tax, to avoid
giving away their legacy
to Medicaid.
What other trust options
do we have available to us and sort
(16:14):
of you know,
what about folks who wanna maybe maximize their
tax savings today?
Are there any options
related to sort of charitable giving or
legacy giving,
anything like that? Yeah.
The charitable remainder trust is a really,
(16:34):
popular one, and that's can be done. We
I talked at the beginning about,
testamentary
trusts and
trusts that come into play while you're living.
So they're funded, meaning
they own property
assets while you're alive. The charitable remainder trust
can be either one.
Meaning right now, you could fund it with
(16:56):
assets,
and then you get the charitable deduction, the
income tax deduction. It's as if you've made
a charitable gift.
And
how that works is
over a period of years,
it could also be we do these as
testamentary
trust, like I said, which are sometimes over
(17:17):
the period of a of,
a lifetime.
They give a beneficiary
a portion, usually, like, 5%
of what the trust owns,
and then the charity gets the remainder.
So I have one right now where a
beneficiary
will get 5%
for the rest of her life.
(17:37):
And then at the end of her life,
whatever is left, that which is called the
remainder, will go to a charity.
So that's a really,
great way to kind of
get some tax savings
for people who have a charitable,
you know, that's important to them to be
(17:58):
able to do that. Also provide,
you know, 5%
of a trust can be a lot of
it's a steady stream of income over a
period of years or a lifetime.
So that's a great way
to to get the best of both worlds,
and that's another
kind of trust. In all of these, really,
you know, I talked about if charitable giving
(18:20):
is important to you. It really is about
the client and what their goals are and
what they wanna achieve and their family situation
and their financial situation. And so there's really
no it's hard to say one is better
or it's really what works for the individual
client.
I think sort of what I was saying
with,
(18:41):
the last
time I was on here with the estate
planning documents,
you know, that's really
and trust, there's so many different options and
there's so many, whether it's protecting assets,
charitable giving, protecting your beneficiary
because
they just are in, you know,
career that's subject to lawsuits. You wanna protect
(19:03):
that inheritance from lawsuits, or they're a minor,
or they have special needs. I mean, there
are all these different situations,
a blended family. So it's really
the key is kind of understanding
client goals and
what would work best for them and then,
you know, crafting
(19:23):
deciding which trust or combination of trust and
kind of crafting the right plan for them.
With the charitable remainder trust, what's
fascinating about that, there there are a lot
of,
pivotal moments in people's lives where they have
maybe spikes in income. If they're selling a
business, selling a piece of real estate,
got huge stock options or something like that,
(19:44):
where
that
strategy a lot of times really screams out
like, hey, if if we're gonna do it,
this this may be a really advantageous
year for you to consider it. That way,
you've filled
a large portion of your charitable bucket and
then you've spread out
the tax burden
of that income over a really long period
(20:04):
of time.
There's there's a lot of positives that can
be done around that. That that is definitely
a lot of these things you talked about
are not a do it yourself
type of program.
The testamentary trust,
revocable, irrevocable, charitable remainder,
that do not do any of this stuff
on your own because there's a lot of
(20:26):
very careful balancing,
planning, wording that needs to be come through
by professional, you know, like Ashley and the
High Point Law Offices.
Right. And there's other situations. We've had clients
say, you know, we just want my son
to keep working, like, have a job. I'm
afraid if they get this inheritance, they're just
gonna, you know, retire and hang out. And
(20:47):
so,
you know, then you can write in a
trust that they have to show the trustee
a pay stub, and then they get a
distribution. You know, there's so much that
can be done. Like, you know, these aren't
there's creativity that can be built in. They're
not just black and white.
Obviously, there are legal requirements and things like
(21:08):
that to make them work, especially the asset
protection
trust. But there are also a lot of
flexibility and a lot of creativity that we
can use given
anyone's unique situation.
The testamentary trust in particular sound like a
great way to sort of extend your the
control of your legacy sort of beyond your
(21:29):
living years. So that's a huge benefit to,
really, anyone.
Yeah. And, also, the charitable
remainder trust too is another way of really,
leaving that legacy to, you know, whatever charity
is important to you.
And I like that you mentioned that you
can use a combination of trusts
(21:50):
as well. So you're not it sounds like
you're not just limited to,
you know, one option here, one option there.
You can use the various,
types of trust to target different objectives. Yes?
Exactly. Like, sometimes,
you know,
just thinking of the situation, somebody has a
house here and a house at the Jersey
Shore. Well, then we wanna do a revocable
(22:12):
living trust because
well, possibly. I mean, we wanna do a
trust to avoid those multiple probates, but then
also, you know, they have a special needs
child or, you know, another reason to do
testamentary, or they have a blended family. So
oftentimes, it's a trust within a trust, if
that makes sense.
So it's a trust that they establish and
(22:35):
fund while they're living, but then
the inheritance is gonna stay in another trust.
So,
yeah,
I have one right now that's
a will with a charitable remainder trust with
a special needs trust. So but that was
right for this client. It makes sense when
you figure it out.
So,
(22:55):
yeah, it's all about
kind of doing the right,
finding the right scheme
again based on a client's individual needs, goals,
and they can change, you know, nothing.
You know, some of these an irrevocable trust
is a little bit is more difficult to
(23:15):
change,
can require court approval or can require all
beneficiaries
to agree. But
a revocable living trust,
and the testamentary
trust too, they can also
be changed given circumstances.
But,
yeah, certainly, any number can be used together
or alone just depending on you know, the
(23:38):
important thing is that it works for the
client.
Well, Andy, I think that's why you said
this is not a do it yourself
type of task.
No. And even so in in the show
notes
for
this episode,
we're gonna make sure that
we provide some some resources to just help
break down some of the major bullet points
(23:58):
that we talked about.
Also,
you know, how to get a hold
of Ashley and her firm, just so that
if
you are thinking
about how to protect your assets and haven't
had that thorough conversation either, you know, with
your,
advisor, financial advisor,
you know, at least, you know, start the
(24:20):
conversation and eventually
you you really have to get in contact
with
a a state planning
attorney that really knows how to draw these
documents and have have the right wording and
implementation
as well.
Absolutely. And so for,
anyone listening or watching today, Ashley, how can
folks get in touch with you,
(24:42):
if they're interested in learning more?
Go to our website.
I think that's the easiest way, highpointlawoffices.com.
You can get in touch with us that
way. Our phone number,
email addresses,
yeah, just give us a call. We love
meeting new people and educating them and learning
and,
(25:03):
helping them learn about these different options. And
maybe they're right for you and maybe they're
not,
but there are certainly
there's a lot to consider
and a lot that I think the average
person does not know. I mean, just understanding
what a trust is,
at the outset, that can be, I mean,
(25:23):
overwhelming. But then all the different things it
can do,
you know, also, it it takes some time
to to digest. And we'd like to spend
that time and,
also be educated by potential clients with what
their goals are and, you know, what how
we can potentially help them. Right. Right. And
(25:44):
and that's the goal of this podcast too
is to really,
provide that education, provide those resources,
help make
difficult topics like these digestible.
And so,
please, you know,
follow us on social media. Follow Prepared Retirement
Institute and the Widow Empowerment Project.
I know High Point is also on social
(26:05):
media, so
like, subscribe.
Check out our website for the resources that
Andy mentioned. And, Ashley, we're so grateful to
have you on the show.
Thank you again for coming back for a
second episode. I hope we can wrangle you
back in for a third.
And we usually close out with,
(26:27):
just a summary from
Andy about the major takeaways of this discussion
today. There's there's a lot to unpack,
as usual with you, Ashley. We're we're just
so grateful to have you here. Thank you.
Thank you. Yes. Thank thank you again, Ashley.
And,
I'll close it out with three bullet points.
It's just time,
(26:48):
stress
and cost. So with time,
if you have ever
even gone through settling in a state for
someone or I'm sure you've had to have
heard a story of someone going through settling
in a state
that there's some mess that was created. There
wasn't proper
proper communication,
proper messaging, proper documents.
(27:09):
This this is the type of
podcast episode that we want you to absorb
and really understand the importance of
taking the time now to establish your wishes,
figure out all the different areas of protection
and maybe estate tax
savings
that,
you can really take advantage of while you're
(27:30):
here.
And then, of course, the stress. With all
of that extra time,
the people that are the executors of your
estate, they're already dealing with grieving, trying to
make sure that,
you know, they're they're
close with the family. Everyone's trying trying to
get through a really tough time. The last
thing you wanna do is
add more stress to the situation by not
(27:52):
being prepared and
laying out your wishes as clear as possible
in a protective manner.
And then finally,
the
the the cost of
of all of this is,
upfront. Of course, there's a cost to everything
to have a professional walk through it with
you. But I can assure you on the
(28:13):
back end,
the amount of cost savings by doing all
of this upfront
is a multiple.
You know, sometimes it's two, five, 10 times
multiple of the amount that you're paying, and
it won't be a waste of your time
going through this exercise for sure. So thank
you for listening to this episode, and we
look forward to having you on our next
(28:36):
podcast. Thank you for tuning in to the
Widow Empowerment Project. If you found value in
today's conversation,
help spread the knowledge and support by sharing
this podcast with someone who could benefit from
it.
Don't forget to hit the follow button and
leave a review.
Your feedback fuels the momentum of this movement.
(29:00):
For additional information on becoming a part of
the Prepared Retirement Institute community,
check out the website at preparedretirementinstitute.com.
And always remember,
you're not alone,
you're not defined by your challenges,
and your spouse would want you to continue
preserving what you built together.
(29:21):
Until next time,
take care.
Popular Podcasts
Are You A Charlotte?
In 1997, actress Kristin Davis’ life was forever changed when she took on the role of Charlotte York in Sex and the City. As we watched Carrie, Samantha, Miranda and Charlotte navigate relationships in NYC, the show helped push once unacceptable conversation topics out of the shadows and altered the narrative around women and sex. We all saw ourselves in them as they searched for fulfillment in life, sex and friendships. Now, Kristin Davis wants to connect with you, the fans, and share untold stories and all the behind the scenes. Together, with Kristin and special guests, what will begin with Sex and the City will evolve into talks about themes that are still so relevant today. "Are you a Charlotte?" is much more than just rewatching this beloved show, it brings the past and the present together as we talk with heart, humor and of course some optimism.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.