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December 3, 2023 • 42 mins
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(00:01):
In your corner, saving one investorat a time, working for clients,
not companies, all while bullyproofing portfolios, totally committed to sharing academic truths.
So I'm missing always representing Main Streetand not Wall Street team. It's your
so money team and this is theSound Money Investment Show with Crown Financial Advisors.

(00:24):
Hello and welcome to the Sound MoneyInvestment Show at Brown Financial Advisors.
I'm Greg Brown and I'm James Boorthand we are a registered investment advisory firm
and we are independent. We dowork for clients and not companies. To
receive your complimentary and personalized financial incompliantgive us a call five months, three
five seven five fine, sixty fiveto four. Perhaps you're seeking advice on

(00:45):
an old four one K four tothree B, some type of employer sponsored
plan, even for some perhaps inany way, analysis here's the point.
If you're no longer with the company, then your money as a rule should
not be there either, so wecan help you take control, whether that
rolling it out into a tax neutralIRA or splitting it via the NU way.
Either way, give us a callfive months, three five, seventy

(01:06):
five nine sixty five four. Ourwebsite Brownfinancial Advisors dot Com. Email team
at Brownfinancial Advisors dot Com. Ourhome offices in Milford, but we also
have locations in blueh Weicester and Florence, greg Well. Today we're going to
discuss this state planning mistakes and howto avoid them. Kind of a question
of the day may very well bedo you need an estate planning review?
Well, if you're in a positionwhere you've experienced any of the following and

(01:30):
it's quite a long list, soyou might find that you are captured in
this question. Ask the answer youare the answer yes, you probably need
an estate planning review yield. Kindof the old saying is that if you
fogged a mirror today, you havean estate. So of the following life
events, we strongly encourage that youwill schedule a complimentary state planning review with
us. We will help you withall things financial, from investment management to

(01:53):
assessing the nature of the investment youcurrently have, the goal subjectives, You
have the risk level that you're mostcomfortable with. First, what is the
actual risk you're taking now with yourinvestments. We'll look at beneficial review life
insurance. We'll review your taxes.I we do tax preparation, tax advisory
insurance needs, whether it's going tobe life insurance or state planning related life
insurance, or the kind of lifeinsurance. It can be used as cash

(02:14):
value over time, drawn out astax resources of income, all kinds of
approaches to what might be the headwindsof your success. You can have the
wind to your back, a smileon your face, and right out to
the horizon and succeed on purpose inthis thing called retirement. And one of
the aspects of retiring is you needto be here physically present, mind and

(02:35):
body to assess, implement, andmaintain, and if you do it right,
it'll maintain itself thereafter. In astate plan, because there's two realities,
there's this side of eternity and thenthere's the other side. Well,
this side is living benefits. Theother side would be death benefits. And
what happens to your money when you'redone with it hopefully goes to charities you
care about, people you love.So let's look at some of these life

(02:59):
events. Birth or adoption of anew child or grandchild in additions to the
family. When a child a grandchildbecomes an adult, they transition to adulthood,
they pick up some new rights theydidn't have as miners, being now
that they are age and majority.How about a child a grandchild needs educational
funding along the journey, maybe startthe day they exit the wound, at
a little each month or each yearuntil they arrive at school age. Whether

(03:22):
it's going to be you know,private school and or if it's going to
be leading up to you know,post secondary in college. You know,
just what are the needs in educationand what role do you want to play?
Death or change in circumstances of aguardian, executor or trustee. Obviously,
if a trustee goes down or anexecutor, will a successor needs named?
Is that already predetermined or is itsomething you need to address? Certainly

(03:46):
should be reviewed. Changes in thenumber of dependents. Dependents such as an
addition of the role of caring foran adult you know, not junior bear,
but senior bear needs some help.What changes need to be made legally
in terms of access to resources andfunds, and who's going to be responsible
for bank account and investment account thatwill perhaps be the source of the resources

(04:08):
and funds to support that journey ofcare. Change in yours or your spouse's
financial goals might might as well throwin there you become newly married or newly
unmarried as in divorce, illness,disability of a spouse. I mean,
you can see the list is ratherlarge when you just stop and think about
it. Changes in your life insuranceor long term care coverage that would alter

(04:30):
the need for a replacement beneficiary,purchasing a home, other large expenses and
assets that are titled and take namesand then by default maybe fall into states
and get captured into a process thatcould involve probate public or private. Do
you need a trust? Do youneed a will? Power? Attorneys,
medical, financial, health care directors? Yes, you need some many maybory

(04:54):
perhaps in circumstances such as yours.It could be all career changes, new
jobs, promotions, businesses. Howto handle those bonuses they come in?
What about benefits that transition to Haveyou ever thought about socialcurity benefits or the
benefits of a minor through the socicurityprogram? Who's going to fight over those
benefits and maintain them? If youbecome disabled in some way condeifully impaired,

(05:15):
but still alive, still have apulse, Large increases, decreases in value
of other assets, such as investments, or hard assets like properties in real
estate investments. About you or afamily member yourself receives a large inheritance or
gift from a third party, Whatare you going to do? How are
you going to structure it to whereyou can use it? If something happens

(05:35):
to you? And you know,we think, we think many times that
things that are not very good forour health or our life happening on accident.
Right, They're not pre planned.So be prepared for those those unplanned
events. If a family member alongthe same line dies, becomes ill once
again disabled. These are all factorsthat need someone of clarity and legal state

(06:00):
to stand in and make decisions andhave the power to do so. Changes
in federal and state laws covering taxesand investments themselves, sometimes reviewing an estate
plan as it relates to the natureand the environment of taxation or the future
of taxation. Sometimes you even haveto get ahead of this, James,
you just don't know. You canyou can count on something for sure that
it will change. Oh yeah,and how often should this be reviewed?

(06:24):
Well, how about this life happens, or how about when legislation changes,
or at least every five years.I mean, you can do it more
frequently than that, but at thevery least, it review your financial estate
plans. If you have the plansin place anyways, at least review them
every five years. So in additionto the you know, some of the
major life events that Greg mentioned,it also helps ensure that your legacy,

(06:47):
both financial and otherwise, is passedon in accordance to what you want to
have happened, your wishes, yourgoals, your plan to your beneficiaries,
receiving your benefits as smoothly as possible. That's the goal. That's the plan,
right, So let's look into youknow, maybe the first mistake people
make is assuming that they're too youngto plan or to have a plan,

(07:09):
and starts off with as Greg mentioned, if you can fog a mirror,
then you should have a plan inplace. It doesn't have to be complicated.
It could be something very simple,very straightforward, at the very least,
having your beneficiary designations up to dateand in place. But youngest,
i'd say, the young adults today, they really do think estate planning is
for the quote unquote old people.Yeah, and I guess I qualify as

(07:32):
one of those, not the former, but the latter. But a common
misperception of the estate planning is thinkingit's just a matter of dispersing their private
property in their old age and onlybenefiting the loved ones after they've passed.
There's so much more about the livingbenefits that go into and are intertwined with
the state planning. So many adults, many young adults today, are unprepared

(07:55):
in the event that they do passprematurely and unexpectedly. You know, they
all headline of died suddenly for whateverreason that you can think of. And
it's surprised to see how many obituariesthere are for people in their thirties and
forties. You know, there's beena significant uptick in those in the last
couple of years. So by notputting a plan in place, chances are
the government, Yes, the governmentwill be in charge of making decisions on

(08:20):
your behalf. Greg Yeah, nodoubt, external forces and internal realities,
all the above. And I betoff the list alone that we read aloud,
that there are perhaps two or threedifferent different situations occurring in your life
now that would merit a review ofyour state. I was a little surprised
if we stepped through the list justhow broad it is. And then elements

(08:41):
of it just so applicable to mosteveryone's current life. Current life meaning if
you haven't currently or recently looked atyour state plan, then it's begging for
you to at least give it someattention, because things happen and unplanned oftentimes,
and you need to plan in advance. And believing your state's too small
to protect, that's a big one. James, you already said that,

(09:03):
like, you know, too young, or you have too small a state.
But again, you have a pulse, You likely have an aestate.
You have an estate. James emphasizedkeeping it simple. You know, if
your life is complicated and have numerousassets and it's a large estate, it
still doesn't have to be too complicated. I can't tell you how often we
see people that kind of get itin their mind that they're all sophisticated and

(09:26):
such, you know, just becausethey have a lot of wealth, they're
just all sophisticated in all, andthey need a sophisticated plan. Not necessarily
because the people are trying to implementthis left you leave may not be all
as sophisticated as you, and they'renew to wealth. They just inherited a
bunch and what are they going todo with it? It needs to be
the abecs of how to get itdone, so it doesn't need to be
complicated more cumbersome. We even seein many estates where people attempt to speak

(09:52):
from the grave through the trust theuse of trust, where they set so
many conditions post life that in speakingfrom the grave, they just disrupt the
lives of the people they are tryingto bless because they just made it too
complicated. So if it sounds likeyou or have you even thought, have
we made this more of a mess, then we attended, Well, let's
just let's just sort it all through, maybe regroup, but believe in your

(10:13):
state's too small. Yeah, that'sthat's just not the issue. It's important
to decide, you know, whenyou're younger, guardianship for your children,
when you're older, guardianship for adults. And if you're an older adult but
you're not your parent, but yourparents still alive, how to maintain your
parents? And what if you godown while a parent and needs still needs
care. Is your spouse going tobe helpful? Is the are the children

(10:35):
of your home who are adults goingto be helpful? Is going to be
a third party? That needs tobe named, identified and named lots to
look at. But your state's neithertoo small too large. It's at Goldilocks.
It's just right and it needs yourattention. And you're not too young.
You're not too old hopefully either.So our phone number of doubt is
five one, three, five,seven, five nine, sixty five to
four calls we can help the staytune. You're listening to the Sound Money

(10:56):
Investment Show with Brown Financial Advisors.You're on fifty five KRC the Attock Station.
Opinions expressed are solely those of BrownFinancial Advisors and should not be interpreted
as specific advice. Materials presented arebelieved to be from reliable sources and no
representations can be made as to itsaccuracy. All ideas and information should be
discussed in detail with one of ourqualified investment advisors prior to implementation. Market

(11:18):
based investments involved risk and past performanceis no guarantee of future results. Insurance
based investments offer guarantees based upon theclaims paying ability of the issuing company.
All insurance, tax and mortgage servicesare offered through Brown Insurance and Tax Advisors
LLC, Brown Financial Advisors and BrownInsurance and Tax advisors are affiliated companies and
may only transact business in those statesin which registered or were otherwise legally permitted.

(11:39):
Welcome back to this out Many investmentshow with Brown Financial Advisors. I'm
Greg Brown and I'm James Bort andwe are independent area that's a registered investment
advisory firm. We do work forclients, not companies. That's Main Street
and not Wall Streets. Our fullnumber five months three five seventy five,
note sixty five to four. WebsiteBrownfinancial Advisors dot com, Email team at

(12:00):
Finaci Advisors dot com. Home officesin Milford, but we'll also have locations
in blueh Westchester and Florence. GregWell, we talked about a few things
here, like, you know,do you need an estate? You have
one? What's the state of yourestate? Is it too small? Is
it too large? It might betoo complicated, it might not exist.
You need to address it. HowAbout you have an estate and you've put

(12:20):
in place a trust, and youwant something conditional in the trust to do
certain things when you're gone. There'sa good reason to have a trust over
just a will, But what ifyou just fail to fund that trust.
What this means is you have notproperly titled your assets to the name of
the trust, to the ownership ofthe trust, so that it then takes
control and whatever's written in the documentwill prevail. So if your assets have

(12:43):
not been properly transferred into the livingtrust or whatever type of trust, that
would then continue to direct those assetsin your passing per the terms of the
trust documents, the trust will essentiallybe useless and perhaps considered invalid. So
once you set up a living trust, it's pretty important that you actually fund
the trust by retitling the assets ofthe assets reference or those that you want

(13:07):
embraced and entangled by the trust andthen maintain and manage and handled by that
trust into the name of that trust. It's like an entity. It can
own things, and if you wantthose things to be in the trust,
you better title them into the trustname of ownership. For example, changing
the deed to your home is onechanging cars. Sometimes on spouses, they

(13:28):
have what's called a dowright and canjust pick up a vehicle that's left behind
you without a great deal of legalwrangling. But as for some of the
assets like broke richean bank accounts,they need to be retitled by the financial
institution where they're held. Now,oftentimes the duties of a trust, administration
and the process of administry and trustsare just splat out and misunderstood. So

(13:50):
a couple of terms like the trustor or grant or, well, that's
the person who creates the trust.They have the responsibility for transferring the assets
into the trust. Okay, they'relike the manager, so not the attorney.
And this misconception is deep, butthis just it helps to access an
attorney to understand, you know,the modality, the inner workings of the

(14:13):
trust that's been put together. Saybuy an attorney, but the attorney's not
the one primarily responsible. You cancontract to have them do a lot of
things, but it's really good foryour trust to be managed by the trustee
in a way that they become familiarwith the trust, that it's a living,
breathing, effective, effectual document.And one way to keep things from
slipping out of control is just maintaininggood records in an organization. Well as

(14:37):
the organizer who that. Let's saythat you're the person that is the donor,
grant or and create the trust.You're the initial organizer, but you
need to bring along with you thetrustee. You may initially be the trustee
of the trust, or your spousemight be a co trustee or success or
trustee, and then it falls downto your children. As you get closer
to passing the baton to the nextperson who is going to be the ongoing
organizer, you need to bring themclose enough to understand your tensions, what

(15:01):
the trust is for, what itreads, how to interpret it, the
assets encumbered, and your purpose forthose assets, and be clear. That's
why you spend the money and thetime and the effort to put together a
trust. So there's no point indrafting a living trust if the assets don't
get properly titled in it, ifit doesn't become living, breathing and viable,
it's just merely a pretty leather boundmaybe folder with some nice parchment paper

(15:24):
in it, and that's all,and a very expensive set of dead trees
at that well. And there's alsomany different types of trust, but categorically
we really have just the revocable versusirrevocable as far as you know, what
does that mean. Revocable means thatyou can change your mind, You can
update or change or even revoke whateveryou have set aside. Into the trust.

(15:46):
It also means the assets are stillcounted as yours when it comes to
perhaps being subject to a nursing homespin down later in your years. The
other one the irrevocable. Be carefulwith this one, because that means once
you set this up, you nolonger have control over the assets, which
is why after a certain period oftime, those assets no longer count as
yours when it comes to again,perhaps a nursing home spin down situation.

(16:10):
But again there's there's much more tothat, many details that need to be
examined thoroughly, not just simply glossedover. And our phone duer with the
office five one three five seven,five nine six five four to answer questions
about those details. Now, anythanks, you know, speaking of questions
sist in general. Just give usa call. Like James said, come
on in. We'll review your entirefinancial situation. Put together financial plan.

(16:33):
It's a complementary. It says yourcurrent investments, your beneficiaries, your insurance
policies, long term care, thebeneficiaries on your title accounts, the nature
of your assets and what your intentionis for them. And then hereafter and
then we'll take a look to taxes, you know, and just see if
we can improve the taxation on yourstate pre and post your passing. Make
it a living benefit. Thereer sometaxes now and enjoy the benefit of that.

(16:56):
But all that, just come inand then go online. Check out
our website Brownfinancial Advisors dot com.There's a place up there somewhere along there
it says seminars. You can alwayscheck to see when our next public seminar
is. It's food, fun andfinance. We'll dinner on us. We'll
get together and just talk about thesevery fun and colorful subjects. Then you
have an opportunity to set an appointment. Come on in, let's review everything,

(17:18):
get the process started. But youdon't have to wait for that.
You could just come in any timeand on a compliment basis. First appointments
all information about you. Get thefacts on the table. Second one is
to have you back and share allthe findings, all the analysis, make
specific recommendations and prepare and share withyou. A company ands a financial plan
that's effectively the draft until you getyour fingerprints on it. We just keep

(17:38):
working from there. You see afit, we work together ongoing on you
don't. We just agree to disagreeand keep us in mind for the future.
It's very low maintenance kind of approach, very effective though, and you'll
enjoy the process. A little bitof your time and then our time and
resources invested in you and we seewhere we go again. That's Complmary means
no cost, no obligation. Pleasetake advantage of that email us call come

(18:00):
see it's a public seminar catches youknow each Sunday noon here in fifty five
Caresy the detoxas right, we're hereall the time, have been for almost
fifteen years or anymore. What podcastscatches on podcasts on your time. All
these are available for you on anyof the subjects, including today's subject being
a state planning James, what happensat the timing you mentioned earlier? The

(18:22):
best time to review in a stateongoing? Yes, at least every two
to five years when it comes toreviewing your plan. Doesn't mean you have
to do any major updates or overhauls. But again, at least two to
five years is the time frame fromwhen we say review to make sure things
are still in place. And youknow your personal and your financial situations will
change over time, so whether itbe you got married, got divorced,

(18:45):
you had children, increase decrease ofassets, accumulation of assets, or you
know, a lot of times.What also should be look into is if
you have businesses or even property likerental property, real estate property, have
you or organized or structure that orand going back to the revocable versus irrevocable.
Another thing that happens a lot isjust simply changing your mind, a

(19:07):
change of heart on those whom you'veleft in charge, or who you want
to have next to be in charge. All these things can and will affect
your estate plan and life does habit, you know, a habit of changing
that means so much your plans.Remember this, A plant works for you
and your family when you're maybe inyour forties will probably look a lot different
when you're seventy five. That's whyit's important that you put your plan in

(19:30):
place and then once in the ina while pull it out and review it
just to see what's occurred, howhas your needs, how has your life
changed? And it's it's again betterto be proactive when handling such a delicate
matter. It is, by theway, your legacy, your family and
they may just be depending upon it. Yeah, it's like James said,

(19:52):
it's not always the changes in yourlife, although they're certain to occur with
time. It's also the changes inyour beneficiary's life. I mean, if
your son Harold married Helga the Horrible, she was just Helga before she became
horrible, you might need to makesome changes because you know, you can't
leave Old Harold too much. Rollwell, well, anyway, you get
the picture. But we like tocall that. You know, sometimes in

(20:14):
laws become outlaws just need to beprepared. Your document should be dynamic enough
to handle many of those things.But as life changes, you also need
to make changes with it. Let'ssee procrastination. Goodness, you know what
that is. It took me awhile to get to that subject. I
put it off anyway. Procrastination nothaving your estate plan at all, or
not having will, not having livingtrust, not having health care. Directors

(20:36):
know, when it comes to stateplans and estate planning, seventy percent of
adults have failed to even create one. And you might be well intending to
get around to it. You mighteven started the process a few times,
just haven't completed it. Well,here's the cattle call. Go ahead and
get it done, get it offthe list of things to do, so
it's one less thing to do.The old adage say it probably too much,
Probably tired of hearing it, butsomeone once said, you should live

(21:00):
your life in such a way thatwhen you die, that's all you had
left to do. Get this offthe list of things to do. Don't
be this statistic. There's that word. Of course it is, so we'll
just keep that in mind. Don'tprocrastinate. Get the help. We're extending
our handout. Accept it, Comeon in. We'll get you on the
right track and take care of this. We have an attorney that's retained to

(21:22):
help our clients do just that.Our founder about the office five one three,
five seventy five nine sixty five fourcall us we can help. Let's
stay tuned listening to the Sound MoneyInvestment Show with Brown Financial Advisors here on
fifty five gar see Detox station.Welcome back to the Sound Many Investment Shows.

(21:45):
Brown Planning a Child Advisors. I'mGreg Brown and I'm James Both and
we are an independent ARIA that's aregistered investment advice you firm working for clients,
not companies, and it does allstart with a plan. That means
actually having a plan knowing what youown and why you own it. So
what you're saying making advice on oldfour one K four three b irate rollover,
investment planning, retirement planning, incomeplanning, tax planning, social security

(22:08):
maximization, roth conversion analysis, anyway analysis and for some perhaps even an
in service rollover. All those themore we can help five one three,
five seven, five ninety six fivefour our website Brownfinanciadvisors dot com, email
team at Brownfinanciadvisors dot com, andour home offices in Milford, but we
also have locations in Blue Ash,Westchester and Florence, Shaw. Well.

(22:30):
We were talking about estate planning mistakesand how to avoid them, and it's
also an important thing to consider howestate planning is actually intertwined with overall financial
planning the big picture. It's oneof the pieces of the of the puzzle,
very important one. We focus somuch on living benefits, which is
a good thing, and estate planninghas living benefit attributes as well, but

(22:53):
it's also a pre I guess,a pre game plan towards a future game,
the game that is without you,and you know the different types of
effects. We talked about the effectthat the government could have on taxation or
property and legislatively, things that changethat need to be aligned with through your

(23:15):
trust. And it's just in thebig picture. None of us can escape
death, right, but through thoughtfulplanning, what may occur before and after
death is one of the most importantthings that can be addressed and predetermined,
so it can just be executed onbehalf for your best interest in those interests
of the people you care about.So the term will better late than ever

(23:36):
or better late than sorry. Itdoesn't apply to state planning. You're either
prepared or you're not. Either didit or you did not. Either started
it and completed it, or youfailed to complete it. So that's right
on que. That means that thatwas someone calling you to remind you to
to get your state plan. James, how about what kind of people should

(23:59):
we be meeting with or or ifyou're not meeting with someone experienced in more
than just oh yeah, another majormistake that we see is people that don't
meet with financial, legal, andtax professionals. So we're talking about professionals
for not only your legal, yourfinancial, but taxes, all those are
intertwined into your state plan. Andyes, it's tempting to save money or

(24:22):
at least try to save money doingit yourself. There's still many people who
will very simply do that no matterwhat. It's just like they just simply
refuse to work with anyone because theyare the experts. They know everything themselves,
or at least that's what they think, and a lot of times what
we find out unfortunately by experience.Experience means you've learned a painful lesson the

(24:45):
hard way, and by not workingwith a financial professional or a legal professional,
you may wind up costing not justsimply you, but your family a
lot of grief and a lot ofmoney down the road around the corner.
So do it yourself is take planningprogram. Let's kind of back up a
step and look at it like this. If you're just crafting a will,

(25:06):
sometimes very simply is for husband wife, all of your stuff goes to her,
all of her stuff goes to you, male versus female. If you're
looking at powers of attorney, makesure that you have in place financial powers
attorney and also for the medical side, your medical directors, your medical powers
of attorney if you will, andmake sure that you don't leave anything out.
One of the most common omissions thatwe see with the financial powers of

(25:29):
attorney is where they don't have theauthority to either update or change or assign
beneficiary designations. So you know,if we've seen it once, we've seen
it a thousand times where that oneomission can have tremendous impact on the future
of a particular estate. So youknow, the reminder there is don't make
that mistake. Yeah, definitely seenthat a number of times, and at

(25:53):
times it meant that money's went tosomeone unintended because at a certain critical point,
no changes can be made to thetrust or the beneficiary structury, even
though they were legitimate concerns and needsfor change. Whoever was left a success
or trustee in charge of making changeslacked the adequate powers. They were not

(26:14):
granted to them properly, just bysome miswording, ill wording, or incomplete
or omissions of critical words and phrases. So it's important these things you get
it done once. You pretty muchare done except for a little bit of
maintenance. If you don't get itdone once correctly, then through the concept
of inherentcency, you are continually caringforward a broken instrument. It doesn't matter

(26:40):
what change you should pile on toit. If the core is bad,
you know the bones. The bonesare good. Remember that song is kind
of a country tune. The bonesare important. Now, when you go
through the process, you'll need tolook at what financial aspects estimating value of
your state, taking consideration income futureincome of the person involved in the state,
the assets and cover by the state, the actual person of the estate,

(27:02):
annual expenses, current assets and debts, Tax implications both federal and state,
the transfers of taxes, moneys,and resources that become tax at different
levels may be tax at a trustlevel, which can be a much higher
tax rate, which the tax bracketsjust soar very quickly. You know how
income tax has banded ranges by dollars, where you progress your way through a

(27:26):
higher incremental tax rate based on income. Well, it's very similar for trust
taxation, but the income brackets aretight and small, and you end up
getting thrown into the highest level uppersa forty percent in a country second.
So sometimes the trust isn't the bestvehicle just because it would cause potentially higher
taxes down the road. Then youintended. You're just trying to get your

(27:48):
stuff the right people in the rightway. With a few conditions here and
there, Lo and behold, youset up and triggered a whole mess of
additional taxes that you would never havedone if you had been eyes wide open,
well informed, making good decisions withgood information. So the state planning
has a lot to do with thefinancial aspect, not just the legal status
and standing of ownership of the stuffencumbered. Well, good news about the
trust as far as taxation is concerned. If you properly structure the trust,

(28:14):
many times you can have the passthrough impact. That means you can have
the effect of the taxation the incomeand then the taxes do on the income
pass through from the trust to theindividuals to the beneficiaries. So again,
properly structuring the trust is so vitallyimportant because, as Greg mentioned, if
you're paying upwards of thirty five toforty percent tax rate on income as low

(28:37):
as say twenty thousand dollars, andthen upwards of twenty to say one hundred
thousand dollars, that's a massive taxbill versus if you pass it through the
individuals and those same individuals are taxat maybe twelve to twenty two percent versus
the thirty five to forty percent.That's a that's a major major difference when
it comes to the impact of taxesand trusts. Now the next one,
Greg, Unfortunately you have some experiencewith this one about one of the major

(29:02):
mistakes is not telling your beneficiaries oryour trustees about your plan. Greg.
Yeah, when it comes to that, it's important to let those people who
you've named either as trustees or beneficiariesabout your state plan and not only trusting
in the wording of the plan.Literally back to letting them know, as
in telling them having a powwow,have a big picture family planning meeting,

(29:26):
just one off. It could bejust over dinner. It can be very
casual. Maybe encourage people to takenotes, take a few notes of your
own, perhaps even write a letterof love that outlines in your own words
what your final wishes are. Itdoesn't have to be all sobby sad.
It doesn't have to be negative.It doesn't have to be legalistic. It
certainly shouldn't be. It shouldn't bejust too heavy or too wordy. It

(29:48):
should just get to the bottom line. Here's my stuff, folks. I
got all these documents here, andthis is what I'm really trying to convey
to you right now. You know, don't waste the money, don't plunder
it. Makewie's decision. Seek goodcounsel. I'm working with the firm.
I want you to go to theday you know or notified at my death.
They know everything I'm intend but I'mtelling you here, I want you
to get this, you to getthat. I want you to be able

(30:10):
to be responsible in taking on therole of this. It's my intent that
so much goes to that charity I'vealways cared about, and the rest goes
to you all and those two kidsthere. And why so specific because we
have found sometimes the legal aspect ofthe trust, like James is talking about,
someone doesn't end up with the rightpowers. The document fails the beneficiaries,

(30:32):
but that doesn't mean the beneficiaries haveto fail themselves. A beneficiary's aware
that certain money is supposed to goaccording to your intent and desire to oh
so and so, And if thedocument ends up wrong and someone else and
another beneficiary, then that OL soand so gets the money. Then hopefully,
hopefully that person has the moral compassand character and integrity, regardless of
the legal standing, that they canreceive those moneies and keep them to can

(30:56):
make the right decision and get thoseresources to who you intended. Because you
had the family discussion. You didn'tleave your beneficiaries for future trustees, successors,
future power of attorney, people inthe dark waiting to just get the
nod once you're dead and someone readsit. You know, some dead trees
with some ink on it. Anyway, just communicate. I guess that's the
bottom line. Well, here's here'sone for you, and here's my personal

(31:19):
experience what this one is. Aspeople get you know, later in their
years, they start hiding things andyou know whether it be there, you
know, put in cash in books, drawers, under mattresses. My dad
unfortunately had a large safe in hishome, but he got to be so
hard of hearing that he could nothear the commindation for the safe. So

(31:41):
his alternative was start hiding stuff wherehe could find them. And unfortunately,
as he also got a little bitlater in years, he forgot where he
hid some of these things. So, as you know, it's like an
Easter egg hunt when we were unfortunatelycleaning stuff out of his home after he'd
passed away. So anyways, justmy personal experience with that one. So
that's as as we mentioned, theseare some things to learn from and try

(32:06):
not to repeat those. Our funnumber at the office five one, three,
five seven, five nine six fivefour call us we can help.
Let's stay tuned. You listening tothe Sound Money Investment Show with Brown Financial
Advisors here in fifty five car seDetox station. Welcome back to the Sound

(32:27):
Many Investment Show with Brown Financial Advisors. I'm Greg Brown and I'm James Fourth
and we are a registered investment advisorfirm and we are independent. We do
our fur clients and our companies.Our fun number five one's three, five,
seven, five nine sixty five tofour, website Brownfinancial Advisors dot com,
email team at Brownfinancial Advisors dot com, and our home offices in Milford,
but we also locations in blueh Westchesterand forms. Greg. Let's look

(32:51):
at leaving your assets is joint TennesseeOkay, estate planning mistakes have the void
them. Well, here's a tipleaving your assets more jointly held held property.
It can be a nightmare of unexpectedtax and non tax problems when the
property is titled jointly between individuals.So should you keep it jointly? Well?
There's pros and cons. We knowthat property jointly held that by default

(33:14):
the other joint owner just becomes asuccess or owner. But there are some
wrinkles. Here's some examples of whatcan and has happened. When the property
is jointly owned. The surviving ownercan give away or leave the formerly joined
owned property to anyone they want,regardless of the delires of the deceased owner.
So if you leave it as simpleas it's ours, well then you
go down. Then it's just theirs. And you might have had an understanding

(33:37):
just generally speaking, that you wantedsome portion or interest of your to go
to someone or something, but itgets subverted because the new owner is who
was the joint owner, and theymay have different plans. So another word,
holding property jointly results in that atotal loss of control at death,
and the surviving owner can completely ignorethe prior wishes of the decedent. You

(34:01):
your wishes on the disposition, whichis another way say how they dispose or
do whatever with the property, andthat loss and control it can be minimal
to horrendous. When the joint ownersare say not related, they're married,
clearly not in agreement as to theultimate recipient of the property. See this
a lot in what you call secondfamilies, sandwich families, etc. Where

(34:22):
you have your set of beneficiaries,they have theirs is kumba yon. Everything's
good while you're married in both thelave and kicking, and then when it
he kicks the bucket, the otherone becomes sole owner. They're under a
lot of pressure. Dress maybe theyhave a bias towards their side of the
family. There can evoke over yours, or your children just upset them,
or there's always that tension, andnow they have the ability to act on

(34:42):
that and solve it by sending yourassets another way. So property owners sometimes
don't even realize jointly held assets likethat pass directly to the driver who can
very well lose the property. Alsodo to taxes, creditors, debtors,
other forms of litigation, lawsuit andsettlement expenses. It's just left exposed.
Sometimes you just need a different structure, wouldn't you agree, so that your

(35:04):
interest in the asset can get directedto the people that you want it to
at your passing and not risk goingthrough transitory hands of the surviving joint owner
of the same said stuff. Soan experienced, well educated professional such as
well, we're experiencing, I thinkwe're well educated. Love to help.
You can help assessue in creating theestate plan that's designed to avoid not just

(35:24):
these possible situations, but solve alot of other issues where they happen too.
So I want to look at acouple elements when it comes to this,
James, All big issue is thinkof the term of gifting versus inheritance.
Here's what happens is a lot oftimes, especially after one of the
spouse has passed away, the otherone tends to want to name children onto

(35:49):
these different types of accounts immediately beforesomeone or anyone else has passed away.
So by you know, putting themon your bank account or on the deed
of the property you've they now createda potential landmine of gifting versus inheritance.
So if you were to pass awayfirst, then the inheritance kicks in and
inheritance has a step up of costbases. That's the major difference between the

(36:12):
gifting versus the inheritance is the lackof a step up of cost basis.
If you gift something so by puttingtheir name like the Chitlun's name on the
deed of your property. Effectively,you've gifted that property to them, either
in part or in full when itcomes to putting their name on the deed
of the property. And then whenit comes time to dispose of that particular

(36:34):
asset and they don't receive the stepup a cost basis, now you've created
a potential major tax implication by themnot receiving the step up. So step
up means that if the house isworth now, say five hundred thousand dollars,
and at the time that she purchasedit way back when it was only
one hundred thousand dollars, if theysold it today five hundred thousand cost bases

(36:55):
for the step up, and thenfive hundred thousand let's just say they sold
it for the proper value. Thatmeans zero taxes are due versus one hundred
thousand cost bass five hundred selling price. They have a four hundred thousand dollars
capital gain to now account for ontheir tax return. So measure twice cut
once when it comes to this.If that's your intention, then that should

(37:15):
be part of your state plan.But if that's an unintended consequence, then
beware of that particular landmine. Greg, What's next? I think I think
that's just a very very important point, and if you look at it from
a different illustration standpoint, maybe demystifyit a bit if you missed it.
Let's say that my dad passed away, my mom received a whole lot of

(37:37):
property as this surviving spouse a jointowner. But in this case marriage original
marriage fully intended to get the stuffbetween my mom and dad. My mom
succeeds my dad. She has thisstuff, but my mom just stays older,
and at that point in life,she feels a little insecure about just
being responsible for all that, andso she puts me on as an owner.

(37:58):
Let's say I'm a little bit naiveand I don't do what we do
for a living, and about thissubject matter, I just don't know what
I don't know. And I said, Okay, Mom, that makes some
sense. I'll have some access andsome rights to access that money and work
on your behalf. You can trustme, you know you can, et
cetera. And then she passes.What just happened when James, what he
just described was that I'm an ownerof that. There was a bad tax

(38:21):
move that just was made all theright intents and purposes, made sense in
a lot of ways, except forit's a very bad tax decision. All
those assets that I could have inheritedat farre at market value if I'd just
been left as a beneficiary, wouldhave meant I'd not paid taxes on all
the gains of this stuff Mom andDad, through Mom left to me as

(38:42):
an owner surviving owner, I owetaxes on the gains if I sell them,
because I'm an owner. I inheritedthe cost basis. Had my mom
in that example just made me powerof attorney and be able to exercise judgment
over all her business dealings, includingher assets, and just left that until
her passing, And then say Iwas there only beneficiary and I received all
this stuff. As James was saying, I wouldn't inherit her cost basis.

(39:04):
I would inherit fair market value asthe cost basis. So it technically had
no gain, no tax due littlethings. And that's more of a financial
perspective than it is a legal perspective. Wellhile, you're just write it up
any way you want, Oh youwant to be joint owners? Sign here
thing one thing too done? Butwhat about taxes very costly. So just
I know that was redundant, butthat's a big one, my friend.

(39:25):
Oh yeah. Another category is aboutestate taxes, and this kind of dovetails
into gifting plus the estate taxes,because currently the estate tax exemption limit is
extremely high, at least comparatively speakingfor most people. What we meant by
that is there's a twelve point ninemillion dollar exemption per individual, and if
you do it right that means fileyour forms correctly and it's called a tax

(39:47):
return filing that properly, then thatcan be doubled up to twenty five million
per couple. So twenty five pointeight four million per couple is a pretty
large number that you can exempt froma state taxes. And most states here
locally at least do not have anestate tax at the state level. Kentucky
does have a form of inheritance taxdepending upon like the different circles of relationships.

(40:13):
So if you're in the inner circleof the family, you don't like
direct family sister, mother, brother, et cetera, you won't have an
inheritance tax. If you're like twoor three circles outwards from that, distant
relatives, not close relatives. You'relikely to have some level of inheritance tax
when it comes to the state ofKentucky. So when it comes to gifting,
think about it this way. There'sa current gifting limit or what they

(40:37):
call the exemption amount. The exemptionamount means basically, don't ask, don't
tell. So if it's under theexemption amount, there's no forms that need
to be filed, no reporting thatneeds to be done. Just simply give
your money away to who you wantto give it to and that's it.
That limit is seventeen thousand dollars perperson per year, and again that can
be excluded from what could otherwise becomeyour estate. If you're married, then

(41:00):
potentially that could be doubled to thirtyfour thousand. So constructively, if you're
gifting something to a person, eachof you, each of the husband wife
team, could gift seventeen thousand dollarsper person per year to the same individual.
That's why we say it could bedoubled from seventeen to thirty four thousand.
So just some examples that may requirecash for your or state. When

(41:21):
it comes to this type of planning, think about and this is again for
the large estates out there, thefederal state tax. There also could be
federal state local income taxes. Therealso could be for many people out there
who don't do this properly, probatecosts, admission costs, so estate tax.
Think of it also this way.It applies to all of your assets,
no matter how they are titled.That means if it's your asset,

(41:45):
if you had a revocable trust,it's still your asset. So Greg,
any other thoughts on that, No, just to keep going back to ownership,
title and assets and all for theright reason. And if you have
those all lined up for the correctreason and you put it in the proper
legal document, you are golden.And if you do this soon, you
won't have to do it often.It'll be done right. So just let's

(42:06):
let's address this. It's on yourmind, it's the topic of our day,
and we will help you with itany time that you're ready. And
our funder brought the office five onethree, five, seven, five nine
six five four again five one three, five, seven, five nine sixty
five four call us we can helpnow behalf of Greg myself. James.
We want to thank you for listeningtoday. Have a great we can remember

(42:27):
this sound money where good things arebelievable, achievable and true for you
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