The Critical Safety Net Most Parents Forget: Estate Planning for Your Child’s Future
If you died tonight, who would decide your child’s future? Without proper estate planning, that crucial decision would be left to a stranger in a courtroom.
This isn’t an exaggeration—it’s the reality many children face when parents skip estate planning.
While you’re meticulously researching car seats and preschools, there’s a critical gap in your children’s safety net: who will raise them if you can’t, and how will they be provided for?
No, this isn’t just another task to add to your overwhelming parent to-do list. It’s the single most important protection you can give your children—more crucial than any car seat or college fund.
The Guardian Question: Don’t Let Courts Decide Your Children’s Future
Picture this scenario:
Two sets of loving grandparents are fighting in court over your children. One pair lives three blocks from your kids’ school. The other has a bigger house and better retirement savings. Both think they know what’s best.
Meanwhile, your children are living in temporary foster care while judges and lawyers debate their future.
This isn’t a hypothetical—it’s a scene that plays out in family courts every week. And it happens because young parents put off a 30-minute conversation about guardianship.
Ask yourself: If something happened to you right now, who would raise your children?
An estate plan ensures YOU choose who becomes Guardian of your kids if you can’t. Without clear documentation, a judge who doesn’t know your family will make this crucial decision.
I’ve witnessed countless courtroom battles where grandparents and loved ones fight over who raises children, turning what should be a time of healing into a difficult legal struggle.
The Money Problem No One Talks About
Here’s a startling truth: without proper planning, even a life insurance payout meant to protect your children could end up causing problems.
Without proper estate planning, an 18-year-old could suddenly inherit hundreds of thousands of dollars—with no strings attached and no guidance. Or worse, your spouse might have to petition a court just to access funds for your children’s basic needs.
Estate planning isn’t just about who raises your kids—it’s about protecting them from financial disasters that well-meaning parents accidentally create. A proper plan ensures:
Your children’s guardian has immediate access to funds for daily expenses
Money is released at the right ages and milestones, not all at once
Education and healthcare needs are covered without court intervention
Assets go to your children instead of being eaten up by taxes and legal fees
8 Ways Good Parents Accidentally Leave Their Kids Vulnerable
Hypothetical 1. “We’ll Do It Later” (Until It’s Too Late)
Remember the couple who kept putting off their estate plan because they were “too young”? Their kids spent months in state care while relatives fought over custody. Youth doesn’t make you immortal—it makes planning more crucial.
Hypothetical 2. The $99 Online Will That Cost $50,000
Sarah thought she was being smart by using a cheap online template. After she died, the court invalidated it over a simple witnessing error. Her daughter’s inheritance was cut in half by legal fees. The money Sarah saved on proper planning cost her daughter her college fund.
Hypothetical 3. “Set It and Forget It” Gone Wrong
Mike created a will when his first daughter was born. Ten years and two more kids later, he still hadn’t updated it. After his accident, his outdated plan left nothing for his younger children and still listed his ex-wife as guardian.
Hypothetical 4. The Life Insurance Trap
The Hendersons thought they were clever naming their kids as direct beneficiaries on a $500,000 policy. After John’s death, their teenage son couldn’t touch the money without a court-appointed guardian—even for college tuition. The court fees and restrictions lasted until he turned 21, exactly when he needed guidance the most.
Hypothetical 5. “The Other Parent Will Handle It”
Maria assumed her ex would automatically get custody of their daughter. But when Maria died suddenly, her daughter spent weeks in temporary care while her ex fought Maria’s parents in court. A simple guardianship designation could have prevented the trauma.
Hypothetical 6. The Lost Digital Legacy
The Patels had everything planned except their digital assets. After they died, their children lost access to thousands of family photos stored in the cloud, cryptocurrency worth $30,000, and a thriving online business that could have supported their education. No one knew the passwords or had legal authority to recover the accounts.
Hypothetical 7. The “All at Once” Inheritance Disaster
Rob inherited $200,000 on his 18th birthday—his parents’ entire life savings. Within two years, it was gone: sports cars, failed investments, and “friends” who disappeared along with the money. His sister, who inherited at 25 thanks to their grandmother’s better-planned trust, used her inheritance for a house down payment.
Hypothetical 8. The Silent Plan
The Wilsons did everything right on paper but told no one. After their accident, their chosen guardians were traveling abroad for a year. Their backup guardians had moved across the country. Their children spent months in foster care while family members scrambled to locate and understand the estate documents.
Think of estate planning like insurance: you don’t buy it because you plan to use it. You buy it because the cost of not having it is devastating.
Essential Legal Tools for Young Parents
While a will is important, it’s just one piece of the puzzle. Young parents need these four essential legal tools to fully protect their family:
Revocable Living Trust
Think of a living trust as your family’s private instruction manual for the future. Unlike a last will which becomes public record, a trust keeps your family’s affairs private and offers three crucial benefits:
Immediate Access to Funds
- Without a trust, your family might wait months or years to access money
- Your estate gets tied up in legal processes
- Your spouse might need court permission just to access your checking account for groceries
Age-Appropriate Distribution
- Structure payments for when your children are ready
- Example: 25% at age 25, 50% at 30, rest at 35
- Prevents unprepared 18-year-olds from receiving large sums at once
Special Needs Planning
- Provides for children with special needs
- Maintains eligibility for government benefits
- Ensures long-term care and support
Power of Attorney
This isn’t just for the elderly. Young parents need this even more. Imagine you’re in a serious accident and spend three months in the hospital without a power of attorney:
- Your spouse might not be able to modify your joint mortgage.
- No one could manage your work benefits or retirement savings plan.
- Business owners wouldn’t have someone to sign contracts or manage payroll.
- A power of attorney lets you choose someone you trust to handle these matters, preventing financial paralysis during a crisis.
Healthcare Directives
As a young parent, your healthcare decisions affect your entire family. Healthcare directives protect both you and your loved ones through two essential documents:
Medical Power of Attorney
- Names someone to make medical decisions if you can’t
- Gives clear legal authority to your chosen representative
- Prevents delays in critical care decisions
- Without this, even your spouse might need court approval
Living Will
- Specifies your wishes for end-of-life care
- Prevents family conflicts during crisis
- Spares loved ones from guessing your preferences
- Provides clear guidance for medical teams
Critical Questions Your Directives Should Answer:
- Do you want aggressive treatment at any cost?
- What are your wishes about life support?
- Who can approve experimental treatments?
- What are your organ donation preferences?
Having these decisions documented now prevents your family from facing impossible choices during a crisis.
Life Insurance: Beyond Just Buying a Policy
Life insurance provides crucial financial protection, but it must work hand-in-hand with your estate plan. Here’s how to get it right:
Calculate True Coverage NeedsThe old “10x your salary” rule often falls short. Consider:
- Lost income years until children reach adulthood
- Full mortgage payoff amount
- Future college expenses for each child
- Childcare costs (especially crucial if a stay-at-home parent dies)
- Final expenses and potential medical bills
Set Up Proper Beneficiary Structure
Common mistakes to avoid:
- Never name minor children as direct beneficiaries
- Don’t name individuals without clear instructions
- Don’t forget to update after life changes
Instead:
- Have insurance pay into your trust
- Let the trust manage money according to your wishes
- Ensure immediate access for your children’s guardian
Choose the Right Type of Policy
For most young families:
- Term insurance offers maximum coverage at minimum cost
- 20-30 year terms cover the critical child-raising years
- Consider multiple policies with different term lengths
- Special situations requiring permanent insurance:
- Children with special needs
- Estate tax planning needs
- Business succession plans
\These four tools work together as a complete safety net. Think of your estate plan like a car’s safety system - airbags (trust), seatbelts (power of attorney), anti-lock brakes (healthcare directives), and insurance all play crucial roles. You wouldn’t want to drive without any of them.
Keeping Your Plan Updated
Your estate plan should grow with your family. Review and update it when:
- You have another child.
- You buy a new home.
- Your financial situation changes significantly
- The circumstances of your chosen guardians change.
- At minimum, review your plan every 2-3 years.
Next Steps
The best gift you can give your children isn’t the latest toy or a college savings account. It’s the certainty that they’ll be protected and cared for, no matter what tomorrow brings. Every day without an estate plan is a day your children’s future is left to chance.
Protect your family this week with these four simple steps:
- Schedule a consultation with an estate planning attorney.
- Have an honest conversation with your chosen guardians.
- Make a list of your assets, including digital accounts.
- Review your life insurance coverage.
You already make countless daily decisions to protect your children – from researching the safest car seats to choosing the best schools. Creating an estate plan is just as essential as any of these parenting decisions. Don’t wait until it’s too late to give your family this fundamental protection.
Your children are depending on you to plan ahead, even if they don’t know it yet.
View on YouTube: https://youtu.be/jFtD2k8_a18
The Critical Safety Net Most Parents Forget: Estate Planning for Your Child’s Future
If you died tonight, who would decide your child’s future? Without proper estate planning, that crucial decision would be left to a stranger in a courtroom.
This isn’t an exaggeration—it’s the reality many children face when parents skip estate planning.
While you’re meticulously researching car seats and preschools, there’s a critical gap in your children’s safety net: who will raise them if you can’t, and how will they be provided for?
No, this isn’t just another task to add to your overwhelming parent to-do list. It’s the single most important protection you can give your children—more crucial than any car seat or college fund.
The Guardian Question: Don’t Let Courts Decide Your Children’s Future
Picture this scenario:
Two sets of loving grandparents are fighting in court over your children. One pair lives three blocks from your kids’ school. The other has a bigger house and better retirement savings. Both think they know what’s best.
Meanwhile, your children are living in temporary foster care while judges and lawyers debate their future.
This isn’t a hypothetical—it’s a scene that plays out in family courts every week. And it happens because young parents put off a 30-minute conversation about guardianship.
Ask yourself: If something happened to you right now, who would raise your children?
An estate plan ensures YOU choose who becomes Guardian of your kids if you can’t. Without clear documentation, a judge who doesn’t know your family will make this crucial decision.
I’ve witnessed countless courtroom battles where grandparents and loved ones fight over who raises children, turning what should be a time of healing into a difficult legal struggle.
The Money Problem No One Talks About
Here’s a startling truth: without proper planning, even a life insurance payout meant to protect your children could end up causing problems.
Without proper estate planning, an 18-year-old could suddenly inherit hundreds of thousands of dollars—with no strings attached and no guidance. Or worse, your spouse might have to petition a court just to access funds for your children’s basic needs.
Estate planning isn’t just about who raises your kids—it’s about protecting them from financial disasters that well-meaning parents accidentally create. A proper plan ensures:
Your children’s guardian has immediate access to funds for daily expenses
Money is released at the right ages and milestones, not all at once
Education and healthcare needs are covered without court intervention
Assets go to your children instead of being eaten up by taxes and legal fees
8 Ways Good Parents Accidentally Leave Their Kids Vulnerable
Hypothetical 1. “We’ll Do It Later” (Until It’s Too Late)
Remember the couple who kept putting off their estate plan because they were “too young”? Their kids spent months in state care while relatives fought over custody. Youth doesn’t make you immortal—it makes planning more crucial.
Hypothetical 2. The $99 Online Will That Cost $50,000
Sarah thought she was being smart by using a cheap online template. After she died, the court invalidated it over a simple witnessing error. Her daughter’s inheritance was cut in half by legal fees. The money Sarah saved on proper planning cost her daughter her college fund.
Hypothetical 3. “Set It and Forget It” Gone Wrong
Mike created a will when his first daughter was born. Ten years and two more kids later, he still hadn’t updated it. After his accident, his outdated plan left nothing for his younger children and still listed his ex-wife as guardian.
Hypothetical 4. The Life Insurance Trap
The Hendersons thought they were clever naming their kids as direct beneficiaries on a $500,000 policy. After John’s death, their teenage son couldn’t touch the money without a court-appointed guardian—even for college tuition. The court fees and restrictions lasted until he turned 21, exactly when he needed guidance the most.
Hypothetical 5. “The Other Parent Will Handle It”
Maria assumed her ex would automatically get custody of their daughter. But when Maria died suddenly, her daughter spent weeks in temporary care while her ex fought Maria’s parents in court. A simple guardianship designation could have prevented the trauma.
Hypothetical 6. The Lost Digital Legacy
The Patels had everything planned except their digital assets. After they died, their children lost access to thousands of family photos stored in the cloud, cryptocurrency worth $30,000, and a thriving online business that could have supported their education. No one knew the passwords or had legal authority to recover the accounts.
Hypothetical 7. The “All at Once” Inheritance Disaster
Rob inherited $200,000 on his 18th birthday—his parents’ entire life savings. Within two years, it was gone: sports cars, failed investments, and “friends” who disappeared along with the money. His sister, who inherited at 25 thanks to their grandmother’s better-planned trust, used her inheritance for a house down payment.
Hypothetical 8. The Silent Plan
The Wilsons did everything right on paper but told no one. After their accident, their chosen guardians were traveling abroad for a year. Their backup guardians had moved across the country. Their children spent months in foster care while family members scrambled to locate and understand the estate documents.
Think of estate planning like insurance: you don’t buy it because you plan to use it. You buy it because the cost of not having it is devastating.
Essential Legal Tools for Young Parents
While a will is important, it’s just one piece of the puzzle. Young parents need these four essential legal tools to fully protect their family:
Revocable Living Trust
Think of a living trust as your family’s private instruction manual for the future. Unlike a last will which becomes public record, a trust keeps your family’s affairs private and offers three crucial benefits:
Immediate Access to Funds
- Without a trust, your family might wait months or years to access money
- Your estate gets tied up in legal processes
- Your spouse might need court permission just to access your checking account for groceries
Age-Appropriate Distribution
- Structure payments for when your children are ready
- Example: 25% at age 25, 50% at 30, rest at 35
- Prevents unprepared 18-year-olds from receiving large sums at once
Special Needs Planning
- Provides for children with special needs
- Maintains eligibility for government benefits
- Ensures long-term care and support
Power of Attorney
This isn’t just for the elderly. Young parents need this even more. Imagine you’re in a serious accident and spend three months in the hospital without a power of attorney:
- Your spouse might not be able to modify your joint mortgage.
- No one could manage your work benefits or retirement savings plan.
- Business owners wouldn’t have someone to sign contracts or manage payroll.
- A power of attorney lets you choose someone you trust to handle these matters, preventing financial paralysis during a crisis.
Healthcare Directives
As a young parent, your healthcare decisions affect your entire family. Healthcare directives protect both you and your loved ones through two essential documents:
Medical Power of Attorney
- Names someone to make medical decisions if you can’t
- Gives clear legal authority to your chosen representative
- Prevents delays in critical care decisions
- Without this, even your spouse might need court approval
Living Will
- Specifies your wishes for end-of-life care
- Prevents family conflicts during crisis
- Spares loved ones from guessing your preferences
- Provides clear guidance for medical teams
Critical Questions Your Directives Should Answer:
- Do you want aggressive treatment at any cost?
- What are your wishes about life support?
- Who can approve experimental treatments?
- What are your organ donation preferences?
Having these decisions documented now prevents your family from facing impossible choices during a crisis.
Life Insurance: Beyond Just Buying a Policy
Life insurance provides crucial financial protection, but it must work hand-in-hand with your estate plan. Here’s how to get it right:
Calculate True Coverage NeedsThe old “10x your salary” rule often falls short. Consider:
- Lost income years until children reach adulthood
- Full mortgage payoff amount
- Future college expenses for each child
- Childcare costs (especially crucial if a stay-at-home parent dies)
- Final expenses and potential medical bills
Set Up Proper Beneficiary Structure
Common mistakes to avoid:
- Never name minor children as direct beneficiaries
- Don’t name individuals without clear instructions
- Don’t forget to update after life changes
Instead:
- Have insurance pay into your trust
- Let the trust manage money according to your wishes
- Ensure immediate access for your children’s guardian
Choose the Right Type of Policy
For most young families:
- Term insurance offers maximum coverage at minimum cost
- 20-30 year terms cover the critical child-raising years
- Consider multiple policies with different term lengths
- Special situations requiring permanent insurance:
- Children with special needs
- Estate tax planning needs
- Business succession plans
\These four tools work together as a complete safety net. Think of your estate plan like a car’s safety system - airbags (trust), seatbelts (power of attorney), anti-lock brakes (healthcare directives), and insurance all play crucial roles. You wouldn’t want to drive without any of them.
Keeping Your Plan Updated
Your estate plan should grow with your family. Review and update it when:
- You have another child.
- You buy a new home.
- Your financial situation changes significantly
- The circumstances of your chosen guardians change.
- At minimum, review your plan every 2-3 years.
Next Steps
The best gift you can give your children isn’t the latest toy or a college savings account. It’s the certainty that they’ll be protected and cared for, no matter what tomorrow brings. Every day without an estate plan is a day your children’s future is left to chance.
Protect your family this week with these four simple steps:
- Schedule a consultation with an estate planning attorney.
- Have an honest conversation with your chosen guardians.
- Make a list of your assets, including digital accounts.
- Review your life insurance coverage.
You already make countless daily decisions to protect your children – from researching the safest car seats to choosing the best schools. Creating an estate plan is just as essential as any of these parenting decisions. Don’t wait until it’s too late to give your family this fundamental protection.
Your children are depending on you to plan ahead, even if they don’t know it yet.
View on YouTube: https://youtu.be/jFtD2k8_a18
Factors to Consider When Choosing an Oklahoma City Probate Law Firm
When choosing a probate law firm in Oklahoma City, there are several factors to consider:
Experience and expertise
It is important to choose a law firm with experience and expertise in probate law. Look for a firm that has handled cases similar to yours and has a track record of success.
Reputation and reviews
Research the reputation of the law firm and read reviews from past clients. This will give you an idea of their level of professionalism and the quality of their services.
Communication and accessibility
Choose a law firm that is easy to communicate with and is accessible when you need them. You should feel comfortable asking questions and receiving updates throughout the process.
Fees and billing practices
Make sure you understand the law firm's fees and billing practices before hiring them. Ask for a clear breakdown of costs and any potential additional fees.
Understanding Probate Law in Oklahoma City
Probate law refers to the legal process of administering the estate of a deceased person. This includes distributing assets, paying off debts, and resolving any disputes that may arise. In Oklahoma City, the probate process can be complex and time-consuming, which is why it is important to hire a probate law firm to guide you through the process.
Some common probate law services include estate planning, estate administration, and drafting estate planning documents such as wills and advance directive health care documents.
Questions to Ask During the Selection Process
When meeting with potential probate law firms, be sure to ask the following questions:
What is your experience with probate cases similar to mine?
It is important to choose a law firm with experience handling cases similar to yours. Ask about their success rate and any challenges they have faced in similar cases.
How do you communicate with clients throughout the process?
Communication is key during the probate process. Ask the attorneys how they communicate with their clients. Do they have a client portal that provides a way to securely share sensitive information? How often do they give updates on your matter? While email and text are quick ways to communicate they are not often secure. Attorneys who appear in court everyday might not be able to read emails and text messages every minute of the day. Often times, it is easier to call the their office and the receptionist is usually able to find the attorney whether they are in the office or the halls of the courthouse.
Probate attorney fees and billing practices
Make sure you understand the law firm's fees and billing practices before hiring them. Ask for a clear breakdown of costs and any potential additional fees. Some probate attorneys bill by the house and some bill a flat fee. While a flat fee might sound good you need to weigh the amount of work that needs to be done.
Client testimonials
Check the client reviews on Google, Facebook and Yelp. Did other probate clients give the law firm five stars? How old are the reviews?
How to Prepare for Your Initial Consultation with an Oklahoma City Probate Law Firm
Before your initial consultation with a probate law firm in Oklahoma City, there are several things you can do to prepare:
Gather necessary documents and information
Bring any necessary documents and information related to the probate process, such as wills, death certificates, property deeds, and financial statements.
Be prepared to discuss your goals and priorities
Be prepared to discuss your goals and priorities for the probate process, such as distributing assets or resolving disputes.
Understand the attorney-client relationship
Understand the attorney-client relationship and what you can expect from the law firm throughout the process.
Conclusion
Choosing the right probate law firm in Oklahoma City is an important decision that should not be taken lightly. By considering factors such as experience, reputation, communication, and fees, and asking the right questions during the selection process, you can find a law firm that meets your unique needs.
Factors to Consider When Choosing an Oklahoma City Probate Law Firm
When choosing a probate law firm in Oklahoma City, there are several factors to consider:
Experience and expertise
It is important to choose a law firm with experience and expertise in probate law. Look for a firm that has handled cases similar to yours and has a track record of success.
Reputation and reviews
Research the reputation of the law firm and read reviews from past clients. This will give you an idea of their level of professionalism and the quality of their services.
Communication and accessibility
Choose a law firm that is easy to communicate with and is accessible when you need them. You should feel comfortable asking questions and receiving updates throughout the process.
Fees and billing practices
Make sure you understand the law firm's fees and billing practices before hiring them. Ask for a clear breakdown of costs and any potential additional fees.
Understanding Probate Law in Oklahoma City
Probate law refers to the legal process of administering the estate of a deceased person. This includes distributing assets, paying off debts, and resolving any disputes that may arise. In Oklahoma City, the probate process can be complex and time-consuming, which is why it is important to hire a probate law firm to guide you through the process.
Some common probate law services include estate planning, estate administration, and drafting estate planning documents such as wills and advance directive health care documents.
Questions to Ask During the Selection Process
When meeting with potential probate law firms, be sure to ask the following questions:
What is your experience with probate cases similar to mine?
It is important to choose a law firm with experience handling cases similar to yours. Ask about their success rate and any challenges they have faced in similar cases.
How do you communicate with clients throughout the process?
Communication is key during the probate process. Ask the attorneys how they communicate with their clients. Do they have a client portal that provides a way to securely share sensitive information? How often do they give updates on your matter? While email and text are quick ways to communicate they are not often secure. Attorneys who appear in court everyday might not be able to read emails and text messages every minute of the day. Often times, it is easier to call the their office and the receptionist is usually able to find the attorney whether they are in the office or the halls of the courthouse.
Probate attorney fees and billing practices
Make sure you understand the law firm's fees and billing practices before hiring them. Ask for a clear breakdown of costs and any potential additional fees. Some probate attorneys bill by the house and some bill a flat fee. While a flat fee might sound good you need to weigh the amount of work that needs to be done.
Client testimonials
Check the client reviews on Google, Facebook and Yelp. Did other probate clients give the law firm five stars? How old are the reviews?
How to Prepare for Your Initial Consultation with an Oklahoma City Probate Law Firm
Before your initial consultation with a probate law firm in Oklahoma City, there are several things you can do to prepare:
Gather necessary documents and information
Bring any necessary documents and information related to the probate process, such as wills, death certificates, property deeds, and financial statements.
Be prepared to discuss your goals and priorities
Be prepared to discuss your goals and priorities for the probate process, such as distributing assets or resolving disputes.
Understand the attorney-client relationship
Understand the attorney-client relationship and what you can expect from the law firm throughout the process.
Conclusion
Choosing the right probate law firm in Oklahoma City is an important decision that should not be taken lightly. By considering factors such as experience, reputation, communication, and fees, and asking the right questions during the selection process, you can find a law firm that meets your unique needs.
No more Step Up in basis?
No more step-up in basis for capital gains purposes for property that's not included in the taxable estate upon death.
The IRS just came out with a new ruling, I believe it's ruling number 2023-2, and it might have a drastic effect on how capital gains is taxed.
First of all you've heard me talk about Step Up basis for capital gains purposes in many other videos. Basically it goes like this if you are a parent and you purchase a house say in the 1970s for ten thousand dollars.
When you die that house is worth two hundred thousand dollars. You give the house to your children as part of your estate.
Whether it's a will or by intestate succession they inherit the property at the Step Up basis of two hundred thousand dollars for capital gains purposes. That means if they turn around and sell that house for two hundred thousand dollars there's no capital gains due.
However the a mistake that a lot of parents make is that they try to give that property to their children before they die.
If that same parent bought that house for ten thousand dollars in the 1970s and they gave it to their children today in 2023 and the house is worth two hundred thousand dollars the parent has triggered a capital gains event of a hundred and ninety thousand dollars.
I know what you're gonna say because we get it all the time in our comments.
The comment section always has several folks that state "I fixed it because they only sold it to me for a dollar."
It doesn't matter what you sell it for. What matters in the eyes of the IRS is what the actual appraised value of the property is on the date of transfer.
So, if your parents give you a piece of property during their lifetime and it's valued at two hundred thousand dollars and they bought it for ten thousand dollars, then there's a capital gains event of a hundred and ninety thousand dollars that taxes have to be paid on.
Why is IRS ruling 2023-2 important?
The IRS ruling important for estate planning because it has to do with the taxable estate. If property is transferred after your death and it's part of your taxable estate, then in that case the Step Up basis will still apply
If you have a revocable living trust and you've put a piece of property in there and you say that when you die that property goes to Enrique.
Enrique will inherit that property as of 2023 at the stepped up basis of two hundred thousand dollars instead of the ten thousand dollars that Mom and Dad bought the house for in the 70s. The same goes if it was transferred during the probate process.
Irrevocable Trusts
Where this ruling affects people is on irrevocable trusts.
You always hear me talking about revocable trust but there is also something out there called an irrevocable trust that people use for purposes of going into assisted living. When you go into assisted living you have to draw down your assets to a certain point before government benefits start to kick in.
What a lot of people do is they put their money and their house into what's called an irrevocable trust. In an Irrevocable trust they essentially cannot control the property anymore. They are usually the beneficiary of the trust, but no longer have control.
Taxable Estate
The question has become whether or not on death that property is part of the taxable estate when a person dies. This ruling is basically saying that if your property is in an irrevocable trust they are taking the position that when you die that was not part of your taxable estate anymore.
That means that if it's not part of your taxable estate the capital gain should apply and you don't get the Step Up basis. Under this ruling, if you have your house in an irrevocable trust you still give it to your son Enrique.
Now, Enrique is not going to get the advantage of having that step up basis of two hundred thousand dollars. Instead he's going to inherit the property at the appraised value of when you originally purchased the property at ten thousand dollars. That means that when Enrique decides to sell that house he is going to have to pay capital gains on a hundred and ninety thousand dollars.
You see how significant this ruling could affect people if they have created an irrevocable trust and put real estate or other assets that can appreciate into the irrevocable trust. Their heirs may be slapped with a very huge capital gains tax.
This is going to cost thousands and thousands of Estates thousands and thousands of dollars. If you're in that position it might be a really good idea to talk to your estate planning an attorney and your tax professional.
No more Step Up in basis?
No more step-up in basis for capital gains purposes for property that's not included in the taxable estate upon death.
The IRS just came out with a new ruling, I believe it's ruling number 2023-2, and it might have a drastic effect on how capital gains is taxed.
First of all you've heard me talk about Step Up basis for capital gains purposes in many other videos. Basically it goes like this if you are a parent and you purchase a house say in the 1970s for ten thousand dollars.
When you die that house is worth two hundred thousand dollars. You give the house to your children as part of your estate.
Whether it's a will or by intestate succession they inherit the property at the Step Up basis of two hundred thousand dollars for capital gains purposes. That means if they turn around and sell that house for two hundred thousand dollars there's no capital gains due.
However the a mistake that a lot of parents make is that they try to give that property to their children before they die.
If that same parent bought that house for ten thousand dollars in the 1970s and they gave it to their children today in 2023 and the house is worth two hundred thousand dollars the parent has triggered a capital gains event of a hundred and ninety thousand dollars.
I know what you're gonna say because we get it all the time in our comments.
The comment section always has several folks that state "I fixed it because they only sold it to me for a dollar."
It doesn't matter what you sell it for. What matters in the eyes of the IRS is what the actual appraised value of the property is on the date of transfer.
So, if your parents give you a piece of property during their lifetime and it's valued at two hundred thousand dollars and they bought it for ten thousand dollars, then there's a capital gains event of a hundred and ninety thousand dollars that taxes have to be paid on.
Why is IRS ruling 2023-2 important?
The IRS ruling important for estate planning because it has to do with the taxable estate. If property is transferred after your death and it's part of your taxable estate, then in that case the Step Up basis will still apply
If you have a revocable living trust and you've put a piece of property in there and you say that when you die that property goes to Enrique.
Enrique will inherit that property as of 2023 at the stepped up basis of two hundred thousand dollars instead of the ten thousand dollars that Mom and Dad bought the house for in the 70s. The same goes if it was transferred during the probate process.
Irrevocable Trusts
Where this ruling affects people is on irrevocable trusts.
You always hear me talking about revocable trust but there is also something out there called an irrevocable trust that people use for purposes of going into assisted living. When you go into assisted living you have to draw down your assets to a certain point before government benefits start to kick in.
What a lot of people do is they put their money and their house into what's called an irrevocable trust. In an Irrevocable trust they essentially cannot control the property anymore. They are usually the beneficiary of the trust, but no longer have control.
Taxable Estate
The question has become whether or not on death that property is part of the taxable estate when a person dies. This ruling is basically saying that if your property is in an irrevocable trust they are taking the position that when you die that was not part of your taxable estate anymore.
That means that if it's not part of your taxable estate the capital gain should apply and you don't get the Step Up basis. Under this ruling, if you have your house in an irrevocable trust you still give it to your son Enrique.
Now, Enrique is not going to get the advantage of having that step up basis of two hundred thousand dollars. Instead he's going to inherit the property at the appraised value of when you originally purchased the property at ten thousand dollars. That means that when Enrique decides to sell that house he is going to have to pay capital gains on a hundred and ninety thousand dollars.
You see how significant this ruling could affect people if they have created an irrevocable trust and put real estate or other assets that can appreciate into the irrevocable trust. Their heirs may be slapped with a very huge capital gains tax.
This is going to cost thousands and thousands of Estates thousands and thousands of dollars. If you're in that position it might be a really good idea to talk to your estate planning an attorney and your tax professional.
ESTATE PLANNING
As I look through photos on a recent family vacation filled with memories lots of family there friends people I hadn't seen in a long time, I can't help but reflect on how important it is to have an estate plan in place.
I know that sounds weird but hear me out.
Estate planning is so much more than just a piece of paper that you get from your lawyer and you put in a drawer. It's a gift we Leave Behind for our loved ones.
Ensuring that our wishes are honored, and our Legacy is protected. It's also an extremely valuable gift giving our loved ones instructions on exactly what you want to happen if you were to ever become incapacitated.
In my opinion after doing this for over 20 years, I believe that incapacity planning is the most important part of Estate Planning.
In a very close second place it's also about what happens to your assets. We can't forget about that. It is also about securing our assets providing for your children's future. Ensuring that your hard earned wealth is going to be distributed according to your wishes.
HEALTH CARE
But it's not just about money.
Estate planning also involves making important decisions about health care. Appointing someone we trust to make medical decisions on our behalf when we are unable to do so. By planning ahead we can ease the burden on our loved ones during difficult times.
It's a way to protect them from unnecessary stress conflicts and confusion. If there's no plan in place they are going to start fighting with each other. In a lot of cases we have had situations where step children have taken the husband of 20 or 30 years to court. Usually because they don't like the health care steps the husband is making. How he's caring for his wife.
Maybe that was a decision that they made together that maybe that wife wanted to go into a nursing facility assisted living facility. She wanted to be protected at her home and cared for in her home.
Those are all decisions that if it's not on paper it can create conflict with family. Actually a lot of times end up in court costing thousands of dollars.
If the unfortunate were to happen right now and you were involved in some sort of accident that rendered you incapacitated for a few months or even for the rest of your life, what is your plan? What's your plan right now?
Let me say it this way:
If you knew, absolutely, that within one year you are going to be incapacitated for the rest of your life, do you want to be the one that makes plans? Makes the decisions on how you are going to be taken care of?
Would you rather your family and friends have to go down to the courthouse? Force them to get a guardianship from a judge that they probably never even met before and get permission just to take care of you on a daily basis?
If you don't make any plans for that incapacity in a year's time, what do you think your family is going to do?
What is their reaction going to be? Do you think they are going to fight with each other over your care? Do you think they have the money and the resources to take care of you on a daily basis? Do you have the money and resources to take care of you on a daily basis?
All of these are questions that go into your incapacity plan.
That is why I feel it's so important to have it in your revocable living trust centered estate plan. Get it in writing, ahead of time.
I'm not forgetting about your assets either. Those are very important.
After you pass away, how do you want your assets to be distributed to your beneficiaries?
When do you want them to receive their distribution?
These are all decisions you get to make if you have an estate plan in place.
WHY IS ESTATE PLANNING SO IMPORTANT?
There are many reasons why you may or may not want to leave a certain amount of inheritance to your kids and grandkids. Maybe some of your children are really good with money. You know that if you give them a lump sum of money they are going to take care of that money and it's going to be put to good use.
You also probably know that for some of your heirs if you give them ten dollars they're going to spend twenty dollars.
In your revocable living trust centered estate plan you can specify exactly how and when you want your inheritance to be distributed.
ESTATE PLANNING
As I look through photos on a recent family vacation filled with memories lots of family there friends people I hadn't seen in a long time, I can't help but reflect on how important it is to have an estate plan in place.
I know that sounds weird but hear me out.
Estate planning is so much more than just a piece of paper that you get from your lawyer and you put in a drawer. It's a gift we Leave Behind for our loved ones.
Ensuring that our wishes are honored, and our Legacy is protected. It's also an extremely valuable gift giving our loved ones instructions on exactly what you want to happen if you were to ever become incapacitated.
In my opinion after doing this for over 20 years, I believe that incapacity planning is the most important part of Estate Planning.
In a very close second place it's also about what happens to your assets. We can't forget about that. It is also about securing our assets providing for your children's future. Ensuring that your hard earned wealth is going to be distributed according to your wishes.
HEALTH CARE
But it's not just about money.
Estate planning also involves making important decisions about health care. Appointing someone we trust to make medical decisions on our behalf when we are unable to do so. By planning ahead we can ease the burden on our loved ones during difficult times.
It's a way to protect them from unnecessary stress conflicts and confusion. If there's no plan in place they are going to start fighting with each other. In a lot of cases we have had situations where step children have taken the husband of 20 or 30 years to court. Usually because they don't like the health care steps the husband is making. How he's caring for his wife.
Maybe that was a decision that they made together that maybe that wife wanted to go into a nursing facility assisted living facility. She wanted to be protected at her home and cared for in her home.
Those are all decisions that if it's not on paper it can create conflict with family. Actually a lot of times end up in court costing thousands of dollars.
If the unfortunate were to happen right now and you were involved in some sort of accident that rendered you incapacitated for a few months or even for the rest of your life, what is your plan? What's your plan right now?
Let me say it this way:
If you knew, absolutely, that within one year you are going to be incapacitated for the rest of your life, do you want to be the one that makes plans? Makes the decisions on how you are going to be taken care of?
Would you rather your family and friends have to go down to the courthouse? Force them to get a guardianship from a judge that they probably never even met before and get permission just to take care of you on a daily basis?
If you don't make any plans for that incapacity in a year's time, what do you think your family is going to do?
What is their reaction going to be? Do you think they are going to fight with each other over your care? Do you think they have the money and the resources to take care of you on a daily basis? Do you have the money and resources to take care of you on a daily basis?
All of these are questions that go into your incapacity plan.
That is why I feel it's so important to have it in your revocable living trust centered estate plan. Get it in writing, ahead of time.
I'm not forgetting about your assets either. Those are very important.
After you pass away, how do you want your assets to be distributed to your beneficiaries?
When do you want them to receive their distribution?
These are all decisions you get to make if you have an estate plan in place.
WHY IS ESTATE PLANNING SO IMPORTANT?
There are many reasons why you may or may not want to leave a certain amount of inheritance to your kids and grandkids. Maybe some of your children are really good with money. You know that if you give them a lump sum of money they are going to take care of that money and it's going to be put to good use.
You also probably know that for some of your heirs if you give them ten dollars they're going to spend twenty dollars.
In your revocable living trust centered estate plan you can specify exactly how and when you want your inheritance to be distributed.
Step kids are kicking me out of my house!
What do I do? Step kids said I have 90 days to vacate the house that I lived in with their father.
This is a situation that actually comes up a lot. The situation goes like this: a couple they gets married and maybe they're on their second or third marriage.
They may have kids from a previous relationship. They move into the husband's house.
For several years they always talked about the fact that the house is just in the name of the husband. The title of the house just has husband's name.
Sally and Johnny have been married for a long time they keep talking about it but nothing ever happens or maybe they don't ever talk about it. The important part is that Sally's name is not on the title of the house.
Husband Dies First
When Johnny dies Sally is left in the house that she's been living in for years, maybe decades.
The children realize that the house is titled in their father's name. So what do they do you think that they do?
The step kids will contact the wife, their stepmother Sally, and say Sally we've been thinking now that dad's gone we would really like to sell the house you've got 90 days.
Or, Sally now that dad's gone we are going to start charging you rent to live in that house .
Sally is absolutely shocked!
Step-Kids Kicking Me out
This usually happens because there is no last will and testament in place. However, it actually doesn't matter whether there is a last will and testament or not.
If there was a last will and testament, then the husband, Johnny, could have actually said when I pass away I want my house to go to my wife Sally.
But, if Johnny didn't do that, then we have to look at the laws of intestate succession in the state that Johnny and Sally lived. Those laws of intestate succession usually state that a husband and wife if they have been married then the wife or the husband has a right to 50 percent of the estate.
Due to the laws of intestate succession and the marital interests that Sally has in the house, she has at least usually a 50 interest in that house. The step kids can't just kick her out of the house.
Spousal Rights
There is probably an issue of whether she can continue to live there, but again in most states there are laws in place that allow the spouse to claim a homestead. If Sally and Johnny claim that as their marital home then she can usually usually continue to live in that property until her death.
What is the better thing to do? While the absolute easiest thing that Johnny and Sally could have done would have been to title that house correctly. After they got married Johnny should have done some type of a deed usually quit claim deed and transferred the property from his name to his name and Sally.
Instead of just having Johnny Smith on the deed, it would read Johnny and Sally Smith as the owners of that house. To give her even more protection he could change that house into joint tenancy so it would read something like: Johnny and Sally Smith a married couple as joint tenants with right of survivorship.
That would mean that if Johnny were to pass away first that house would automatically all go to Sally – 100%.
The drawback of that is also that if Sally were to pass away first then all of it would go to Johnny. but Maybe they don't care about that. However, if they're thinking about their estate plan and providing for both of their children from earlier relationships, then they really probably need to think about doing a revocable living trust centered estate plan.
Revocable Living Trust
With a revocable living trust they can outline in the trust that whoever dies first that the surviving spouse has a life estate in that house. The survivor can live in the house for the rest of their life.
Then once they pass away, that house can be divided up however Johnny and Sally want it to be divided up.
Can they kick Sally out of the house? Probably not.
Sally has a marital interest in that house. She has, at least I think in most jurisdictions, a 50 percent interest in that house and so it's just going to have to be up to the family to decide what they do as a group. However, Sally's going to be allowed to live in that house - at least until she dies.Step kids are kicking me out of my house!
What do I do? Step kids said I have 90 days to vacate the house that I lived in with their father.
This is a situation that actually comes up a lot. The situation goes like this: a couple they gets married and maybe they're on their second or third marriage.
They may have kids from a previous relationship. They move into the husband's house.
For several years they always talked about the fact that the house is just in the name of the husband. The title of the house just has husband's name.
Sally and Johnny have been married for a long time they keep talking about it but nothing ever happens or maybe they don't ever talk about it. The important part is that Sally's name is not on the title of the house.
Husband Dies First
When Johnny dies Sally is left in the house that she's been living in for years, maybe decades.
The children realize that the house is titled in their father's name. So what do they do you think that they do?
The step kids will contact the wife, their stepmother Sally, and say Sally we've been thinking now that dad's gone we would really like to sell the house you've got 90 days.
Or, Sally now that dad's gone we are going to start charging you rent to live in that house .
Sally is absolutely shocked!
Step-Kids Kicking Me out
This usually happens because there is no last will and testament in place. However, it actually doesn't matter whether there is a last will and testament or not.
If there was a last will and testament, then the husband, Johnny, could have actually said when I pass away I want my house to go to my wife Sally.
But, if Johnny didn't do that, then we have to look at the laws of intestate succession in the state that Johnny and Sally lived. Those laws of intestate succession usually state that a husband and wife if they have been married then the wife or the husband has a right to 50 percent of the estate.
Due to the laws of intestate succession and the marital interests that Sally has in the house, she has at least usually a 50 interest in that house. The step kids can't just kick her out of the house.
Spousal Rights
There is probably an issue of whether she can continue to live there, but again in most states there are laws in place that allow the spouse to claim a homestead. If Sally and Johnny claim that as their marital home then she can usually usually continue to live in that property until her death.
What is the better thing to do? While the absolute easiest thing that Johnny and Sally could have done would have been to title that house correctly. After they got married Johnny should have done some type of a deed usually quit claim deed and transferred the property from his name to his name and Sally.
Instead of just having Johnny Smith on the deed, it would read Johnny and Sally Smith as the owners of that house. To give her even more protection he could change that house into joint tenancy so it would read something like: Johnny and Sally Smith a married couple as joint tenants with right of survivorship.
That would mean that if Johnny were to pass away first that house would automatically all go to Sally – 100%.
The drawback of that is also that if Sally were to pass away first then all of it would go to Johnny. but Maybe they don't care about that. However, if they're thinking about their estate plan and providing for both of their children from earlier relationships, then they really probably need to think about doing a revocable living trust centered estate plan.
Revocable Living Trust
With a revocable living trust they can outline in the trust that whoever dies first that the surviving spouse has a life estate in that house. The survivor can live in the house for the rest of their life.
Then once they pass away, that house can be divided up however Johnny and Sally want it to be divided up.
Can they kick Sally out of the house? Probably not.
Sally has a marital interest in that house. She has, at least I think in most jurisdictions, a 50 percent interest in that house and so it's just going to have to be up to the family to decide what they do as a group. However, Sally's going to be allowed to live in that house - at least until she dies.How is my property transferred at death?
This is probably the most common question that we get. The first one is you have a last will and testament. That last will and testament states exactly how your assets are going to be transferred from your estate.
Remember once you pass away all of your assets go into the estate bucket. Your last will and testament will say who gets what out of that bucket.
You might have three kids and each one gets a third. You might have three kids and want to also give something to a favorite Charities. The charity gets a fourth and your kids each get a four.
It's however you want it. It is your last will and testament.
Along with the last will and testament is a revocable living trust. You guys know, I really like a revocable living trust centered estate plan.
A revocable living trust will say exactly how to transfer the assets that are in the Trust bucket to your heirs.
Beneficiary Designations
The second way is beneficiary designations, You'll see these a lot on insurance policies and retirement accounts. Sometimes called pay on death designations on bank accounts.
That is a form that you fill out with your insurance company, retirement account, or your bank. It states if you pass away, you want your money to go to this person. It's a really simple way to transfer the assets that you have in Banks and retirement accounts to somebody directly.
It's a really easy way to transfer those assets without having to go through the probate process.
How does this work? The financial institution will usually require a death certificate and some type of affidavit proving you are who you say you are. They need rock solid proof of your identity.
Once the financial institution has satisfactorily identified you; and matched you to the person on the beneficiary designation, then they will write you a check.
Operation of Law
The third way to transfer property is by operation of Law. If you own a house with your spouse or your partner, you probably own that home that you're living in as “joint tenants with the right of survivorship”.
That means once one of you passes away the property automatically goes to whoever the Survivor is of the two of you.
The surviving person needs to file a simple form letting the world know who died.
Let's say it's a husband and wife, and the husband dies first. The wife is the survivor. By operation of law the property goes to her.
The property transfers automatically to her in most states. However, she still needs to file what's called an affidavit of surviving joint tenant.
This is a form that tells the world that you owned this property with your husband, as joint tenants with right of survivorship. That the husband has passed died first. And, pursuant to operation of law you're the surviving joint tenant.
You're now the sole owner of that house - that piece of real estate.
Intestate Succession
The fourth way to transfer property is by state law called “intestate succession”.
You did not have a last will and testament? Yu did not have a revocable living trust? You did not have any beneficiary designations? You did not have any property set up by operation of law?
Then we must look to the laws in your state, to the laws of intestate succession.
You probably won't like the way property is distributed under the laws of intestate succession. It's a very strict statutory way of Distributing your property.
We have witnessed where people lived together for years and years, but they were never legally married. They never legally formed a partnership. They had no estate planning whatsoever. In all those cases, the surviving partner lost out on the entire estate.
It happens repeatedly. Unfortunately, we see this all the time.
Always make sure you have an estate plan in place.
So that the assets that you've worked your entire life for are not distributed to somebody who you didn't want or maybe that you didn't even know.
Make certain that assets go to who YOU want.
How is my property transferred at death?
This is probably the most common question that we get. The first one is you have a last will and testament. That last will and testament states exactly how your assets are going to be transferred from your estate.
Remember once you pass away all of your assets go into the estate bucket. Your last will and testament will say who gets what out of that bucket.
You might have three kids and each one gets a third. You might have three kids and want to also give something to a favorite Charities. The charity gets a fourth and your kids each get a four.
It's however you want it. It is your last will and testament.
Along with the last will and testament is a revocable living trust. You guys know, I really like a revocable living trust centered estate plan.
A revocable living trust will say exactly how to transfer the assets that are in the Trust bucket to your heirs.
Beneficiary Designations
The second way is beneficiary designations, You'll see these a lot on insurance policies and retirement accounts. Sometimes called pay on death designations on bank accounts.
That is a form that you fill out with your insurance company, retirement account, or your bank. It states if you pass away, you want your money to go to this person. It's a really simple way to transfer the assets that you have in Banks and retirement accounts to somebody directly.
It's a really easy way to transfer those assets without having to go through the probate process.
How does this work? The financial institution will usually require a death certificate and some type of affidavit proving you are who you say you are. They need rock solid proof of your identity.
Once the financial institution has satisfactorily identified you; and matched you to the person on the beneficiary designation, then they will write you a check.
Operation of Law
The third way to transfer property is by operation of Law. If you own a house with your spouse or your partner, you probably own that home that you're living in as “joint tenants with the right of survivorship”.
That means once one of you passes away the property automatically goes to whoever the Survivor is of the two of you.
The surviving person needs to file a simple form letting the world know who died.
Let's say it's a husband and wife, and the husband dies first. The wife is the survivor. By operation of law the property goes to her.
The property transfers automatically to her in most states. However, she still needs to file what's called an affidavit of surviving joint tenant.
This is a form that tells the world that you owned this property with your husband, as joint tenants with right of survivorship. That the husband has passed died first. And, pursuant to operation of law you're the surviving joint tenant.
You're now the sole owner of that house - that piece of real estate.
Intestate Succession
The fourth way to transfer property is by state law called “intestate succession”.
You did not have a last will and testament? Yu did not have a revocable living trust? You did not have any beneficiary designations? You did not have any property set up by operation of law?
Then we must look to the laws in your state, to the laws of intestate succession.
You probably won't like the way property is distributed under the laws of intestate succession. It's a very strict statutory way of Distributing your property.
We have witnessed where people lived together for years and years, but they were never legally married. They never legally formed a partnership. They had no estate planning whatsoever. In all those cases, the surviving partner lost out on the entire estate.
It happens repeatedly. Unfortunately, we see this all the time.
Always make sure you have an estate plan in place.
So that the assets that you've worked your entire life for are not distributed to somebody who you didn't want or maybe that you didn't even know.
Make certain that assets go to who YOU want.
How You Can Protect Your Retirement
You may have noticed an increase in media coverage regarding the uncertain future of social security.
This has led to Americans wondering if social security will run out by the time they are eligible to receive the benefits they have been paying for throughout their careers.
The bad news is that, according to the 2022 annual report from the Social Security board of trustees, social security’s cash reserves will be fully depleted by 2034 if Congress does not implement any changes to balance social security’s budget.
The somewhat good news is that if social security’s cash reserves do become fully depleted, this doesn’t mean that you won’t receive any social security benefits.
Rather, you will simply be receiving less benefits than you might have expected or planned for.
So why is social security in trouble?
The most prominent reason observers have raised concerns about the future social security is longer life expectancies, a smaller working-age population, and an increase in the number of retirees.
The reality of the situation is that by 2035, the number of Americans 65 and older will increase to more than 78 million from about 56 million today.
As a result, more people will be taking money out of the social security system – but there will be fewer paying into it – see the problem?
There are several ways Congress can balance the social security budget, each of which has its benefits and pitfalls.
While the how and when Congress decides to resolve the social security crisis remains uncertain, there are a few things you can do to ensure your retirement.
Tip #1: Save Your Money
If you aren’t already, start saving!
No matter your age it is important to start saving as early as possible.
Start small and try to increase the amount you save each month.
The sooner you start saving, the more time your money has to grow.
Make saving for your retirement a priority – set goals, make a plan, and stick to it!!
To show you how important saving is, consider this:
If you saved $6,000 each year and your money earned 7% annually, in just 15 years you will have saved $150,744!
In 35 years you will have saved $829,421 for your retirement!!
Tip #2: Know Your Retirement Needs
Did you know that only half of Americans have calculated how much they need to save for retirement?
Retirement is expensive.
Experts estimate that you will need 70 to 90 percent of your preretirement income to maintain your standard of living when you stop working.
So, it is important that you calculate how much money you want to have saved to maintain your lifestyle and fulfill your retirement needs and wants.
Tip #3: Contribute to Your Employer’s Retirement Savings Plan
If your employer offers a retirement savings plan, such as a 401k, you should sign up and contribute all you can.
There are several benefits to contributing to your employer’s savings plan.
For instance, your taxes will be lower, your company may kick in more, and setting up automatic deductions makes it a quick and easy process.
Over time, compound interest and tax deferrals make a big difference in the amount of money you will accumulate.
So talk to your employer and learn more about your plan.
Tip #4: Learn About Your Employer's Pension Plan
If your employer has a traditional pension plan, check to see if you are covered by the plan and be sure to understand how it works.
Ask your employer for an individual benefit statement to see what your benefit is worth.
It is also important learn about any benefits you may have from a previous employer as well as be sure you find out what will happen to your pension benefit if you change jobs.
If you’re married, you may also want to look into if you are entitled to any benefits from your spouse’s pension plan.
Tip #5: Don’t Touch Your Retirement Savings!
If you withdraw your retirement savings now, you will lose principal and interest and you might lose tax benefits or have to pay withdrawal penalties, so be sure not to touch your retirement savings!
Tip #6: Consider Investing
How you save is just as important as how much you save.
Inflation and the type of investments you make play important roles in how much you’ll have saved for your retirement.
Know how your savings or pension plan is invested and learn about your investment options.
It’s important to diversify your savings by putting it into different types of investments in order to reduce risk and improve return.
Consider meeting with a financial advisor/planner to see how to best invest your saving and save yourself the headache.
A financial advisor/planner will make your money work for you.
The earlier you start investing the more your money will make you!
Tip #7: Put Money Into an Individual Retirement Account (IRA)
You can put up to $6,000 a year into an IRA and if you are 50 or older you can contribute even more.
It’s all up to you.
Another perk of IRAs is tax advantages.
You have two types of IRAs to choose from: a traditional IRA or a Roth IRA – each with different tax treatments.
Additionally, the after-tax value of your withdrawal will depend on inflation and the type of IRA you choose.
IRAs can provide an easy way to save.
Similar to your 401k, you can set up automatic deductions from your checking or saving account and whatever amount you’d like deposited into you IRA.
Tip #8: Create an Estate Plan
Think of your estate plan as a comfort blanket for your money and assets.
If something were ever to happen to you, such as a car wreck, that caused you to become incapacitated or even takes your life, you don’t want all your hard earned savings to be spent on legal fees or have your family members stuck in probate court…unless you really don’t like them…
Consider meeting with an estate planning attorney to ensure that if something were to happen, distributing your estate will be a quick and easy process.
And if you do hate any of your relatives, organizing your estate is the best way to ensure they get nothing!
Conclusion
While your social security benefits are beneficial to your retirement plan, they shouldn’t be the only thing you rely on to ensure a relaxing retirement.
Following these 8 tips will provide you with security and a sense of comfort knowing that your retirement is not completely in the hands of Congress.
It is your retirement after all!How You Can Protect Your Retirement
You may have noticed an increase in media coverage regarding the uncertain future of social security.
This has led to Americans wondering if social security will run out by the time they are eligible to receive the benefits they have been paying for throughout their careers.
The bad news is that, according to the 2022 annual report from the Social Security board of trustees, social security’s cash reserves will be fully depleted by 2034 if Congress does not implement any changes to balance social security’s budget.
The somewhat good news is that if social security’s cash reserves do become fully depleted, this doesn’t mean that you won’t receive any social security benefits.
Rather, you will simply be receiving less benefits than you might have expected or planned for.
So why is social security in trouble?
The most prominent reason observers have raised concerns about the future social security is longer life expectancies, a smaller working-age population, and an increase in the number of retirees.
The reality of the situation is that by 2035, the number of Americans 65 and older will increase to more than 78 million from about 56 million today.
As a result, more people will be taking money out of the social security system – but there will be fewer paying into it – see the problem?
There are several ways Congress can balance the social security budget, each of which has its benefits and pitfalls.
While the how and when Congress decides to resolve the social security crisis remains uncertain, there are a few things you can do to ensure your retirement.
Tip #1: Save Your Money
If you aren’t already, start saving!
No matter your age it is important to start saving as early as possible.
Start small and try to increase the amount you save each month.
The sooner you start saving, the more time your money has to grow.
Make saving for your retirement a priority – set goals, make a plan, and stick to it!!
To show you how important saving is, consider this:
If you saved $6,000 each year and your money earned 7% annually, in just 15 years you will have saved $150,744!
In 35 years you will have saved $829,421 for your retirement!!
Tip #2: Know Your Retirement Needs
Did you know that only half of Americans have calculated how much they need to save for retirement?
Retirement is expensive.
Experts estimate that you will need 70 to 90 percent of your preretirement income to maintain your standard of living when you stop working.
So, it is important that you calculate how much money you want to have saved to maintain your lifestyle and fulfill your retirement needs and wants.
Tip #3: Contribute to Your Employer’s Retirement Savings Plan
If your employer offers a retirement savings plan, such as a 401k, you should sign up and contribute all you can.
There are several benefits to contributing to your employer’s savings plan.
For instance, your taxes will be lower, your company may kick in more, and setting up automatic deductions makes it a quick and easy process.
Over time, compound interest and tax deferrals make a big difference in the amount of money you will accumulate.
So talk to your employer and learn more about your plan.
Tip #4: Learn About Your Employer's Pension Plan
If your employer has a traditional pension plan, check to see if you are covered by the plan and be sure to understand how it works.
Ask your employer for an individual benefit statement to see what your benefit is worth.
It is also important learn about any benefits you may have from a previous employer as well as be sure you find out what will happen to your pension benefit if you change jobs.
If you’re married, you may also want to look into if you are entitled to any benefits from your spouse’s pension plan.
Tip #5: Don’t Touch Your Retirement Savings!
If you withdraw your retirement savings now, you will lose principal and interest and you might lose tax benefits or have to pay withdrawal penalties, so be sure not to touch your retirement savings!
Tip #6: Consider Investing
How you save is just as important as how much you save.
Inflation and the type of investments you make play important roles in how much you’ll have saved for your retirement.
Know how your savings or pension plan is invested and learn about your investment options.
It’s important to diversify your savings by putting it into different types of investments in order to reduce risk and improve return.
Consider meeting with a financial advisor/planner to see how to best invest your saving and save yourself the headache.
A financial advisor/planner will make your money work for you.
The earlier you start investing the more your money will make you!
Tip #7: Put Money Into an Individual Retirement Account (IRA)
You can put up to $6,000 a year into an IRA and if you are 50 or older you can contribute even more.
It’s all up to you.
Another perk of IRAs is tax advantages.
You have two types of IRAs to choose from: a traditional IRA or a Roth IRA – each with different tax treatments.
Additionally, the after-tax value of your withdrawal will depend on inflation and the type of IRA you choose.
IRAs can provide an easy way to save.
Similar to your 401k, you can set up automatic deductions from your checking or saving account and whatever amount you’d like deposited into you IRA.
Tip #8: Create an Estate Plan
Think of your estate plan as a comfort blanket for your money and assets.
If something were ever to happen to you, such as a car wreck, that caused you to become incapacitated or even takes your life, you don’t want all your hard earned savings to be spent on legal fees or have your family members stuck in probate court…unless you really don’t like them…
Consider meeting with an estate planning attorney to ensure that if something were to happen, distributing your estate will be a quick and easy process.
And if you do hate any of your relatives, organizing your estate is the best way to ensure they get nothing!
Conclusion
While your social security benefits are beneficial to your retirement plan, they shouldn’t be the only thing you rely on to ensure a relaxing retirement.
Following these 8 tips will provide you with security and a sense of comfort knowing that your retirement is not completely in the hands of Congress.
It is your retirement after all!How much did you save for retirement?
Do you have a retirement savings? Do you have enough to retire at age 65, 70 or even 75? How big is your nest egg already retired. Do you have enough to last?
Most experts will say that for a $55,000 annual retirement income, the bare minimum is $700,000 in savings. The key is to go into retirement with big assets paid off.
It's probably a bad idea to buy that vacation, home or car you've always dreamed of, right as you start your retirement. I'm not a financial advisor and this is not financial advice.
I tell you guys all the time, you must be the CEO of your own life. People are living longer. You're living longer than past generations. Only 53% of Americans have an emergency fund, let alone a retirement account.
For a long time, generations looked at retirement as a simple thing. You went to work every day and every month money was put into your 401. K or some type of pension.
You've probably heard your parents talk about the 4% rule, the 4% drawdown rule states that you should be able to take 4% from your investments annually during retirement without touching the principal.
Times have changed. Americans are having much, much longer lives. The 4% rule still might be valid. You need to apply it to a much longer life and that means a lot more retirement savings. Retirement is not just ten years or 20 years anymore.
We regularly see our estate planning clients in their eighties and even their nineties. The problem is that most have not saved enough money to live an extra 30 or 40 years.
We advise our clients to meet with a financial advisor because it is an important part of your estate plan.
A recent article on Yahoo finance did the calculations. A single individual with $800,000 saved and spending $55,000 a year will run out of money at age 95. If that single individual had saved $900,000 and spent the same $55,000 a year in retirement, they could leave at almost $270,000 inheritance to their kids, to their heirs.
This takes into account a $30,000 Social Security benefit and inflation. Like I said, I'm not a financial planner, but these numbers are fascinating.
A married couple might enjoy around $60,000 in Social Security benefits with that same $700,000 in retirement savings spending, $55,000 a year would have about $24,000 left over if they both died at age 95. Here is where the numbers get interesting.
That same married couple with $800,000 in retirement savings could leave their heirs almost $350,000 if they died at age 95, just by having a little bit more money; and a whopping $670,000 if they had saved $900,000 for retirement.
These numbers sound fantastic if that is what you actually have saved. Spoiler alert most Americans don't have that. According to a recent study by Vanguard.
Their average retirement savings for Americans at 65 years of age is only $280,000. That means most people are going to be leaning very hard on their Social Security benefits. And it does not leave a lot of room for vacation homes, let alone vacations at all. If you need more than $55,000 annually to live in retirement, then you are going to need a much bigger retirement savings account.
You need a bigger nest egg. The good news for Americans is that the younger generation is actually saving more than, quite frankly, my generation. The first time in decades, people in their twenties and thirties are actually saving for their retirement.
On average, they are saving at least 15% of their income for retirement. What should you do if you are not part of this 20 something group?
Well, start saving.
It's never too late to do these four things first. Really evaluate your income and expenses. I am constantly amazed at how many of our estate planning clients don't know how much they have or even how much they're spending on a monthly basis.
Some of them are very surprised to realize that they have actually accumulated a solid foundation for retirement and they will have an inheritance for their kids.
Second, save unexpected money. A friend of mine constantly brags about a childhood friend of his who inherited recently a quite a bit of money.
This guy upgraded to a mega-mansion. He bought a lake house. He bought a big boat to go on the weekends at the lake, he bought new cars and he's living the high life. His income cannot support all of these luxuries, and at some point it's going to crash down around him.
Unfortunately, we see this all the time. When we are administering estates, we write a check to an heir for a quarter million dollars and within a few months it is all gone. We see this all the time.
If you receive an unexpected windfall, then, well, save it. Use it to boost your retirement. Talk to a financial advisor on how to make that money grow for you for your retirement.
Third, automate your retirement savings. Automate your savings in general automatically deduct from your paycheck straight into a retirement account. Start gradually.
You probably have some debts, pay those off first and steadily increase what you are setting aside every single month for retirement. You'll be surprised how quickly that will accumulate. Fourth, have a very, very candid discussion with your life partner on what retirement means to them and to you and get on the same page.
Recent studies show that men and women see retirement very differently. Surprised men see it as a cabin in the woods or a house on the lake where they do nothing all day long.
Women see it as the next stage in their life, and that could be taking on a new job. Volunteering at a charity. Doing something that is personally rewarding to them. Starting a new business and volunteering at their favorite charity or their grandkids.
Men see it as a time to spend all of their time with their wife. Women see retirement as a time to build and maintain strong relationships with their friends and experiencing new things. Talk to your partner now because you might have very different views on what retirement means.
Remember, it's never too late to start saving, but start saving as soon as you can, even if it's just a little bit because it'll add up quicker than you think. As always these are for educational and entertainment purposes only. Always check with a financial advisor and attorney.How much did you save for retirement?
Do you have a retirement savings? Do you have enough to retire at age 65, 70 or even 75? How big is your nest egg already retired. Do you have enough to last?
Most experts will say that for a $55,000 annual retirement income, the bare minimum is $700,000 in savings. The key is to go into retirement with big assets paid off.
It's probably a bad idea to buy that vacation, home or car you've always dreamed of, right as you start your retirement. I'm not a financial advisor and this is not financial advice.
I tell you guys all the time, you must be the CEO of your own life. People are living longer. You're living longer than past generations. Only 53% of Americans have an emergency fund, let alone a retirement account.
For a long time, generations looked at retirement as a simple thing. You went to work every day and every month money was put into your 401. K or some type of pension.
You've probably heard your parents talk about the 4% rule, the 4% drawdown rule states that you should be able to take 4% from your investments annually during retirement without touching the principal.
Times have changed. Americans are having much, much longer lives. The 4% rule still might be valid. You need to apply it to a much longer life and that means a lot more retirement savings. Retirement is not just ten years or 20 years anymore.
We regularly see our estate planning clients in their eighties and even their nineties. The problem is that most have not saved enough money to live an extra 30 or 40 years.
We advise our clients to meet with a financial advisor because it is an important part of your estate plan.
A recent article on Yahoo finance did the calculations. A single individual with $800,000 saved and spending $55,000 a year will run out of money at age 95. If that single individual had saved $900,000 and spent the same $55,000 a year in retirement, they could leave at almost $270,000 inheritance to their kids, to their heirs.
This takes into account a $30,000 Social Security benefit and inflation. Like I said, I'm not a financial planner, but these numbers are fascinating.
A married couple might enjoy around $60,000 in Social Security benefits with that same $700,000 in retirement savings spending, $55,000 a year would have about $24,000 left over if they both died at age 95. Here is where the numbers get interesting.
That same married couple with $800,000 in retirement savings could leave their heirs almost $350,000 if they died at age 95, just by having a little bit more money; and a whopping $670,000 if they had saved $900,000 for retirement.
These numbers sound fantastic if that is what you actually have saved. Spoiler alert most Americans don't have that. According to a recent study by Vanguard.
Their average retirement savings for Americans at 65 years of age is only $280,000. That means most people are going to be leaning very hard on their Social Security benefits. And it does not leave a lot of room for vacation homes, let alone vacations at all. If you need more than $55,000 annually to live in retirement, then you are going to need a much bigger retirement savings account.
You need a bigger nest egg. The good news for Americans is that the younger generation is actually saving more than, quite frankly, my generation. The first time in decades, people in their twenties and thirties are actually saving for their retirement.
On average, they are saving at least 15% of their income for retirement. What should you do if you are not part of this 20 something group?
Well, start saving.
It's never too late to do these four things first. Really evaluate your income and expenses. I am constantly amazed at how many of our estate planning clients don't know how much they have or even how much they're spending on a monthly basis.
Some of them are very surprised to realize that they have actually accumulated a solid foundation for retirement and they will have an inheritance for their kids.
Second, save unexpected money. A friend of mine constantly brags about a childhood friend of his who inherited recently a quite a bit of money.
This guy upgraded to a mega-mansion. He bought a lake house. He bought a big boat to go on the weekends at the lake, he bought new cars and he's living the high life. His income cannot support all of these luxuries, and at some point it's going to crash down around him.
Unfortunately, we see this all the time. When we are administering estates, we write a check to an heir for a quarter million dollars and within a few months it is all gone. We see this all the time.
If you receive an unexpected windfall, then, well, save it. Use it to boost your retirement. Talk to a financial advisor on how to make that money grow for you for your retirement.
Third, automate your retirement savings. Automate your savings in general automatically deduct from your paycheck straight into a retirement account. Start gradually.
You probably have some debts, pay those off first and steadily increase what you are setting aside every single month for retirement. You'll be surprised how quickly that will accumulate. Fourth, have a very, very candid discussion with your life partner on what retirement means to them and to you and get on the same page.
Recent studies show that men and women see retirement very differently. Surprised men see it as a cabin in the woods or a house on the lake where they do nothing all day long.
Women see it as the next stage in their life, and that could be taking on a new job. Volunteering at a charity. Doing something that is personally rewarding to them. Starting a new business and volunteering at their favorite charity or their grandkids.
Men see it as a time to spend all of their time with their wife. Women see retirement as a time to build and maintain strong relationships with their friends and experiencing new things. Talk to your partner now because you might have very different views on what retirement means.
Remember, it's never too late to start saving, but start saving as soon as you can, even if it's just a little bit because it'll add up quicker than you think. As always these are for educational and entertainment purposes only. Always check with a financial advisor and attorney.What is a Revocable Living Trust?
A revocable living trust, also known as an intervivos trust, is a trust that you create during your lifetime. You still have complete control over all of the assets that you put into the revocable living trust.
The reason it's revocable is because you can change it at any time. If you want to amend it, if you want to revoke it, whatever you want to do, you can do as long as you do it correctly with the right legal documents.
That's kind of the definition that anybody will give you for a revocable trust. But what is a revocable trust and how can it help you?
Kicking the Bucket
The best way to think about it is to think about it as a bucket. You've all heard the saying, kicking the bucket when you pass away.
That is probably the easiest way to think about what a trust bucket is, what a revocable living trust bucket is and what it can do for you. If you don't have a revocable living trust, then your estate plan is probably, well, a stinky bucket.
Your estate is actually more than one bucket. You probably have three buckets. It's what most people have. And let's start with the easiest one.
Non-Probate Bucket
Your non-probate bucket. Those are assets that are going to transfer to your heirs no matter what, whether there's a probate, whether there's a trust, it doesn't matter.
A non-probate asset could be like a life insurance policy that pays out to a specific beneficiary or a bank account that is held in joint tenancy or has a pay on death beneficiary.
The bank doesn't care if you have a probate or a trust, they're just going to pay out to whoever your beneficiary is. Retirement accounts are sometimes like that as well.
If you have a house, you might have it in joint tenancy with somebody else. When the first joint tenant dies, the other one automatically gets the property.
You can also have a transfer on death deed, which is kind of a new thing in property that we're seeing creep up in different states. These allow you to designate somebody as your beneficiary of your home when you pass away. It's kind of like a pay on death for a bank account, but instead it's a transfer on death for your property. That is your non-probate bucket.
Probate Bucket
A probate bucket is what most people probably have. This could also include your house, your car, your bank account, all your personal items in your house. Those are all items that need to be transferred to somebody on your passing.
When you die, everything in the probate bucket has to go through a probate court down at the courthouse with a probate judge. They have to actually transfer those assets from your personal name to the name of your beneficiaries. So that is your probate bucket.
You can see already that most of you probably already have two buckets, right? You have your non-probate assets and you have your probate assets that will have to go through the probate process.
Revocable Living Trust Bucket
If you notice, both of these buckets only kick in when you pass away. There is a third bucket that some people choose to have, and it's a smart way to plan your estate, and that is your trust bucket.
In this third bucket, you can still put most of all those same assets that were in the non-probate bucket and the probate bucket into your revocable living trust bucket. Why would you want to do that?
You might want to for ease of administration after you pass away. And that's the key. The probate and non-probate buckets only go into effect after you have died.
A revocable living trust, on the other hand, allows you to control those assets while you are still living and allows a successor trustee to also control those assets while you are still living. So why is that important?
In all my videos, you hear me talk about that I believe the most important thing about estate planning is incapacity planning. You need to have an incapacity plan in place right now if something were to happen to you today or in the near future.
That is what a revocable living trust will allow you to do because you put all of your assets into that bucket. You put your house into your trust. You change the deed on the house from your personal name, from Sally Smith to Sally Smith as trustee of the Sally Smith Revocable Living Trust. And now that house is in the trust bucket.
You do the same thing with your cars. You do the same thing with your bank accounts. Anything that has a title, a boat, a boat motor, all of those items, if it has a title, it has a registration, you title it and you register it in the name of your trust.
Why is it so important to have this trust bucket and have all of those assets in there? I've already said incapacity planning. If you were to become incapacitated, your successor trustee would simply step into your shoes. Right now you're the CEO of your own life, right?
Incapacity Plan
You have control over all of those assets that are in your revocable living trust bucket. But if you were to become incapacitated and you've placed everything into that bucket, then your successor trustee simply steps into your shoes and makes certain that all of those assets are taken care of.
Maybe you have a rental house. If it's your personal house, are the bills going to get paid? Whatever you are doing, your successor trustee will simply be able to step into your shoes.
If you need healthcare, your successor trustee can work in conjunction with your healthcare power of attorney to make certain that your assets are used for your benefit. Not for anybody else's benefit, but for your benefit.
That's one of the keys of having a revocable living trust is that it provides very solid protection during incapacity. Because if you don't have a revocable living trust, you probably don't have all the other documents that come along with it, like a power of attorney, the living will, HIPAA authorization.
That means that your family is probably going to have to go down to the courthouse and get a guardianship to take control over your assets, to take control over your health, mind, body and soul, and get you the treatment that you need.
But if you've done proper estate planning with a revocable living trust, centered estate plan, you will have all of your assets in the revocable living trust bucket, and your trustee and the other fiduciaries that you have named for healthcare will be able to work together to make certain that you get the protection and the care that you need and that you want and that you've specified explicitly to them.
Another great benefit of having a revocable living trust centered estate plan is in that bucket, you can also put assets that are in another state. So, let's say that you lived where we live in Oklahoma and you had an asset in California, or you had a ski house in Colorado, or maybe when your child went down to Texas for college, you bought them a little condo to live in, or maybe you bought yourself a condo so you could go visit them.
In either case, you can put those assets into the name of your revocable living trust. The advantage of having it in your revocable living trust bucket is that if you were to become incapacitated, again, your successor trustee could take over those assets in Texas, California, Colorado, wherever they are, and seamlessly administer what needs to be done for that particular asset.
When you pass away, your successor trustee for death can also have complete control over those assets because they are titled in the name of your trust, giving them control over that asset. And if your trust says, "Sell everything," then they can easily sell that property as your trustee.
Avoid Probate
The key here is also the next benefit, and that is that it avoids probate. If you have all of your assets in your trust, in your revocable trust, your heirs will avoid probate when you pass away.
And that means, going back to the out-of-state property, that if you have property in Texas, Colorado, California, Florida, wherever it is, if you have property in those states, but it's titled in the name of your trust, then your successor trustee does not have to have a probate in Florida for that condo that you have, or in Texas for that land that you have, or in California for that vacation house you have.
Wherever that property is, as long as it's in the name of the trust, your successor trustee will have control over it, and they will not have to have multiple probates in different states. That's a huge advantage of having a revocable living trust.
What is a Revocable Living Trust?
A revocable living trust, also known as an intervivos trust, is a trust that you create during your lifetime. You still have complete control over all of the assets that you put into the revocable living trust.
The reason it's revocable is because you can change it at any time. If you want to amend it, if you want to revoke it, whatever you want to do, you can do as long as you do it correctly with the right legal documents.
That's kind of the definition that anybody will give you for a revocable trust. But what is a revocable trust and how can it help you?
Kicking the Bucket
The best way to think about it is to think about it as a bucket. You've all heard the saying, kicking the bucket when you pass away.
That is probably the easiest way to think about what a trust bucket is, what a revocable living trust bucket is and what it can do for you. If you don't have a revocable living trust, then your estate plan is probably, well, a stinky bucket.
Your estate is actually more than one bucket. You probably have three buckets. It's what most people have. And let's start with the easiest one.
Non-Probate Bucket
Your non-probate bucket. Those are assets that are going to transfer to your heirs no matter what, whether there's a probate, whether there's a trust, it doesn't matter.
A non-probate asset could be like a life insurance policy that pays out to a specific beneficiary or a bank account that is held in joint tenancy or has a pay on death beneficiary.
The bank doesn't care if you have a probate or a trust, they're just going to pay out to whoever your beneficiary is. Retirement accounts are sometimes like that as well.
If you have a house, you might have it in joint tenancy with somebody else. When the first joint tenant dies, the other one automatically gets the property.
You can also have a transfer on death deed, which is kind of a new thing in property that we're seeing creep up in different states. These allow you to designate somebody as your beneficiary of your home when you pass away. It's kind of like a pay on death for a bank account, but instead it's a transfer on death for your property. That is your non-probate bucket.
Probate Bucket
A probate bucket is what most people probably have. This could also include your house, your car, your bank account, all your personal items in your house. Those are all items that need to be transferred to somebody on your passing.
When you die, everything in the probate bucket has to go through a probate court down at the courthouse with a probate judge. They have to actually transfer those assets from your personal name to the name of your beneficiaries. So that is your probate bucket.
You can see already that most of you probably already have two buckets, right? You have your non-probate assets and you have your probate assets that will have to go through the probate process.
Revocable Living Trust Bucket
If you notice, both of these buckets only kick in when you pass away. There is a third bucket that some people choose to have, and it's a smart way to plan your estate, and that is your trust bucket.
In this third bucket, you can still put most of all those same assets that were in the non-probate bucket and the probate bucket into your revocable living trust bucket. Why would you want to do that?
You might want to for ease of administration after you pass away. And that's the key. The probate and non-probate buckets only go into effect after you have died.
A revocable living trust, on the other hand, allows you to control those assets while you are still living and allows a successor trustee to also control those assets while you are still living. So why is that important?
In all my videos, you hear me talk about that I believe the most important thing about estate planning is incapacity planning. You need to have an incapacity plan in place right now if something were to happen to you today or in the near future.
That is what a revocable living trust will allow you to do because you put all of your assets into that bucket. You put your house into your trust. You change the deed on the house from your personal name, from Sally Smith to Sally Smith as trustee of the Sally Smith Revocable Living Trust. And now that house is in the trust bucket.
You do the same thing with your cars. You do the same thing with your bank accounts. Anything that has a title, a boat, a boat motor, all of those items, if it has a title, it has a registration, you title it and you register it in the name of your trust.
Why is it so important to have this trust bucket and have all of those assets in there? I've already said incapacity planning. If you were to become incapacitated, your successor trustee would simply step into your shoes. Right now you're the CEO of your own life, right?
Incapacity Plan
You have control over all of those assets that are in your revocable living trust bucket. But if you were to become incapacitated and you've placed everything into that bucket, then your successor trustee simply steps into your shoes and makes certain that all of those assets are taken care of.
Maybe you have a rental house. If it's your personal house, are the bills going to get paid? Whatever you are doing, your successor trustee will simply be able to step into your shoes.
If you need healthcare, your successor trustee can work in conjunction with your healthcare power of attorney to make certain that your assets are used for your benefit. Not for anybody else's benefit, but for your benefit.
That's one of the keys of having a revocable living trust is that it provides very solid protection during incapacity. Because if you don't have a revocable living trust, you probably don't have all the other documents that come along with it, like a power of attorney, the living will, HIPAA authorization.
That means that your family is probably going to have to go down to the courthouse and get a guardianship to take control over your assets, to take control over your health, mind, body and soul, and get you the treatment that you need.
But if you've done proper estate planning with a revocable living trust, centered estate plan, you will have all of your assets in the revocable living trust bucket, and your trustee and the other fiduciaries that you have named for healthcare will be able to work together to make certain that you get the protection and the care that you need and that you want and that you've specified explicitly to them.
Another great benefit of having a revocable living trust centered estate plan is in that bucket, you can also put assets that are in another state. So, let's say that you lived where we live in Oklahoma and you had an asset in California, or you had a ski house in Colorado, or maybe when your child went down to Texas for college, you bought them a little condo to live in, or maybe you bought yourself a condo so you could go visit them.
In either case, you can put those assets into the name of your revocable living trust. The advantage of having it in your revocable living trust bucket is that if you were to become incapacitated, again, your successor trustee could take over those assets in Texas, California, Colorado, wherever they are, and seamlessly administer what needs to be done for that particular asset.
When you pass away, your successor trustee for death can also have complete control over those assets because they are titled in the name of your trust, giving them control over that asset. And if your trust says, "Sell everything," then they can easily sell that property as your trustee.
Avoid Probate
The key here is also the next benefit, and that is that it avoids probate. If you have all of your assets in your trust, in your revocable trust, your heirs will avoid probate when you pass away.
And that means, going back to the out-of-state property, that if you have property in Texas, Colorado, California, Florida, wherever it is, if you have property in those states, but it's titled in the name of your trust, then your successor trustee does not have to have a probate in Florida for that condo that you have, or in Texas for that land that you have, or in California for that vacation house you have.
Wherever that property is, as long as it's in the name of the trust, your successor trustee will have control over it, and they will not have to have multiple probates in different states. That's a huge advantage of having a revocable living trust.
Six things baby boomers are blowing their retirement on.
When I retire, I'm going on a month-long vacation. When I retire, I'm buying that 1965 Mustang Shelby or my dream Corvette. When I retire, I'm renovating our home from top to bottom. When I retire, I'm buying a house on the beach in Costa Rica. I love this. Believe me, that's a dream.
The problem is, Americans are not saving enough to fulfill their dreams. Your dreams.
They are miscalculating what they need in retirement and blowing it all. In the next few years, the youngest baby boomers will turn 67 years old in the year 2031. That means millions of baby boomers are still in the workforce, and if you're one of them, do not make these six mistakes that older baby boomers are making every day in retirement.
In our last video, I discussed that to retire on a $55,000 annual retirement, you needed to save at least $700,000. A lot of you are not happy with me. I'm sorry, but according to a recent study conducted by Transamerica Center baby boomers that have not retired, they're still working, believe that $750,000 is what they need to feel financially secure.
So we were not far off in our last video. Unfortunately, according to another study by Vanguard, the average retirement savings for Americans at the age of 65 is only $280,000 for baby boomers. It's even worse - the average baby boomer savings is just $202,000 at this time. The average Social Security benefit is just $1,681 per month for those who have already retired.
The news, you see it every day, is constantly reporting on the future, possible reduction in Social Security benefits and even the increase in the retirement age. Baby boomers must take control of their spending to guarantee they can live comfortably throughout retirement. Because we're all living longer.
If all of these news reports are causing you concern. Then, now is the time to start saving more money. Getting your estate plan in place and avoiding these six retirement mistakes.
Number one, spending too much time on that dream vacation. I know what you're thinking. You deserve a vacation and you know what you do. But vacations are expensive.
You only have so much for retirement, and any big lump sums taken off the top in the first few years are going to affect how much you can continue to draw down each year. You've probably heard others talk about the 4% rule, 4% from your investments annually without touching the principle
Plan your dream vacation within the 4% rule. Pay for it from the interest earned off of the principal and not the principal.
I know it can be tempting because you have all that money sitting there. If you cannot pay for that dream vacation from the interest earned off your retirement savings, then unfortunately you're going to have to save money from your retirement distribution each month until you have enough money in that vacation fund to go on that vacation.
Even better, if you know you want to take that dream vacation, then start saving now for it while you are still working.
Buying expensive gifts.
One of the first things our estate planning clients tell us all the time is they want to spoil their grandchildren with expensive gifts, even their children. And I get it. You love them, right?
And you want to do nice things for them. You know what? Make those gifts, spoil them. You know what I'm going to say? Keep it within the 4% rule. Can you see where I'm going with all of these? Only spend what you can afford and leave your heirs. What is left over as part of your estate plan. Remember, take care of you. Take care of yourself first.
Number three, paying too much for medical expenses. If you go to the doctor or receive treatment, well, you have to pay for it. Somebody does a service for you. You pay for it. But make certain you are not overpaying or paying that bill too early. Medical costs are out of control and people call us all the time in a panic when they get a medical bill for hundreds of thousands of dollars.
It happens every day in these instances. Many times, insurance has not yet determined what their benefits are. Hospitals and medical facilities are huge corporations these days, and sometimes the left hand doesn't speak very clearly to the right hand.
Always, always ask for an itemized medical bill and make certain make sure you are not double or even triple paying for those medical expenses when those astronomical medical bills do come in and they will.
Wait for and double check them against your health insurance companies Explanation of benefits.
A few years ago, I heard of a situation where four unmarried adult children all still lived with their elderly father. I'm not talking about children in their twenties or thirties. These were adult children who live their entire life at home on their father's dime.
When their father finally died, they were lost. The father paid from his monthly retirement savings, a car insurance, a mortgage, the utilities, the cable TV, the food to feed them all.
This was an extreme case that I heard about, but we see parents making similar decisions all the time. You must be the CEO of your life. It might be tough love, but you must take care of yourself.
You first know it's tempting to help an adult child out and only do it if you have the money and the savings to do it and if it's not going to have an adverse effect on your retirement.
Number five, buying a timeshare. Don't do it. Do not do it. I know it is tempting. You see those beautiful brochures?
Maybe you visited the property on the promise of free money or free tickets to a concert or a free vacation just for listening to their sales pitch. Do you think all this is free just because they're nice? You know, that's not the answer. It's a business. You know, it's a business. You buy a timeshare and you are locked into maintenance fees for the rest of your life and they are almost impossible to get out of.
Actually, I think they are impossible. Many will try to convince you and your kids that the timeshare automatically transfers to them, to your children at your death. They want to keep that money coming in. Many clients have tried to convince me what a great investment that condo in Puerto Vallarta is and that it will be passed on to their children.
That's a horrible estate plan. A timeshare is not an estate plan. In fact, when we probate estates, the heirs will disclaim.
A timeshare is not real estate. A timeshare is not an investment. A timeshare is a bad idea. As people get older, they quit using that week in paradise. But maintenance fees don't care how old you are or even whether you visited the property in years.
Maintenance fees are due every single year, and if that beautiful condominium complex starts to get older and it needs upgrades, guess what? You could be stuck with an assessment on top of the annual maintenance fees when it comes to timeshare. Please do not buy them.
Number six in retirement you are on a fixed income. You know this. You might get cost of living adjustments if you're lucky, but you're not getting a promotion.
And you know what I'm going to say? Only pay for those renovations if it fits into the 4% rule. That's the rule for all of these. Your dream is to do some major renovations and make that home you've been living in to into your retirement oasis, then plan for it while you are still working. If you're already retired, then start a renovation fund to make those renovations.
Bottom line we all must live within our means during retirement. Talk to an Estate Planning An attorney and a financial advisor to make those dreams come true. And if you're still working, then start saving now for their retirement dreams. They're your dreams and you deserve them.Six things baby boomers are blowing their retirement on.
When I retire, I'm going on a month-long vacation. When I retire, I'm buying that 1965 Mustang Shelby or my dream Corvette. When I retire, I'm renovating our home from top to bottom. When I retire, I'm buying a house on the beach in Costa Rica. I love this. Believe me, that's a dream.
The problem is, Americans are not saving enough to fulfill their dreams. Your dreams.
They are miscalculating what they need in retirement and blowing it all. In the next few years, the youngest baby boomers will turn 67 years old in the year 2031. That means millions of baby boomers are still in the workforce, and if you're one of them, do not make these six mistakes that older baby boomers are making every day in retirement.
In our last video, I discussed that to retire on a $55,000 annual retirement, you needed to save at least $700,000. A lot of you are not happy with me. I'm sorry, but according to a recent study conducted by Transamerica Center baby boomers that have not retired, they're still working, believe that $750,000 is what they need to feel financially secure.
So we were not far off in our last video. Unfortunately, according to another study by Vanguard, the average retirement savings for Americans at the age of 65 is only $280,000 for baby boomers. It's even worse - the average baby boomer savings is just $202,000 at this time. The average Social Security benefit is just $1,681 per month for those who have already retired.
The news, you see it every day, is constantly reporting on the future, possible reduction in Social Security benefits and even the increase in the retirement age. Baby boomers must take control of their spending to guarantee they can live comfortably throughout retirement. Because we're all living longer.
If all of these news reports are causing you concern. Then, now is the time to start saving more money. Getting your estate plan in place and avoiding these six retirement mistakes.
Number one, spending too much time on that dream vacation. I know what you're thinking. You deserve a vacation and you know what you do. But vacations are expensive.
You only have so much for retirement, and any big lump sums taken off the top in the first few years are going to affect how much you can continue to draw down each year. You've probably heard others talk about the 4% rule, 4% from your investments annually without touching the principle
Plan your dream vacation within the 4% rule. Pay for it from the interest earned off of the principal and not the principal.
I know it can be tempting because you have all that money sitting there. If you cannot pay for that dream vacation from the interest earned off your retirement savings, then unfortunately you're going to have to save money from your retirement distribution each month until you have enough money in that vacation fund to go on that vacation.
Even better, if you know you want to take that dream vacation, then start saving now for it while you are still working.
Buying expensive gifts.
One of the first things our estate planning clients tell us all the time is they want to spoil their grandchildren with expensive gifts, even their children. And I get it. You love them, right?
And you want to do nice things for them. You know what? Make those gifts, spoil them. You know what I'm going to say? Keep it within the 4% rule. Can you see where I'm going with all of these? Only spend what you can afford and leave your heirs. What is left over as part of your estate plan. Remember, take care of you. Take care of yourself first.
Number three, paying too much for medical expenses. If you go to the doctor or receive treatment, well, you have to pay for it. Somebody does a service for you. You pay for it. But make certain you are not overpaying or paying that bill too early. Medical costs are out of control and people call us all the time in a panic when they get a medical bill for hundreds of thousands of dollars.
It happens every day in these instances. Many times, insurance has not yet determined what their benefits are. Hospitals and medical facilities are huge corporations these days, and sometimes the left hand doesn't speak very clearly to the right hand.
Always, always ask for an itemized medical bill and make certain make sure you are not double or even triple paying for those medical expenses when those astronomical medical bills do come in and they will.
Wait for and double check them against your health insurance companies Explanation of benefits.
A few years ago, I heard of a situation where four unmarried adult children all still lived with their elderly father. I'm not talking about children in their twenties or thirties. These were adult children who live their entire life at home on their father's dime.
When their father finally died, they were lost. The father paid from his monthly retirement savings, a car insurance, a mortgage, the utilities, the cable TV, the food to feed them all.
This was an extreme case that I heard about, but we see parents making similar decisions all the time. You must be the CEO of your life. It might be tough love, but you must take care of yourself.
You first know it's tempting to help an adult child out and only do it if you have the money and the savings to do it and if it's not going to have an adverse effect on your retirement.
Number five, buying a timeshare. Don't do it. Do not do it. I know it is tempting. You see those beautiful brochures?
Maybe you visited the property on the promise of free money or free tickets to a concert or a free vacation just for listening to their sales pitch. Do you think all this is free just because they're nice? You know, that's not the answer. It's a business. You know, it's a business. You buy a timeshare and you are locked into maintenance fees for the rest of your life and they are almost impossible to get out of.
Actually, I think they are impossible. Many will try to convince you and your kids that the timeshare automatically transfers to them, to your children at your death. They want to keep that money coming in. Many clients have tried to convince me what a great investment that condo in Puerto Vallarta is and that it will be passed on to their children.
That's a horrible estate plan. A timeshare is not an estate plan. In fact, when we probate estates, the heirs will disclaim.
A timeshare is not real estate. A timeshare is not an investment. A timeshare is a bad idea. As people get older, they quit using that week in paradise. But maintenance fees don't care how old you are or even whether you visited the property in years.
Maintenance fees are due every single year, and if that beautiful condominium complex starts to get older and it needs upgrades, guess what? You could be stuck with an assessment on top of the annual maintenance fees when it comes to timeshare. Please do not buy them.
Number six in retirement you are on a fixed income. You know this. You might get cost of living adjustments if you're lucky, but you're not getting a promotion.
And you know what I'm going to say? Only pay for those renovations if it fits into the 4% rule. That's the rule for all of these. Your dream is to do some major renovations and make that home you've been living in to into your retirement oasis, then plan for it while you are still working. If you're already retired, then start a renovation fund to make those renovations.
Bottom line we all must live within our means during retirement. Talk to an Estate Planning An attorney and a financial advisor to make those dreams come true. And if you're still working, then start saving now for their retirement dreams. They're your dreams and you deserve them.The month of May has now become known as Mental Awareness Month in almost all states.
If you have somebody who is suffering with mental illness, please get help immediately for them and really for you as well.
National statistics say that in the year 2021, over 57 million people suffered in the United States from some sort of substance abuse problem.
The reason I wanted to talk about it today is because you've heard me say over and over again when I'm talking about estate planning, that I truly believe the most important thing is incapacity planning. Everybody thinks about estate planning as what happens after they die.
Who gets their stuff, right? Who gets their money? The house, the cars, all of that. But what's even more important is what happens if you are still alive and you are incapacitated. If you have a mental illness, if you have a substance abuse problem, who is going to take care of you?
What do you want to happen if you were to become incapacitated?
No family
We are seeing more and more people come into our office who are friends of somebody. The person who is suffering from either mental illness or substance abuse don't have family either locally or they don't have family anymore.
Maybe all of their kids have moved away. Maybe their spouse has passed away, and so they are truly alone
Whether it's a family member or a friend, somebody is going to have to step up and they're going to have to go and get a guardianship.
And what does that mean? That means that they are going to have to go to the courthouse, and meet with a judge that they've never met before. It's scary for a relative to have to go down and talk to a judge and tell the judge why they need a guardianship over this person because they no longer have capacity or they're having a substance abuse problem.
Guardianships are worse than Probates
Guardianships are like living probates.
When somebody dies, you have to probate their estate. A lot of times probate comes several months after the person has passed away. You still feel grief, but that that huge initial hit of grief is gone.
However, in a guardianship. The person is still alive.
The person who you may have gone on vacation with, who you saw at family dinners, who you'd have lunches with, dinners with, who you had a relationship with - they're not mentally there anymore.
That can be very, very difficult for the family member or the friend who is having to deal with that. Having to still communicate with the person on a daily basis, because obviously they still love them, they want to take care of them, but they're having to go in front of a judge and ask the judge for permission to have complete control over this person.
Much of the time the person doesn't want a guardianship. They're going to say absolutely no. They're going to say they want to still keep driving their car. They're going to say they still want to live at their house. They want us to live an independent life. And that's that's human nature.
That is why I think guardianships can be so difficult for family and friends, because somebody has to step up and make those decisions and be the bad guys
Guardianships can be Expensive
Another consequence of not having an incapacity plan is that a guardianship can be very expensive. It is not a cheap process.
You have to usually hire an attorney, get background checks, and pay for court costs and fees. You're going to outlay cash upfront to pay all these costs.
Continued Reporting and Accounting
Once a Guardian is appointed they have to do an annual report every single year. You have to go before the judge every single year and give them an annual report, and an annual accounting.
What are the finances and what's the health status of the person who you have control over? The person who actually gets the guardianship has a lot of work
Guardianship Process
Usually, there's two ways you can depending on whether or not there exists an imminent threat of harm.
Maybe you have secured this person in a memory care facility or assisted living. Someplace where they're going to be taken care of for a while and everything is stable.
In those circumstances, we usually go with a regular guardianship, and that takes a few weeks between the time you file a petition for guardianship and the time you actually get to see a judge. If the Judge approves the Guardianship, then they might require periodic status hearings. At the very least, expect an annual review hearing.
In other cases, where there is an imminent threat of harm from substance abuse or mental illness, we need to get a person someplace immediately for help.
When that happens, we will still file the regular petition for guardianship, but we will also go down to the judge that day and request an emergency guardianship.
This becomes effective immediately, so that they can immediately take care of that person that they love and get them the care that they need.
If you need to go down and get a guardianship, it is no fun.
Somebody in the family has to step up to take care of the person that everybody loves when they don't have an incapacity plan in place.
That's why over and over in all of our videos, I say when you get your estate plan, make certain that you have a rock solid incapacity plan in place to take care of you and provide guidance for your family on how you want to be taken care of.
The month of May has now become known as Mental Awareness Month in almost all states.
If you have somebody who is suffering with mental illness, please get help immediately for them and really for you as well.
National statistics say that in the year 2021, over 57 million people suffered in the United States from some sort of substance abuse problem.
The reason I wanted to talk about it today is because you've heard me say over and over again when I'm talking about estate planning, that I truly believe the most important thing is incapacity planning. Everybody thinks about estate planning as what happens after they die.
Who gets their stuff, right? Who gets their money? The house, the cars, all of that. But what's even more important is what happens if you are still alive and you are incapacitated. If you have a mental illness, if you have a substance abuse problem, who is going to take care of you?
What do you want to happen if you were to become incapacitated?
No family
We are seeing more and more people come into our office who are friends of somebody. The person who is suffering from either mental illness or substance abuse don't have family either locally or they don't have family anymore.
Maybe all of their kids have moved away. Maybe their spouse has passed away, and so they are truly alone
Whether it's a family member or a friend, somebody is going to have to step up and they're going to have to go and get a guardianship.
And what does that mean? That means that they are going to have to go to the courthouse, and meet with a judge that they've never met before. It's scary for a relative to have to go down and talk to a judge and tell the judge why they need a guardianship over this person because they no longer have capacity or they're having a substance abuse problem.
Guardianships are worse than Probates
Guardianships are like living probates.
When somebody dies, you have to probate their estate. A lot of times probate comes several months after the person has passed away. You still feel grief, but that that huge initial hit of grief is gone.
However, in a guardianship. The person is still alive.
The person who you may have gone on vacation with, who you saw at family dinners, who you'd have lunches with, dinners with, who you had a relationship with - they're not mentally there anymore.
That can be very, very difficult for the family member or the friend who is having to deal with that. Having to still communicate with the person on a daily basis, because obviously they still love them, they want to take care of them, but they're having to go in front of a judge and ask the judge for permission to have complete control over this person.
Much of the time the person doesn't want a guardianship. They're going to say absolutely no. They're going to say they want to still keep driving their car. They're going to say they still want to live at their house. They want us to live an independent life. And that's that's human nature.
That is why I think guardianships can be so difficult for family and friends, because somebody has to step up and make those decisions and be the bad guys
Guardianships can be Expensive
Another consequence of not having an incapacity plan is that a guardianship can be very expensive. It is not a cheap process.
You have to usually hire an attorney, get background checks, and pay for court costs and fees. You're going to outlay cash upfront to pay all these costs.
Continued Reporting and Accounting
Once a Guardian is appointed they have to do an annual report every single year. You have to go before the judge every single year and give them an annual report, and an annual accounting.
What are the finances and what's the health status of the person who you have control over? The person who actually gets the guardianship has a lot of work
Guardianship Process
Usually, there's two ways you can depending on whether or not there exists an imminent threat of harm.
Maybe you have secured this person in a memory care facility or assisted living. Someplace where they're going to be taken care of for a while and everything is stable.
In those circumstances, we usually go with a regular guardianship, and that takes a few weeks between the time you file a petition for guardianship and the time you actually get to see a judge. If the Judge approves the Guardianship, then they might require periodic status hearings. At the very least, expect an annual review hearing.
In other cases, where there is an imminent threat of harm from substance abuse or mental illness, we need to get a person someplace immediately for help.
When that happens, we will still file the regular petition for guardianship, but we will also go down to the judge that day and request an emergency guardianship.
This becomes effective immediately, so that they can immediately take care of that person that they love and get them the care that they need.
If you need to go down and get a guardianship, it is no fun.
Somebody in the family has to step up to take care of the person that everybody loves when they don't have an incapacity plan in place.
That's why over and over in all of our videos, I say when you get your estate plan, make certain that you have a rock solid incapacity plan in place to take care of you and provide guidance for your family on how you want to be taken care of.
The key to financial happiness is money and lots of it.
That's not true. And you know it.
Money does not buy happiness, despite what you may think and what you might hear and see in the TV's and the movies. It does make things less stressful, but it does not give you everlasting, perpetual happiness. Today, we're going to talk about things that can reduce your financial stress and hopefully make you happier.
Saving up to six months of money to live on
You hear this all the time? You probably heard it in high school. You probably heard it in college. You probably heard it in graduate school. You probably heard it from other people throughout your lifetime. It really is true.
The best evidence is what happened a few years ago when the whole world shut down.
Some people were lucky and they continued to get their paychecks. Some people were not so lucky and they lost their jobs. Those people that I know who did save money, who saved six months to a year worth of savings, it was not as bad of a deal for them because they had money saved up. They could continue to live and it allowed them to instead focus on what they could do to find another job to make money.
And because they had money saved up, it allowed them to look for other work or work from home type of work. It allowed them to continue to live and come up with fresh ideas on how they could make their life better, how they could be happy.
Contrast that with other people I knew who completely lost their income immediately. They were immediately stressed with credit card bills, mortgage payments, utility bills.
Life got really hard for a lot of people really quick.
But if you can save six months to a year for your living expenses, it's going to make your life a lot less stressful. I know that's easier said than done, but you can do it saving a little bit at a time. It may take you a few years to get to that point, but you will feel a lot happier and a lot less stressed.
Tracking your net worth in one spot.
One place where you can easily find it and see all of your assets and all of your debts. It's something that I actually learned about probably about 15 years ago when I started talking to a financial advisor.
They had this really fancy program. They put it up on the big screen and they could show me all of my assets and all of my debts.
It was really interesting to see what I actually had and what I owed. Now, I didn't actually end up going with that financial advisor because I found another place called Wealthfront, which I'll put a link to down below.
At Wealthfront you can invest money, you can save money, but it also has that same software that that financial advisor has that actually stated exactly what my assets are and what my debts are.
And at a glance, any time of the day, 24 hours a day, I can either look on my phone or I can look on my computer and see exactly where I am financially.
It really is a great stress reliever to see your financial picture as one snapshot because it allows you to track your goals, to see where you're going, where maybe you started spending a little bit too much money here and maybe need to cut back and start to refocus.
And it's a great stress reliever to actually just see everything in one spot.
Get an estate plan, get a revocable living trust centered estate plan.
With that revocable living trust centered estate plan, you're going to have all the documents that are going to protect you, dear, in your lifetime and protect your assets and your beneficiaries, your kids and your spouse after you pass away.
And I can't tell you how many clients come into our office. And once they have the revocable living, trust centered estate plan with the power of attorneys, the pore over wills, the health care power of attorneys, the advanced directive living wills, how much less stress that they have because they have taken care of a major part of their life.
If something were to happen to them and they have protected their kids and their family, if something were to happen to them, we see this all the time. Once they get that revocable living, trust centered estate plan, they then start to turn and look at their finances, what they can do to improve their finances and reduce the stress in their finances as well.
So this is a great way to get you started on your journey to reduce the stress, create more happiness in your life and it's not only just your estate plan. Like I said, it's your finances. And it's also putting together a plan of what happens. And it's all in your estate plan. If this happens, if I am injured in a car wreck, I want this to happen.
These are the steps that I want my family to take, and that could also include your digital assets. I don't think there's anything worse than when, you know, a friend has passed away and you can continue to see their Facebook page or their Twitter page or their Instagram page still up and people continually posting on it saying, Hey, how you doing?
I haven't seen you in a while. That's horrible to see. And so it can be a great relief for a person to have a plan in place for somebody designated in their estate plan to easily go in and shut all of that down or put up a memorial page, whatever you are again, it's your decision. So get an estate plan, prepare for what happens during incapacity and what happens after you pass away.
And I promise you're going to feel a lot less stress and you're going to be a lot happier about the decisions that you've made to protect your family,
Buying an affordable home and an affordable car.
I don't think there's anything more stressful when we're talking to our clients, and I can see it in their faces, in their eyes when they have bought this huge, big McMansion or they are nearing retirement and they're still living in the family home where they raised their kids.
They don't need that 3000, 5000, whatever the square footage houses, if it's got more than two bedrooms and all of your kids have left and you're probably in a house that's too big for you and the expenses start to add up. You have less income because you're starting to retire or you're already retired. The utilities are going to stay.
The same, the maintenance on the house is going to stay the same. The insurance and the taxes are probably going to continue to go up every year. One way that I've seen people reduce the stress in their lives is to get a house that they can afford. And it's not to say that you can't afford that family home, but maybe if you downsize into a home that is more appropriate for your lifestyle now that you're in retirement or thinking about retirement, then it's going to reduce a lot of stress as far as all those expenses that you have to pay.
Same thing goes with the car. You don't need to be driving the most expensive car to keep up with the neighbor down the street. I went to a charity event recently and everybody was getting out of these super expensive cars and dressed to the nines, all their designer bags and designer dresses. But the point is that the person who they are actually honoring that day, the person who actually contributed the most money, several hundreds of thousand dollars, maybe millions, they drove up in a Toyota.
They knew the value of money. They knew the value of stress. They knew the value of happiness. And they made a conscious decision not to have that expensive car. And probably if they're still driving that car now that they have all this money, it's probably an attitude that they have throughout their life. So is it nice to have that expensive car?
Absolutely. Is it nice to have that expensive house? Absolutely. But is it something that's really going to fit in to your lifestyle or is it going to create more stress in you and your family and your spouse? It's your judgment call. But I can tell you that, again, once we see people do their estate line with us, they start to reevaluate all of these things.
And usually within a year they have sold that family home, they have sold those expensive cars, and we see them driving more appropriate cars so they can plan for the future and they're able to enjoy their life and not have to worry about the money
Generating passive income.
And by this, I don't mean all those people you see in your Instagram or your Facebook feed or your Twitter feed, they're guaranteed to make you millions of dollars if you just buy their cars on passive income.
What I'm talking about here is meeting with a financial advisor and creating a plan so that you start to receive dividends on an annual basis or a quarterly basis or every six months and build that into your long term financial plan so that when you retire or even while you're working, you have income coming in from your investments.
And again, I know this is easier said than done because first you have to have the money to do it. And that's why I always advise our estate planning clients to go meet with a financial advisor and just get a snapshot. It's like I say, meet with us to see what your options are. Meet with our financial advisor to see what your options are, because putting a little bit of money each month away is going to start growing bigger and bigger with compounding.
And before you know it, you're going to have that passive income, real passive income dividends coming in to support you and your family, either during your working life or your retirement. So talk to a financial advisor
Getting the appropriate amount of life insurance.
This is another big one that I see after we have created a revocable living, trust centered estate plan for our clients and they're starting to think about their retirement or what they want to do or maybe they've already retired, is to get the life insurance policies in check.
You may have already had a life insurance policy that you've had for years and years and years. Talk to your financial advisor, talk to your insurance provider and make sure that it's still the appropriate amount of coverage for what you need and make certain that you are covered. If you were to become incapacitated, make sure your family is covered, if you were to become incapacitated, and make sure there's enough insurance to provide for your family.
If you were to actually die. And I can tell you, this is a huge stress reliever for a lot of people knowing that they have protected their family. Talk to a financial advisor, talk to an insurance provider and talk to an estate planning attorney to get your affairs in order and reduce the stress in your life.
The key to financial happiness is money and lots of it.
That's not true. And you know it.
Money does not buy happiness, despite what you may think and what you might hear and see in the TV's and the movies. It does make things less stressful, but it does not give you everlasting, perpetual happiness. Today, we're going to talk about things that can reduce your financial stress and hopefully make you happier.
Saving up to six months of money to live on
You hear this all the time? You probably heard it in high school. You probably heard it in college. You probably heard it in graduate school. You probably heard it from other people throughout your lifetime. It really is true.
The best evidence is what happened a few years ago when the whole world shut down.
Some people were lucky and they continued to get their paychecks. Some people were not so lucky and they lost their jobs. Those people that I know who did save money, who saved six months to a year worth of savings, it was not as bad of a deal for them because they had money saved up. They could continue to live and it allowed them to instead focus on what they could do to find another job to make money.
And because they had money saved up, it allowed them to look for other work or work from home type of work. It allowed them to continue to live and come up with fresh ideas on how they could make their life better, how they could be happy.
Contrast that with other people I knew who completely lost their income immediately. They were immediately stressed with credit card bills, mortgage payments, utility bills.
Life got really hard for a lot of people really quick.
But if you can save six months to a year for your living expenses, it's going to make your life a lot less stressful. I know that's easier said than done, but you can do it saving a little bit at a time. It may take you a few years to get to that point, but you will feel a lot happier and a lot less stressed.
Tracking your net worth in one spot.
One place where you can easily find it and see all of your assets and all of your debts. It's something that I actually learned about probably about 15 years ago when I started talking to a financial advisor.
They had this really fancy program. They put it up on the big screen and they could show me all of my assets and all of my debts.
It was really interesting to see what I actually had and what I owed. Now, I didn't actually end up going with that financial advisor because I found another place called Wealthfront, which I'll put a link to down below.
At Wealthfront you can invest money, you can save money, but it also has that same software that that financial advisor has that actually stated exactly what my assets are and what my debts are.
And at a glance, any time of the day, 24 hours a day, I can either look on my phone or I can look on my computer and see exactly where I am financially.
It really is a great stress reliever to see your financial picture as one snapshot because it allows you to track your goals, to see where you're going, where maybe you started spending a little bit too much money here and maybe need to cut back and start to refocus.
And it's a great stress reliever to actually just see everything in one spot.
Get an estate plan, get a revocable living trust centered estate plan.
With that revocable living trust centered estate plan, you're going to have all the documents that are going to protect you, dear, in your lifetime and protect your assets and your beneficiaries, your kids and your spouse after you pass away.
And I can't tell you how many clients come into our office. And once they have the revocable living, trust centered estate plan with the power of attorneys, the pore over wills, the health care power of attorneys, the advanced directive living wills, how much less stress that they have because they have taken care of a major part of their life.
If something were to happen to them and they have protected their kids and their family, if something were to happen to them, we see this all the time. Once they get that revocable living, trust centered estate plan, they then start to turn and look at their finances, what they can do to improve their finances and reduce the stress in their finances as well.
So this is a great way to get you started on your journey to reduce the stress, create more happiness in your life and it's not only just your estate plan. Like I said, it's your finances. And it's also putting together a plan of what happens. And it's all in your estate plan. If this happens, if I am injured in a car wreck, I want this to happen.
These are the steps that I want my family to take, and that could also include your digital assets. I don't think there's anything worse than when, you know, a friend has passed away and you can continue to see their Facebook page or their Twitter page or their Instagram page still up and people continually posting on it saying, Hey, how you doing?
I haven't seen you in a while. That's horrible to see. And so it can be a great relief for a person to have a plan in place for somebody designated in their estate plan to easily go in and shut all of that down or put up a memorial page, whatever you are again, it's your decision. So get an estate plan, prepare for what happens during incapacity and what happens after you pass away.
And I promise you're going to feel a lot less stress and you're going to be a lot happier about the decisions that you've made to protect your family,
Buying an affordable home and an affordable car.
I don't think there's anything more stressful when we're talking to our clients, and I can see it in their faces, in their eyes when they have bought this huge, big McMansion or they are nearing retirement and they're still living in the family home where they raised their kids.
They don't need that 3000, 5000, whatever the square footage houses, if it's got more than two bedrooms and all of your kids have left and you're probably in a house that's too big for you and the expenses start to add up. You have less income because you're starting to retire or you're already retired. The utilities are going to stay.
The same, the maintenance on the house is going to stay the same. The insurance and the taxes are probably going to continue to go up every year. One way that I've seen people reduce the stress in their lives is to get a house that they can afford. And it's not to say that you can't afford that family home, but maybe if you downsize into a home that is more appropriate for your lifestyle now that you're in retirement or thinking about retirement, then it's going to reduce a lot of stress as far as all those expenses that you have to pay.
Same thing goes with the car. You don't need to be driving the most expensive car to keep up with the neighbor down the street. I went to a charity event recently and everybody was getting out of these super expensive cars and dressed to the nines, all their designer bags and designer dresses. But the point is that the person who they are actually honoring that day, the person who actually contributed the most money, several hundreds of thousand dollars, maybe millions, they drove up in a Toyota.
They knew the value of money. They knew the value of stress. They knew the value of happiness. And they made a conscious decision not to have that expensive car. And probably if they're still driving that car now that they have all this money, it's probably an attitude that they have throughout their life. So is it nice to have that expensive car?
Absolutely. Is it nice to have that expensive house? Absolutely. But is it something that's really going to fit in to your lifestyle or is it going to create more stress in you and your family and your spouse? It's your judgment call. But I can tell you that, again, once we see people do their estate line with us, they start to reevaluate all of these things.
And usually within a year they have sold that family home, they have sold those expensive cars, and we see them driving more appropriate cars so they can plan for the future and they're able to enjoy their life and not have to worry about the money
Generating passive income.
And by this, I don't mean all those people you see in your Instagram or your Facebook feed or your Twitter feed, they're guaranteed to make you millions of dollars if you just buy their cars on passive income.
What I'm talking about here is meeting with a financial advisor and creating a plan so that you start to receive dividends on an annual basis or a quarterly basis or every six months and build that into your long term financial plan so that when you retire or even while you're working, you have income coming in from your investments.
And again, I know this is easier said than done because first you have to have the money to do it. And that's why I always advise our estate planning clients to go meet with a financial advisor and just get a snapshot. It's like I say, meet with us to see what your options are. Meet with our financial advisor to see what your options are, because putting a little bit of money each month away is going to start growing bigger and bigger with compounding.
And before you know it, you're going to have that passive income, real passive income dividends coming in to support you and your family, either during your working life or your retirement. So talk to a financial advisor
Getting the appropriate amount of life insurance.
This is another big one that I see after we have created a revocable living, trust centered estate plan for our clients and they're starting to think about their retirement or what they want to do or maybe they've already retired, is to get the life insurance policies in check.
You may have already had a life insurance policy that you've had for years and years and years. Talk to your financial advisor, talk to your insurance provider and make sure that it's still the appropriate amount of coverage for what you need and make certain that you are covered. If you were to become incapacitated, make sure your family is covered, if you were to become incapacitated, and make sure there's enough insurance to provide for your family.
If you were to actually die. And I can tell you, this is a huge stress reliever for a lot of people knowing that they have protected their family. Talk to a financial advisor, talk to an insurance provider and talk to an estate planning attorney to get your affairs in order and reduce the stress in your life.
Do you want to travel during retirement?
Do you wish you had a time portal to travel anywhere in the world? The reality is no one has a travel portal yet. If you want to travel during retirement, then build it into your retirement savings and your estate plan.
Here are four things that the experts say you can do to travel more during your retirement.
Number one, start saving before you retire.
Not saving enough is the biggest reason experts say folks cannot take their dream vacation. Sounds obvious, doesn't it? Experts say that you should have two goals for savings. One is to create and maintain an emergency fund and for repairs around the house.
The second is growth - investing your money or growth. Part of that investing for growth should include a subsection for traveling, so you can travel the world.
And I should stop here and say that on the extreme end, do not try to save so much money that, well, you never retire. Talk to a financial advisor, talk to an expert.
Tell them that one of your goals, one of your main goals is to travel during retirement. Figure out where you want to travel and how often you want to go. Put together a long-term plan and a strategy for saving up for that dream vacation to Italy, Dubai, or my favorite Costa Rica.
That brings us to number two.
Find cheap or inexpensive places to travel. You can find some very inexpensive places to travel to, like Laos, Cambodia, or even Vietnam. Unfortunately, prices in many countries are not that much different from the United States.
Many places have the same retail and restaurant chains that we have here. Even Taco Bell, KFC, McDonald's, and Starbucks. Guess what?
The prices at Starbucks in San Jose, Costa Rica are the same as Starbucks in your neighborhood.
There's no difference.
People do not realize how expensive travel can be nowadays. Just turn on the TV or open the newspaper and see all the troubles people are having with the expense and headache of travel. Once you are in a foreign land on vacation, always check to see if there are less expensive alternatives for doing the same thing.
This is especially true with transportation. On a recent trip, the cost of a taxi from the airport to my hotel was over $50. And that was only if I agreed to pay in advance.
I checked out Uber and it was less than $9 for the same trip. I saved $40 and I used that money to eat where the locals eat, not at expensive risk traps.
Do your homework before you travel.
If you still want to take that extravagant vacation, well, do it. Just plan for it.
Number three, stop spending so much money.
Stop buying everything you see, especially when it comes to credit cards to do it. Experts say that credit card debt and student loans are the biggest hurdles to saving money.
Make a budget and get a hold of your savings.
Decide how much of your salary you can devote toward paying off that debt. Experts say to start paying down the debt with the highest interest rates first. Once those are paid, then start working, especially if you have student loans, on all those federal loans which have much lower interest rates.
Get your debt under control so that you can start saving more money for travel and the essentials during retirement.
Number four, downsize.
Why do you need that big house where you raised your kids? You don't!
One of the first things we see with our estate planning clients, after they sign the revocable living trust-centered estate plan that we create specifically for them, is to downsize and sell their family home.
Once they have a solid estate plan in place, a spark is lit and they realize that a three or four-bedroom home is really not needed anymore.
Some people love their big homes. And you know what? Like everything else, if you can maintain it and still travel and do the things you want to do, then keep it.
The number one reason people keep their family home is for when the kids visit. However, if the kids are only visiting once a year for the holidays. It's probably cheaper for them to stay at a hotel or maybe even on the couch.
Sell that big home and start traveling the world.
The bottom line, save more money now. Travel more later.
Talk to a financial advisor to grow that vacation savings plan to grow your savings.
Talk to an estate planning attorney to protect you and your partner during your lifetime.
Start traveling.
Do you want to travel during retirement?
Do you wish you had a time portal to travel anywhere in the world? The reality is no one has a travel portal yet. If you want to travel during retirement, then build it into your retirement savings and your estate plan.
Here are four things that the experts say you can do to travel more during your retirement.
Number one, start saving before you retire.
Not saving enough is the biggest reason experts say folks cannot take their dream vacation. Sounds obvious, doesn't it? Experts say that you should have two goals for savings. One is to create and maintain an emergency fund and for repairs around the house.
The second is growth - investing your money or growth. Part of that investing for growth should include a subsection for traveling, so you can travel the world.
And I should stop here and say that on the extreme end, do not try to save so much money that, well, you never retire. Talk to a financial advisor, talk to an expert.
Tell them that one of your goals, one of your main goals is to travel during retirement. Figure out where you want to travel and how often you want to go. Put together a long-term plan and a strategy for saving up for that dream vacation to Italy, Dubai, or my favorite Costa Rica.
That brings us to number two.
Find cheap or inexpensive places to travel. You can find some very inexpensive places to travel to, like Laos, Cambodia, or even Vietnam. Unfortunately, prices in many countries are not that much different from the United States.
Many places have the same retail and restaurant chains that we have here. Even Taco Bell, KFC, McDonald's, and Starbucks. Guess what?
The prices at Starbucks in San Jose, Costa Rica are the same as Starbucks in your neighborhood.
There's no difference.
People do not realize how expensive travel can be nowadays. Just turn on the TV or open the newspaper and see all the troubles people are having with the expense and headache of travel. Once you are in a foreign land on vacation, always check to see if there are less expensive alternatives for doing the same thing.
This is especially true with transportation. On a recent trip, the cost of a taxi from the airport to my hotel was over $50. And that was only if I agreed to pay in advance.
I checked out Uber and it was less than $9 for the same trip. I saved $40 and I used that money to eat where the locals eat, not at expensive risk traps.
Do your homework before you travel.
If you still want to take that extravagant vacation, well, do it. Just plan for it.
Number three, stop spending so much money.
Stop buying everything you see, especially when it comes to credit cards to do it. Experts say that credit card debt and student loans are the biggest hurdles to saving money.
Make a budget and get a hold of your savings.
Decide how much of your salary you can devote toward paying off that debt. Experts say to start paying down the debt with the highest interest rates first. Once those are paid, then start working, especially if you have student loans, on all those federal loans which have much lower interest rates.
Get your debt under control so that you can start saving more money for travel and the essentials during retirement.
Number four, downsize.
Why do you need that big house where you raised your kids? You don't!
One of the first things we see with our estate planning clients, after they sign the revocable living trust-centered estate plan that we create specifically for them, is to downsize and sell their family home.
Once they have a solid estate plan in place, a spark is lit and they realize that a three or four-bedroom home is really not needed anymore.
Some people love their big homes. And you know what? Like everything else, if you can maintain it and still travel and do the things you want to do, then keep it.
The number one reason people keep their family home is for when the kids visit. However, if the kids are only visiting once a year for the holidays. It's probably cheaper for them to stay at a hotel or maybe even on the couch.
Sell that big home and start traveling the world.
The bottom line, save more money now. Travel more later.
Talk to a financial advisor to grow that vacation savings plan to grow your savings.
Talk to an estate planning attorney to protect you and your partner during your lifetime.
Start traveling.
Can ChatGPT write a last will and testament.
ChatGPT is all over the news right now.
ChatGPT is artificial intelligence generative pre-trained transformer three GPT. It's a language processing artificial intelligence model developed by open A.I. Yes, this is a third version and it's only getting smarter with each version. It can create human like text essays, songs, poems, novels, and even a last will and testament.
All the news stories talk about all the jobs that will be lost due to artificial intelligence. A new job is being created called prompt creator. Anyone can tell ChatGPT to write a love poem. However, the better your prompts are, the better the output is going to be. This is very important. After experimenting with ChatGPT for over a month, I have found this to be absolutely true.
So who wins between ChatGPT generated last will and testament and an attorney drafted last will and testament? Well, that's up to you. The more good you put into it, the more good you're going to get out of it. But if you don't know what you're doing, then you're going to get out garbage. That output is not going to be what you want.
You probably won't get a last will and testament that is going to do what you wanted it to do. And you may not get one that's going to hold up in a court of law. This is a last will and testament that I created for a sample, pretend client called Tommy Sample and it is over 24 pages long compared to the one page last will and testament that was generated by chat.
Now I can't criticize that. I have seen some very, very well written last will and testaments. They were only one page long and did exactly what the deceased person wanted to happen and we were actually able to easily probate their estate because they did put very specific language for a very specific situation.
And it worked. But I'm going to tell you that maybe 95 to 90% of the time, it's not going to work. But in this last will and testament that I did for Tommy Sample, just some of the things that were not included in the ChatGPT version are things like a remote beneficiary. If for whatever reason, all of the heirs are gone and there's nobody to give the estate to then who ultimately receives everything.
Think of it as a plane going down with the entire family who gets your estate if everybody dies with you. Chat.
It did include an executor because I told it to, but one of the things that I forgot to include was a guardian for the minor children. We did talk about the fact that there were three children, and I did not put in there who Enrique wanted to be the guardian for his three minor children.
The three children were minors. But we did not talk about who their guardian is to take care of them on a day to day basis. That was missing. And again, it was an input that I did not put in. So I can't completely blame ChatGPT for that.
But it's something that would have been on our checklist when we're creating this, whether or not we needed to have a guardian for the minor children. ChatGPT’s did not include general administrative provisions .
There wasn't really anything about whether there is a bond would be required on the part of the executor. Nothing about employment provisions for professionals in administering the estate.
Nothing for distributions to people who are incapacitated. Not just because they're under the age of 18. But what if they are incapacitated because they were in a car accident? Maybe they're receiving Social Security, SSI benefits or some other type of government type benefit and inheritance might ruin or even mess up their government benefits. So that has to be planned for very carefully.
Also didn't talk about specifically the powers that are generally needed for an executor. Like investment powers, banking powers, contract powers, farm ranch and agricultural powers, litigation and settlement powers. What if they were in an accident and now the estate needs to sue? We specifically list 22 to 30 different powers in our last will and testament that an executor needs.
Bottom line is there is a lot in the last will and testament drafted by an attorney that is not in the ChatGPT last will and testament. But again, it all depends on the inputs. If you're going to spend your time getting all the inputs into that ChatGPT correctly, then you might come out with a pretty good last will and testament completely generated by artificial intelligence.
What do I think? is ChatGPT going to displace or get rid of attorney jobs? I don't know.
It may do that for a lot of jobs, but like I said earlier, this version of ChatGPT is already on the third version and each version is getting better and better, but it still depends on what the inputs are.
I can't stress that enough that if you don't know what to ask ChatGPT to do, then it's not going to know what to do. Maybe instead of replacing attorneys, it is going to redefine the job of an attorney in how well an attorney can define the inputs to put into ChatGPT instead of an attorney taking 2 to 3 days to draft a last will and testament.
Maybe technology like this will enable them to create a last will and testament ready for a client's signature within an hour. At their very first meeting.
I absolutely love technology and seen what it can do to make our lives better. Sometimes it does. Sometimes it doesn't. Right now, I'm extremely hesitant to recommend that people use online services or copy a last will and testament from a friend and trying to make it their own.
That's just my general advice. When we see people go online, they don't know what kind of clauses they need to have in their last will and testament for their specific situation. People do not correctly disinherit children and other relatives in their document. They do not sign it correctly. They don't know what their state law is. They do not have correct self-proving clauses for themselves and for the witnesses.
That alone may get a last will and testament kicked out. For all of these reasons, I think they also apply to chatGPT. If you don't know what to ask for, it's not going to give you a good document. It's not going to give you a good last will. As always this video is for educational purposes only.Can ChatGPT write a last will and testament.
ChatGPT is all over the news right now.
ChatGPT is artificial intelligence generative pre-trained transformer three GPT. It's a language processing artificial intelligence model developed by open A.I. Yes, this is a third version and it's only getting smarter with each version. It can create human like text essays, songs, poems, novels, and even a last will and testament.
All the news stories talk about all the jobs that will be lost due to artificial intelligence. A new job is being created called prompt creator. Anyone can tell ChatGPT to write a love poem. However, the better your prompts are, the better the output is going to be. This is very important. After experimenting with ChatGPT for over a month, I have found this to be absolutely true.
So who wins between ChatGPT generated last will and testament and an attorney drafted last will and testament? Well, that's up to you. The more good you put into it, the more good you're going to get out of it. But if you don't know what you're doing, then you're going to get out garbage. That output is not going to be what you want.
You probably won't get a last will and testament that is going to do what you wanted it to do. And you may not get one that's going to hold up in a court of law. This is a last will and testament that I created for a sample, pretend client called Tommy Sample and it is over 24 pages long compared to the one page last will and testament that was generated by chat.
Now I can't criticize that. I have seen some very, very well written last will and testaments. They were only one page long and did exactly what the deceased person wanted to happen and we were actually able to easily probate their estate because they did put very specific language for a very specific situation.
And it worked. But I'm going to tell you that maybe 95 to 90% of the time, it's not going to work. But in this last will and testament that I did for Tommy Sample, just some of the things that were not included in the ChatGPT version are things like a remote beneficiary. If for whatever reason, all of the heirs are gone and there's nobody to give the estate to then who ultimately receives everything.
Think of it as a plane going down with the entire family who gets your estate if everybody dies with you. Chat.
It did include an executor because I told it to, but one of the things that I forgot to include was a guardian for the minor children. We did talk about the fact that there were three children, and I did not put in there who Enrique wanted to be the guardian for his three minor children.
The three children were minors. But we did not talk about who their guardian is to take care of them on a day to day basis. That was missing. And again, it was an input that I did not put in. So I can't completely blame ChatGPT for that.
But it's something that would have been on our checklist when we're creating this, whether or not we needed to have a guardian for the minor children. ChatGPT’s did not include general administrative provisions .
There wasn't really anything about whether there is a bond would be required on the part of the executor. Nothing about employment provisions for professionals in administering the estate.
Nothing for distributions to people who are incapacitated. Not just because they're under the age of 18. But what if they are incapacitated because they were in a car accident? Maybe they're receiving Social Security, SSI benefits or some other type of government type benefit and inheritance might ruin or even mess up their government benefits. So that has to be planned for very carefully.
Also didn't talk about specifically the powers that are generally needed for an executor. Like investment powers, banking powers, contract powers, farm ranch and agricultural powers, litigation and settlement powers. What if they were in an accident and now the estate needs to sue? We specifically list 22 to 30 different powers in our last will and testament that an executor needs.
Bottom line is there is a lot in the last will and testament drafted by an attorney that is not in the ChatGPT last will and testament. But again, it all depends on the inputs. If you're going to spend your time getting all the inputs into that ChatGPT correctly, then you might come out with a pretty good last will and testament completely generated by artificial intelligence.
What do I think? is ChatGPT going to displace or get rid of attorney jobs? I don't know.
It may do that for a lot of jobs, but like I said earlier, this version of ChatGPT is already on the third version and each version is getting better and better, but it still depends on what the inputs are.
I can't stress that enough that if you don't know what to ask ChatGPT to do, then it's not going to know what to do. Maybe instead of replacing attorneys, it is going to redefine the job of an attorney in how well an attorney can define the inputs to put into ChatGPT instead of an attorney taking 2 to 3 days to draft a last will and testament.
Maybe technology like this will enable them to create a last will and testament ready for a client's signature within an hour. At their very first meeting.
I absolutely love technology and seen what it can do to make our lives better. Sometimes it does. Sometimes it doesn't. Right now, I'm extremely hesitant to recommend that people use online services or copy a last will and testament from a friend and trying to make it their own.
That's just my general advice. When we see people go online, they don't know what kind of clauses they need to have in their last will and testament for their specific situation. People do not correctly disinherit children and other relatives in their document. They do not sign it correctly. They don't know what their state law is. They do not have correct self-proving clauses for themselves and for the witnesses.
That alone may get a last will and testament kicked out. For all of these reasons, I think they also apply to chatGPT. If you don't know what to ask for, it's not going to give you a good document. It's not going to give you a good last will. As always this video is for educational purposes only.How to transfer a real estate in your trust
Do you have a trust? Is your home in trust? Do you have a second home? Do you have a rental property? Do you have multiple rental properties? Are you a house flipper? Did you just create a new revocable living trust center estate plan? If you have a revocable trust, then it must be properly funded.
And that means anything that has a title showing ownership must be updated to show it is owned by the Trust. Your Trust. If you have a trust, then make certain all of your assets are in the name of your trust. That's called trust funding. The biggest asset most people have is well, their home. How do you transfer real estate, your home into trust?
If you go to an estate planning attorney and they prepare a revocable trust centered estate plan for you or you already have a trust, you can do it in one of two ways. The first is quick and pretty straightforward. It's a quitclaim deed. You've probably heard about this throughout your entire life. A quick claim deed from your personal name to the name of your revocable living trust so that the property is transferred into the name of your trust, where titling it in your trust.
For example, the current deed to the house of a married couple probably says something like this Jimmy Smith and Sally Smith as joint tenants with right of survivorship. When you transfer it to your trust, the quitclaim deed will state something similar to this. It'll say Jimmy Smith and Sally Smith transfer and convey to Jimmy Smith and Sally Smith trustees of the Jimmy Smith and Sally Smith Revocable Living Trust.
That's it. Now, the quitclaim deed will have other important language that is relevant to the state where you live in, but that is basically it. If you have the revocable trust done by an attorney, they will most likely do this for you as part of their revocable living trust package. We don't like our clients leaving our office without first putting their real estate into their trust.
The second way to transfer real estate is to have a tile company execute a warranty deed for you. Now we have seen people do this if they want to make certain that they have absolutely clean title. The reason for this is that the client themselves might have recently purchased the real estate by a quick claim deed, or maybe they bought it at an auction.
Now they're working on their estate plan, their retirement plan, and they want to make certain that there is clean title for their heirs. In other words, they want to clean up the title now and get rid of any issues so that their kids don't have to worry about it later on, or even their spouse in that case, they will actually go to a title company and have them do their complete package of title searches.
The title company will then issue a warranty and transfer the property from the person's personal name to the name of their trust. It can be done in either one of these two ways, either with a quick claim or with the warranty deed. It's really just up to you. We just do it with a quitclaim, and it's a pretty easy process.
As you can see, we prepare the deed for them. They sign it in front of our notary when they sign all their other estate planning documents. Then we take it down to the county clerk's office and file that claim deed with a memorandum of transfer certificate of trust and file that with the county clerk the property card. By doing that, you have transferred your home real estate from your personal name to the name of your trust is usually a painless process.
To put your real estate into your trust fund, in your trust with the real estate is extremely important. The consequence of not transferring your real estate is guess what? It needs to be probated. It's a real bummer when a person did everything correctly. They spent all that money on a trust. They funded everything else correctly except for that one piece of real estate.
Recently we had a brother and sister come in and they were trying to administer their father's estate, his trust estate. He was very diligent in putting all of his assets into his trust into that trust bucket. His attorney made certain that his home was in the name of the trust when he signed his trust fortune a year after he did this, the father sold that home and he bought a new, smaller home.
And just in his personal life, can you guess what happened? The house had to go through the probate process with real property if the person has already died. The only way to get it transferred from the deceased person's name to their heirs or into their trust is to go through the probate process. There are a few things that you need to be aware of when you put real estate into your trust.
Number one is your mortgage. A lot of time mortgages will have what is called a do on sale clause. That simply means that if you transfer the property in any way, then the mortgage is due and payable immediately. It triggers that clause. Now, the courts and legislatures have spoken on this issue. Transferring your home into your trust does not trigger the due on sale clause because a revocable trust is what's called a grant or trust.
It is essentially you in paper form, so to speak. Number two, you need to be concerned about homeowner's insurance if your home is insured in your name and then you transfer it to your trust. You need to make sure that your trust is named as also unsure under the policy. It's a simple process of calling your insurance agent, usually letting them know you have a trust, a revocable trust, and requesting that the trust be listed as also insured.
They can usually make this change over the phone. Contact your insurance agent so that it gets done right and do it at the time the property is transferred. Number three, your homestead exemption. If it's the home that you're actually living in, you need to make certain that your homestead exemption stays in place. This really depends on the county and the state where you are living in almost all instances.
As long as a person is transferring the property from their personal name to their personal trust with essentially the same name, then the homestead exemption stays in place. But I've heard stories or stories from other parts of the country, and they have to reapply for their homestead exemption, possibly at a higher rate. Always check with your taxing authority before you make those changes.
Very important. Bottom line on all of this trust fund, make certain that your property is titled correctly so that your estate plan, your retirement plan works correctly when it needs to remember that if an asset is not properly titled in the name of your trust, then it will have to go through the lengthy and expensive probate process. If you're still alive, then it's probably a guardianship process.
It's extremely important not only to avoid probate, but also to make certain that your heirs, the ones that you want to get your real property, actually receive it under the terms of your local living trust estate plan.
How to transfer a real estate in your trust
Do you have a trust? Is your home in trust? Do you have a second home? Do you have a rental property? Do you have multiple rental properties? Are you a house flipper? Did you just create a new revocable living trust center estate plan? If you have a revocable trust, then it must be properly funded.
And that means anything that has a title showing ownership must be updated to show it is owned by the Trust. Your Trust. If you have a trust, then make certain all of your assets are in the name of your trust. That's called trust funding. The biggest asset most people have is well, their home. How do you transfer real estate, your home into trust?
If you go to an estate planning attorney and they prepare a revocable trust centered estate plan for you or you already have a trust, you can do it in one of two ways. The first is quick and pretty straightforward. It's a quitclaim deed. You've probably heard about this throughout your entire life. A quick claim deed from your personal name to the name of your revocable living trust so that the property is transferred into the name of your trust, where titling it in your trust.
For example, the current deed to the house of a married couple probably says something like this Jimmy Smith and Sally Smith as joint tenants with right of survivorship. When you transfer it to your trust, the quitclaim deed will state something similar to this. It'll say Jimmy Smith and Sally Smith transfer and convey to Jimmy Smith and Sally Smith trustees of the Jimmy Smith and Sally Smith Revocable Living Trust.
That's it. Now, the quitclaim deed will have other important language that is relevant to the state where you live in, but that is basically it. If you have the revocable trust done by an attorney, they will most likely do this for you as part of their revocable living trust package. We don't like our clients leaving our office without first putting their real estate into their trust.
The second way to transfer real estate is to have a tile company execute a warranty deed for you. Now we have seen people do this if they want to make certain that they have absolutely clean title. The reason for this is that the client themselves might have recently purchased the real estate by a quick claim deed, or maybe they bought it at an auction.
Now they're working on their estate plan, their retirement plan, and they want to make certain that there is clean title for their heirs. In other words, they want to clean up the title now and get rid of any issues so that their kids don't have to worry about it later on, or even their spouse in that case, they will actually go to a title company and have them do their complete package of title searches.
The title company will then issue a warranty and transfer the property from the person's personal name to the name of their trust. It can be done in either one of these two ways, either with a quick claim or with the warranty deed. It's really just up to you. We just do it with a quitclaim, and it's a pretty easy process.
As you can see, we prepare the deed for them. They sign it in front of our notary when they sign all their other estate planning documents. Then we take it down to the county clerk's office and file that claim deed with a memorandum of transfer certificate of trust and file that with the county clerk the property card. By doing that, you have transferred your home real estate from your personal name to the name of your trust is usually a painless process.
To put your real estate into your trust fund, in your trust with the real estate is extremely important. The consequence of not transferring your real estate is guess what? It needs to be probated. It's a real bummer when a person did everything correctly. They spent all that money on a trust. They funded everything else correctly except for that one piece of real estate.
Recently we had a brother and sister come in and they were trying to administer their father's estate, his trust estate. He was very diligent in putting all of his assets into his trust into that trust bucket. His attorney made certain that his home was in the name of the trust when he signed his trust fortune a year after he did this, the father sold that home and he bought a new, smaller home.
And just in his personal life, can you guess what happened? The house had to go through the probate process with real property if the person has already died. The only way to get it transferred from the deceased person's name to their heirs or into their trust is to go through the probate process. There are a few things that you need to be aware of when you put real estate into your trust.
Number one is your mortgage. A lot of time mortgages will have what is called a do on sale clause. That simply means that if you transfer the property in any way, then the mortgage is due and payable immediately. It triggers that clause. Now, the courts and legislatures have spoken on this issue. Transferring your home into your trust does not trigger the due on sale clause because a revocable trust is what's called a grant or trust.
It is essentially you in paper form, so to speak. Number two, you need to be concerned about homeowner's insurance if your home is insured in your name and then you transfer it to your trust. You need to make sure that your trust is named as also unsure under the policy. It's a simple process of calling your insurance agent, usually letting them know you have a trust, a revocable trust, and requesting that the trust be listed as also insured.
They can usually make this change over the phone. Contact your insurance agent so that it gets done right and do it at the time the property is transferred. Number three, your homestead exemption. If it's the home that you're actually living in, you need to make certain that your homestead exemption stays in place. This really depends on the county and the state where you are living in almost all instances.
As long as a person is transferring the property from their personal name to their personal trust with essentially the same name, then the homestead exemption stays in place. But I've heard stories or stories from other parts of the country, and they have to reapply for their homestead exemption, possibly at a higher rate. Always check with your taxing authority before you make those changes.
Very important. Bottom line on all of this trust fund, make certain that your property is titled correctly so that your estate plan, your retirement plan works correctly when it needs to remember that if an asset is not properly titled in the name of your trust, then it will have to go through the lengthy and expensive probate process. If you're still alive, then it's probably a guardianship process.
It's extremely important not only to avoid probate, but also to make certain that your heirs, the ones that you want to get your real property, actually receive it under the terms of your local living trust estate plan.
Real Estate in Trust.
I cannot over state how important it is to have a fully funded revocable living trust. A fully funded trust means that you have transferred all of your assets into your trust. An unfunded or partially funded revocable living trust means that those assets that you do not transfer into your trust must go through the probate process at a courthouse.
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Real Estate in Trust.
I cannot over state how important it is to have a fully funded revocable living trust. A fully funded trust means that you have transferred all of your assets into your trust. An unfunded or partially funded revocable living trust means that those assets that you do not transfer into your trust must go through the probate process at a courthouse.
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Trust funding involves titling all of your assets in the name of your Trust. If you forget to transfer an asset (including bank accounts and real property), then your heirs will need to probate the Pour Over Will to move the asset into the Trust for distribution. Trust funding is extremely important for client-centered Oklahoma estate planning. Estate planning lawyers can help with this process.
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Trust funding involves titling all of your assets in the name of your Trust. If you forget to transfer an asset (including bank accounts and real property), then your heirs will need to probate the Pour Over Will to move the asset into the Trust for distribution. Trust funding is extremely important for client-centered Oklahoma estate planning. Estate planning lawyers can help with this process.
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A HIPAA authorization grants someone, usually your Trustee and Health Care Power of Attorney, the power to access your medical records and talk with your medical providers.
There might be times where you want a partner or spouse to be able to reach your medical provider and get information about how you are doing while in the hospital. Your designated HIPAA representative will be able to speak with medical providers for important information regarding your health.
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A HIPAA authorization grants someone, usually your Trustee and Health Care Power of Attorney, the power to access your medical records and talk with your medical providers.
There might be times where you want a partner or spouse to be able to reach your medical provider and get information about how you are doing while in the hospital. Your designated HIPAA representative will be able to speak with medical providers for important information regarding your health.
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An advanced directive, or living will as it is sometimes called, is a written and signed document that lets people state their wishes about their medical treatment when they can no longer communicate. It provides guidance to your health care agent and medical providers about the type of treatments you would want in the event you are no longer able to make decisions for yourself.
Living Will vs Will. It is extremely important to understand that a living will is NOT the same thing as a Will. A Last Will tells the world what you what to happen to your assets after you die. A Living Will tells people what you want to happen during your lifetime.
If doctors have determined that you are in a persistent vegetative state, in other words brain dead, then what should happen. Do you want life support? Do you want food, water and pain medication?
The truth is that we do not know what happen when someone is brain dead. Most people ask for pain medication only and wish to die peacefully.
Watch this YouTube on Living Will vs Will: https://www.youtube.com/shorts/_uIeTa6USpA
This is all YOUR decision!
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An advanced directive, or living will as it is sometimes called, is a written and signed document that lets people state their wishes about their medical treatment when they can no longer communicate. It provides guidance to your health care agent and medical providers about the type of treatments you would want in the event you are no longer able to make decisions for yourself.
Living Will vs Will. It is extremely important to understand that a living will is NOT the same thing as a Will. A Last Will tells the world what you what to happen to your assets after you die. A Living Will tells people what you want to happen during your lifetime.
If doctors have determined that you are in a persistent vegetative state, in other words brain dead, then what should happen. Do you want life support? Do you want food, water and pain medication?
The truth is that we do not know what happen when someone is brain dead. Most people ask for pain medication only and wish to die peacefully.
Watch this YouTube on Living Will vs Will: https://www.youtube.com/shorts/_uIeTa6USpA
This is all YOUR decision!
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The well done professionally drafted Health care power of attorney may be used to give an agent the legal authority to make health care decisions for you if you become unable or unwilling to make those decisions yourself. Health care powers of attorney are often called "proxy directives" because they allow someone else (your "agent" or "health care proxy" or "Health Care Power of Attorney") to make health care decisions on your behalf in a manner that's very similar to how a durable power of attorney designates a person who can manage your financial affairs when you cannot.
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The well done professionally drafted Health care power of attorney may be used to give an agent the legal authority to make health care decisions for you if you become unable or unwilling to make those decisions yourself. Health care powers of attorney are often called "proxy directives" because they allow someone else (your "agent" or "health care proxy" or "Health Care Power of Attorney") to make health care decisions on your behalf in a manner that's very similar to how a durable power of attorney designates a person who can manage your financial affairs when you cannot.
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The Durable Power of Attorney allows an agent to make decisions when the person who granted power is no longer able to do so, if they lose the ability to make informed decisions due to illness or disability. It can also be referred to as a power of attorney that lasts "even if I lose my capacity." This power continues even after the principal becomes incapacitated and overrides any other power of attorney document that may have been created earlier.
The power of attorney grants an agent power to do something for the principal. A power of attorney must be in writing, signed by the person granting power, and properly notarized. It may also be witnessed or verified. Don't use an online form and mess things up for your loved ones.
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The Durable Power of Attorney allows an agent to make decisions when the person who granted power is no longer able to do so, if they lose the ability to make informed decisions due to illness or disability. It can also be referred to as a power of attorney that lasts "even if I lose my capacity." This power continues even after the principal becomes incapacitated and overrides any other power of attorney document that may have been created earlier.
The power of attorney grants an agent power to do something for the principal. A power of attorney must be in writing, signed by the person granting power, and properly notarized. It may also be witnessed or verified. Don't use an online form and mess things up for your loved ones.
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A Pour Over will is just a fancy name for a Last Will and Testament when it is part of client-centered estate plan. The goal of having a revocable living trust is to put ALL of your assets in the Trust. However, sometimes a person will forget to title an asset in the name of the trust. It is not ideal, but when this happens the Pour Over Will with a probate proceeding transfers (pours) the asset into the Trust. The Pour Over Will also plays a very important role for parents by naming guardians for minor children. Keep this updated just like the other documents in your Estate Plan.
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A Pour Over will is just a fancy name for a Last Will and Testament when it is part of client-centered estate plan. The goal of having a revocable living trust is to put ALL of your assets in the Trust. However, sometimes a person will forget to title an asset in the name of the trust. It is not ideal, but when this happens the Pour Over Will with a probate proceeding transfers (pours) the asset into the Trust. The Pour Over Will also plays a very important role for parents by naming guardians for minor children. Keep this updated just like the other documents in your Estate Plan.
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This is the most important part of Client-Centered Estate Planning. Together with the documents below, a revocable living trust can be easily changed during your life. You retain total control of the assets in the trust. If you become disabled, then your Disability Trustee provides continuity in taking care of your affairs and loved ones.
Many people think that estate planning is only for the wealthy. However, this couldn't be further from the truth. Estate planning can help to protect assets and ensure your legacy will last long after you are gone.
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This is the most important part of Client-Centered Estate Planning. Together with the documents below, a revocable living trust can be easily changed during your life. You retain total control of the assets in the trust. If you become disabled, then your Disability Trustee provides continuity in taking care of your affairs and loved ones.
Many people think that estate planning is only for the wealthy. However, this couldn't be further from the truth. Estate planning can help to protect assets and ensure your legacy will last long after you are gone.
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Revocable Trusts are now the fundamental foundation of proper Estate Planning. Individuals of any ages, individual backgrounds, and monetary circumstances.
Revocable Trusts are main stream because when put up against a Last Will and Testament, a Revocable Trust offers many more advantages:
A Revocable Trust secures your confidentiality by maintaining your final wishes a core family matter, given that just your beneficiaries and Trustees are permitted to read the trust agreement after your death. However, a Last Will and Testament is filed with the probate court and is a public record, which anyone can access.
A Revocable Trust gives directions for your health care and the administration of your assets if you become mentally or physically incapacitated. Because Last Will and Testament is only effective upon death, it is useless for incapacity planning.
With proper funding of your assets into your Revocable Trust during your lifetime, then those specific assets will avoid the expensive and time consuming probate process. Property that passes under the terms of a Last Will and Testament most likely will have to be probated. Costing your estate thousands of dollars.
Revocable Trusts are now the fundamental foundation of proper Estate Planning. Individuals of any ages, individual backgrounds, and monetary circumstances.
Revocable Trusts are main stream because when put up against a Last Will and Testament, a Revocable Trust offers many more advantages:
A Revocable Trust secures your confidentiality by maintaining your final wishes a core family matter, given that just your beneficiaries and Trustees are permitted to read the trust agreement after your death. However, a Last Will and Testament is filed with the probate court and is a public record, which anyone can access.
A Revocable Trust gives directions for your health care and the administration of your assets if you become mentally or physically incapacitated. Because Last Will and Testament is only effective upon death, it is useless for incapacity planning.
With proper funding of your assets into your Revocable Trust during your lifetime, then those specific assets will avoid the expensive and time consuming probate process. Property that passes under the terms of a Last Will and Testament most likely will have to be probated. Costing your estate thousands of dollars.
Estate planning lawyers.
As estate planning lawyers, we like to work with our clients on an individual basis. Estate planning, like you have heard me say, many times before is not always just about what happens after you pass away. I think the most important part of estate planning is what happens to you, during your lifetime.
If you were to become incapacitated right now, what plan do you have in place to take care of you? Now, all of this together, all the documents that we're going to talk about today, all of this goes into your estate plan proper. Estate planning. When we meet with individuals, we want to meet with you and create an individual estate plan customized just for you.
We call this client centered estate planning.
Like I've said in all of my videos, this video is for educational purposes, Only. And before you do an estate plan, if you try to do it yourself, I advise you not to, but always do yourself the favor of getting educated on this subject. Right. If you want to become whatever it is in life, whatever a career, we have to educate ourselves on what we're going to do.
The same thing with estate planning. Read books about it. Watch videos. Watch these videos on our channel. Meet with an attorney, meet with more than one attorney, and figure out what is going to be best for you. Enjoy these videos. But remember, they're for educational purposes only and they're part of your education. To get you started on the right foot.
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Cortes Law Firm
5801 Broadway Extension Hwy Suite 110
Oklahoma City, OK, 73118
405-213-0856
Estate planning lawyers.
As estate planning lawyers, we like to work with our clients on an individual basis. Estate planning, like you have heard me say, many times before is not always just about what happens after you pass away. I think the most important part of estate planning is what happens to you, during your lifetime.
If you were to become incapacitated right now, what plan do you have in place to take care of you? Now, all of this together, all the documents that we're going to talk about today, all of this goes into your estate plan proper. Estate planning. When we meet with individuals, we want to meet with you and create an individual estate plan customized just for you.
We call this client centered estate planning.
Like I've said in all of my videos, this video is for educational purposes, Only. And before you do an estate plan, if you try to do it yourself, I advise you not to, but always do yourself the favor of getting educated on this subject. Right. If you want to become whatever it is in life, whatever a career, we have to educate ourselves on what we're going to do.
The same thing with estate planning. Read books about it. Watch videos. Watch these videos on our channel. Meet with an attorney, meet with more than one attorney, and figure out what is going to be best for you. Enjoy these videos. But remember, they're for educational purposes only and they're part of your education. To get you started on the right foot.
Find us on SUPER LAWYERS
Find us on TikTok
Find us on Facebook
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Cortes Law Firm
5801 Broadway Extension Hwy Suite 110
Oklahoma City, OK, 73118
405-213-0856