Estate Planning Essentials — Protecting Your Wealth & Legacy

Hey, good afternoon, everybody. Happy Wednesday. Happy post-Memorial Day Wednesday. Hopefully everybody's doing well. Hopefully everybody had a good holiday. And thank you for joining us. A couple of things we wanted to announce before we go ahead and get started with our topic today of estate planning. Hopefully in the last week or so, most of you have received your invitations in the mail for upcoming 10-year celebration. It's going to be held Saturday, July 25th at Morton Arboretum. You get a chance to dress in your Sunday best and come out and have a good time and celebrate with us. And we promise no presentations. So looking forward to seeing you there. And thank you guys for making time to join us for this important topic today. I know we held this live last month at Morton's Steakhouse in Naperville. I know a lot of you were not able to make it, so we decided to host this webinar live so you can kind of hear about this important topic. We're fortunate today to have with us some panelists. We have Nathan Beamster, who's going to speak to us from Schwab Trust. We have an attorney, Denise Giroc, who we think is going to be joining us. And then we have our very own VP of Investments, Freddie Garcia, and this whole topic was his idea, uh, primarily because over the years as we've been working with clients, we've seen clients do a wonderful job in accumulating assets and growing their accounts. But unfortunately, when people pass away, things always don't go as smoothly as planned. And so we think it's really important to, um, to really pay attention to this. So without further ado, I'm going to pass it over to Freddy Garcia and we're going to go ahead and get started.

Thank you, Nolan, and thank you everyone for attending. Again, my name is Freddy Garcia. I work with a lot of you here, and I know we've got some, some people who aren't familiar with Left Brain as well listening on to the call. But we want to make sure we cover all topics when it comes to financial planning. And one of them is estate planning. So we appreciate you joining us. I promise you this will be one of the most exciting hours of your life because we're going to make it interesting and talk about a lot of important things. Please, I know we're recording this, so don't ever go back to that first statement I just said. So we are recording this session. As Nolan mentioned, we did this session about 6 weeks ago live, and we had a lot of requests from people who couldn't make it out and also people that did attend that session. When it comes to estate planning, we had a lot of excitement. A lot of people were ready to take action. We had a lot of requests, people trying to say they're going to do something. Right away, and now 6 weeks have gone by and nothing happened. So this is a very important topic, but it's one of the least acted on topics. And again, this is something that we feel should be addressed and like everything else, needs constant maintenance. So we're going to cover a lot of key aspects when it comes to estate planning, how it is a holistic approach and relates to all of your financial matters. And it is also a team approach. So like Nolan mentioned, we've got some guests here today that are going to help really share their expertise with us. And there's going to be time for a Q&A afterwards. So during the session, if you do have questions, Brian Dress, one of our advisors and head of our investment research, will be leading that Q&A after the session. And again, if you have to break out, again, feel free to listen to the recording as again, we'll have everything available for you. So let's talk about why estate planning matters. Well, when it comes to estate planning, we are dealing with your money and staying in control of what happens to the money that you have built up and the things that you've built up. Who should determine who gets to keep that and where it goes? And we feel it should not be the state. So your family's protected from confusion and conflict when you do proper estate planning. Your assets go to where you intended and they go efficiently as well. And you could possibly avoid unnecessary taxes delays. And again, this is something we don't think about, and many times people may not worry about it because they're thinking, well, if I'm not around, I don't have to deal with it. But again, it is the money that you have worked hard for, so it should go exactly how you want it to go. We also want to make sure when it comes to estate planning, and this is why it's so important that your wishes are clear, especially during difficult times. Unfortunately, you know, we've had to deal with family members going through this, and it's not always easy. But what makes it easier to go through is when there is clear direction. So what we're going to do today is we're going to cover the things to think about when it comes to estate planning and make sure we avoid common mistakes. That's one of our primary goals, is if we give you clarity, we can avoid these common mistakes. If you avoid these common mistakes, you can then properly protect and transfer your wealth efficiently the way you intended. You can also ensure your wishes are carried out the way you intended. Many times as we do meetings, we speak with people and we ask them, we flat out just ask them during these meetings, what is it you would like to happen? And then they tell us. And then our next question is, what makes you think that's going to happen? Because if there is nothing clear and concise, it doesn't guarantee that. And even when there are things that state how you want it to happen, it still also may not guarantee that. We're going to get to more on that in a moment. That's why estate planning involves multiple processes and things to make sure that they're getting out properly from the choices you make to who is doing it. It all needs to be covered. The other parts we're going to cover today is key tax and charitable planning considerations. Many of you are charitably inclined, want to take advantage of that now because it's going to impact what happens to your assets later. Also, we're going to cover using a corporate trustee. Does this make sense for you? For some of you, it will. For some of you, if we explain it, then you really get to understand, is this something you should consider? We've thrown out that topic before, but now more than ever, we feel it is very important because A lot of times when it comes to trustees that people appoint, many of them may not be alive when you actually pass away, or sometimes they just may not have the capability to carry out the things you wanted them to do. So a corporate trustee is a strong topic, and sometimes there's not a big understanding of how it works. So today we're really going to completely delve into how that works, what to consider, what some of the costs may be, and why you should possibly consider it. And then lastly, make sure how to keep your estate plan aligned with your overall financial plan. And again, constantly review it. And then lastly, we'll wrap up with Q&A because again, as we go through this, hopefully questions have come up and you want to follow up with our panel of specialists that we have here today. So what can go wrong without proper planning? Well, like I'm going to keep mentioning throughout this, and our experts will agree, is that your wishes will not be carried out as they are intended. And again, as I mentioned earlier, when we speak to people, there's always the want But if there's not the follow-through or exact reading and direction as to how things need to be carried out, it will not happen. Long-term care decisions for yourself may not also reflect your preferences. So making sure that gets covered. Probate delays and complications for your family. Again, real simple things that could be avoided, but sometimes they're not. Sometimes things are a little more complicated. They can also be avoided. But if there's direct planning, it goes a lot smoother. Unnecessary taxes. We're going to touch on that a bit more because there's a big misnomer when it comes to these taxes, when they kick in, or some people may think they may not even have to deal with the tax issue. And you would be surprised. So we don't want these financial burdens, especially when they're surprised, passed on to your heirs or to the estate. And lastly, and this is really important, we have never seen anything come between families more than money issues. So we want to avoid that because family is important. This is not something that you want to have your legacy leave, uh, leave behind where you have family disharmony. And we have seen that. And I'm showing these pictures of people that hopefully everyone knows— the Presley family here— and they are still in disharmony, uh, dealing over money issues. And there's not a lot of them left. And a lot of what's going on could have been avoided through proper planning. We hate to see when our clients fall into this, and we have had it happen. So we'd like to help you avoid that. And many people think it may not happen to them, but it does. And we figured who better to share some of these stories than an experienced estate planning attorney, Denise Gajrich, who has been planning with families for this important topic for close to 30 years. And she's going to share some stories today of what's— what you should be considering when it comes to estate planning, things that have happened throughout her practice, things that were avoided, and the follow-through steps that are necessary. And again, there's going to be time for Q&A with Denise after this presentation. Education as well. We have forwarded clients to work with Denise, and again, many people have had really good— most everyone that we've sent over has really good responses, and the main thing has been the follow-through. So Denise, I'm going to turn it over to you, and again, if you can share with our clients— and she's promised to keep this clean because we are recording this session, so it will be PG.

Well, thank you for having me, um, on this panel. Um, I've been doing this kind of work for 30-plus years, and I could write a book of stories of things that went wrong because people didn't follow through on what they wanted. One of the things that I always ask when there are kids involved, I always ask, "Do your kids get along?" And invariably, the parents who I'm doing work for say, "Oh yes, they get along fine. You know, they're just normal kids. They once in a while have little disagreements." And I know from my experience that, you know, the clients are not being truthful to themselves, much less to me. When the clients go to heaven, it's like having a pot of boiling water on your stove with a cover on it, and when you're gone, poof, it goes all over the place because the kids don't get along. They can't, you know, give any sort of consideration to the other one. They're always trying to one-up the other person. Their spouses get involved or their kids.

Well, I want that.

Why should that person get that? And there's all of these kind of things that happen all the time and that you could deal with up front. For instance, you know, usually people fight over certain Items of personal property. Well, what did you want to give to somebody? Did you write it down? We put in our documents a memorandum that has you list, and some people will make a picture of every piece of jewelry or every, you know, particular thing that you got from someplace that meant something to somebody else. So it can be a list going to your kids, specific kids. It can be grandkids, it can be friends. Of the family. And that way you at least know you've said this. I had an occasion where I had to go into probate court because there were items of, oh, there were jewelry, but they, they had some paste and some not paste diamonds, lots of different ones, and made into bracelets or other things. And so they couldn't decide amongst them because they were supposed to divide in an equal share and Nobody would pick. So I brought them all into court and I said, Judge, we have to, you know, do something about this because this is our impediment. We can finish everything if we can just get them to pick. So he made everybody sit down and he sent his bailiff out to get those brown paper bags, you know, that you use for kids' sandwiches or whatever, or they used to. And he put one piece of jewelry in each bag, and he mixed them all up, and he says, "Now you can pick." And they were appalled. But it could have all been avoided had they just written down and taken a picture of what is specifically Mom and Dad wanted you to have. And if there's no agreement and you acknowledge that they can't agree, then sell it. Direct that it be sold and the proceeds donated. Then there's no incentive for them to fight over things. I've had people walk into their parents' house and walk out with whatever they want after the parents are gone. Or when the parents are older and they may have some dementia, they come in, they take what they want, and they leave. And now they are excluding the other person. So I always take with a grain of salt when somebody says the siblings get along. Another area involving siblings is, you know, a lot of times the largest asset in an estate, if somebody is not retired, is their business. So they might have one of their children involved in running the business, but the others aren't. So if they divide everything in their estate equally, that means the other kids who aren't involved in the business get a piece of the business and they're part of the board and they're directing traffic with the person that's still there. They want to get the same distribution or the same salary or whatever as that other person did. And so guess what happens with the business? It goes south. Now that could have been avoided by, you know, having a life insurance policy that was going to cover the other people and just making a distribution of the shares of stock to the one that's involved in the business. Another business story, I had a guy who came in and we were talking about some business issues and I said to him, "Well, do you have anything that you've done, what's going to happen with your business if something happens to you, just in short?" And he said, "I don't care, I'm dead." And I was so taken aback that he would say that and I'm like, "You don't really mean this. This business is like your baby." It's like your child. You can't just say that. And he says, no, my two boys are both involved in my business. They'll figure it out. And I'm like, no, you got to do something on both, both on the business side, writing up what you want to have happen and on the side of your estate plan so that people know what to do. He said, no, I won't do it. 3 weeks later he dies. And what he didn't consider was you don't write a will or a trust up. The state will write the will for you. And so the people that got his business were the two boys that were involved in the business. They got half and his second wife got the other half. They didn't get along and the business fell apart shortly thereafter. So that's just a couple of things where, you know, people could plan and not have to worry about it. Um, then another issue I see a lot of times is people have properties in lots of different states. So did you realize that if you do that, that you might have to have, at your death, might have to have a probate opened in every state in order to get this out of your name at your death and have it go to your family? Most people don't recognize that. So this is what you have to do when you're doing estate planning. A deed is going to be issued, and if you have a trust, it's going to go into the trust name so we don't have to go through that at death. Another thing is not keeping track of assets. When people come in to see us, we make an inventory. We make people bring in copies of their assets, so statements from investment companies, you know, deeds, or if you don't have the deeds to properties, then give me a copy of like a tax ID number, your tax bill, whatever, life insurance. Bring it all together because I want to make a list of everything because I don't want anybody to lose track of things. I have had people that do lose track of benefits that are left at a prior job that they had and they never took it out, or they might not have been able to. If it was a pension, it might not be able to roll over. Into another fund. So those things were forgotten. You know, we always check, you know, the state of Illinois, and other states have this too, for those forgotten properties or those forgotten accounts that are still in somebody's name that they didn't turn in. I had a case of a hoarder guy. He was a hoarder, but he was a hoarder of financial docs. Things. So he had stock that he invested in, and he had no family to go through this. I had to go through this myself. And so I walked into his apartment, and he had lines of 8.5 by 11, 4 feet tall type stacks. And the only clue I had was he, he was an investor. So I walk into his, like, living room And I found $2.5 million worth of stock certificates. Okay, so he didn't do anything with that, but, you know, had I not known to look for that or whatever, it would have been a problem. So then I went through all of the stacks. I had to go through each one, and I found another $100,000 worth of dividends that he didn't cash and stock dividends. So he wasn't organized at all, and this ended up, you know, taking a lot more time. And his brother was in Florida and was about 85, and he couldn't help. So it created a lot of issues for the brother to deal with this because he never dealt with it. He may have wanted to, but he never did. A lot of times when people go to an attorney, an estate planning attorney, they think that the attorney that they have is a specialist, but I, I think most people feel that the— every attorney has the same knowledge of every other attorney, and that's really not the case. If you are looking for an attorney, you should find somebody that has a lot of experience in estate planning. One of the things that a lot of firms don't do is they don't fund the trust. So if you have a living trust, and I know Freddie has talked a little bit about that and will probably talk more about it, um, you don't keep yourself out of having a probate if you don't take the property that you own and retitle it into the name of the trust. We make that as a point. We're very detailed. I've got a CPA background too, so I'm kind of fastidious when it comes to that. Also, when somebody comes in and they want me to look at their documents, I do an audit of their assets. You'd be surprised how many times people move their assets around with different investment advisors, or when they move to a different business, you know, that they are now working for, they have new benefits They've rolled things over. So most of the time people come in and after 5 years, if they're changing something and I ask them to look at the old list, they're like, oh, I don't have any of these things anymore. And that tells me that for the most part, they're now— their new assets are not properly titled, so they could end up having a result that they didn't want. One question people ask is if they move to a new state, are my documents going to be good? For the most part, I would say you at least have something to start with, but if you are long-term going to be living in a different state, it's probably not a bad idea to have somebody take a look at it and at least do new Powers of Attorney for that particular state in case you are in need of that to use those at some point in the future. So this is a couple of the things that, you know, I've noticed along the way. I've also had people that They try to put properties in their kids' names while they're still alive, and then the kids, one of them because of their significant other, tries to take advantage of the parent and gets the parent to try to, you know, sign a document in order to sell the property before the parent is gone. So You know, everyone thinks that my job is so boring, but it's not, because every day I'm seeing different situations and different ways that I need to help somebody out to make sure they do things correctly. I did want to say one more thing about transferring or changing assets. If you get divorced, it's really, really important to change the beneficiary designations on a lot of your your assets. In certain states, Illinois being one of them, let's say you have a life insurance policy and you had your ex's name on there as beneficiary. If you don't change the beneficiary, your ex is going to end up with the proceeds of that, even though, you know, from a divorce standpoint, she's giving up, or he's giving up, the rights to it. It's just the state of the law. I don't like that, but I had one client who lost $1 million didn't go to his kids, went to his ex instead because he didn't take the time to do it. And this is in part because when you're going through a divorce, it's no fun. So when you get to the end, you're like, I'm so finished with this, I don't want to look at this anymore. You got to do that because otherwise your family is not going to be protected the way you want. So I could go on and on, but I want to, you know, yield to Freddie here so he can take it the next step and You can pull me in, Freddie, at any point in time. I'm happy to help.

Thank you, Denise, and thank you for sharing. And just a reminder, Denise will be doing the Q&A as part of the team afterwards. So if you do have questions from some of the things you'd mentioned or things that you've been wanting to ask an experienced estate planning attorney, then feel free to, to get your questions ready. One of the reasons why we like partnering with Denise is that this does take a team of people when it comes to estate planning. You have your financial advisors, you have your accountant, and then you definitely have your estate planning attorney. And her office does a very good job communicating with us, because part of this, like she mentioned, is the follow-through, making sure when you do create trust, when you do update, you know, your will, that it's notified. And again, your trusts are funded and all your accounts are updated. So that's one of the reasons why we always like bringing Denise, because not all attorneys always do that. Sometimes clients of ours have gotten new wills or new trusts, and unless we ask them, we have no idea. So, so again, it is part of that team process and you want to keep everyone in the loop when it comes to your assets. And again, when it comes to estate planning, the other part of this is why we're doing this is who needs an estate plan? Again, many people may think they don't need it if it's pretty simple. They just want to leave things to their kids, divide things equally. Well, a lot of things can change that and factor into that. So without an estate plan, you have no control of your property if you die or become incapacitated. Any estate plan makes sure your wishes are clear. Like I mentioned, that is a key thing. Things are clear and they're written down and they prevent family disputes. They can also help preserve assets and provide for loved ones. Also, you may need an estate plan if, you know, when your spouse handles all of your financial affairs, then— and that's typically the case that we see. Usually there's the one lead person, but the other person does need to get involved as well, at least know where everything's at. If you have minor children, again, you definitely need an estate plan. Children from a previous marriage. Again, we see a lot of nuclear families or different type of family settings. Net worth exceeding the federal or state tax thresholds, property in multiple states. As you know, we are here based in Naperville, Illinois. A lot of our clients, some of you listening today, don't live in Illinois anymore. So if you have property in multiple states, definitely need of an estate plan and ownership in a business as well. When it comes to the estate planning, it involves more than just documents. So we've kind of got a flowchart here to kind of break it down, the things that you should consider. Planning for incapacity, that is part of an estate plan. Health care, property management, planning for death, wills and probate, tax basics, lifetime giving, life insurance and trust. These are all things that are part of the estate planning process. So as we go through these, we'll go over the core pieces of an estate plan. A will. A will directs how your assets are distributed. But keep in mind, a will does not avoid probate. It's really good for directing, you know, personal assets that you have. It's also important to realize that somebody has to distribute these assets as well. Revocable living trust, another document, helps avoid probate and control assets, how they are passed on. Again, it's one thing to create these documents, but you also have to review them. Many times we see people who've created trust documents 20, 30 years ago. They may have had minor children at the time. Sometimes they've had no children. Sometimes, you know, the people that they've left behind in charge of those trusts are no longer around. So you do have to update these things and your finamily and your family dynamic will continue to change. Power of attorney allows someone to manage your financial matters even if you cannot. Again, this is something to consider. And again, you have to be very careful who you appoint this to because you are giving them discretionary authority over your accounts. You can have springing powers of attorney as well. Health care directives. This one's very simple, but it's something that we always look over, but it's very easy to set up and I'll go over that more in a moment. But it outlines your medical wishes and key decision-making. Beneficiary designations. We're going to spend a little more time on this because this is one of the easiest things to do and it's also one of the most overlooked one as well. So beneficiary designations matter more than you think. Retirement accounts and insurance pass directly to named beneficiaries. This is very easy to do. Many times when we're meeting with you, we always want to go through and update beneficiaries, even if it's something that we've done multiple times. I had a meeting just 2 weeks ago, even after this session, where I asked the person again to go over beneficiaries. And sure enough, that family member had passed away. It does happen. We may not think about it. As Denise mentioned earlier, previous marriage. I was guilty of this too. I didn't update my beneficiaries when I came out. I think I took about over a year and a half myself to update that feature. It does happen. So this is why we always when we, when we meet with you, we always ask beneficiaries. And if you have multiple accounts and you have accounts everywhere, that does get harder to do. And many times we find that accounts get overlooked when it comes to properties in Illinois. In certain counties, you can now name beneficiaries on property as well. You do have to go through the process of doing that. If not, there is no one named on there unless you put it in a trust. So also things to think about when it comes to beneficiary beneficiary designations override wills, override trust as well. So when you have that designation on there, it can cover a lot. Out— out— like I mentioned before, outdated designations can lead to unintended outcomes. We had a client again recently pass away and they had some outdated designations that didn't line up with their trust documents. So unfortunately, that may not be a smooth situation that we're going to deal with for this client. Always name primary and contingent beneficiaries as well, because if you just have the one person and something happens to both of you, now there's no beneficiaries listed on this account. So contingents are important. You can name as many as you want, and it doesn't have to be equal percentages. So if you happen to like one kid more than another, go ahead and put different percentages. I'm kidding if my kids are listening, uh, since this is recorded. But again, you can name different percentages on there for contingent beneficiaries and even for primary as well. And like we always tell people, review after major life events as well. But it all starts with that simple beneficiary review. Planning for the capacity part, for the capacity in healthcare, again, living will, Put your medical wishes in writing. Very simple to do. Again, documents that can be created, notarized, and signed. Health care power of attorney allows someone that you trust to make medical decisions for you. Do not resuscitate. Some people— for everyone, we have different wishes that we want, but it specifies what your life-saving measures should be used. Again, once these documents are in place, we have direction how to follow them. Also, it's important. The person that you name on here to apply, let them know. And again, someone that you know that's capable. If you name multiple people, well, then they have to make a consensus decision. So I've seen that before. Again, I have 3 kids myself, as you know. We're supposed to go out for dinner later on tonight. And as I'm asking them where they want to go, I'm getting different answers. One of them says anywhere. And when the other 2 bring up places, they said anywhere but there. And that's been their consistent response. So it lets you know when you have multiple people, sometimes the decision may not always be as fluid. So sometimes Naming that direct person, someone you know and someone you can trust. And again, updating that in case that person is no longer around. Planning for capacity and property. Joint ownership. This is something that we start recommending a lot, especially as some of our clients have gone into nursing facilities. And unfortunately, if they have that one fall, it doesn't end for them. But it makes, you know, bill paying a little bit tougher during that time frame. So sometimes just opening up a joint checking account that allows the other person to pay bills. You don't have to put anything, anything, everything in there, but it allows for a continuation and allows for financial matters to be taken care of. Durable power of attorney. Again, there's different ways of handling that where it can be a springing one, but allows someone to handle financial matters on your behalf. Again, this does get difficult, especially as some of our clients have gotten older, that it allows someone to start doing it on their behalf. Living trust enables successor trustee to step in and manage assets. Different things to consider. And again, this is tougher to do after— if you're incapacitated, because sometimes you can't make decisions after that. Understanding trust. So a trust can help you avoid probate and maintain privacy, allow you to control how and when your assets are distributed. They can protect your beneficiaries from creditors and poor decisions and provide flexibility as part of your overall plan. Trusts can be very basic and can also be very complicated. They can be tailor-made to the individual. So not every trust should be alike because not everyone's needs are alike. And that's the nice thing about a trust. It can become an entity. But typically when you're creating a trust, it becomes a revocable trust. You can later on create irrevocable trusts as well. But a trust is a document that gets created and needs to also get updated as well. You can update current trust or you can create new ones. Part of the estate planning process is to do continuation and reviews to make sure that your trust is still meeting your needs because many times we find documents that have been created many, many years ago. Estate taxes. This is also a reason why you want to continue to do updated estate planning, because estate taxes have continually changed. The ranges have changed continually. It used to be very low limits and then now we have higher limits. There have been things that have been going away. Now things are set. One thing that's been set for a while and hasn't gone away is that for those of you who are Illinois residents, I know many of you decided that the cold weather wasn't for you anymore and moved away. Good for you. But for those of you that are still bearing Illinois, we have an estate tax for Illinois residents. For some of you have moved away but still may fall under Illinois state tax if you have not made your residence change properly. So just keep that in mind as well. And right now the threshold is $4 million. Anything above that, again, can put you into that estate Illinois estate tax. Also, it's a cliff effect. So what that means is that it doesn't mean that if you go $4,000,001, only the dollar gets taxed. It means that if you go $4,000,001 over, you fall into it. And it's a graduated tax ranging from 0.8% all the way to 16%. And it's very easy to fall in. Remember, property does include that. And when we do these estate planning reviews, Many times for a married couple because it doesn't transfer over. We do— you can do some planning to kind of separate assets and put certain things in certain names, especially when it comes to IRA accounts. If one person is more weighted than the other, different things to consider. And again, we ask you to do that during our planning discussions. The other one is the federal estate tax. So everyone listening to the call lives here in the U.S., so we have a federal estate tax now. It has changed a lot throughout the years. This is why you want to constantly review. Here right now we're set and the tax exemption is up to $15 million and that's per individual. Married couple gets up to $30 million. It's indexed for inflation annually, so that will continue to go up. But it's also progressive tax. So what does that mean? It means that once you cross over that $30, you get hit with the tax and it goes 18% to 40%. 40% tax is a lot. Now, many times through poor planning, we may not think that we're going to get hit with estate taxes, but we can, and it's too late after the fact. One of the tools that we have available through our planning discussion is that Wealth Tracker tool. A lot of you are already retired and may not think that you need to do a scenario to find out what your assets are going to be at because you know you have enough to retire. But what that scenario also provides is what your estate can grow to, not just, you know, 2 years from now, 5 years, 10 years, depending on your longevity, it can give you a good synopsis to say, all right, in 20, 25 years, I might be actually hitting the Fed estate tax. Some of you are sooner or closer there. Some of you've already exceeded it. So definitely something to consider and to plan around to avoid that. Estate tax planning strategies. Well, gifting can help out to that, especially to heirs while living. Strategically donated charities. A lot of you are already charitably inclined before death, can reduce your overall taxable estate and lower your state and lower your taxes now. So it gives a big benefit that way. Using life insurance to pass tax-free money to beneficiaries. I'll go more into that here in a moment. Trust structures designed to remove assets from the estate. Remember, if you have a revocable trust, it is still considered an asset of yours. So there's different trust design to remove that, but it has to be done. So meeting with an estate planning attorney is key to do that and create that document properly. If not, it is still considered part of your estate. So earlier I mentioned life insurance and annuities for estate planning. Again, when you run that tool with us that can give you a projection of what your estate can grow to, this is where it can help you consider, do you possibly need these other types of insurance vehicles that can help you with the estate planning process? Life insurance can provide liquidity to cover these estate taxes or final expenses. They can also help equally distribute assets if they're not easily divided, especially when it comes to sale of a business or land. Or you may have certain beneficiaries that may not want to own individual stocks and bonds. Maybe they just want cash. They can also help support business succession planning. They can also have the proceeds typically pass outside of probate, especially if that insurance is set up outside of your estate, so it doesn't have to be included in your overall estate, which is key because you only have a certain amount. So definitely something to consider, but it has to be structured properly. Also, annuities can provide guaranteed income for heirs who struggle with money management. A lot of us have that relative, unfortunate, but it is something to consider. Transferring wealth to heirs not subject to taxes also bypass probate court.. And also, in many cases, if it's a smaller estate, sometimes an annuity can be just as easy to set up, especially when it's smaller assets. And maybe it does not suitable for having a trust trustee serve on there, but just setting up an annuity policy, potentially less expensive and very simple. But life insurance, main thing to keep in mind, it equalizes inheritance, minimizes estate taxes, can also cover the estate taxes. Annuities, secure income payments. And distribute wealth while you're living. Some of you already have some of these structures in place. They do need to get reviewed because they were possibly meeting under the old rules. And again, under my 29 years of doing this, I've seen the estate rules change consistently. They are never the same and they will continue to change. That's why it's important to review the stuff that even if we set them up for you, but it was 10 or 15 years ago, we need to review them again to continue to see if they meet your needs. Charitable strategies for estate planning. Like I mentioned, a lot of you are charitably inclined already. Remember, strategic giving can reduce your taxes and increase your overall impact. IRAs, very hard to get out of your estate, but if you're 70 and over, you can now begin to do qualified charitable distribution, QCDs, for IRA holders. Donor advised funds for flexible and ongoing giving. Again, they're out there. Schwab has them. And if your assets grow in those accounts and if they're over $100,000, You can continue to have them managed by us where we're still picking some of those stocks that grew your estate and grew your assets. You continue to have them grow that way without using mutual funds, and that way the gift can have an even bigger impact over a lifetime. Charitable trusts that can provide income while supporting causes that you care about. Again, so that continuation can carry on. Ask us about these, these things again, the donor advised fund or the charitable trust. Private foundations for larger, more complex giving goals, especially if you've grown large assets that you want to leave behind for charity. Again, attorneys can set up these private foundations, Denise being one of them, so that if that is something that you're more inclined to, again, ask and we can provide you the right direction. And it also can get the family involved in that decision process as well. Strategies for charitable— benefits of charitable strategies. It can reduce the size of your taxable estate. May provide current income tax benefit, use for highly appreciated assets. Again, many things that you wouldn't want to sell now, but you can transfer over to the charitable account, create tax-efficient income stream, and allows your family to get involved in the giving decisions. That way, again, it can carry on even after your passing if the family gets involved now. The other topic before we go on to discussing a corporate trustee that we have an expert on here today is choosing the right executor. And there are differences when it comes to executor and a corporate trustee. Your plan only works if someone can carry it out for you. This person should be financially trustworthy and financially responsible. They need the time, the ability to handle the administrative task, and emotions can run very high during this time frame. So objectivity matters. This is actually one of the reasons why I'd asked Nolan that I wanted to schedule this call to talk to our clients and people about this, because over our time of doing this, we you typically see people pick family members or friends as their executor. Now, again, nothing against that person, but there is no guarantee that that person carries out the wishes the way you want it. The reason being because they are in charge of your accounts now. There are not trust police to make sure things get carried out. You are really relying on that executor to sell property, to distribute assets. And, you know, I shared this in the live session that we had, but I had a very good client. Unfortunately, they passed away. Over a year ago, and she had left as beneficiary because she had no kids. She had left her sister down to carry out her wishes. So her assets were supposed to be distributed in many different ways, and that did not happen. The sister just put the assets in her name. So none of the charitable giving or the way her assets were distributed took that place. And there was nothing that could be done because the other people that were on there, no one could notify them because it was up to that trustee to do that. So this does happen. So this is where you may want to consider an executor. I've had other clients say, I've got multiple properties. I'm worried about the beneficiaries not possibly selling those properties in a manner that makes sense because they're quick to get cash, or it may cause family disharmony. So choosing the executor is key because they can handle this. And there are corporate executors that you can pick. There are attorneys. Denise can act also as one as well. We as your financial professional cannot, but attorneys, banks, and of course corporate executors can. You can hire these people to just do the distribution. This is just the distribution of the assets. Some of the differences are corporate professional executors, experienced and impartial. They handle complex estates efficiently, reduce the burden, potential conflicts on the family. Fees do apply, but it may be worth it because things get done. A lot of you have many complex estates, and again, this can be just a one-time thing to reduce it. A family member, well, again, they are familiar with the dynamics. There may not be the cost, but we do see that conflict and they may lack the experience or the time, or they may just not do it the way you wanted them to. Definitely something to consider. Reach out to us if you're considering using a corporate executor or a professional in this manner. And it can be a joint person. They can act with the family member or the, or the person that you appoint. What that means, there always is a corporate professional executor involved. So in a sense, there does become that police when needed to avoid that situation that I mentioned earlier. And the other factor is the corporate trustee. So in the case where you want the trust or your assets to go forward even after you've passed, this is where again, we have the ability to have Schwab continue on and have a corporate trustee assigned to you. Now, the best way to explain that is to actually have someone who serves as a corporate trustee in that capacity and is the local Chicago contact who lives here in Chicago, Nathan Beamster, who's a JD himself and actually serves in this capacity. So Nathan, I will turn it over to you to discuss how our corporate trustee works and why someone should consider that.

Yeah, absolutely. Thank you, Freddie. Appreciate it. So my name again, Nathan Beamster. I work for Charles Schwab Trust Company of Delaware. Um, we act as a corporate trustee, um, so we will handle the administration of trusts, um, managing distributions, uh, filing trust tax returns, etc. Um, but wanted to kind of go over, um, in layman's terms and in general, uh, what a corporate trustee does, um, how we look and how we act with regard to your estate plan. Um, so first off, what is a corporate trustee? Um, it's a professional institution that manages trust relationships. Uh, what that means is we as corporate trustees are chartered, uh, by either the state or the federal government. So we have a license to administer trusts. Um, we employ experts in all sorts of of, uh, areas that would be involved with trust relationships. Um, so tax, um, trust law, um, accounting, um, real estate law, um, you know, anything a trust could possibly own, we have some sort of expert that is helping us to deal with situations that may arise with regard to that asset. Um, so there's a couple types of trust companies. Uh, first off, we have a bank trust company, which is a, uh, you know, you're— you go to a bank, um, they may also, as a side offering to their general mortgages and bank accounts, etc., they may offer trustee services. Um, so that's, um, absolutely a fine route to go. Um, a lot of banks do. You can think of any big bank, they usually have a trust company. Um, but there's also, uh, standalone trust companies. Their sole job is to manage trusts, so they don't do lending, they don't do bank accounts, things like that. Um, we can argue back and forth which one is better. Um, I will say that I think with a standalone trust company, uh, you don't have the conflicts of interest that you may have with a bank. Um, maybe a bank trying to, cross-sell, uh, different assets, maybe invest in their own proprietary mutual funds, um, whereas a trust company, you're generally not going to have that. Their job is literally to administer trusts. So what does a trustee do? Um, so we have investments. Uh, first thing is you have assets, uh, in your trust, and Freddie went over, um, how important it is to title assets in the name of your trust. Well, once you pass away, that trustee is going to step in and manage those assets. They're going to make those investment decisions. They're going to, you know, buy new stock, sell stock, you know, etc., whatever it takes in order to meet the needs of your trust and specifically the needs of your beneficiary. The second thing that a trustee does is administer. Trusts, um, the administration portion of the trust, which is what Charles Schwab Trust Company of Delaware does. And I'll get to that a little bit later. Um, but what we do is, uh, administering the trust. We handle distributions, uh, first off. One, the biggest thing I think that most people think of, uh, when they're naming a trustee: how is my money going to be distributed to my beneficiaries? Uh, so distributions cover mandatory distributions from the trust. So you may in your document say that the beneficiary should receive the net income of the trust quarterly or monthly or whatever frequency you decide. Uh, the corporate trustee is going to calculate what that net income is and distribute that to the beneficiary. Uh, perhaps you have a percentage of the trust that you say the beneficiary should receive, such as For example, my trustee shall distribute 5% of the value of the trust each year. Corporate trustee also is going to handle that and make sure that the beneficiary is getting that money. Another thing that the trustee will do is make discretionary distribution decisions. So a lot of people in their trust will state that the trustee may make distributions for the beneficiary's health health, education, maintenance, and support. Uh, so what that— that's not necessarily a, uh, a mandatory distribution. So somebody actually has to make a decision as to whether a distribution request from a beneficiary falls under that terminology: health, education, maintenance, and support. And what that means in layman's terms is we're supposed to make distributions as the trustee to keep the beneficiary in the lifestyle that they are accustomed to when the trust becomes irrevocable. Um, so for most of you, that means when you pass away, what are the beneficiaries accustomed to from a lifestyle expectancy? And we're supposed to make that determination, um, as to distributions from the trust. Uh, so my favorite example is if you're if your children, usually those are the natural beneficiaries of your trust, if they drive a Porsche and fly to Fiji on a regular basis, we're going to keep them in that lifestyle as long as the trust can support it. If your children drive a Honda Civic and their vacation style is going to Northern Michigan, that's what we're going to support as trustee. So just a little bit of a nuance there. Whatever your beneficiary or your children are used to, that's what we're going to support. Second thing that trustee does from an administrative standpoint— oh, sorry, if you can go back, Freddie— is the trust records. So we're making sure that the trust owns what it says it does. So, you know, if you have real estate owned by the trust, for example, we're going to make sure that the real estate is properly titled in the trust. If the real estate is separated into a separate trust for one of your beneficiaries, we're going to make sure that's retitled. But basically keeping track of the assets that are owned by your trust. Third thing is communication. Uh, so we're going to make sure that the beneficiaries and any trust parties, uh, such as a co-trustee, uh, receive statements and they receive access to what is happening in the trust. And then finally, tax reporting. Um, so a trust, especially once you pass away, becomes irrevocable and it becomes its own taxpaying entity. Uh, so just like a corporation has to file a tax return, the trust needs to file a tax return, and that can be state-required tax returns and federal-required tax returns. We'll make sure as a trustee that we're filing those. Um, next slide, please. So corporate trustees in particular, uh, what are some of the benefits of a corporate trustee? Um, first off, professional investment management. Our trust company is slightly different in that Left Brain would manage the trust investments. But in general, when you're naming a corporate trustee, you're going to get professional investment management. It's not going to be your brother-in-law or whomever you may name that is just picking stocks or mutual funds. You have somebody who is a professional and knows what they're doing. Managing the investments and they're tailoring those investments to the beneficiary's needs. Um, so, you know, whatever distributions the beneficiaries require, um, the investment advisor or the trustee in this case would be working with the beneficiary to make sure that they're developing a portfolio, um, that can meet those needs. Uh, second, uh, continuity. Um, so if you name your brother, for example, as trustee, your brother is probably close to your age and they're going to pass away at some point. Corporate trustee doesn't die. So if you have a trust that's going through the generations to your children, to your grandchildren, to your great-grandchildren, etc., that corporate trustee is there as a continuous, aspect in the trust relationship. Um, you know, we don't— well, we individually go on vacation, of course, but, uh, that trust company, there's always going to be somebody there, uh, to take a distribution request, um, etc. You know, if you name your brother, maybe they're traveling in France and they can't answer a question, offer the beneficiary, or make a distribution. The corporate trustee is always there and available. Third item, objective decision-making. So when we're acting as trustee, we are not taking sides. So if you have 3 children who are requesting distributions from a trust and one, you know, wants more money than maybe the other ones, we're going to consider that in relation to the other beneficiaries but we're not going to take sides and say, you know, maybe, um, your, your daughter Jill pulled Johnny's hair, um, back in 1975, and we don't like them anymore and they shouldn't get any money. Um, we're not there to take sides. We're looking at this from an objective standpoint. I'm just making distributions pursuant to the terms of the trust. Administrative expertise and compliance. So we're experts in reading the trust, interpreting the trust. We have specialized software that accounts for trust assets. We work with professionals, left brain being one from an investment standpoint, attorneys like Denise who can assist if there's some legal issue that needs to be addressed. Um, there's a lot of complexities when it comes to trusts. Um, one thing that Freddie mentioned, I believe, earlier is, um, IRAs, for example, making sure that we're following the laws on how we make— take distributions from any sort of inherited IRA. We have those experts in-house to handle that. Um, tax benefits, uh, so we our, as a corporate trustee, I said our trust company is called Charles Schwab Trust Company of Delaware. Um, Delaware is a state that does not impose an income tax on trust retained income. So if we're not making distributions to beneficiaries, um, if a trust is meant to last for a long time, there's no state tax on the assets because we're a Delaware-based trustee. So a lot of people will choose a corporate trustee based on where it's located. There can be benefits to the state in which they work. Let family be family. So you name a, you know, one of your children or a brother, etc., as a trustee, and they have to make decisions as to what their siblings or their niece or nephew receive. Financially, that can be a tough situation to put somebody in. Uh, they have to make a decision as a fiduciary as to what is appropriate under the trust. But, you know, they may— a beneficiary, if you tell them no, they are going to be a little bit mad. Um, and you're putting those people in a potential situation where they're going to be the bad guy. So what we say is let family be family. Let the trust— let a corporate trustee be the bad guy. And then finally, security. So we as a corporate trustee are highly regulated. We are audited by the state of Delaware every year. We have internal audits. We hire external auditors. Ernst Young is ours. We carry insurance. It's called errors and omissions insurance. So if we do something wrong, we have insurance to back us up to pay for that. We hope that doesn't happen, but it can happen. But we're there to, you know, put our money where our mouth is and back that up. We also have internal controls. So if a beneficiary asks for money, we actually have to have 2 people at any situation in order to approve a distribution from a trust. So eliminating that kind of bad actor situation that Freddie mentioned earlier. We do have police within our trust company. We're policing each other to make sure that nobody is trying to slip money into their own account. Again, we're— as an employee of a financial institution, I've went through a background check to make sure I don't have any financial crimes in my background. I'm continuously reviewed for that. But in addition to that, in case there was some sort of issue like that, we do have the checks and balances. So next slide, please. So why would you choose a corporate trustee? Complex family dynamics, second marriage situations, maybe you have a failure to launch child or beneficiary who may not be capable of managing their financial affairs, and they could benefit from a professional trustee who's going to make those budgeting decisions for them. Spendthrift beneficiaries, you know, maybe somebody spends way too much money inappropriately. A trustee is there to regulate that and stop them from making poor financial decisions. Large multigenerational estates. So the more money you have, I think the more controversy that can potentially come up, uh, in it. Uh, well, honestly, when people are dividing money, uh, it just tends to be an inherent conflict, uh, between everybody. Everybody's looking over their shoulders, etc. Having a corporate trustee there to be that neutral third party, uh, can just provide a lot of stability. Um, multigenerational estates, as I talked about, a corporate trustee doesn't die. Uh, so we're going from the children to the grandchildren to the great-grandchildren. The continuity of having that corporate trustee can be very beneficial. Um, special needs beneficiaries, um, there are pretty complex rules when it comes to distributions from trusts for special needs beneficiaries. Um, when I say special needs, beneficiaries, those would be individuals who are considered disabled for purposes of Social Security disability. So basically permanently disabled. A corporate trustee can step in and provide that expertise. And then finally, some people don't have a suitable individual trustee. You know, just because you have an oldest son doesn't mean that they're equipped to manage a trust. It's more complex than just sitting there and, you know, making sure the taxes are filed. You're making tough decisions every day. You're supposed to account for principal and income of the trust. There's a lot more involvement than just meets the eye. Next slide. So some drawbacks, let's be honest, a corporate trustee isn't perfect. So what could be a drawback? Fees and costs, right? So corporate trustee is going to charge for their services. You may name your brother or your child as trustee and perhaps they won't charge anything for what they're doing. Perhaps they will. But a corporate trustee, yes, we are running a business and we do have to charge for that service. Um, a less personal relationship. Um, I'll say that a corporate trustee does get rather involved, uh, with the relationship and starts to know your beneficiaries, but we're not a replacement for necessarily a family member who may know a situation better. Like, I don't know if, uh, necessarily if a beneficiary is having substance abuse issues, um, or is, uh, you know, spending money inappropriately that we give them. We try to find that out. We're not burying our heads in the sand whatsoever, but I'm not there on a day-to-day basis with the beneficiary to determine those. Do our best, but you know, there can be absolutely a benefit to having an individual. And I know we mentioned acting as a co-trustee. That can be a solution there, having a family member act as a co-trustee with a corporate trustee. We're conservative to an extent. So if a trust— if you tell me that I have to consider the other resources available to a beneficiary before I make a distribution, I need to get a copy of their tax returns. And I need to know what other assets they have. Maybe an individual trustee wouldn't request those items. They should. But to be honest, in the practicality of the circumstance, they are not always doing that. But I've got to follow the book. I've got to follow what this trust document says. So there may be a little more corporate input than you may expect because we do have to get some of this knowledge that, you know, maybe an individual wouldn't request. We also have administrative restrictions like what we can do as a, as a trustee. So some people will say in their trust, we need to drug test a beneficiary if we expect that they're— or suspect, I'm sorry, that they, the beneficiary has drug issues. Like we're not able to go out once a month and make sure that the beneficiary pees in a cup and tests negative for drugs. Um, it's just a limitation as a corporate trustee. We're not going to go that far. Um, you may have specific trusts like pet trusts or cemetery trusts, uh, that, uh, like in the example of a pet trust, uh, it's meant to support your pets, uh, once you pass away. Corporate trustee, um, some may administer those. Our trust company, for example, will not. Uh, it's just a little bit outside of our purview of what we're really looking for when we're looking for business. And then also trust size. Um, I think that's the big one. Um, Schwab is a big company, um, and I think we do a good job of supporting the smaller trusts. Um, so we'll go down to $500,000, um, for the minimum size trust. But, uh, a lot of corporate trustees won't look at a trust that's, uh, under $5 million. Um, so when you're setting up a trust, a corporate trustee may not be the best option for, you know, $100,000 trust or $200,000 trust. The economics of it just simply don't make sense. Um, next slide. So quickly, what does our trust company do? Charles Schwab Trust Company of Delaware. Um, we act as what's called a directed trustee. Um, so I mentioned earlier that a trustee manages investments and the administration of a trust. Our trust company bifurcates those roles. So left brain will be managing the trust investments. They'll buy, sell, trade, you know, do anything that is appropriate for the benefit of the beneficiaries. Whereas our trust company solely handles the administration. So making those distribution decisions, accounting for the trust assets, providing statements and filing the trust tax returns. What a lot of clients like about that is that Left Brain has a lot more flexibility than your standard corporate trustee when it comes to investments. A lot of corporate trustees have a portfolio made of mutual funds, ETFs, and that's really all they can do. I'm not saying that that's necessarily a bad investment choice, but what I'm saying is that they don't have the flexibility to move outside of that. Um, so being able to bifurcate that role provides flexibility in your investment strategy for the trusts. Um, we can also act, um, as current or a successor trustee. Um, so maybe you're setting up a trust now, whether it be like a charitable trust or, um, a gift trust for a beneficiary. We can act as a trustee immediately. Or we can act in the future. Um, so if we need to, um, maybe 30, 40 years down the road, uh, you say that when I die I need a corporate trustee to step in, we're happy to look at those situations as well, not just situations where we're being named to act immediately. Um, and if you did want to, uh, potentially use us as corporate trustee, we're happy to review the trust. You'd reach out to your your colleagues and— or sorry, your partners at LeftBrain, and they're going to facilitate that conversation. Um, what we're really going to do is review a copy of your trust agreement, um, and figure out where our trust company can fit into that relationship. Um, I am the dedicated, uh, trust services consultant for LeftBrain, so I would be working with anybody at Left Brain who you work with in order to establish that relationship. So feel free to reach out to them if you have any corporate trustee needs. And I will turn it back to Freddie.

Thank you, Nathan. Just really good stuff. And even better, you didn't scare anyone away. I thought Denise may have with the first time, but no, everyone is still here. So This is good. It's an important topic and I know a lot of you want more, but we are now getting close to wrapping up here. So for those of you that did have questions about wanting to learn more about Schwab Trust Services, why we specifically chose them, again, they are actually very cost effective when it comes to the fee side as well compared to what is out there. But if that is something that you're interested in, please feel free to reach out to us and we can get the ball rolling on that one. So as we wrap up here, we just want to go over a couple of things of what happens when you don't have an estate plan. As I've reiterated before, property will not pass automatically the way you may want to. Everything else is distributed according to state law. The state decides who receives your assets and in what order. And again, this process can lead to delays, cost, and unintended outcomes. So here's the steps when it comes to the planning process. One of the things I want to ask you to do is to create an inventory of your assets. Sets. Understand your family's needs and goals. Establish your key directives. Again, from things of like healthcare proxies to again, who your trustees are going to be. These are all things that are important. Review and update your beneficiaries. One of the easiest steps to do, but one of the most forgotten. Understand your estate's estate tax laws. Again, we are joined here today. I was looking at the call log, probably about like 8 different states that have people that have registered in here today. So all of them have different state laws. Coordinate with your appropriate professionals. And again, this isn't just a one-stop thing. You have to continue to reassess. Have the conversation with your family. We ask you, please, to do this, even if it's a spouse. You'd be surprised. Again, many couples, you always have the lead person and the one person who's not aware of any of the stuff because it's not, you know, they've let the other person be in charge. This makes things extremely difficult when that key person passes away. So have those discussions also with the people that you're leaving behind to be in charge of things. They don't necessarily have to know, you know, what the amounts are, but they should know how to communicate with the people that they need to talk to and what their roles are. Be clear who is responsible for the decisions and how assets will be distributed. These conversations are often more difficult when left to your children. Keep your plan updated and again, it helps avoid confusion later on. So the next steps: review your estate plan. Feel free to reach out to us to set an appointment, schedule planning meeting, update outdated documents, and discuss trustee options. From the many things that we discuss here, we want to make sure your legacy is protected. We also want to make sure you stay happy for the rest of your life. So these are all the key things that we're looking to do with you at Left Brain. We've also made it even easier when it comes to this asset inventory. A lot of you that use our wealth tracker tool, One of the things that we have available on there when you log in, there is a tool up here called the Vault. This is where you can load the documents, whether it be other accounts that you have outside of Left Brain, whether you have trusts or wills. These are all key documents that you can load up to make sure the experience when you are updating or doing a review of your financial plan, we can do it accurately for you. Please use this tool. It is a secure system. So again, you're not sending anything to us by email, you're not mailing us anything. It is just being uploaded on the vault so these documents can be used, especially if we're dealing with a family member later on. We can go and access this area right away. Very easy to use tool and it's secure. And the whole thing about this is you don't have to do this alone. Don't be like that guy trying to do this alone. There is help out there. There are people that are professionals to help you, guide you through this process. So one of the things we're going to ask, if you do have questions also too, for those of you that have stayed on this call and I go, no, you want more. If you want more and are looking to have things, one of the things that Denise is going to send out to us is a tool that she has used with her clients over the past 30 years. And it's a simple questionnaire that we can email out to you. And it also tells you what things and documents that you have to get together. So if you are interested in getting the estate plan done, we will email you this questionnaire that will help prepare you for the estate planning appointment and also help you get the necessary documents that you can begin to upload onto the vault. So without further ado, for those of you that have been waiting anxiously to ask questions from our experts that we have here today, again, we have Denise, we have Nathan, and again, Nolan is also— remember, as CFPs, we do study estate planning and are experts in this area as well. So we are ready to answer those questions. And also, too, don't let the questions stop. Make that additional step to get the planning process going, because like I said, many of us, we did this presentation back in April 18th, and we had a lot of people that were excited. They came up to us and said, we want to get the process going. And as of right now, no one has made that appointment yet. I know she's— and she gave out cards. People were interested in meeting with her. They said they were going to call her. And again, it did not happen. Estate planning only works if you make it happen. I've got a vacation coming up next week. And one of the things I realized is I wanted to lose weight for that vacation. I said it that first week and nothing was happening. I realized, oh shoot, I actually have to do something to make it happen. Happen. So we ask everyone to do the same. So Brian is going to handle the question, the Q&A from here going forward. I hope everyone enjoyed the discussion. This is a recorded call. So if you know that there's family members or other people that would share and benefit from what you heard here today, we are happy to pass along this webinar to them also. And again, we know the question and answer period is something that a lot of people benefit from as well. So stay on for this next section. It should be about 20 minutes if you can. Thank you, everyone.

Okay, Freddie, thanks for passing it over. I think you look fantastic. So we'll just leave that there.

I got a shine on my forehead, so please overlook that.

So Denise, thanks for answering a number of questions that came into the chat box. If anyone has more questions, please put them in. We want to make sure that we cover them for you. I've got some questions just to put out to the group, and then whoever thinks they've got the answer, go ahead. But let's start with this one. One question that we had from someone who signed up for the webinar asking the distinction between a TOD, transfer on death, versus a living trust and the benefits between kind of the two different designations and setting things up in those two different ways.

Well, there is a big difference. So, having a living trust own something will allow for us, if something happens to the beneficiary, it'll have another beneficiary that follows that. It will also mean that if that beneficiary is not able to handle it, you have a trustee who can sell the asset if it's appropriate, can use that— the funds for that person's care. None of that happens on a TOD. It just goes to the survivor, and you hope that survivor survives you, otherwise you have a probate estate to handle to decide who is going to end up with the ultimate property. So there's a big difference between the two. TODs were used years ago as an old-fashioned kind of estate planning, cheap way to do it, but you, you get kind of sometimes what you pay for. So I don't think it necessarily accomplishes what a person wants to have in their estate plan these days.

Thank you, Denise. Next question is, question was post-divorce estate planning. Are there any thoughts or considerations that need to go into doing estate planning after a divorce?

Definitely. I guess I'm the estate planner, so I have to answer these questions. Definitely, you need to have new powers of attorney, new, you know, documents, or even if you're going to keep the documents in a similar fashion, you should appoint new people so that your spouse is not on this there either as a beneficiary or as, you know, the executor trustee. So you don't want to put them in charge if— and I have seen it on occasion where it does happen, people want to, that's the person they trusted, and they just can't live together. But that's a rare occasion. So you want to make sure that that is done and you want to make sure that beneficiaries are double-checked so that you name different beneficiaries on all of your assets to make sure that ex-spouse doesn't end up with things that you didn't intend.

Thanks, Denise. A couple of questions on taxes that came across. One was how to minimize tax liabilities of recipients of your estate. And then sort of along the same lines, tax-efficient strategies for charitable giving.

Brady, did you want to take that?

I think Nathan, I see him. I think he wants to hop in on this one.

So, I'd be happy. Like, so, and this is a, it's a huge question. Right? There's so many facts and circumstances involved with that question. But let me give an example. So let's say that in my estate, I want to give 20% of it to charity, and then 80% of it to my children. My assets are an IRA, and then an account with, you know, a taxable account with cash marketable securities. One efficiency that I can do there is name the charity as the beneficiary of my IRA. Because, you know, to the extent that you're naming your children as the beneficiary, when they withdraw that money from the IRA, they're going to pay ordinary income tax on it. Whereas if you give that directly to a charity, that portion that you were already going to give to charity Um, the charity is not going to pay any income tax. It's an exempt organization, does not have to pay income tax. Um, and also there's an even bigger benefit to that. Um, if you do have a taxable estate, um, as we discussed earlier, um, in Illinois above $4 million or federally above $15 million, um, for individuals, uh, you're also talking about an exemption., from estate tax, for those assets that pass to charity. Um, so that's one way of minimizing taxes to beneficiaries. Um, just making sure that you're deciding who gets what, appropriately. Uh, there's quite a few other strategies, especially when it comes to gifting. Um, for example, you have the ability to gift, up to $19,000 $19,000, if I'm not mistaken, Denise, um, a year, um, per person. So $38,000 per couple, um, each year without paying any sort of transfer taxes. Uh, so that's per individual. So if you have 4 children and 20 grandchildren, you can gift a lot of money, um, during your life and get that out of your estate. And especially in situations where you may have a taxable estate, that can be highly beneficial. Um, but yeah, I'll stop there because we could go on and on. Um, but, uh, there are definitely ways to mitigate that. And what Denise specializes in, especially like when she asks for that inventory, are things like that. Um, finding tax efficiencies for you.

Thank you, Nathan. Um, let's move over to the Q&A box. And if you— again, if you've got other questions, please let us know. But we'll dispense with the questions we've got here now. So the first is from one of our attendees. If I spend 4 months in 3 different states, for example, let's call it Illinois, Florida, and Michigan, am I subject to estate taxes in all 3 of these different states?

I would say that if you have real estate that's just in your name in the individual states, you may be subject to tax in that state at your death. But remember, Florida doesn't have an estate tax, you know, and there are other, you know, places that don't have estate, state, estate tax. Say that fast 3 times. You know, they don't all have that. So sometimes when you have that, because I've had clients that they did live in Illinois, now they live in Florida, and they might have a family farm. So, you know, if all they're doing is going to own the farm title, we might put the farm into a limited liability company, an LLC, and have the LLC owned by the trust as long as they're not farm managers. Because if they have a business there, they're going to be stuck with it, but if they don't, it may not be. So So you have a particular question. I think that's something that needs a specific answer that is based upon your specific situation.

Thank you, Denise. Another one that's specifically for Denise and Nathan, just asking if you, if both of you or either of you is licensed to offer services in Colorado.

Nathan? Yeah. So from a trustee standpoint, and by the way, I am, I'm a JD, but I do not do estate planning for individuals. I work for Charles Schwab Trust Company of Delaware, which can absolutely act as a trustee for people who live in Colorado. What I'll say is that when we're acting as trustee, we do move the trustee— I'm sorry, the trust situs— to Delaware. It's not— it kind of sounds complicated, etc., but it's something that estate planners do quite often, choosing certain jurisdictions. It doesn't matter that you're in Colorado. There's nothing prohibiting us from moving the trust to Delaware where we could act as trustee.

And from my perspective, I'm licensed in Illinois and Arizona. Darn, I should have taken the bar in Colorado too.

It's too pretty.

Thanks, guys.

Looks like someone had raised their hand in the attendees.

Yeah. Not sure how we deal with that.

They want to ask their question. I could allow them to talk. Okay. I just allowed them to talk.

It's Deepak.

Yes, Deepak. Hi, Deepak. Thank you for joining us. Hi. I just had a quick question.

I heard that according to the new big beautiful bill pass or those things that your heir has to use the IRA funding within 10 years.

And if that's the case, how do you—

how do they can mitigate the taxes? That's a great question. So when a trust is named as the beneficiary of an IRA, what we do as trustee is we establish an inherited IRA., which is owned by the trust. And there's, there's quite a few circumstances where this may apply, but in general, you have to take that money out within 10 years. Um, we as trustee can work with your beneficiary and then also left brain, um, if there are any tax advantageous times to take out more money. Um, let's say for example your beneficiary, uh, sold some securities in one year that, you know, netted a capital loss or something like that that we could use to offset some of that income. Maybe we take out more money in that year than we would normally do, um, in, in the year. Um, so it's, it's not perfect, of course, but we do try to work work with beneficiaries to find those tax efficiencies.

Thank you.

Thank you, Nathan. A couple more. If you, again, if you've got other questions, please put them in the Q&A. Question is, is if one spouse passes away, does the remaining person have access to banking and checking accounts?

I would say not if the, the only name on the account was just the spouse. Even if you're on the account as the Power of Attorney, that Power of Attorney goes away at the time the person passes. So it's a good idea, again, if you have a Living Trust, change even the bank accounts into the name of the Living Trust so that if you're the successor or the co-trustee, that you'll have access to the accounts at that point.

And my, uh, just practical experience on the bank account is, you know, sometimes it takes your trustee a little bit of time to gather assets and to show that they are the trustee and are entitled to use those accounts. Um, if you do have a spouse, um, what I see a lot of times is naming the spouse as a payable-on-death or transfer-on-death beneficiary for a smaller account. Because sometimes the assets are in one spouse's name alone, and if that spouse passes away first, there aren't any— there's not cash available to pay living expenses or funeral expenses et cetera. Um, funeral homes can get pretty demanding, um, to get paid. Um, so maybe even having like a small account, um, in like that is payable on death to your surviving spouse to hold them over until the trustee can get access to the majority of the funds can be really beneficial.

Thanks, Nathan. Couple more. Um, regarding charitable donations through a trust, Uh, this question person asks, what if it's yours or your family's charity or nonprofit?

So a— as long as— so there, there could be a potential conflict if you or a family member is like the individual trustee and has too much discretion, um, being able to appoint it to a charity that you also run. But from a corporate trustee perspective, you can absolutely have a private foundation as a beneficiary of your trust. A lot of people do it. A lot of people, I know it was mentioned briefly, use donor advised funds as well as the beneficiary of a charitable trust. So the trustee basically puts money in the donor advised fund and you're able to, or whomever you designate, is able to direct that money to, you know, certain charities as you define, or if you leave it wide open, um, that beneficiary or that person can, you know, like really choose whomever they want to. Um, so just a couple different ways. Um, yeah, absolutely, a lot of people will name their own private foundation as a beneficiary.

Okay, last question in, um, is there any discussion in Congress of eliminating step-up in basis for stocks? And then does the step-up in basis also apply to stocks that are in Well, that does happen from time to time when they're looking for money.

They talk about eliminating that, but there's always such an uproar that it hasn't happened at this point. Back in history, back in the '70s, they had actually done that. And for trustees, they were having— they might have a joint tenancy asset, and half of the basis in it was one thing, and the other half was the other thing, and it became very unwieldy to determine, you know, what your gain or loss would be if they sold the asset. So eventually they figured out that it wasn't such a great idea. It sounded good at the time, so I can't say that it won't happen again, that they'll suggest it, but I hope they don't pass something like that. It's too hard to find a cost basis out, you know, when people had stock certificates, you could at least go for the date on the stock certificate figuring that's when they bought it. But now everything is all, you know, done in book name or whatever. And so you don't know what that basis was, where they got it from or whatever. So from a tax standpoint, it gets very hard to determine that and then to give proper advice to the client who may be a trustee of a trust or whatever to determine what you know, gain or loss there is.

And Denise, can you—

if you have a trust, usually most people are putting their assets in a revocable trust, which means that you have control over those assets. You can amend that trust, revoke it, get those assets back, etc. It will get a step-up in basis at your death.

That's correct.

All right, Freddie, I think we've exhausted all our questions here. If you want to go ahead and close things out for us.

Sure. Well, thank you everyone for joining us. Thank you for those of us that— for those of you that helped us out today. Denise, Nolan, Nathan, Brian, and Marina and China, all those of us here at Left Brain. And again, to all our clients and the people that are looking for answers, we definitely want to help guide you and continue to talk about this very, very important topic. Again, this is a recorded session, so if there's something you want to pass along to someone that you think you can benefit from this, feel free to let us know and reach out to us, and we'd be happy to schedule an appointment with you as well. Thank you all for coming.