The Good Steward Law and Wealth Podcast

Welcome everybody. I think some people are starting to come in. We'll give it a few minutes, let some people— everyone get signed on, and then we'll get going. How's everybody doing today? Feel free to jump in the chat if you have any questions throughout this. We'll keep it pretty informal. Can everyone hear me? All right, I guess. All right, yeah, everybody's starting to log on now. Give it about a couple more minutes and I'll get going. And I'll try to check the chat every now and then as I get going through this. So if you have questions, feel free to ask away. And then if I miss it, I will get them at the end. Or if I don't know the answer, I'll pretend that I didn't see it. So, all right, we can kind of get going now. Good bit of people are on here, so we'll see, some other people may join, but you should get the recording to this after this presentation's over. So try to take notes if you hear anything important, but you will get the recording and we'll send a summary of everything we talk about today. But basically, this is Arkansas estate planning, and we call it the family wealth system. So through the years, we've seen some different things that work really good for young families, and that's what this seminar is going to focus on, is young families and the documents you need within an estate plan. So that's kind of what we call it. We call it the family wealth system, and I'll go over exactly what that means. But who we are, so Ledly Jennings Law, we are an estate planning law firm and that is all we do. We do estate planning. So, but under that umbrella, there is elder law, there is wealth planning and probate. So a lot of things kind of fit under that, but generally when you think of estate planning, it's wills, trusts, powers of attorneys. That's exactly what we're talking about here. But some key takeaways that I want everyone to walk away from, and these are just questions that we've gotten through the years with young families that I answer in just about every meeting. So the key takeaways from that would be, how do we avoid probate? So we're going to talk about how you avoid probate and of course what probate is, but then we're going to lay out the exact documents that you need for your estate plan, especially with young families. And then we're going to talk about how to protect your children. From really anything, everything, but mainly we're talking about finances. If something were to happen to mom and dad while kids are still young, so we're going to talk about all that. What are the risks associated with that? Well, one, you have to decide who will raise your kids. So if you passed away today while your kids are underage, who is in charge of raising them? And that is a real risk because it's not always who you would choose, and the law has a specific plan for your kids. The next is who will provide for them financially. Maybe you have the money for it to provide for them, but who will administer that money and make sure they know how to use it? So we'll talk about that, and then we'll talk about how we can protect the wealth. And what I mean by that is, is it protected? Well, what I really mean is, will it last? So what you have, if you had today, died today, would what you leave your kids be enough to pay for their food, clothes, care, car, even in the future as you get to college, then settings is what you're leaving them. Is it enough? And then also, will it last? Because there's a lot of things that young kids can do to lose what you leave them. And you'll see a few ways right there on the screen: immaturity, mistakes, creditors, even divorce. And when you think about it, you know, if you handed an 18-year-old a lot of money, they may lose a lot of it due to immaturity. But even down the road, you know, your child may get a divorce and lose half of the wealth that you've left them. So there's a lot of risks out there in how we protect things, and we'll talk about that today. But what we call this, like I said, is the Family Wealth System. So the end goal of this is our Family Wealth System makes sure that you avoid probate, you name someone to raise your kids, you have a financial system that will last, and you protect everything you build long-term. So this simple system that we're going to lay out here will solve all those problems and show you how we do that. And I'll try to keep it pretty quick. We won't be here long, usually under, you know, 30-40 minutes. But if there's a lot of questions, that's fine too. We can answer those as we go or at the end. But this is our family wealth system. I know it's kind of small here, but I see our system as in 3 phases. You will see Phase 1, 2, and 3, and this may mean nothing to you right now, but we will go through each phase of how this system protects your kids while you're living, if one of you pass away, like husband or wife pass away, and then when you're both gone. That's what this is. So we'll go over every, each phase of that. But first, what are the documents that you need that make up this system that every, really anyone over the age of 18 needs to have these documents? What are the basic documents? And there's, uh, 5 documents essentially. So, well, let's hit on the first 4 real quick and write these down so you will remember them. But like I said, we will send you the replay too if you forget. But the first document is the financial power of attorney. So this is a document that everyone over the age of 18 needs, especially if you have young kids. This document basically lets you authorize someone to make financial decisions for you if you're incapacitated. Yeah, and I see a question in there. You will get an email copy of the presentation, and I have some notes that I wrote down from this that I will send y'all as well. But the financial power of attorney is basically where you name someone you trust to make decisions for you if you're incapacitated. So like if you were in a car wreck, you're in the hospital, or when you get older, if you have dementia or Alzheimer's, somebody needs to make financial decisions for you. But this is really important with young kids because this is where you can name a temporary guardian. So say you were in that car accident, someone still needs to be able to make decisions for your kids, whether it's big decisions like, you know, healthcare or major financial decisions, or something small like I need to sign them out of school or I need to give them permission to go on this field trip. That's where a power of attorney comes in. And why it's so important, I use this example a lot. I was, um, my wife's Apple Watch broke, so I went to the Verizon store to get her a new one. And we went, it was going to be a surprise. We went all the way up to the checkout point. I get to the counter and then the guy's like, Well, are you Bethany? And I said, no, that's my wife. They said, well, you can't purchase this because her name's the only one on this account. So luckily for me, I picked up the phone, I called her, you know, ruined the surprise, but she was able to say, yes, it's okay, he can purchase this on my account. But you could imagine if Verizon is that tough about, you know, what they allow done, how tough would banks or Medicare, Medicaid be, and luckily my wife was able to pick up the phone and authorize it. But what if you're incapacitated? That's where this power of attorney comes in. And like I said, it's where you also name a temporary power of attorney, not just for you, but for your kids, someone that can make decisions for them. So that's document number 1. Number 2 is, let me click over here, the healthcare power of attorney. So this is the same as the financial power of attorney, but for healthcare decisions. I do these as two separate documents because they authorize separate things, but this is really important because it authorizes someone to make healthcare decisions for you. Same with your kids. Say you are traveling on vacation out of the country, someone is keeping and watching your kids back home, they need the healthcare power of attorney to be able to make healthcare decisions for your kids in the event of emergency. So that's how important these documents are. And the health— the healthcare power of attorney is one of three healthcare documents. Together we call them your directives, but individually we have the power of attorney and then this document here, which is the HIPAA authorization. So this just means people you trust can be in the room when the doctor's talking and have access to medical information. And then that ultimately works together with what we call the living will. So the living will is your end-of-life document. Um, it authorizes your power of attorney to make end-of-life decisions for you if you are unable. So those— the financial power of attorney, healthcare power of attorney, HIPAA, and living will— are the 4 documents, the first 4 that everyone needs. Um, if you're over the age 18, you need them. If you have kids, you need them for your kids. Um, so make sure you remember those. But a lot of people say, well, what if I don't have any of those? Like, if you don't have a estate plan, then what happens? Let me see, we got a question here. What happens if you set something up and then life changes or change is needed? Yes, all those 4 documents, you can change those at any point in your life. So if you name someone today and something happens to them, something happens to that person, or maybe you don't even like that person anymore, you want to swap them out, you can change that person at any point, you know, throughout your life. And we update those a lot. But what happens if you don't have any of those? Well, guardianship happens. So that is the court-led process of choosing someone to make these decisions for you or for your kids. And it's not always who you would have chose. You know, you're— you may think that the court would pick your mom or dad, or it would— they would pick your friend, but they don't know that. They don't know your family. They don't know who you would want. So it is up to the court to decide. Now they try to make a good decision, but it's not always who you want. Another downside to guardianship is it's public. So everyone is going to know what you own, where it is, you know, who's in charge of what. It's all public information. So I like to say write it down on a piece of paper, get those 4 documents we said, and avoid guardianship court. Do we need an attorney on retainer to make those updates, or is it as simple as filing an updated permission form at the courthouse? I advise having an attorney do it because it's it's, you know, done correctly. But a point on your question is you don't have to file these documents at the courthouse. They are private documents. You keep them in your possession that only you and the people you name know. We don't file it with the court until we have to, until something happens. So anytime you want to make a change, you just do it. You just swap out, you know, the, the name in the document. It's real easy. And a lot of times, like, if an attorney does that, if we're just swapping out a name, that's no big deal. There's really no fee or anything associated with that. But you don't have to file all that, um, with the court. So the next document— this is the 5th document that everybody needs. It's called a last will and testament, and this is probably the most common document you think of when you hear estate planning. You know, you think, all right, I got my will, that's what I need. And what a will is, is first off, it names a guardian for your kids. So Your power of attorney names a temporary guardian. Your will names a permanent guardian because if we're using the will, then you've passed away. So we name someone permanent to be your guardian. But basically what a will does is it names who's in charge of your estate and your kids if something happens to you. And it says where your stuff goes, like how it's divided, who you want it to go to. And basically it gives the court instructions and a guide on what to follow. So the court knows who you want and where you want your stuff to go, and they do their best to follow that. Um, are wills the same way as those power of attorneys? Like, do you have to file them, um, or they just have to exist? I see it both ways. Our main policy is we don't file wills because I like to keep everything private. I don't like being in the public eye, and anything in the court system is public. So I like to keep things private. But you do file wills when you have to use it. So when you pass away, we take that will and submit it to the probate court. Court. And that key word being there is probate court. So a lot of people think that a will avoids probate, and it doesn't. A will actually mandates probate because we have to take that will and submit it to the court system in order to administer it. So that's the biggest misconception of my industry. You know, a lot of people don't know this, and then when I tell them this, they act surprised. But you're probably thinking, well, what's the big deal about probate? Like, why do we want to avoid it? And yeah, see there, a lot of people don't know that, but a will does not avoid probate. It means your kids and your stuff is going to be stuck in probate court. And yeah, you will get the recording of this so your husband can listen to everything. Um, but so you're probably wondering, like, why is probate bad? Why do we want to avoid it? Well, One, what I tell people is my firm gets paid to do probates. We do a lot of probates and they can pay good, but it's terrible. So if it's something you get paid to do and you don't enjoy it, then there's something wrong with it. But main reason being, it's time-consuming. So probate lasts a minimum of 6 months. Sometimes it goes a year or up to 2 years. We've had one go about 2 years just because of a lot of things going on, but statutorily it will last a minimum of 6 months. Secondly, it's expensive. The statute allows attorneys to charge a fee, a percentage fee based on what your estate's worth, and it can be anywhere from 2 to 6%. So if you think on, you know, your house, your retirement accounts, everything adds up to $1 million, 3% of that is a lot of money that's going to be going to go through probate. And but The last thing, like I said, I don't like being in public, so probate is all public. It's anything filed with the court system everyone can view. Go to courtconnect.com in Arkansas and you can view every court filing. It's actually pretty entertaining, but the downside means everyone's going to know what you own and where it went. So that's why probate is worth avoiding. We always set our clients up to avoid probate, and that's going to be one of the key takeaways of this whole little webinar here is how do we avoid it, and hopefully I just made it clear that you want to avoid it. But how do you avoid probate? Well, the simplest term, especially for young families, is a trust, and we'll spend a good bit of this talking about a trust and how its, its uses and what it does. But I always start the conversation with young families with the trust, and there's all kinds of trusts, so we have to be clear on what kind we're talking about. And they all serve different purposes. But I will say the most common one is called a revocable living trust, and it is the cornerstone of our family wealth system. It is the document that is, you know, the base document, the container for everything we're talking about today. And what that is, is a revocable living trust, number one, avoids probate. So anything in a trust, if you have one, it will stay outside of the court system and be completely private. It protects you while you're incapacitated. So if you were in that car accident or in the nursing home with a stroke or whatever it is, your trust allows your assets to still be managed and it maintains privacy. So everything stays completely private while you're living and then even after you're gone. But some key terms about this, so It's, it's basically just like a will because it says who's in charge. So it says who you want to be in charge of your stuff after you're gone, where your stuff goes. But unlike a will, a trust is outside of the court system. So a trust avoids probate. So it still says who's in charge of your stuff and where it goes, but it stays outside of the court system. And that is the power of a trust. And this one we're talking about, the revocable trust, is one that you can change as many times as you want to in your life. That's what revocable means. It means you can revoke it, you can change it, you can adjust it. So, you know, we put in provisions today because you're a young family with one child, and then down the road you have another child, we can adjust the trust at any point to add in that other child. Or maybe you name someone in charge of your trust that steps in after you're gone and maybe they pass away before you, we need to swap that name out. So you maintain complete control of everything while you're living. And how you think about how it works. So, you know, like we said, it's just like a will. Basically, if you have a will, you have the document and you draft it up, you write in all the provisions you want, and then you sign it and you're done. So it's one step. But with the trust, there's two steps. You write down the document, you put in all the provisions you want, You sign it, you execute it, and that's just step 1. Step 2 is we actually put all your assets in the trust. So whatever it is, your bank accounts, your home, you know, your life insurance, your personal property, we actually fund the trust. So we put things in it and that's how it avoids probate because it's no longer just in your name, it's in the trust name and the trust stays outside of the court system. And I think about, I use this little example here in a lot of my webinars. Is I think about a trust like a bucket. You know, you see there, we're putting all your stuff in that bucket. You know, we're putting your house, your money, your jewelry, your cars, everything in that bucket. While you're living, you're carrying that bucket around. So you control everything. You know, you can do whatever you want to with that bucket. You can put more things in it. You can take more things out. You know, it's your bucket. But when you pass away, we take that bucket and pour it over to those smiling beneficiaries down there. And they're smiling because they just got their inheritance outside of the court system quick, easy, no hassle. So that's how we like to think about a trust. It's a container that holds your assets. Um, and I know this is a lot of information, so we'll kind of go in depth more on what a trust is and all the differences. And I look at it like these two cars here. So you think about it, are both these cars the same? You know, is the only difference in them price, or are they built different? You know, you got the one nice car over here, the Cadillac, then you got this Yugo over here. But these are just like an estate plan in certain ways because you don't know what you've got in that car until maybe it's too late. So like, you didn't know that this Yugo here was a bad car until you had a wreck or until you were stuck on the side of the road with, uh, you know, the engine broke down. That's just like your estate plan. You don't— you won't know something's wrong with it till you die, and even then you really don't know something's wrong with it because your kids or your heirs are the ones that are going to be dealing with it. So that's what I want to spend a good bit now talking about is how do you make sure your overall estate plan, it will work when tested and is exactly what you need. So we'll go back to this flowchart again, the family wealth system. This is what we're going to spend a good bit of time talking about. So it's divided in 3 different phases here. We've got phase 1, It's while you're living. Phase 2 is when one spouse has passed away, and Phase 3 is when both spouses are gone. Um, and just the example we're using here will be a husband and wife with kids, um, because I think most people here have, um, young kids. Actually, let me— I had a poll for that. Let's see what the ages of kids are just so I get an idea of how I, uh, kind of approach the rest of this and what ages we're thinking about. So answer that if you have kids under 3, under 10, under 18, whatever your youngest trust is. So if y'all answer some of that poll as I'm talking, I'll look at it, um, here in a little bit. But let's go into detail on this family wealth system in each phase of it. So the first phase, Phase 1, is while husband and wife are both living. So we're happy family, we're all living right here, that's Phase 1. And the benefit of a trust during Phase 1 is, like we talked about, is you control everything while you're living. You maintain access to everything. You can amend it whenever you want, but it provides for you while you're living. And why that's important is during incapacity, you're provided for. So what if you and your spouse are, you know, in a car wreck, in that coma, or just incapacitated in any way? What happens? Well, with the trust, your backup trustee can step in immediately. No guardianship court, nothing like that. They just immediately step in and provide for you, make sure your bills are paid, all that, make sure your kids have what they need. And the benefit of this too is you can come back in if you are unincapacitated. It's like if you come out of that coma, you come back into your role as trustee. So your trust actually protects you while you're living. And I call it, um, the bulletproof plan. Our family wealth system is bulletproof during incapacity. And while we call it a system, is all these documents work together. Oh, I didn't ever publish this poll. Sorry. I was wondering why it wasn't clicking. Now I publish it. So let me know the ages of your kids now that we're in here. But so the family wealth system is bulletproof. And what I mean by that is your trustee can step in immediately and manage your assets within your trust. But your power of attorney can step in and act as guardian and your healthcare directives can make healthcare decisions for you and for your kids. So that's how this is bulletproof. Roof. You know, it completely protects you in any instance to make sure everyone has access to pay your bills, make healthcare decisions, raise your kids, whatever it is. So this is really important while you're living. Now, so we're back to do the flowchart again. So that's phase 1, how this wealth system works while you're living. But then we go down to phase 2. Let's say one spouse has passed away, whether it's husband or wife, one spouse has passed away. Then we're in the middle section here where you want to make sure that surviving spouse is provided for. One, that they have access to everything they need to continue living their life in the manner that y'all lived it together. And one important thing to think about here is, if you look at this, uh, spouse out of the financial loop. I see this all the time, you know, maybe wife was the one that raised the kids, knew everything about, you know, school schedules, making the lunch, all that. But the husband manages the finances, you know, he knew where the insurance was paid out of, he did the financial investments, he filed the taxes, all that. So you have to think about if you passed away today, would your spouse know who your CPA is? Would they know who to call? To access finances? Do they know where your insurance is through, how your bills are paid, or even simple stuff as passwords to Facebook? That's little, but also big things like banking or, you know, whatever that y'all need to have access to. So that's, that's kind of a something that a lot of people worry about, and I've seen no real good issue to that or real good solution to that. So we kind of created something that I'll share with y'all that gets the spouse in the loop. So if you pass away, then your wife knows exactly who to call and where to start finding things. And we call that our Good Steward Family Continuity Plan. And let me see how— and so I see here on the poll, there's a lot of people that have kids under 3, and some have kids under 10, a few have kids under 18. So we kind of have the ranges here. But there's a lot of people that have kids under 18. Um, so let me see if I can share this. Um, I usually know how to do it. Offers. There we go. This family continuity plan, I will share it and then y'all can download this. Um, so click on it and you can download it. Let me see if I can share my screen and I'll show you an example of why this is important. Um, I'm pretty sure I can. There we go. So now it should show the continuity plan. So what this is, is basically an emergency binder. If something happens to your spouse or any loved one, what do we do next? Like, who do we call? What are the steps we need to take? So download this as a free download, and it'll be one of the most valuable things that you can get. Like, you'll see here, I'm looking over this side of my other screen, but It lists, you know, where, what funeral home are we using? Who, what close family members do we need to call? What do we do during the first week after death? What do we do in the first few weeks? But really more important stuff as you scroll down here is family information. Where do we keep our estate planning documents? Digital vault, password manager, you know, all this stuff. Asset inventory. What banks do we use? Do we have a bank account at Farmers Bank or Arvest Bank or wherever it is? So that's, that's what this document is. And this is just a giveaway for y'all. I recommend for sure downloading this and filling it out. If you don't get any kind of estate planning done, at least get this done. And I'll leave this offer open for a little bit. Let me go back to sharing my slides. But that's just the beginning of the continuity plan. There's a lot more to it than just those first few pages, but we'll hit on that here. In a little bit so you can see some of the more, the different aspects of it. But so that's how we prepare the spouse if one spouse passes away. But another issue that I see a lot is second marriages. I call this the blended bunch. Um, you know, if you have a young family and you pass away, there's a good chance maybe your spouse will get remarried. And a lot of people want to make sure that whatever they built together goes to their kids that they had together, not, you know, new husband's restaurant dream or, you know, anything like that. So a trust in this family wealth system can protect against that. That's a lot of people have concerns with that. But back to the flowchart, so we'll see now we went through Phase 1 and Phase 2. Now we'll go to Phase 3 about when both spouse passes, pass away. What do we do? How do we make sure our kids are provided for and protected? And I'll go, I'll spend a good bit of this because I know this is some of the main concerns about why a lot of you are here today. And you'll see at this, the bottom of this flowchart at phase 3, you have 2 different boxes. One box says outright, one box says lifetime trust. And that's because you have options on how you leave things. So you can say when I pass away, I just want to leave everything outright to my kids. You know, free and clear, they can do what they want to with it. Or you can leave it to them in a protected manner, which is that left box over there, a lifetime trust, meaning it's protected from creditors, divorce, bankruptcy, all that. And you'll see kind of why you would want to protect against that. And if any of y'all have issues downloading that, you can shoot us an email, um, and we can send it to you if y'all have some issues with that. Our email is info@ledlyjenningslaw.com. Um, I think Emily and Linda are in here. If y'all want to, if y'all type that in that chat so they can have that, um, then we will send that to you if you have trouble downloading. But why you would be concerned about how you leave things, I use this example here, um, your child. So by law, if you had no planning in place, then the law has things protected for them until they're 18, meaning someone else will manage the money for them until they're 18. But when they're 18, they get it outright free and clear. And that can be dangerous. You see the guy here holding an inheritance of $1 million at 18. And I don't know about y'all, but I wouldn't have been very good at managing $1 million at 18. I would have probably blown it all quickly, and most people would. And you may think, well, I don't have that much money, but if you start adding up, you know, life insurance, the value of your house, your retirement accounts, that number can get pretty high pretty quick. And you may never have sat down and calculated your net worth. I think everybody should do that, is look at your net worth statement. But you don't want to leave a lot of money to your kid at age 18. So that's where this family wealth system comes in and where a trust, it allows you to name an age beyond 18, whatever age you deem appropriate, you know, whether it's 25, 30, even 40. I've seen all kinds of ages, but usually 18 is not the answer. And you'll see here, so it protects from not only ages, like you can name a beyond age longer than 18, but it protects from creditors, divorce, bankruptcy, a lot of that. I use these 3 examples here. You know, you've got the guy over here on the right, the spendthrift, your young kid that maybe isn't good with money yet or just isn't good with money at all. A trust in this family wealth system can protect himself from himself, meaning it can make sure the money goes to good use and does not harm him. And it lasts throughout their life or as long as they need it, you know, to pay for school, college, their first car, whatever it is. But another thing that people worry about is divorce. I see this a lot with like a family farm. Say you have a farm that you live on that you want to stay in your family. You, if you leave that to your kids or any money, then that, that is open to their divorce down the road. So if they get a divorce, then half of whatever you leave them will go to the ex-spouse. So a trust can protect against that. And some of you may say, well, my kid's fine with money, I think, or will be, and I'm not too worried about divorce. Now, a lot of you here said you had young kids, so you have no idea who your kid's going to marry. So that should be a concern for everybody, but I told my parents, if I'm going to inherit something, this is the way I want to inherit it and how I have it set up for them. Because in this example here, you see the doctor over there to the left. You know, he may be fine with money, responsible in the world, but doctors get sued for malpractice. You know, they're open to lawsuits. They're open to things that they can't control. Same with my work as an attorney. I may get sued for malpractice, but if you leave it to them in a trust, it's protected from all that. So basically the benefit of a trust is whatever you leave your kids is going to stay with them and be protected for their life as long as they need it. And I mean, as long as there's money there. But the other example we'll talk about, you see down here this co-trustee at 25 and sole trustee at 30. This is probably the thing I'm most proud of in the Family Wealth System because this is a methodology that I've developed that I like to leave things and how I put people in charge of things. And this is the example we'll show. So basically how I have my trust set up, and y'all may want to have different ages on yours, but someone else— say I died today and my kids are 3 and 1, so I have no idea how well off they'll be in the world, you know, if they're going to be good with money, bad with money, whatever it is. But someone else is trustee over their share of whatever I leave them. Until they're 25. So I know that their school will be covered, their healthcare, you know, their needs will be taken care of while they're dependent. And then at age 25, my kid can step in as co-trustee, meaning he becomes in charge of the investments and, you know, how he manages the money, how he distributes the money, but with supervision. So he has a co-trustee, meaning that trustee stays on board just as supervision. I call it— think of it like a co-pilot. Someone's helping him fly the plane and kind of training him in, you know, the different aspects of managing money and getting used to having it. So, but then that's in place for 5 years. So during that 5 years, it's like a training period. And then at age 30, that co-trustee goes away. So my thought with all this is he's had 5 years to get used to the money, to become mature, to know what it's there for and how to manage it. And then he can become in charge of his own share. And even when he's in charge of everything, it's still protected from creditors, divorce, bankruptcy, all that. And let me go back. This is pretty valuable, the rest of the continuity plan. I'll share my screen over here again. Um, let me see. There we go. So let me scroll down to the portion, like that training period that I just mentioned to you. That's where we see here, how do you help your kids handle an inheritance well? I won't read all this for you, but this is a prompt and various, you know, things that you can go through and answer that helps you leave a system for your kids about how they can manage money. One example I'll show is there's a trustee letter. So this teaches you how to write a trustee letter, which is basically a letter to your trustee on what your purpose for this money is, what you want your kids to achieve, and what you want the money to be used for. That's just one letter, um, that's pretty valuable. And they even give you a sample letter here that you can read and see how I have mine drafted. I kind of made it a little general, but this is generally how I drafted mine. And then we have a value worksheet which lets you draft a value letter. So you can lay out what are my values for my family, like how do I want my kids to live their life, what are things I want them live by. Um, and one good thing I love here is it's— I call it the training plan. Like I mentioned, during that 5-year period, they have to read these books, they have to do these courses, they have to, you know, maybe travel to certain places or continue family traditions. Just various things that you want them to know that you would want them to do. Because like, you— if you're living, you're gonna do this for them and hopefully implement this in their lives. But if you're gone, who's going to do that? And that's where this values letter is super valuable. Like you'll see here is the sample of mine. I wanted them to read, you know, the Dave Ramsey book. They need to know how to manage money. So this is just a good example of, you know, the Family Wealth System and how you can use that download that you just got. But let me go back to this presentation. And kind of hit on the end of this here. So let's see, next steps. We— I just showed you the trustee letter and the value letter. This is really valuable. I mean, your kids, you may have all these legal documents in place, but they're just legal jargon. They need something from you that they can read and know, hey, this is what Mom and Dad would have wanted. So that probably brought up a question while we're talking about that, where I said, you know, that someone else is managing their money. That is called a trustee. Like I said, while you're living, you are trustee, mom and dad are trustee, but when you pass away, who can you name as that backup role? And there's a lot of options here. You can name the beneficiary, so your kids can be their own trustee if they're of age and age you think is responsible. Like I said, at 30, my kids are their own trustee. But during that training period time, you have other options. You can name a third party. This is probably most common. Maybe it's a friend or family member, or, you know, an aunt, an uncle, or it can be like an attorney or CPA or financial advisor. They act as trustees. But also banks are very common. Any bank you see, like, I know where we have an office in Magnolia, there's Farmers Bank and Trust. So like, if you see a bank that says and Trust, then they have a trust department. Department. And most big banks here in Arkansas have one, like Arvest, Simmons, Regions— all the big banks here have a trust department, so they can act as trustee. Um, and that made me think, while we've got— I won't go a ton much longer, but I had another offer here. Let me remove that continuity plan. By the end of this, I'll show you, but we are letting everyone here who sits through listening to me talk for you know, whatever time I'm talking, you can book a meeting with me. So what we're talking about here is general to, you know, everyone's estate planning needs. But I like to have meetings with people to get really specific about your personal situation. And normally we charge for those, our initial consultations, but we'll start, we'll do an offer here where y'all can book on my calendar, um, a meeting with me for free. Uh, it can be either Zoom, over the phone, video call, or in person if you're near one of our offices— we have one in Little Rock and, uh, South Arkansas, Magnolia— so if you're near one of those, you can just book a meeting with us in person. Or, um, whoops, let me figure out how to book this. There we go, publish. I knew I could figure it out. Or you can book through this link. It'll take you to my calendar and you can book on my link and, um, just get on my calendar. If you don't see a time that works for you, uh, just, uh, Email us at info@ledlyjenningslaw.com and we'll get you on the calendar. But I wanted to get that open because it's only for a limited time till the end of this seminar. So I wanted people to have the opportunity to book here. But that's the legal side and the structure of the family wealth system. So the trust, the power of attorneys, and how it flows. But I wanted to talk a little bit about the, the financial side of this, you know, how do you invest things, how do you make sure your money will last, and then I'll get to the questions that I see here in a little bit. But I want to make sure I can get through this, and I'll just briefly hit on the financial aspect because this could be a whole other conversation. I have a whole presentation on this, but I want to hit the highlights for you. So an effective estate plan as far as your financials are concerned is you have to have one, an income that outlasts you. Meaning your income needs to last your entire lifetime and then some. And you need to have some wealth that you're going to pass on to the next generation, because like we talked about, if you passed away today and your kids are young, they need money that will provide for them. And we'll talk a little bit on how we do that. But that money and that income that you have and that you're leaving them needs to be protected. And protected in the structure that we just laid out, that gives them a ton of protection from outside forces. Like creditors, divorce, bankruptcy, or their own immaturity. But some of the biggest risks to financial investing is inflation and taxes. Everyone knows that inflation is extremely high right now and is only growing, and taxes are the same thing. But how you do that with a good estate plan is you have to be invested. So time is your greatest ally here. Because inflation and taxes are your biggest threat. But how you beat inflation and taxes is you got to be invested and stay invested. And why I say time is your greatest ally is because if you look here, most of y'all with young kids just say, well, we'll just say we're 35 years old, we're going to retire at 65. That's 30 years of growth. And if you look at this stat here, over 30 years, the average annual return of the stock market is 9%. So if you are invested over that 30-year period, you're going to make 9% per year. That's almost guaranteed. I don't ever say guaranteed, but that's just what the stats show. And one example we'll look at, you'll see here, if you max out a Roth IRA for 30 years with a 9% return, you're going to have $1.2 million in your retirement. That's just the power of compounding over a long period of time. And a lot of you are probably thinking, well, what if the stock market goes down? Well, the stock market may go up and down, but we're not concerned about the fluctuations with a lifetime plan because 100% of the time in the history of, you know, our economy over a 30-year period, the stock market has always been positive. So look at this chart here. It shows you how that progression works. So like if you're invested for 1 day, and then it's a 53% chance that you're going to have a positive return. Return. If you're invested for 3 years, it's a— that jumps up to an 84% chance. But if you're invested for 20 years or 30 years, then that is a 100% chance, just based on what history shows, that you're going to have a positive return in the stock market. So a lot of people say the stock market's risky, but if time is on our side, it's not very risky. Um, and you can look at this chart of just about how you're invested and why timing really doesn't matter. This shows if you time the market perfect in every instance, which almost nobody can do unless I guess you're Warren Buffett, then, you know, you would make a good return. But if you just stayed invested, meaning you invested consistently for 30 years, you're still going to have this really high return. So be invested. That's the power of the Family Wealth System and how you make sure your money will be there when your kids need it. But one thing to think about— oh, I do want to hit on IRAs real quick before I get to life insurance a little bit. IRAs and 401(k)s are some of the best ways to invest. A lot of you have a job where they probably match your 401(k). Always do that. And you're— like I said previous though, there is a thing called a Roth IRA, and that is the most powerful investment tool as far as inheritance goes, is a Roth IRA. So IRAs and 401(k)s have their purpose because you get the company match, you get some tax deductions, but for your kids and for passing on wealth, a Roth IRA is one of the best tools. Because if you have an IRA or 401(k), that means it goes in tax-free, but then it's taxed on the way out. So if you invest, if you maxed it out and invested that same term that you did in a Roth, that Roth got you $1.2 million, your 401(k) IRA got you $978,000. $100,000. So there's a difference there just based on taxes. And also there's some inheritance rules with an IRA, meaning if you leave an IRA to kids, they have to withdraw it all within 10 years. And, you know, if you have a million-dollar IRA, that means they're gonna be taking out $100,000 every year for 10 years. And that's a big tax issue because that's all taxable money. That's why I say a Roth IRA is one of the best things you can leave somebody because it is um, tax-free money. You paid the taxes on the way in, so all the growth is tax-free, meaning your kids don't have to worry about taking it out because it's already been taxed. So that is a great tool. Uh, the next thing we'll look at is life insurance. So a lot of you with young kids, you know, you're saying, well, I'm not anywhere near retirement, I haven't built up my nest egg, how do I know my kids will be provided for? The simple answer is term life insurance. Uh, it's super cheap. Mom and Dad, if under, I don't know, whatever it is, 40, you can get really cheap life insurance. You can get $1 million by mom, $1 million by dad for, you know, a couple hundred bucks a month. And that is a great way to ensure that your kids have what they need if something happened to you today. And why I say term is because it's so cheap and it lasts as long as you need it to. So you can make it last until you're 60 or 70, but by then you've built up your retirement, so you don't need the life insurance anymore. Anymore. But while you're young and in the build phase of your life, you need the life insurance. Now you'll see a lot with trust and life insurance salesmen, they will talk about how the Rockefellers did it, and they say that the Rockefellers took out a life insurance policy on every kid in the family the day they were born, and that's how they built their wealth. Um, there's something to that. You can look into whole life insurance on your kid when they're born because it is really I guess, how do you say, it's really cheap because they are so young, they have no health issues, um, you know, ideally, and they don't have to go through medical underwriting. If you do it, you know, within a certain amount of time after your kid's born, then you can do that. We do that on our kids, you know, just small policies, whatever it is, $30,000 or $40,000 on your kid. The benefit of that is you get it really cheap, but it builds for their life, and maybe by the time they're 30 or 40 then that's worth, you know, $30,000, $40,000, and that could be used. You can withdraw that cash for their wedding or their car or whatever it is. So that's something to look at. But I really focus on term life insurance. And I see a question there, um, if you have life insurance already, how do you pair that with your living trust? Yeah, really easy. All we do is make the beneficiary of that life insurance policy the trust. So you pass away, it funnels through that family wealth system, through that flowchart, and it's in your trust. Um, one more question on life insurance. I see life insurance through a retail company. Um, yeah, you have life insurance through your work, basically. Um, so if you no longer work for them, does it continue? I'd have to read the policy to know for sure, but a lot of times you can maybe they're paying for it, for it now while you're working, but if you quit working for them, you can still keep it, but you have to take over payments. But it's something we can review if you book that meeting with me. That's some of the documents I'll ask for, and I'll look over it and let you know, um, kind of how it flows. But one thing, um, I think everyone should really work with some sort of financial planner. I've seen so much value in that. I'm not a financial planner, but I work with the good ones regularly. Good financial planners send clients to me and I send clients to them because they need to work together with your estate plan. But some things to look for, what I look for is number one, they need to be a fiduciary. So if it says on their website they're a fiduciary, that means they're acting in your best interest. Um, two, they need to be independent. Um, you need to watch out who's motivated by what, because some people are product salesmen, not financial advisors. Meaning they're just trying to sell you an insurance policy or a specific annuity. You need them to plan for you in your best interest. So that's one thing to look out for. If someone's pitching you a life insurance policy as an investment, you need to make sure they have your best interest in mind. But if y'all want a list of good financial planners, we had— we keep one, or I keep one, um, in my office that I can give you. I have several that I recommend based on your specific situation. I've got some people that are great with with young families, some people that are great with business owners. You know, I can— I'll share that list with you as we meet. Um, but I want to hit real quick, and then I'll be done, on taxes. So there is a lot of issues with taxes and how do we avoid them with your estate plan. There's 3 kinds of taxes: death taxes, capital gains tax, and income tax. So the first one is death taxes. People worry about, I don't want to pay an inheritance tax when I'm gone. I don't want to pay a death tax. It's all the same thing. Estate tax, inheritance tax, death tax, that's the same term. But luckily not many people have an issue with this. And I'd like to say it's because of this great document system that I have, but it's just because the law allows it. So basically, if your estate is not worth more than $15 million, then you're not going to owe an estate tax. That's the federal exemption. So as long as your net worth is under $15 million, you don't owe estate tax. Now, if it's over that, you may have a problem. And then Arkansas as a state does not have an estate tax either. Some states do, so it varies on where you live, but Arkansas does not. So don't worry about death taxes. Now, what you do need to worry about is capital gains tax, and a trust eliminates capital gains tax if it's drafted correctly. So basically, I'll briefly say what this is. If you have a house that you bought for $100,000 and you sold it for $200,000, you're going to owe capital gains on that difference. But if you leave a house through a trust to your kids, they inherit it at the value at the date of your death. So say you die when that house is worth $200,000, they're going to inherit it at that basis and they're going to owe zero tax when it's sold. Sold. So your trustee can sell the house, pay zero tax, and all the money goes to your kids. This works for a lot of different things. Real estate's the most common example, but it works for like maybe you have a lot of Walmart stock that you inherited. You know, you can still get the benefits from that. Any type of asset can get a step-up in basis. Um, income tax, that is, you know, what everyone pays. You all see your income tax every year. You can't minimize that or you can't eliminate that through estate planning, but there are strategies you can do to minimize it through good financial planning. So come see me if this is a concern, and it's something we work with financial planners on, on how to pay less income tax or how to invest in a way that strategically puts you in a better position. So that's on taxes, and then one thing here I want to hit on that doesn't concern y'all directly, because all y'all are younger families with young kids, but it concerns your parents because eventually all of y'all are going to take over for your parents. You know, you're going to be in charge of making sure their care is paid for. And one thing parents worry about is nursing home and long-term care costs. And that is something to be concerned about because it's about $9,000-$10,000 a month in Arkansas. And that means your parents, if they had to go to the nursing home one day, they have to pay that out of pocket.. So make sure your parents have enough funds or have a plan to pay for that. Some can get long-term care insurance. Those products aren't very affordable nowadays unless you get it when you're in your 50s. But what we help a lot of people with is developing a plan to pay for nursing home care and protect their assets, because if you structure things the right way, Medicaid will pay for their long-term care. But essentially, to get on Medicaid, you have to be broke, meaning you have to move assets out of your name before you need it. So that's what we do. We help people plan for their long-term care. That's what you call elder law. So if your parent— you're worried about your parents being able to pay for this, and maybe their age is— I mean, their health is declining as they get older, then we probably need to have a meeting with them as well to look at their assets. And make sure they are prepared for this, because if they're not, you're going to be the one dealing with it. Um, and it's pretty time sensitive because if you transfer things out of your name to prepare for long-term care, there is a 5-year lookback period. So don't just go transferring things or doing planning without a qualified attorney. And that's why it's time sensitive to plan today before you will actually need it. Um, I may be about done. Uh, just one thing to look out for on estate planning in general, um, is make sure a qualified attorney does it. There are a lot of general practitioner attorneys, like maybe if you see on a website that says I do personal injury, divorce, and estate planning, and they don't do estate planning, they do a lot of different things. This is the only practice area I do. I wake up every day thinking about it. So make sure a qualified attorney does it and not a financial advisor, insurance agent, or even a free online service. I fix a lot of mistakes from online services, and I see a lot of financial advisors offering estate planning, but they do not need to be the one drafting the documents. Your attorney and your financial advisor need to work together to do that. So just make sure you pay attention to that as you're, um, getting your estate planning done. Um, and then this is our process of how I work. So if you booked a meeting with me, this is kind of the process that will follow, um, is this wheel here. So the organizer phase is phase 1, where when you book this meeting with me, you should get an intake link to fill out, and it just helps you get organized. So, and it helps me get organized because I know what you own, um, you know, where it's located, different types of assets we need to plan for. But then in that initial meeting that you book, we will do a goal conversation where we just run through what are your end goals, like how do you want to provide for your kids, who do you want to provide for, and who do you want to be in charge of it. And then from there, I design a plan, uh, that's specific to y'all. Every plan is unique. It'll fit your family perfectly. And then once we agree on a plan, I start drafting everything. That takes about 3 weeks. So within the time from us meeting, we can have the whole family wealth system and your estate plan in place within 3 weeks. And then we start the asset phase, which is that financial planner I mentioned. I will work with your financial planner to make sure all your assets assets get where they need to be. And if you don't have a financial planner, then we will work through that too. But then we have a maintenance program. This is where the real value is. I will meet with you once a year just to check in to make sure whatever we set up for you actually works, and we've kept track of your assets. So when you pass away, I know what you own and where it's located, so we're not left searching for everything. You know, we have an accurate list to guide husband or wife or your guardian through the process. Um, yeah, so that's basically my whole process, but I put up that link. So I think a lot of you I saw have already booked meetings with me. If you didn't get in in time, shoot us an email and I will make sure you get on the calendar. Um, but generally, yeah, that was it. I'll kind of open it up for questions. Um, and I always put this up here. Oh, your estate plan really matters, but what really matters is where you go when you pass away. So scan this QR and you can learn more about that. I won't preach to you today, but it's a pretty interesting little website if you scan that QR code. So let me look at some questions I saw. Latest one here, so how do you know if your father had a trust somewhere? That's a good question. Trusts are meant to be private, so you don't know. No, um, you need to know, you know, you would have to know that he had a trust and the attorney that did it probably to locate it. Um, so there's really, there's no public source to do that or where to find it. Um, but with us, that's why we keep track of this and we get names, contact info, and all that in our family continuity plan that you have. So if something happens, then your kids know who to call call. They know where the documents are. So if you set all this up, make sure someone knows where your documents are, um, that they can access them. And yes, there is a link to rewatch this. Um, you should get it in your email. I don't know if it comes this afternoon or tomorrow, but you'll get a replay link to watch. If you don't get it, just shoot us that email. Um, here it is here. That's our contact info, and we'll send it to you. Um, and I think there was one other question I skipped over at one point. Um, let me see. Anything I didn't cover that y'all had questions on? Uh, we got out within the hour, so I did my goal. I can talk about this stuff all day. Um, if you aren't able to go to Little Rock, will the meeting be online? Yes, that Microsoft Office link, if you booked a meeting with me, is Microsoft Teams. Teams. So it's a video call, so it'll be online. And now if you want an in-person meeting, you can come to my office, obviously. Just kind of email me on the back end and we'll rearrange that. But if you just booked on my calendar, then that is a virtual first meeting that can be with you and your spouse, um, and it's Microsoft Teams. But some people don't have Teams. If that's an issue, access— and we have all the methods. I can send you a Zoom link, or we can hop on the, just a phone call, but yeah, it'll be online. Um, and we even have it where a lot of people, you usually have to come to our office to sign documents. Once we get them set up, we can have people that come to you. So we have remote signings too. That's why this is a statewide webinar in Arkansas, because we can go anywhere in the state. Um, I always like to meet y'all in person, but sometimes it's not that easy. So if you are from a part of a state that's not near one of our offices, then we can do that virtually. But we'll just kind of work that out once we know what kind of planning we're doing for y'all. What else? Any major questions? Linda, you're the brains of the operation. Did you have anything I didn't cover that I normally hit on? I think I did it all. But I guess that is really all I had. So I will get off here. Thanks everyone for coming. And you'll get a replay link. So forward that to anybody. I'm going to try to do this about once a month. They may be different topics, but there will be a webinar about once a month. So check back with our Facebook page and we'll go over that. Um, someone did ask a few questions. Y'all can get off if you need to, but I'll answer questions while I can. Home is inherited from family. How Would that look for my own children? Um, so like, meaning the home is not in your name yet, maybe it's still in your family's name, then it's really their decision on how they leave things. But say we set up a trust for you, we can do a special deed that says if your family passes away, that home is left to your trust, so it can flow to your kids in that manner. But if you've already inherited the property, then we can line it up with your estate plan then as well. But like I said, each of these plans are unique to each family. So once I know like what you own and how it's— the title sits, I'll tell you how we get it in your estate plan. On average, living trust, how much is the cost? Yeah, and you hate this answer, but it just depends. Our family wealth system is a whole set of documents. We're going to do all those power of attorneys that I mentioned at the beginning. That you may have missed if you showed up a little late, but there's 4 or 5 documents at the beginning that everybody needs, and then we do the trust. So it's a whole package of documents, and it just ranges on cost depending on really how much stuff you have. It doesn't depend on how much you're worth, it just depends how much work will go into putting it all together and kind of the unique provisions that you may want. But I will tell you a flat fee quote up front up front before we do any work. So I tell everyone what it costs up front. So once we meet and I know exactly what we're going to do, I'll tell you what it costs. Um, and I know, I know some of y'all here— I don't know a lot of y'all— but I usually tell people to go look at our Google reviews. Uh, you Google Ledly Jennings Law Little Rock, and there's some good Google reviews of people that have had good experiences working with us. And that just helps y'all see that we're going to make sure you get taken care of and things will get done the right way. So I think I better get kicked off of here, but thanks everyone for coming, and y'all get the replay in your inbox soon. Thank you.