Mark Kohler explains his three-part estate planning approach: a revocable living trust that owns all your assets, your tax return, and a clear split between business operations and personal assets. The trust itself offers no asset protection, but it's the foundation you layer other structures onto later.
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So what the living trust looks like in the trifecta. Here's your revocable living trust. Here's your 1040 tax return. And we divide your life in half and we put your operations over here. Either be a side hustle LLC or you've converted it to an S corporation. So you've got your company, Ordinary income. On this side, you might be selling a product or a service. We want those businesses owned by your trust on the right side, which is your assets. We want the trust to own your home, to be the beneficiary of your investment accounts, your crypto, gold, silver. We want life insurance to end up in your trust. And then we have your LLCs that own rental property. And over here we have your 401k, your IRA, your Roth and your HSA. All of those cool tax strategies. We want every one of those to have your trust as a beneficiary. You should own nothing in this equation. I want your trust to own everything. Now, there's no asset protection with this type of trust. We can add that bell and whistle later, but even my most wealthy clients with intense asset protection always started with the revocable living trust. And then they're going to add additional structures and barriers where needed. So we can add all sorts of goodies for asset protection. But the revocable living trust is revocable. You get to change it. You are the trustee and this is the symbol for change. So you can change it anytime you want. So that is the estate plan. That's where a living trust fits.
