Take Control of Your Legacy, Get Your Trust in Order

The core foundation of it is your revocable living trust. You all need to have one, because we will all die someday.

That legacy piece is making sure that it's not wasted, it's not lost to taxes or lawyers or disputes or fights.

Welcome everyone, to the Main Street Business podcast. This is Matt Sorenson, joined by my amazing co host, Mark J. Kohler on

location, beautiful Hawaii, Maui, to be more specific. Here at the Brandon Turner Better Life event, original host of Biggerpockets and a lot of his crowd tribe community has put together a big real estate event. So I came here for work. It was, it's, it's miserable. But, you know, you got to do what you got to do.

Yeah, we had to send somebody. And so, yeah, Mark drew the short straw. He's out there, you know, of course, Mark rocks the stage. We all know that. So we send our superstar out there. But hey, we are excited for this month of podcasts. We're going to be talking about building a legacy. A lot of things that go into that. And one of the core pieces that we don't give a lot of attention to of the trifecta, too. This is a big piece. Many of you know the trifecta. We're going to give a lot of attention to that this month. I don't know how much mystery I want to put into this, but that's what we're going over, building a legacy.

Anything more than that? No, it's, it's. And I think it's really a month that I want. All of you, if you're a regular listener, if you want to share this podcast with others or if you're catching this on YouTube, please share it with your friends, family, business partners. That it's not just about making money and this legacy piece is what's creating wealth and it's creating freedom and passing on what you've learned and your experiences. It's not just a will or a trust, but those are the parts of it. So this next month we're gonna call, we're calling a legacy month. I mean, you've got Shark Week. In fact, right here, this little section you're looking at is a straight between Maui and Molokai. The most prolific shark attacks in Hawaii are in this stretch because it's, it's kind of protected. The shark's life is a little calmer. So I'm going to be surfing over here earlier, later and make sure.

Is your estate plan done before you do that?

Yes.

Okay. Because no swimming in shark infested waters. Bungee Jumping any of that, you know, until your state plan's done. Okay, folks?

Okay, yeah, we'll do that. All right. So last night, Matt and I were thinking, okay, what are the topics we need to cover during this legacy month? And the trust concept. Having a trust is a key piece of that whole equation. And so rather than get into the. Some of the other moving parts, and we've got a lot to cover over these broadcasts this month, we, in fact, we should dedicate one of our open forum questions to just estate planning. So that'll be a part of it, too. So if you have questions where we want you to send those in, we'll give you where to do that. So the trust is a key part of it. And last night I was at a little dinner at the end of the event, and mix and mingle. Well, yes, there was roast pig. Don't rub it in.

Like, yeah, food was terrible. It rained, it was windy.

You know, you know, you go with that. So anyway, so. But several people seriously came up and said, what about the Delaware statutory trust? And what about an irrevocable trust? And what about this? Because everybody wants to just. Rather than do anything, they want to go too far. It's like, yeah, rather than just take that easy step. We've got to find an analogy or a good concept to teach that today. But let's talk about the trust that everybody needs and how to watch out for the crazy out there.

Yeah, the crazy will stop people from doing what they need to do. That's the hard thing is a lot of people hear the crazy and hear about all these trusts that they should do, and particularly real estate investors. I hate to say it, but real estate investors are the number one culprits for the worst information about trusts and estate planning. There's some whole industry out there selling as BS out there. Now, let me say one thing. If you're learning about statutory trusts, Delaware trust, irrevocable trust, I guarantee you 99. Well, 99 times out of 100, it is not a real lawyer selling you this. It's just not. It was real lawyers. Mark and I and our whole team here at KQS, lawyers, for every 1,000 trusts we set up, we might have an irrevocable trust. Maybe it's every 2000, an irrevocable trust. These are just not that common. You should not. It should not be on your roadmap. I'm never gonna do one. Mark's not gonna do one. These are things that are just not for the typical small business owner. Real estate investor. So don't get confused by this, you know, crazy shiny thing over there.

And we're gonna talk about some of those. There's the dapt. Domestic Asset Protection Trust, the charitable trust. We're gonna talk about different names. Yeah. And we'll talk about those. We'll. We'll unpack those. But where we want to start is just this basic concept of why a trust? What is that trust that all of us should be looking at. Where do we go from there? I will say, Matt, in defense of the real estate industry. Dennis. Dennis. I don't know what it is. And in fact, last night, it was a dentist and his wife that were here at a real estate conference that brought up the Delaware statutory dress. And I was like, usual suspect. Yeah, usual suspect. And now everybody you met, this might sound familiar. I said, was this person pitching this charging 5, 10, 15, or 20 grand for this trust structure? And they, they looked up in the sky. They couldn't look at me straight and go, yeah, okay. Was it a law firm that was going to stand behind it and actually file your tax returns next year, or were they just saying, go to your accountant? Yeah. And I said, there's. Those are two key signs that there's a problem. And I, I was jumping up. Now. It's funny, I was like, trust me, if the, if the Delaware statutory trust worked, I'd be selling it.

Yes.

You know, you don't think I'd sell it. I'm here to make money, but I can't look these people in the eye on day two and said, I did the right thing. They do exist. There are some people. Yeah, there's some really rich people out there that have one. That's 0.001% of the community. Don't think it's for you. Don't go there.

Yeah. So let's just start with the core foundation of the trifecta. You guys know we Teach the Trifecta several podcast episodes on that. It's a way to organize your tax financial wealth. Building life. We've got operating assets on your left and businesses. We've got your assets and investments on your right. And underneath it all, the core foundation of it is your revocable living trust. You all need to have one, because we will all die someday. And we want to have a legacy and a plan that carries forward what's going to happen to our business? What's going to happen to our assets? What do we value and love? You know, and if you love your family, you're going to Leave them. We're all going to die one day. You want to leave a legacy and a plan for them, not chaos. So that's this revocable living trust here. And it really shows what you value too, because all this work you're putting in your business, making money, your day job, whatever it may be, all these assets you're trying to accumulate on the right side of the trifecta and get structured and minimize taxes. Well, the end of the day, there's something left over and a lot of us that are working our butts off, that's something left over. That legacy is in our estate plan. We have to get this thing done.

Yeah. And let's break down just so that there's. Spoiler alert. We do not charge over $2,500 for this. In fact, the $2,500 trust package that we have includes designing your trifecta and making sure you're bringing it all together. In fact, it's in it. It's an enhanced estate plan because we just don't want to throw a trust at you. There's a bunch of pieces and parts. So if you're out there paying well, and this is classic in Hawaii. Well, Mark, you don't know Hawaii. And they're $5,000 here. No, they don't have to be. It's just that's what they charge in Honolulu. Oh, and we do estate plans all over the country. We don't have to have be licensed in New Jersey to do a trust in New Jersey. The Restatement of Trust is a federal concept law that has been adopted by 99% of all the states. There are some weird states like Louisiana and a couple unique things in some states, but we're aware of that. We embedded this. We have incredible software and partnerships with larger companies than us that make sure we have all the right provisions in our estate plan. So what I just wanted to say is as we're talking about this, don't think we're talking about a 5, 10 or 15 thousand dollar project. This could easily be $2,500 less and something you update over the next 20 years. So just a thought there too.

Yeah, okay. Well, I think. How about we just talk about. A lot of people think, well, I have a will, you know, or how do I just do what? I just do a will. What do I got to do a trust. Let's talk about that for a second here. Well, a will is basically say who gets what, but you have no control about what conditions. You can't carry it out. And restrict things. You still have to go to probate. If you own a home, even just a home, let alone all you real estate investors have properties in multiple states. Oh, you got a property in Oklahoma and one in Texas and you live in Arizona. You're going to court in three states when you die with the will. You think your loved ones are going to love that? No, they're going to that.

Yeah. And this legacy, I wanted to go back to that for a minute. And when Matt said, you're doing an estate plan for legacy, in that trust, you're going to be able to capture this bigger concept of not just who is what, who gets what. It's. I want to have a business continuation plan. What do I want to see happen to that big multi unit project or this lam development or you're going to have a board of advisors, a board of directors. You should be updating your business plan and including it in your corporate books and in your estate planning binder. So if anything happens to you, your board of directors, your board advisors, your spouse, your kids, your parents, whoever is those people that are going to pick up the pieces when you die. It's not if, it's when that legacy piece is making sure that it's not wasted, it's not lost to taxes or lawyers or disputes or fights. And so you can really craft a really cool distribution plan for your wealth. That's the legacy. Now there's no asset protection. There's no, you know, spooky, you know, no one can find you crap. This is just good core what happens to my stuff plan. And that's the core trust that we're talking about.

Yeah. And, you know, think of just the normal things in life. You know, you pass away and you got kids in their teens or younger, you got adult kids who don't, you know, who act like they're teenagers still. I mean, they could receive a very large inheritance directly from a will. And you may not want them to get this big piece of money or this responsibility in this business yet or and managing all your properties that you would want to be carried out. But a trust allows you to put in some mechanisms over time where they can get distributions. They might get a third when they're 25, another third when they're 30, another third when they're 35. You can make them for every dollar they earn, they get a dollar from it. So you get to start putting in some controls. And this is where I get back to like leaving a legacy. It's not just about who gets the Money within this, you can say what you value. How are my kids going to get this? What charities am I supporting? What conditions am I putting on this money for it to be used and put to work? And that's all stuff you can do in a trust that you cannot do in a will. You need to do this in a trust.

Love it. Now, what is the term? Let's hit some terms again. This is going to be a shorter podcast. We want to just get this topic out there for all of you to kind of start marinating on this. We'll talk about turnaround time, expectations, this overall estate planning concept, and then we're going to unpack it over the next three to four podcasts and again, do some Q and A for any of you that have questions that we don't seem to cover. Terms this, what we're talking about is a revocable living trust. Rlt. Revocable living trust. It can be used for privacy in some instances, but it's primarily there to avoid probate and pass on these terms, if you will, these rules of distributions. A domestic asset protection trust is only good in about 15 states. It's for protecting your home, maybe a cabin or ranch. They're very well designed and structured to be affordable and they make sense. That's a domestic asset protection trust. You might hear about a charitable remainder trust. We've been designing those for years. That's where we're going to put it in appreciated assets, sell it, hold that money and distribute it over your life. And then it goes to charity when you pass away. And that does create some asset protection. But it's also an investment mechanism to avoid taxes. It's not the foundation. So the DAPT and the CRT are two well known, well used in respect to trust structures, but they're still separate from this. The RLT is your foundation. What are some other trusts, Matt, that you come to mind? That or just kind of fringe? Don't go there or.

Well, there's one part of the irrevocable life insurance trust that is, that's a common one. That's if you have a very large estate. 10 million plus, 20 million plus. If you're married, you might want to use what's called an irrevocable life insurance trust. This is designed to minimize or reduce estate tax when you die. So the estate tax exemption, you don't need to worry about an estate tax unless you had a 10 million plus plus estate. I think it's even like 11 million now or something single. 20 million plus if you're married. But if you are, you know, in that scenario we do have clients that hit that and have to use this irrevocable life insurance trust. That can be a tool, but that's not instead of a revocable living trust, that's in addition to so make sure you've got the core foundational piece to revoke living trust. Then you add on some of these things. Maybe an irrevocable life insurance, maybe a CRT charitable remainder trust. These are a little add on trust in addition to the estate plan or vocal trust.

A couple other thoughts folks, as you're out there. When you do a trust with us, we're going to diagram it all out and bring it together. Your trust should own your rental, your llc, your businesses. We'll get into more of that, funding the trust and I'm sure future podcasts this next month. But one concept here is another trust is the land trust. Some you may hear about land trusts. They're used, they're cool. They're for a real estate transaction where I want to avoid a due on sale clause, maybe create some seasoning and they're a decent technique in most states. There's still states that just don't like them at all. We're not a big proponent of land trusts because it's really just a transactional function that, that only certain types of real estate investors use. We're a firm believer in the LLC and we can create privacy with an LLC and protection. We don't need a land trust to do that. So keep in mind the land trust role. This Delaware statutory trust, I just, I just don't see their benefit. They're typically again sold by the non lawyers, the kind of fringe we know it better, asset protection lawyer or tax teams or advisors or whatever they are. And they're charging five times for this revocable living trust structure. If you're considering that, just get a second or third opinion, call us up, tell us what you're seeing, what they're telling you and we'll, we'll figure it out. I mean, yeah, yeah.

A lot of times there's a simpler, easier, less taxing solution than the Delaware statutory trust. So we can talk about that and what your goals are. But you know, it's hard. It's so hard because there's so much misinformation. We don't know what you've been told or what someone's told you because most of it's not, it's not right. I don't know what you know. So we have to hear it and be like, ah, no, don't do that. Yeah, okay, well, I think we hit the common trusts that are thrown out there. Remember, we like the revocaliving trust. Sometimes people call it like a family trust or a. Or just your estate plan planning trust. The key thing in there, revocable, means you can change it at any time. And that's the one thing that's really important about this type of trust. A lot of these more complex trusts, once you do it, you're done. You cannot change it. It's set in stone. But the revoke living trust, you can change anytime. You got a kid you don't want to give money to, you got a person in your life, boyfriend, girlfriend, you know, spouses. That's get a little tricky there. You got to do some divorce stuff. But, you know, you can change it at any time. And that's the nice thing about revocable. It also doesn't require separate tax returns. It's just everything's still going to flow on your 1040. All the same. It's not going to wreak havoc on your tax life. It's not going to require 10 CPAs to freaking do your tax return now because you implemented some irrevocable trust that your typical accountant, CPA can easily handle, it's not going to mess anything up on your taxes.

Yep. I love it. And you know, it was funny at another, which I was a huge or three mix and mingles networking events this, this last few days. And of course I. People come up and ask questions and. And it was funny. At one point I had. Yeah, I love it. It's fun. There's so many good people here. But I had this couple, literally 10 kids there. This woman had birthed 10 kids. It wasn't a blended family. She. She was like, nope, they were mine. And I. And I go, any twins? She's like, nope, no twins. I was like, holy crap. Yeah. A bunch of single. Yeah. And they were ranging from age 5 to 22. Wow. And they had 17 rental properties. Just. I'll leave it at that. I won't say where they're from or anything like that. I want to be generally private, but there was people standing around as they were sharing this. It was. But it was exciting to hear what they were doing in real estate. And no trust. They're like, no one's ever told us to do a trust. They go, we've done all of our own entities by ourself online. Our accountant doesn't know what they're doing. We Just switched recently, and they were a hot mess. And they were, like, so excited to meet with one of our attorneys and say, please bring it together. We know we need something. We just have been scared to pull the trigger because we keep hearing bad info. But right next to them was a single guy. And this single guy had. Same type of story, multiple rentals, and a small business. And he's like, well, I don't think I need an estate plan until I get married or have kids. I'm like, oh, my gosh. So both of these two ends of the spectrum had thought it didn't apply. I think the family knew better than the single. But I told the single guy, what happens if you die? Is your family gonna pick mom and dad, a brother or sister? You've got a syndication. He had. He had set up a syndication with 50 investors. And I was like, what are you gonna do? You know? And he's like, oh, God. And so. So whatever stage you're at in life, this is important. That's the point of. Doesn't matter. 10 kids in a Cadillac. That's a sweet 80 song. But. Or single guy, you know, Single gal.

Yeah, that's. Yeah. I think everybody needs this, especially those of you. And I just think you're building assets. You've got a business, you own real estate, you've got kids. I mean, all these things in and of itself are one reason why you need to have an estate plan. So. So we want. We're obviously big proponents of it, and it is estate planning special month at KQS. Lawyers. You save 200 bucks by getting it done. Now, I'm telling you, we do more estate plans this month than we do the rest of the year because a lot of our clients wait for it. We give a special to get it over the hump. We know it's one of those things that people avoid doing, but we're trying to switch the narrative here. Don't think of this as, oh, I got to think about dying. Think about your legacy. Think about all of your assets passing on. Think about how you want it to be when you're gone. I know a lot of people are like, I don't give a. I'll be, you know, six feet under. What do I care? You do care. You do care. Care of these people.

All this hard work.

Oh, my gosh, yes, you do care. And you do not want to leave them fighting. I can't tell you. Mark and I have seen it so often. No estate plan. Someone passes away. Even the best of families that have the best intentions have misunderstandings about who's supposed to get what and what mom or dad actually wanted because there was no written plan. Okay? They would have been cool with what you wanted if they knew it was your plan. But. But they're all confused. No one talked about it and now they're left having to figure it out and fight over it. And that's the last thing you want. You want your family to love each other after you pass on, not be fighting over because you were too lazy to get a fricking estate plan done.

I love it. Matt's just opening up so many avenues for discussion here. I know one of our upcoming episodes is going to be just creative provisions for your legacy because it can get so fun. Because you can create these board of directors and advisors while you're alive. Are you going to implement your own private foundation or charity upon your passing? You can do that. I just given you a little teaser here of all the fun you can have with making sure that these assets you're building are impacting not only your own family, but maybe the community and everyone around you in your church or your school that your alma mater that you believe in. There's so many opportunities here. Just dropping $5 million in your 27 year old's lap maybe is not the best thing. You know, Creating a trust baby. Lots of options. You can definitely help your kids step on your shoulders and do great things. But you can also impact the greater good with a good estate plan. But again, 2,500 bucks or less. We've got a special this month. There's a lot involved in a good estate plan that we're going to unpack over the next month. And it's something that can be done in a good two to four weeks. Really. Once you get your appointment, you get all the information downloaded to the. To the attorney. You're going to meet with a real attorney, believe that or not. Yes. And I got this is not a do it yourself. Email you the docs and you figure it out. We really walk you through this whole thing, create a diagram that whole process can be in a month's time. We really push our attorneys to try to turn these around. It's a busy time of the year, but we bring the whole team together for this special month so that we can focus on and help you get over the hump.

And the regular package is actually 16.95 with the discount. So it's very affordable. Planet enough. You've got family members too, your parents or something that you're like, man, I don't want to be the one left here having to worry about this with my siblings. You know, mom and dad, get this done for your. Your sake. You know, maybe it's a great Father's Day present coming up. Yeah. Or something like that.

Belated Mother's Day.

Belated Mother's Day. You know, whatever excuse you need, you know, give the gift of a legacy.

Totally. Well, okay. I think hopefully we've warned many of you about the crazy that's out there. Yet a second opinion. If you're hearing about a trust that sounds too good to be true, that has some sort of unique asset protection benefit or tax benefit, we didn't even bring up the deferred sales trust. I'll just say it now. Deferred sales trust is a glorified installment sale, and you know that. So someone's pitched you this and said you can sell your asset first and get this stream of income and spread out the taxes. Love it. I love installment sales. Just be careful with the person that's pitching this. And what's a percentage of the sale that doesn't need to happen. We don't charge percentages of your wealth to do the work. How these people think that's okay. And this value billing of. Well, it's 2% of the value, and that's your deferred. No, it shouldn't be more than five grand for a basic trust. A deferred sales trust I can draft. A deferred sales trust is these companies that think they've cracked the code and want to charge a percentage. So be careful with that one. Sorry, Matt, I forgot to bring that one up. But just get a second opinion if you're something weird.

Focus on the basic. As you can see, because we get on some of these points and some of these trusts that we run into, and there's a lot of sparkle and pizzazz and pitching and selling of all these unique, exotic trusts. I'm just telling you, the smart people, the people that have real wealth do not do these. Very rarely are they doing these. You've got to start at the foundational trust, which is your revocable trust, and get that done. You got tens of millions, hundreds of millions of dollars. Let's talk about some of these other trusts that you might do in certain limited instances. Even then, you might not do it. Okay.

Yeah.

So for those of us between less than 20 million, marriage, 10 million, it's just focus on getting your revocable estate plan done, avoiding probate, getting a say in how your assets are going to be distributed upon your passing. Building a legacy and not a train wreck for your family after your passing and having a plan for it. That's what we're going to try to hit in the next few weeks as we go through this, we'll talk about the creative provisions. I love that one. We've got some great ones. We have a whole list by the way, when you do an estate plan with this, of just creative options. We've seen clients, clients do that. We've to give you some ideas if you're like, man, I don't even know. We'll hit that in the podcast episode. What about healthcare and financial powers of attorney? One of the things that happens in your later years, and this is super common now, I've seen it with my own parents, is you need to use these healthcare powers of attorney, these financial powers of attorney, a living will if someone needs to be pulled off, life sustaining or support. I just had a friend last week that had to do this with their own children actually. And so, so we see these things that come up in life and these are some other things that are part of the estate plan because it's not just a trust. There's other pieces to it that we take care in the same process.

Great, great point. Okay, if you have questions about this, please go to mainstreetbusinesspodcast.com you can get over there and submit a question and choose the estate planning topic. We have different, there's like five categories for questions. Focus on the estate planning. That's where we're going to go with that culminating Q and A podcast as part of Legacy month. And I'm going to go inside, ink my estate plan and go out and surf in these shark infested waters and just call it good.

So I do have a buy sell agreement, you know, in place in case he dies. Just so you know. That's another thing by the way, you got business partners and stuff. I just hate to keep dropping this, these ideas out there, but you need to have a plan there and you might need a separate by sell agreement. Make sure that's coordinating your state plan too.

So yeah, that'll be, that'll be coming. We're going to hit it folks. Thanks everyone. Have a great week and we hope to see more of you. Please share this podcast, give us a five star review if you find it helpful and we'll see you next week.