Latest / The Jon Sanchez Show / The 10 Common Mistakes People Make With An Existing Trust
Transcript
- Jon G. Sanchez: Back to the John Sanchez show on Newstock 780 KOH once again is a quick recap of today's market activity. We lost six on the Dow. Yeehaw. 52218 was our close. NASDAQ gave up 146.57%. SP down 10. All right, we'll be getting to our topic momentarily. 10 common mistakes people make with existing estate plans. But first, I want to cover Google. highly anticipated Google earnings numbers that came out today after the close. So here's the numbers, but more importantly, Watch the capital expenditure side. This is what the street was looking for. here's how the stock again is performing. Regular session, we finished down $4.28 to $341.91, a 1.24% loss. Watching it right now in the after hours, the stock is down $9.21, 2.69% at $332.70. All right. here is what Google had to say in their earnings call today. I'm gonna just simplify things a little bit. Let's go to the earnings per share. They only made $2.85. Wall Street was looking for $2.89. Revenue was a beat, though, $119.80 billion. Estimates $116.93 billion. there's two reasons, in my opinion, that the stock is selling off in the after hours. Number one, you had the earnings per share miss, which again is you know number the number one reason. But number two is the capital expenditure. How much money, what we call CapEx spend? How much money is the company going to be spending over the next year regards to AI? I'll just use the term build-out because that encompasses a lot of areas. Most the street were looking for a CapEx spending of about $185 billion for the next year. no. Came in well above that. Google said today on the analyst call they expect to spend as high as $205 billion. Little interesting stat I picked up in the earnings. company for the quarter made ninety-nine billion in what they call other income. That is stakes in anthropic and spacex. You know, just little extra side money they they threw the stocks. Made ninety-nine billion dollars. my goodness. ⁓ the company debuted ⁓ today, excuse me, yesterday debuted three cheaper Gemini models, including a cyber model geared towards tackling cybersecurity concerns. So they a lot of things going on. But again, the ⁓ the CapEx side of it really is where the focus is on the ⁓ on the on the trading side of things. and I should mention that guidance again was one hundred eighty five to about one ninety five. Again, the company came out today and said one ninety five to two hundred and five billion. So well above expectation. that was the gist of it. Again, I don't unfortunately I don't have time to go through great details of that. But you know, the reaction, ⁓ like I said, in the after hour session, not the best. That doesn't mean it's gonna continue to stay down overnight. Probably will, but we will see. And you know, course, we always want to watch and see what a juggernaut like ⁓ like Google is doing to the ⁓ to the after hour session and ⁓ put a little bit pressure. We've got the NASDAQ futures again to start it trading down 159. Dow future is down 49. SP is lower by 26. right. With that said, let's go to the commodity side. As I mentioned, $1.86 gain on oil, $86.80 at a barrel, and a $74.90 rise in gold at $4,151.60 per ounce. All Other ⁓ movers ⁓ of the day today. Tesla was down about $4.80. They had earnings report after the close. okay, numbers. nothing great. I'm not even gonna waste time telling you about it. ⁓ let's see, Nvidia has a good performer today, $4.75 increase, $212.04 AMD, advanced microdevices, $7.90 rise to $552.23. IBM was one of the drags on the Dow, lost about 2.1% or $4.41. let's see, was the star of the day after issuing encouraging margin guidance in the pre-market session this morning. SMCI finished up or $5.06 to $30.56. But it had a big carryover effect to Dell and Hewlett-Packard Enterprises. Dell gained $37.55, 9.29% rise to 441.70. Hewlett Packard Enterprises, a 3.04% ⁓ up a dollar forty-two to forty-eight fourteen. let's see. Other than that, like I said, yeah, there's a few movers here, a few movers there, but ⁓ nothing real, real significant. I'm gonna take a closer look ⁓ when I go to break at the ⁓ what Tesla's doing in the after hours. We'll see what kind of impact. But Headline that I saw was ⁓ they missed some numbers. So we'll see what ⁓ what the stock is doing, as I said. right, let's get down to our topic. Once 10 comment mistakes people make with existing trust. I just got an email again, hosting a webinar for you ⁓ next Wednesday, 6 One hour webinar. Is trust outdated? Again, I'm gonna go through all the details as to how you can tell if your trust is outdated. And again, it's not about the date of the trust, it's about so many other components. So many other items, and those are going to be the things I'm going to share with you. But I'm going to give you a little cursor, a little pretease ⁓ of what that webinar is going to be about. ⁓ go to the website, specializetrust.com. Go the Step Learning Institute at the top of the website, and you'll see webinars and just sign yourself up right there. All right. let me start this off real quickly before I go to break with the following. One of the biggest misconceptions that I see in estate planning is this: I have a trust. I'm done. I don't need to talk about it. It's done. Finished it a couple years ago. Everything is great. But the truth is, creating the trust is really just the initial step. Because over the years, your life changes. Your family changes. you love, people you hate change. Assets change, they come and go. Tax laws and estate planning laws change. And life changes. I ⁓ I attended a webinar today. It was really fascinating. really high end attorney ⁓ was hosting it. she one problem that they're seeing a lot of right now is if trust was written between twenty nine ⁓ twenty twenty and twenty twenty five, many of the were written with the quote assumption that the unified credit, which is the amount that you can have in your estate before state taxes come due, was gonna sunset. Remember that before Trump got elected in twenty twenty five, ⁓ they were talking about the exemption at that point, which I don't remember what it was, eleven, ten, eleven, twelve million at that point, and bringing it back to like two, three, or four million. Meaning any a state over that amount be could have been subjected to estate taxes. ⁓ So people, especially high net worth people, just went bonkers like we we can't take the chance. We don't know if Trump's gonna get elected. ⁓ So rewrite the trust. So they're seeing a lot of problems with those trusts written between twenty ⁓ nineteen twenty or nineteen twenty, twenty twenty and twenty twenty five, having wrong verbiage in there. Because it was written again under the assumption that it was going to sunset. So just a little FYI from that attorney. today, again, because tax laws change, your life changes, we're going to discuss the 10 most common mistakes I see when I'm reviewing existing trust and why having a trust does not necessarily mean that your estate is up to date. So we'll come back with mistake number one. Welcome back to the John Sanchez Show on New Stock 780K which happy Wednesday to all of you. We'll get back to our topic that we're just starting. 10 common mistakes people make who have existing trusts. Told you I'd follow up on the Tesla situation. So we've got some pressure on the stock. Regular session closed four dollars and ninety-two cents, lower one point three percent to three seventy-four ⁓ one. Right now in the after hours, it's down sixteen dollars and ninety-three cents, four point five three percent decline to thirty-five, ⁓ three fifty-seven ⁓ eight. Essentially what happened, ⁓ the company had a pretty good earnings miss. they reported just our earnings of 33 cents a share. They missed Wall Street's expectation by 18 cents. company did beat on the revenue side, posting 28.24 billion. revenue expectation was 25.71 billion. So making a lot of money on the top line, but hurting on the bottom line. So that's the reason the ⁓ the stock is doing what it's doing in the after hour session. All right, back the topic that we just started here. Mistake number one. Out of my tip. Your trust hasn't been reviewed in years. your life has changed. Your family's changed. Your financial conditions have changed. New laws have come into question. When was the last time someone actually reviewed your trust? And again, as I've mentioned many times, and many of you have taken advantage of, if you have an existing trust and it hasn't been reviewed, reach out to me. Send me an email, John J O N at specialized trust dot com. I'll up a discovery call with you, a thirty minute discovery ⁓ video call. No charge, no nothing. we'll talk about what you have. Then I'll have you send over your existing trust. We'll throw it into our software, hate using that term, but we'll throw it into our software. We have four large language AI models ⁓ will review every single word of that trust. It'll give us a summary report with graphically as well as written in plain English so you can understand it. Then it will come back with the recommendations. I'll add my recommendations. The will add the recommendations. And then we'll have our next meeting and discuss it. Here's what the you know, here's what it is. You can decide what you want to do, keep it as is, or make changes on it. It's really that simple. again, I don't I don't charge anything for the trust review. It's my way of giving back to you and saying, hey, congratulations. Everything is great. Or no, this is wrong. And unfortunately, I have yet to come across one where there was not some things that were wrong. Okay, because again, all these f changes happen. Let's go to mistake number two that I see. Your trust isn't fully funded. Remember. Funded means you've transferred the asset's name into the name of your trust. Okay. not every asset, of course, can be transferred. And the reason it can't be transferred, there's no title to it. So example, ⁓ I had this discussion with a client today. She's like, Do I need to transfer my vehicles into the trust that you're creating for me? I said, No. You really don't need to do a vehicle transfer simply because vehicles are really simple because you have a title. You go down to the DMV show them the death or your beneficiary, shows them the death certificate, and you know you go from there. Now, the vehicle, along with other assets, tools. I just had a conversation right before the show with a client, guns, things like that. You can gift those over to somebody, or if you do that, remember the second component of your estate plan is what's called a pour-over will. That will acts as what I call a fishing net. So it captures all All of the assets that you don't have a title to that you were not able to fund. So things like the guns, cash, I mean, you name it. ⁓ all those things with a poor over will, they get captured, they avoid probate because you have the poor overwill combined with the revocable trust. But again, fully funded means, well, like the gentleman I shared with you a moment ago, he's got you know millions of dollars of assets, not one of them are in a trust because he doesn't have a trust. But let's say he had a trust. And some of that, you $50 million of investment real estate, if it's, you know, he I told him you first of all you need to do is put it in a in a put those in LLCs to get you the asset protection because right now you're a walking lawsuit ⁓ And the second way you do that is then you do an assignment ⁓ where you're transferring the ownership of that LLC over to the name of the trust. So therefore it avoids probate. So there's lot of ways that we can do it. But but seeing it a lot. You know, assets are not funded. Where I'm seeing it the most is on bank accounts, savings accounts. And a few brokerage, but definitely bank and savings accounts, right? People tend to change banks over time and they just never put that new ⁓ bank account into the name of the trust. So we make sure when we create the trust that ⁓ that's one of the funding instructions we give. again, typically things that are not funded, homes, bank brokerage accounts, again, LLC interest. So remember a trust only controls the assets that are properly titled or as I said, assigned to it. Mistake number three. Your beneficiary designation does not match your estate plan. Remember, when you opened an IRA 401k through your work, if you have life insurance, if you have annuities, you were asked when you open those accounts, who do you want to name as your primary and contingent beneficiary? Well, everybody names a primary. Major I I say less than majority, ⁓ a contingent, which means the contingen the person that gets the money if you and the primary are gone. But here's the problem that I'm coming across. And that is people are naming again beneficiaries in the IRAs, 401ks, life insurance, et cetera. But those beneficiaries are different than the ones they've named in their trust. So remember, the in this example, an IRA application is governing document. So if you name, you know, generally you're if you're married, you're going to name your spouse as primary beneficiary. Okay. But what if you didn't? What if you forgot let's say you're 401k and you have an ex-wife? Or you don't like your wife or your husband and you've named a kid. But in trust, you name somebody different. Guess what? What whomever you've named in that IRA application or life insurance app or 401k application, that is the person that's going to get the money, not who you name in your trust. So it is a Big, big problem. People again, as time goes on, things change, they forget to update that. we want to make sure that the beneficiaries in the trust match the beneficiaries in the IRA 401k, et cetera. Again, beneficiary forms, just remember this. Beneficiary forms override the trust. Mistake four your successor trustee is no longer the best choice. Now, what the heck's a sex successor trustee? That's the person that you've named, designated to handle your estate. Take you know, again, to to are they are the top dog when you and your spouse, if you have a spouse, are gone. They are the, like I said, top dog. They're making all the decisions to follow instructions of your living trust. And as I think I did a show last Wednesday, people just hap-hazardly a successor trustee, which is a major mistake. Again, you want to name that's got a good business acumen. Hopefully they live close by. ⁓ they've got the time to be, you know, the successor trustee, et cetera. Now you can name multiple successor trustees. I don't like that strategy personally because guess what? Let's say you have two kids and you go, you know what, love both of them. They're both smart, good business acumen, et cetera. So I'm going to name my son and my daughter as 50-50 successor trustees. Reason I don't like that? Guess what? They've got to agree. Many times they don't agree. So now they've got a problem handling your estate. Choose a person, like I said, that has good business acumen, et cetera, and you shouldn't have any problem. But make sure, the other problem that I see, make sure you tell that person, that successor trustee, make sure you, first of all, get their permission that they're they want to be successor trustee. make sure you pay them, as I said last week, because a lot of work, a lot of responsibility. It's a legal obligation also, right? You have a, if you're a successor trustee, you have a fiduci responsibility to that estate. You are personally held liable if you screw up, if you embezzle, if you don't handle it as a fiduciary, you're on the hook. So it's a huge responsibility, nothing to be taken lightly. your trustee is again extremely, extremely important. Make sure you have the right choice. So take in a take account for what their health condition is. You don't want somebody that's, you know, frail and not able to travel or ⁓ meet professionals, et cetera. Take account their age, right? especially if you are younger than what they are. Do you want them around? I mean, are they going to be around, do you think, ⁓ 15 years from now? Their location, as I said, I've seen it happen many times where people will name like a child that lives back east. And then husband and wife are gone. And that child is trying to manage the estate as the successor trustee from far away. And it's ⁓ very, difficult even with today's technology. So question is if you have an existing trust, which is our topic today, Would you choose the same trustee today as you did originally? again, a discussion I had right before the show with a client. He named somebody that, you know, years and years ago where we're doing a trust restatement. he's not sure if you, you know, if this guy's even gonna want to do it again. So that's a big question. Last thing you want, and and again, this is very common, you've named someone years ago. Again, you haven't had your trust reviewed. So let's say 10 years ago you had the trust done, and now say you named, you know, cousin Fred. Well, cousin Fred is now ten years older, different life, and maybe moved and on and so forth. Does cousin Fred really will still want to be the successor trustee? if the answer is no, again, that's the reason that you got to ⁓ have this trust review and get things restated. All right, we come back, I'm gonna squeeze back, squeeze in, I think maybe one, if not two more, which is another reason that people make mistakes with existing trusts, their powers of attorney are outdated. Back to the John Sanchez show on News Doc 780K, which let's continue down our path. The 10 common mistakes people make with existing trusts. right. ⁓ I left off with a mistake number five. The powers of attorney are outdated. Now, what the heck am I talking about? So part of a comprehensive estate plan ⁓ is financial powers of attorney and your medical powers of attorney. Now, the goes by the correct term advanced directive, but I'm just going to keep it simple and call it financial POA and medical POA. Once again, when you have a the when you create the financial POA and the medical POA, name an agent. That agent or agents, and I'm just gonna use it, make it simple, make it one That agent is the one responsible to fulfill your wishes. So let's use the medical side. They are the ones, again, that are quote officially charge of all of the decisions that you have made in your living trust. I want to be on life support. I don't. I want to be have hydration. I want to have food. I don't. All these different things. This is what the agent of the medical POA. Once again, common mistake is people named somebody or they named them years ago. That person may not be around. Do you really want someone to be your financial or excuse me, your medical POA they live in Topeka, Kansas, and you're here in Reno? Probably not. So think about once again, location. Are they here locally? Can they run to the hospital in the event that you become ⁓ unable to make your own medical decisions. So very important on the medical POA. Same thing on the financial side. quite as important as the medical, but same thing. You're going to name an agent or agents to handle all of your financial affairs. They would deal with companies like mine, you know, on the investment side. ⁓ would deal with attorneys and CPAs and ⁓ real agents and so on and so forth. So once they need to have a good financial acumen, be able to understand things, talk to people, be organized. So on and so forth. But who have you named on that? Is it somebody here locally? as critical, as I said, as the medical, but at least they should understand technology where they could jump on a ⁓ a video call with the professionals and talk with them. very important. Is it the right person? Can they handle it? Maybe when you named them ⁓ 10 ago as an example, maybe your estate was significantly, hopefully it was, significantly smaller than where it is now. Is the person you have as your financial POA Can they handle an estate the size of yours? Right? That's another major consideration. So, question you want to ask would the people you've chosen then, when you wrote the trust, would they still be your choice? If the answer is no, time to have a restatement. Number six, your family situation has changed. Boy, marriage, divorce, births, deaths, grandchildren, special needs children. Children that you thought were gonna be great and they developed a drug or alcohol problem, you're to shield their inheritance from a sticky finger wife or ex-wife or ex-husband, so on and so forth. Very, very to understand the family dynamics and family situation. There are ways, again, in the estate planning documents, to protect again ⁓ your money to, let's say your son who's got a sticky finger wife, or your daughter who has a sticky finger husband. There's a way to protect it so that those daughter or son-in-law can't get their hand on it. But it has to be the right documentation and the living trust. So, does your trust that you wrote X number of years ago ⁓ reflect your wishes? Mistake seven you bought new assets. You bought a new home, you bought a rental property, a vacation property, ⁓ you a business, you sold a business, you had an LLC. Now you don't have an LLC. You had investment accounts. Are any new assets, excuse me, are your new assets coordinated with your trust? As I said earlier, they need to match. And if they don't, there could be significant problems. Again, back to the funding side of it. If they're not listed in the living trust, such as taxable accounts, like a taxable brokerage account, as I mentioned, it's going to probate, even though if you have an estate plan. Remember your IRA 401k life insurance where you've named beneficiaries. Those don't need to be in the trust unless you have certain language and you want to have rules as to how the recipient of that money can spend it and so on and so forth. That's a whole nother subject. Mistake eight, tax and financial laws have changed. Number nine, your family doesn't know where anything is. And number you assume everything is fine because you have a trust. Those are just 10. I could probably give you a list of a hundred. Give me a call if you need a review of yours. And by all means, sign up for our web our ⁓ webinar next Wednesday. Use your trust outdated. Go to specialized trust dot com, click on Step Learning Center. God bless, have a great afternoon. See you tomorrow.