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ESTATE PLANNING: TRUSTS, WILLS, & LIFE INSURANCE · Earn Your Leisure

• 0:00
  Speaker 1: A state plan very big. Yes, when we talk about
• 0:04
  Speaker 1: wills and we talk about putting beneficiaries, doing things, things
• 0:07
  Speaker 1: of that nature. What are some things that life insurance
• 0:10
  Speaker 1: stuff like that. What are some things that people need
• 0:12
  Speaker 1: to be aware when developing their estate plan.
• 0:15
  Speaker 2: So when it comes to your state plan, I want
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  Speaker 2: you to think about a will, potentially a trust and beneficiaries.
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  Speaker 2: Those are like the core components. So a will is
• 0:26
  Speaker 2: like the bare bones. You don't necessarily if you're twenty
• 0:29
  Speaker 2: five years old, you ain't got no kids, you've got nothing,
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  Speaker 2: you don't necessarily need a will. Right, Well, let's start
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  Speaker 2: even before that beneficiaries. Right, So, no matter what, even
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  Speaker 2: if you are twenty one years old, you got a
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  Speaker 2: bank account, you got in the state, you got life
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  Speaker 2: insurance you have in the state. You know, So put
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  Speaker 2: your mama, your cousin, your best friend, your sister, your
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  Speaker 2: brother as a beneficiary on your bank account, on your
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  Speaker 2: life insurance policy if you have one. That way, if
• 0:54
  Speaker 2: something should happen to you, that is what a state
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  Speaker 2: planning looks like when you really don't have much, but
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  Speaker 2: it's still something, But you don't want to be mindful
• 1:01
  Speaker 2: because if someone is a beneficiary on your on your
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  Speaker 2: bank account. Let's just say you put them on when
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  Speaker 2: you're twenty five, your sister, and then at thirty five
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  Speaker 2: you got kids and a and a significant other, like
• 1:13
  Speaker 2: and you have a will and all other stuff, but
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  Speaker 2: you never updated that form. If something should happen to you,
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  Speaker 2: what's on your beneficiaries form trumps everything else. It doesn't
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  Speaker 2: matter what's in your will or your or your trust.
• 1:25
  Speaker 2: So that's really important. I remember, like, so my my
• 1:28
  Speaker 2: husband when I met him, he had a daughter already
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  Speaker 2: she was seven, so he and her mother were together,
• 1:35
  Speaker 2: and he had he has like he works for the city,
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  Speaker 2: so he has a pension. So the other day he
• 1:41
  Speaker 2: was like, Babe, my friend is trying to figure out
• 1:43
  Speaker 2: how to change his beneficiaries on his pension. And I
• 1:46
  Speaker 2: was like, all right, well you know, let's update. Well,
• 1:48
  Speaker 2: let me show you how to log in because I
• 1:50
  Speaker 2: do all of my financial stuff. So we log in
• 1:52
  Speaker 2: change the beneficiaries and I'm like, hold up, and I'll say,
• 1:55
  Speaker 2: tiffany on here. It's said baby momm's on here. Now.
• 1:58
  Speaker 2: Don't get me wrong. Even baby and baby Mouse is
• 2:00
  Speaker 2: really cool, but not that cool.
• 2:03
  Speaker 1: Bruh.
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  Speaker 2: You what if you would have died and left your
• 2:08
  Speaker 2: paton to her, I would have had to raise you
• 2:10
  Speaker 2: up from the dead, kill you back dead again. So
• 2:15
  Speaker 2: but I just say all that to say that, like,
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  Speaker 2: it's so, it's so important to make sure those forms
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  Speaker 2: are up to date. So then next level will if
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  Speaker 2: you have children, you have to have a will. Who
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  Speaker 2: do you want to raise your children. It's not enough
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  Speaker 2: to be like, oh that's my that's my godmother. No no, no, no, no.
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  Speaker 2: Legally you have to assign because you know, you.
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  Speaker 1: Know us the conversation.
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  Speaker 2: Yes, like, oh that's so that's your gradma. If something
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  Speaker 2: happened to me, No, no, no, no, and this is
• 2:43
  Speaker 2: all we might been gigging with money, and so yes,
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  Speaker 2: you want to make sure that you have you know,
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  Speaker 2: like you legally have some papers drawn up to say
• 2:51
  Speaker 2: this is what happens to my minor children and I'm
• 2:54
  Speaker 2: not here because let's just say you're Muslim, right, and
• 2:58
  Speaker 2: your your parents a Christian, and you really don't want
• 3:01
  Speaker 2: your parents to raise your kids or your sister raise
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  Speaker 2: your kids because you want your kids to be raising
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  Speaker 2: a Muslim household. So you really want your brother, you know,
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  Speaker 2: but if you want that to happen you have to
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  Speaker 2: put that down. So a will is bare bones. But
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  Speaker 2: a will is not going to save you from probate court.
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  Speaker 2: You know you are still going to pay them tax
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  Speaker 2: on tax on tax on taxes.
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  Speaker 3: Right.
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  Speaker 2: But I will say this, if you have a trust
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  Speaker 2: is not for someone I would even consider a trust
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  Speaker 2: because of the cost unless you have at least one
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  Speaker 2: hundred thousand dollars in assets, right, because twenty thousand it
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  Speaker 2: doesn't make sense for the cost of a trust. Now,
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  Speaker 2: if you have assets to five hundred thousand or over,
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  Speaker 2: you must have a trust because the amount of money
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  Speaker 2: you're going to lose in probate court plus probaate court
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  Speaker 2: is embarrassing. It's like ringside teeths to like, oh how
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  Speaker 2: much eating got Oh? Okay, oh exactly, you.
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  Speaker 1: Know what I mean.
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  Speaker 2: And so that part is important.
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  Speaker 1: So a trust.
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  Speaker 2: What makes a trust so special is that a trust
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  Speaker 2: locks things away behind closed doors, so no one can
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  Speaker 2: see unless you decide to share, unlike a will where
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  Speaker 2: everybody can see. But also trust is like a person
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  Speaker 2: that never dies. When money goes passes from one person
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  Speaker 2: to another person because of death, there's a tax involved.
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  Speaker 2: But a trust, it's like this person that doesn't die.
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  Speaker 2: So money, if it's held or your assets are held there.
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  Speaker 2: Even if you pass, the trust stays alive. Even if
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  Speaker 2: someone else passes, the trust stays alive. So you don't
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  Speaker 2: have to worry about the tax incurred going from person
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  Speaker 2: to person. But you want to be mindful. What kind
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  Speaker 2: of trust do you want to have? An irrevocable trust
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  Speaker 2: or a vocable trust, And irrevocable means that it cannot
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  Speaker 2: be broken or changed unless everyone who's involved in the
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  Speaker 2: trust says okay, right. So, for example, Kobe Bryant had
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  Speaker 2: an irrevocable trust right So the problem was that he
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  Speaker 2: so he and his wife every when their children turned one,
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  Speaker 2: they added that child to the trust. But we all
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  Speaker 2: know he passed away when his baby was still younger
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  Speaker 2: than one, so she was not in that trust all
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  Speaker 2: of that wealth he had set aside. So she had
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  Speaker 2: to petition the courts to say, I know this is irrevocable,
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  Speaker 2: but let's be real, coll we would not want the
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  Speaker 2: baby not to be in here. So they granted her that.
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  Speaker 2: So you just want to be mindful. You know, what
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  Speaker 2: kind of trust do you want to happen? At state planning,
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  Speaker 2: we tend not to do it, but it's actually more
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  Speaker 2: expensive not to you know, like it just is. So
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  Speaker 2: if you if you have just a little bit of something,
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  Speaker 2: you want to put something down, you want to get
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  Speaker 2: it notarized, and you want to fund it and sign it.
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  Speaker 2: So if something happens to you, everybody knows what your
• 5:31
  Speaker 2: desires are.
• 5:32
  Speaker 1: Don't like Prince and then prevents all the fight in
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  Speaker 1: the three passes. I just want to I just want
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  Speaker 1: to add one thing to that because everything you said
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  Speaker 1: was right on point, and me as a financial advisor,
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  Speaker 1: one of the things when I first came into the
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  Speaker 1: industry is this guy, uh well, they was speaking and
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  Speaker 1: they was talking about a guy that worked the job
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  Speaker 1: for like thirty years, had like a big pension and
• 5:50
  Speaker 1: all of that, and you know, he got divorced like
• 5:52
  Speaker 1: twenty years ago and had a new wife and you know,
• 5:55
  Speaker 1: had like three kids and all that. And when he died,
• 5:57
  Speaker 1: he never updated his beneficiary. And like you said, the
• 6:01
  Speaker 1: beneficiary supersedes everything and it's no negotiation, nothing you can
• 6:04
  Speaker 1: do about it. So it went that it went to
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  Speaker 1: his ex wife and she kept it.
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  Speaker 2: She didn't have to give it up.
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  Speaker 1: Yeah, so you have to you have to update your beneficiary,
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  Speaker 1: and everything should have a beneficiary, including bank accounts. And
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  Speaker 1: then also what you speak about as far as the
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  Speaker 1: trust is extremely important. The Airvocable trust we spoke about
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  Speaker 1: the hospital about the island before, which is the Airvocable
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  Speaker 1: Life Insurance Trust. And I love how you say a
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  Speaker 1: trust is a person that can die, because that's really true.
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  Speaker 1: It's treated like an outside entity as a person. So,
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  Speaker 1: you know, especially when we have more advanced conversations about
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  Speaker 1: tax shelter because life insurance can actually add to in a
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  Speaker 1: state planning problem because the money goes into your state.
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  Speaker 1: So if your state is worth three million dollars and
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  Speaker 1: you have a two million dollar life insurance policy, now
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  Speaker 1: when you die, you're actually a state is worth five
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  Speaker 1: million dollars. So that can actually be counterproductive because it's
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  Speaker 1: going to add to your tax bills. So that's why
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  Speaker 1: people sometimes people will put the life insurance in a
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  Speaker 1: trust because now that two million is not part is
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  Speaker 1: not part of the estate's out of the estate, and
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  Speaker 1: it still goes to the beneficiary tax free because of
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  Speaker 1: the life insurance to tax free. So yeah, everything that
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  Speaker 1: you speak about is extremely important, and like you said,
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  Speaker 1: it's not something unfortunately that we have really thought about
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  Speaker 1: a lot. It's like, yeah, most of the time, it's
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  Speaker 1: just like, all right, figure it out when you die.
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  Speaker 1: And then you know that leads to all kinds of issues,
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  Speaker 1: and as you said, it's actually more expensive not to
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  Speaker 1: have it mentally and financially because mentally, you know, family
• 7:35
  Speaker 1: members gotta fight. Breaks up families all the time. It's
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  Speaker 1: pretty common. You know, your grandmother has a house and
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  Speaker 1: then there's like four kids and they're fighting over the house.
• 7:43
  Speaker 1: So all of this stuff. We talk about stocks, we
• 7:45
  Speaker 1: talk about investing, all of that.
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  Speaker 2: The fundamentals are critical, great.
• 7:48
  Speaker 1: Well, yeah, you gotta have the fundamentals down. My graduates
• 7:53
  Speaker 1: from my school being forced bad and drop drop, drop bad,
• 7:59
  Speaker 1: drop us.
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