Tariffs and how they relate to an estate planning checkup

0:00 Welcome to something more with Chris Boyd. Chris Boyd is a certified financial planner, practitioner, and senior vice president, financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it something more because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter. Here he is your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Thank you for joining us for another episode of something more with Chris Boyd. I'm Chris Boyd here with Jeff Perry. We are both of the AMR team of Wealth Enhancement and glad to have you joining us every time we have these podcasts.

0:48 You can find them of course, by audio where you like to listen to your podcasts, but they're also available on video on YouTube or our webpage at somethingmorewithchrisboyd.com. So glad to have you here. We have a returning guest we haven't seen in quite a little while. My brother, attorney F Keats Boyd III of Boyd & Boyd, the estate planning law firm here on Cape Cod. And we thought it would be desirable to have a little chance to talk a little bit about financial planning. Their estate planning is a related discipline just as their tax planning and insurance considerations and so on. All of these are components of the things we need to be considering and planning around.

1:30 You know, oftentimes we take for granted that people have taken the time and the steps to do all these things and that's not always the case, probably more likely as things change and evolve. Yeah. And that doesn't just have to be tax laws and exterior considerations, but you know, there's also the own personal dynamics, family dynamics. I was talking with someone the other day and they were saying how, well, some of their beneficiaries have passed away and they need to do some revisions of their plan to be mindful of, well, now what happens, you know, how do they want to structure things?

2:10 And we've had some occasions where people have been talking about, I'm not sure who to turn to for important roles in the process. So, but, you know, before we jump into that, you just had an interesting communication to clients today. We're recording this by the way, on Thursday, April 3rd. And as it turns out, today is a big day in the markets with all that's going on with the introduction, tariff positions and all that's happening, the markets interpretation of that. And so it's on people's minds. We're focused on these things. But you had some insights to share on this specifically as it relates to estate planning.

2:58 And I know you've been very active talking about another issue as it relates to business owners and LLC owners, a couple of those kinds of things, and then turn some attention to some of these other considerations. All right. Sounds good. Where do you want to begin? I don't know. I guess we'll start with saying first, thank you for having me back. Good to be here. Good to see you, Bob. And I'd like to wish everybody a happy Liberation Day plus one. A little tongue in cheek, but you know, that's what they're touting the policy shift to be part of the golden age in America, bringing that back. Now, whether you like President Trump or not, I think what we have to do as planners, whether it's financial planners or estate planners, wealth protection planners, is recognize policy shifts and recognize and look for the opportunities contained within them to help our clients.

3:53 And that was really the point of my newsletter that I sent out to our client base this morning. The tariff proposals that are being implemented do have opportunities buried within them. We may have to look a little bit deeper for them. We may not feel the opportunity today as we look at the portfolio moving in what we perceive to be the wrong direction. But very often those are opportunities for buying, maybe looking, you know, not that you can time those very well necessarily, but if you happen to have cash sitting on the sideline, it might be a chance to improve your portfolio. And, you know, this is your area of expertise, not mine, but I would think that looking at domestic buying opportunities in some of the companies here in the United States or companies that are investing in the United States to avoid some of these tariffs, that might be the purchasing opportunity for investors in the next few days, next week or so as the markets adjust to this.

4:57 Yeah, I wouldn't speak to the timing as far as that's concerned, but I will say that, you know, your sentiment echoes some of ours in that on the one hand, I think, you know, we're looking at what remains to be a little bit murky as far as, you know, this, how this policy will play out. Will there be reciprocal response? Will it escalate all of that? And that can have some economic slowing consequence profitability is what we look to, to derive, you know, share price. But to your point, not all companies are the same, right? And when you look at particularly some of the parts of the market where they've seemed to be the most expensive at times, will there be greater opportunity for these companies that to a large extent don't import contents for their product, their service base, their thought, you know, programming kind of content?

5:58 There may be some values that are in the making, right? And whether today is that point, you know, I'm not sure I admit, you know, but at the same time, you know, at the start of the year, we were looking at some of these companies saying, oh, their pricing is really frothy. Yeah. And your favorite word, right? It is. It's a word I use frequently, not at the moment. I'm not using frothy, but I have used it. He likes that word. But now, you know, you may be getting to a point where you start looking opportunistic, right? You know, saying some of this is getting priced in a way that it could be more attractive and more opportunity. So, you know, I think to some extent the challenge is what's the greater economic impact if you mentioned like manufacturing being more done here?

6:52 Yeah, that takes a long time for that to evolve. So you look at what happened in the last couple of months. Some very big names have promised to invest in manufacturing in the United States, Hyundai, a company that I happen to drive a Hyundai manufactured vehicle. I love the car and I'm glad to see that they're doing that. I'd like to buy another one, but the tariff might stop me. But now if they're manufactured in the United States, I don't have that problem. We see that already with some, you know, you see that with the Toyotas and some extent already where they build them here largely. Exactly. Another one I'm thrilled to see is Taiwan Semiconductor. About a year ago, I was very nervous about whether or not Taiwan would be occupied by now.

7:38 And what would that do to the semiconductor market? Because the large majority of semiconductors are manufactured by Taiwan Semiconductor. Now that they're going to invest in the United States and have manufacturing here, that's, I think, a very good thing for the computer industry as a whole, because we're not going to have that fear of what would happen if China finally says, hey, you're part of our country and you're not a separate nation anymore. On that particular, I think we've seen that as a concern in the last administration, as well as this administration. Right. Yeah. You know, the technology stuff, Nvidia, SoftBank, OpenAI, Oracle, those commitments to invest in the United States, I think that's a really good opportunity for a growing industry of blockchain technologies and artificial intelligence.

8:33 These two technologies, to me, are major disruptors of so many service industries and other manufacturing industries or other parts of our economy, rather. I think those two areas are going to introduce major change in the next five to 10 years in so many areas that's just going to be a complete disruption. And to have those more based in this country is critical to our country's economic success. And we are known as an innovator as a country. And so I think it's really important to have that innovation be centered here to a large extent. So bring this back to the commentary about an estate plan and how this is relevant to the way we think about our estate planning as dynamic, not static.

9:26 Well, you know, I think you always need to review it. I mean, part of it is saying, you know, what is my portfolio worth? You know, and that will change day to day, obviously, up and down. But if this does do what President Trump is expecting this will do to uplift American industry, to renovate and revitalize manufacturing in this country, that will uplift most portfolios. And so I think that's one opportunity. I think another thing is, as we see these tariffs go into place, it's going to bring dollars into the United States that will strengthen the U.S. dollar as opposed to other currencies. So our buying power will increase.

10:07 I think that's an important consideration. I think another important thing is tariff revenues will offset the need for tax increases. We have a huge deficit. And if tariffs do bring in revenues, as they should, then those revenues can be either used to pay down the deficit or eventually maybe reduce income taxes. President Trump has alluded to the idea of maybe eliminating income taxes in favor of tariffs. Now, again, a lot of what the president says is hyperbole.

10:47 It is often done as a tool for putting himself in a negotiation posture for something else he's really trying to do. But tax relief to the middle class and lower class, I think, is important. While one party is trying to emphasize the tax favorability to the uber wealthy, the 1 percent, a lot of the tax policies that he wants to implement will really help the middle class. And it's not just going to be the super wealthy. An extension of the estate tax reforms from the Tax Cuts and Jobs Act, that will have a major impact on people.

11:31 There is a bill before the House right now. It's an estate tax repeal bill that, in my perspective on it, is really a tax hike on everybody but the uber rich. Estate tax repeal would mean that we'd no longer have an estate tax in this country. And if we no longer have an estate tax, we no longer have what's called a step up in cost basis. And that's a big concept for capital gains taxes. If we do away with the step up in basis because we don't have an estate tax, there are two possibilities. One, we'll have inherited cost basis.

12:11 So when someone passes away, the cost basis of the decedent will become the cost basis of the heirs. And if they want to sell mom and dad's home after they pass, they're going to have a capital gains tax that could be enormous based on a property that has been held in the family for 30, 40 years. Same with the stock portfolio, huge capital gains tax consequences if the kids sell the portfolio. The other capital gains impact would be there could be death as a capital gains recognition event whereby mom and dad pass away. We have to pay a capital gains tax because they died and that would replace the estate tax.

12:55 In my mind, that would be a tax on the lower middle class, not so much a big deal for the uber wealthy, the one percent, because right now the estate tax is 40 percent. They would love to see a 20 percent capital gains tax, but most lower middle class families who are not going to be subject to an estate tax because their estate's under 14 million dollars or under 28 million dollars if they're married, they're not going to get that 40 percent tax. But instead, they will be replaced with a mandatory 20 percent tax, possibly 15, but most likely 20 percent on most families because they have a capital gains tax event because they died.

13:36 That to me is is is extremely confiscatory and something to be avoided. So I would much rather see the tax cuts and jobs acts expanded to either become permanent or at least for another 10 years and give us a better opportunity to allow tariff revenue to replace these income tax revenues. And I think it would be a wonderful thing if we could do away with the income tax code. That would that would do be such a boon for the economy, for economic growth. Yeah, but the the amount of tariffs, even though they're looking at a sizable tax increase for for consumers, isn't going to be the scale of the income tax probably revenue that we generate today.

14:27 But, you know, it's just it's it's interesting to see that even if it's a tax reduction, if we go from a typical 22 percent down to, I don't know, 10, 12 percent, you cut it in half. If that is possible, that would be such a stimulus to the economy. You think about it. If you get paid a thousand dollars but only get to keep 80. Eighty eight hundred dollars, 80 percent of it, the question is to change that to 90 percent. Now you've got more to spend and that will create a stronger economy in the whole. Yeah. So are we saying you're expecting tariff revenue to compete with income tax?

15:11 I'm saying it's going to be interesting to see what happens. And if, you know, countries who against whom we are placing these tariffs have two choices, they can reduce their tariffs and we'll reduce or eliminate ours, or they can increase their tariffs and we'll increase ours. The wiser choice for both sides would be to eliminate tariffs. So if that happens, then we'll see what happens. But that's going to impact those countries revenues. And so it's going to be a little bit of a wait and see what everybody does. I think there is certainly there have been significant revenues from China on the tariffs that were put in place under the last Trump administration and kept in place by the Biden administration.

16:02 You know, they were working for a number of revenue reasons. And so it'll be interesting to see how this plays out. You know, I'm not going to make that prediction that can it replace income taxes. But even if it can offset them or reduce them, I think that will have a major positive economic impact because taxes create huge economic inefficiency. It's basic economics 101. You raise a tax, you lose a portion of the economy that we are not working in the most efficient fashion anymore. And that that deadweight loss concept is well accepted within economics. And it's something that, you know, any tax increase is going to do that if we can change that income tax revenue by shifting it toward tariffs, I think we'll get a better result.

16:52 So, you know, to revisit this notion that things are dynamic and not static, I mean, just. Prior to yesterday, tariff revenue represented about one percent of the revenues of the. The the the budget, right? Right. When it comes to income taxes represent about thirty seven percent payroll taxes, FICA type stuff, Medicare, maybe twenty five percent corporate taxes, seven percent. And then you got twenty seven percent debt, right?

17:34 Deficit. I mean, so that we're financing. So more likely we're going to be trying to reduce that than replace it. Income tax in the short run. Absolutely. I agree 100 percent. I do think, though, that, you know, they're battling this on a two front approach, trying to reduce the size of the federal government, trying to reduce fraud, waste and abuse, which having been a government contracting officer in a prior life, you know, I know exists. We did our best to minimize it. But when, for example, Congress wouldn't authorize a new building, we'd create a new building in two years.

18:15 We'd renovate the inside in one year from the frame out and then the next year from the frame. I'm sorry, from the frame in and then the next year from the frame out, put a new building on. So, you know, it's there are things that are inefficient in the way that the federal government is run. And that certainly can be reduced and eliminated, thereby reducing the need for so much deficit spending. You do that and you increase tariffs that increase revenues. I mean, we you know, if I don't know the specifics of what tariffs were in place before yesterday, it would be interesting to see. Yeah, there's some interesting stuff that's been reported on that to you on the Wall Street Journal as an example.

18:57 They had some details about that kind of information. Yeah. But to that point, anyway, let's let's let's bring it into the state planning again, you know, to talk about, I mean, interesting discussion, lots to think about. You know, so, OK, maybe that's something we will see opportunity in terms of investment. Maybe there'll be some things in terms of economic expansion. You know, you're you're forecasting that would be the ideal for all of us. Right. That this works out as such. So, you know, then I think we want to talk about some of this in that context of the plan.

19:43 Right. So as far as the plan goes, I think there are a number of opportunities certainly to revisit investment allocations. That's something where clients should reach out to folks like you and say, what's my investment allocation look like? Am I too exposed in one sector or another? Yeah. Am I positioned? Yeah. Review asset valuation. And that means, what's my house worth? What's my portfolio worth? How much money is in my IRA versus in my non-retirement portfolio? What do we have in cash? Reviewing those valuations to see where does that put you from a tax planning perspective. I think also reviewing your basic plan to make sure that it is doing more than just avoiding probate and avoiding estate tax.

20:32 Many people today think the tax to avoid is still the estate tax. It is not. It is the income tax. And so an estate plan really needs to be crafted to be income tax sensitive. That means making sure that when a trust becomes irrevocable after somebody dies, that the trust is taxed at personal rates, not at the more common trust tax rates. And that just means the trust has to be drafted to accomplish that. You're talking a difference between if you have an irrevocable trust and it's going to pay taxes at 37% when income exceeds around $15,500.

21:15 Should we be paying 37% when we could instead be paying 22%, 24% by shifting the way the trust is written? Should we be paying capital gains rates at 20% or should we be paying 15 %? Should we be subject to the Affordable Care Act surtax of 3.8% when we can completely avoid it by keeping income taxed at lower rates? It's just a question of structuring things the right way. That's really, really important. I also think that looking at how your plan is structured, we've been promoting two concepts in the last six months or so.

21:59 The first concept is something we're calling a golden funnel. If you look at a traditional estate plan, especially will-based estate plans or trust-based estate plans that give everything to your kids when you die, outright distribution. What you're doing is, if you imagine it as an upside down funnel, assets are going out to various family members and they're owned outright. They are not concentrated. They're not working together anymore. They're fractured and that often can result in loss, whether it's a divorce of one of the kids, a bankruptcy need for one of the children, a lawsuit against them.

22:40 That wealth is not protected. It's not concentrated. It's dispersed and it often gets dissipated. If you want to turn the traditional estate plan upside down, you concentrate it and instead have it work like a regular funnel, a right side up funnel. That will concentrate the wealth. You do that through long-term asset protection, trust, multi-generational dynastic planning. You do it through things like using limited liability companies within the estate plan, either to act as a family trustee or to act as an asset protection device, to act as a family governance device, or maybe even a tool to teach the kids how to work with money that they really don't understand ahead of time.

23:25 How many families have we all worked with where mom and dad understand how to invest, but the kids didn't get that skill set? Using an LLC is a wonderful tool to provide that educational resource to put the portfolio in there, bring the kids in to understand how wealth is managed, to get them involved in it. Maybe it's to help with charitable giving and the structures and the goals of what charities to help and guide with. LLCs are a critical part that we're putting a big emphasis on. I noticed you've really been emphasizing the LLC as a structure. Is this in any way replacing the use of a trust or is it supplementing it?

24:11 Yeah, it's complementing it. Obviously, there's some liability elements that are attractive through an LLC, but is that the driver? What is- It's a driver. Most people do estate planning and they're doing things for the kids. They're not doing things for themselves. An LLC is a structure where you can really do something for yourself. You can help structure it so that if you hit the gas pedal instead of the brake, you're not going to lose everything you own. There was this case- When you get into an accident. Yeah, just a case that is referred to in my industry a lot is a gentleman named George Weller who's since passed away. In 2003, he got into a car accident.

24:51 He was driving in Santa Monica, bumped into the car in front of him, apparently got flustered, hit the gas pedal instead of the brake, and ended up driving through a farmer's market. He ended up killing 10 people and injuring 70, costing some damages somewhere in the neighborhood of $21 million in 2003 dollars. Today, it's well over $30 million as the damages. Who's estate could possibly afford that because of an accident? Your estate can't withstand that. Even if you have a good umbrella policy, it's not going to protect your estate from all that damage. An LLC can help with that because the LLC can protect you from outside people trying to get in to take away your money, but it's got to be structured the right way using the right state's laws.

25:37 We tend to look at states like Nevada, South Dakota, and Wyoming because they have statutes that say the only remedy of a creditor is to wait around until the LLC ends, and then they can participate in liquidation. They can't break through the LLC and try to sell off stuff, even if there's only one owner. These LLCs are a great tool from an asset protection standpoint. It offers something to the client to protect their wealth and give them a safety net if something bad should happen by accident. It also provides these other tools that you can use it to be a family trustee.

26:18 You could use it to be that educational role of bringing the kids in and getting them involved while mom and dad are still around to teach them the values and the skill sets that they're going to need to maintain the wealth that mom and dad have created and to keep it concentrated so it's still working for the family as a whole. I've talked about the Vanderbilt family for years as a family to look at to see if you don't do it right, your wealth gets dissipated. Commodore Vanderbilt had, I think it was $100 million when he died in 1877. He was the most wealthy person in the United States at the time.

26:58 When his family had a reunion, let's see, it was in 1973, 120 members came for the family reunion. There was not a single millionaire among them. How many generations? About four generations maybe. It was through a lack of planning. They used the old primogenitor model, give everything to the eldest and the eldest did not have good skill sets. They invested in the breakers and beautiful buildings with this opulence. And within 30 years, their families were not among the richest families in the United States anymore. Then you look at the Rockefeller family. John D.

27:38 Rockefeller Sr. used dynastic trusts with business entities and created a tool for generational wealth, making sure that he had family education on wealth and how to manage the money. They had set up rules for how to pull money out of the trust and you couldn't just go crazy with it. He set it up with a good structure. While you don't have to be a John D. Rockefeller, you can be a family with a modest means. You mimic that structure and you're guaranteeing that wealth can grow for two or three or four generations and continue to be substantial wealth or grow to be even more substantial wealth for your family in the next generation or two or three.

28:21 That's the model that we're trying to guide our clients to use. And the tariff thing, to an extent, it's a reminder that you can't just put your estate plan up on the shelf after you got it. You know, we did our will, we did our trust. Okay, I'm all set. I can ignore this for 10 years or so, dust it off. No, you've got to keep it open and review it regularly. That's why we're saying review your valuations. Make sure that, you know, do you have an estate tax problem in Massachusetts? Are there ways to eliminate or reduce that estate tax? What are the steps you need to take? What about income taxes? How can we modify our trust to eliminate income taxes or maybe not eliminate but reduce them to lower rates?

29:04 You know, those kinds of things are important. And then recognizing that each year new cases come down that impact your estate plan. Each year new regulations are issued. Last year, the Corporate Transparency Act was a big deal. Each year there's new statutes and tax revisions that impact your estate plan. And so you've got to recognize that your plan needs to be dynamic. It cannot be static. It can't just be put up on the shelf and forgotten about. So Keats, how often should that, you know, our doctors tell us to come back, our financial planning clients, even if we don't reach out to them and we're not in regular contact with them all the time, at least once a year, we want to sit down with them and have an annual review.

29:54 Do you have a timeframe for people generally? Yeah, a couple of things. One, you know, I think it's a really good idea to do a self-exam. You know, every six months or so, uh, review the valuation of your state and see how it's moved. Uh, review who are your important people? Who are your fiduciaries? Uh, you know, your executor, your personal representative, not so important if you're using a trust -based plan, but still a consideration. Who's your power of attorney? Who's your healthcare agent? And who most importantly is, who is your trustee? Uh, make sure that they're still the right people. Are they still where you had them in the original document?

30:36 Now, if they've moved, sometimes we don't need to make a change simply because they've moved. Um, but we, you know, if you move out of Massachusetts or wherever your residence is, and you move to a new state, that's certainly a time to talk to your attorney and review. I'd say, you know, I used to think every three to five years was an important timeline. The last couple of years, I'm beginning to move a little bit more toward an annual review. Um, and that's, there's so much going on and we've tried to address that by having clients enroll in a maintenance program. Uh, and we've got a couple of different options, but you know, at the very least it'll give a 30 minute conference of some kind at no cost other than the maintenance program cost.

31:21 And, uh, it just come in, let's talk about it. Or you want to have a little more with your family or whatever. Probably a little more proactive in dealing with some of these seemingly, uh, routine now, uh, changes that happen in terms of legal impact on your estate plan. Right. Right. Um, so that's a good idea. The, the maintenance program, um, I, you were talking about, Oh, do a review of your, your, your plan and your numbers. Um, I think a lot of times people who have an estate plan, put it on the shelf because it's intimidating. It's not written in a way that's easy to follow.

32:02 Right. And so it becomes a little bit challenging to know, what do I have? How does it work? You know, that it's not as clear. I know you do some education around this with clients routinely. Yeah. That can help. Right. And some of that education we've posted to our website. So even if you're not a client of ours and you want the education, feel free to go to our website. It's available for free. We've got, uh, one that we call a walk through the trust where, you know, if you pick up a trust today, they are written in legalese. Um, but they need to be, you know, everybody wants it to be such that their child can pick it up, read the trust and understand exactly what they're supposed to do. But the truth of the matter is if I wrote it in plain English, it's like trying to tell a computer, I'm going to write a program and I'm going to write it in conversational voice.

32:51 And you're going to do what I want you to do, but the computer doesn't understand it. You have to write it in Python or in code and you know, you have to have the code and you got to write it in the right language. It's like saying to a person from another country, I'm going to speak to you in English and you're going to follow my instructions. Granted you speak French or Italian or Spanish or Portuguese or whatever the language is, you may not speak English. And so talking to you in English, isn't going to help you to understand what you need to do. So we have to write it in legalese. So for our clients, we use the opportunity of a walk through the trust to translate the legalese into plain English and we get really high response from our clients.

33:33 It very positive. Uh, and so that's very helpful. We do another one about how to fund your trust. Uh, you know, every trust should be properly funded. What does that mean? I take my house and I deed it into the trust. I take my non-retirement investment assets and I change them so that trust is the owner. I take my savings account, my money market, my CD, I make it so that my trust is the owner. And we walk you through during that seminar, how you do those things. Uh, we teach our clients how to do it. When we have them sign their trust, we spend a lot of time trying and give them written resources and tools to help them do this stuff. And of course, if they want us to, we'll do it for them. Uh, you know, so there's a lots of opportunity to make sure that it's done the right way.

34:16 But funding a trust is one of the biggest overlooked things. It's one of the, we have a book that's, I think it's available on our website called the seven biggest estate planning mistakes. Uh, and that's one of them, uh, not funding your trust. So, so I think a lot of times people think, um, that's easy. Why do I need someone else to do some of the things when someone passes and, um, they have expectation of, well, you know, mom and dad died. Let's just get this done. Oh yeah. Tuesday. Good for you. You know what I mean? Uh, you know what I mean? Yeah, I do. And all too often it's sadly, that's the hardest part of our job when that happens is to set realistic expectations as to how long this is going to take.

35:01 And there is a process. Yeah. See, that's the other thing. And I, I've run into instances where I've said, oh, and did you get the valuation when your spouse died? And they look at me like, what? Yeah. You know what I mean? And, and so I said, well, who settled your, the fair interest? Um, we didn't, we didn't do that. Yeah. There wasn't an estate tax, right. To your point about the estate tax. So, um, you know, I think that's worth reiterating why that's, it's not quite as straightforward as it seems. Uh, there, there is layers of complexity that, uh, you can do things in a way that, you know, functionally you might be able to get by, but there may be missed opportunities when it comes to a step up in basis.

35:44 In this case, that's what I was talking about with someone or fill in the blank of right. You probably, I just, we, yesterday we had a situation where, um, uh, we were working with the estate of a surviving spouse trying to amend his plan. And, uh, we reviewed the trust that we were amending. And when his spouse passed away, uh, a large portion of the estate was supposed to be put into an irrevocable trust and wasn't. And so now, you know, it's been years, you know, about 15 years, we're left with the situation of, well, how do we do the forensic accounting to figure out what was owned by whom then, how has it been transferred?

36:34 What did it get used to buy? And just to complicate things a little bit more, uh, the couple at the time of, of the first spouse's death lived in a community property state, which meant half of everything that wasn't dictated to be separate property was community property. Half of it belonged to the decedent, half of it belonged to the survivor. So half of it is supposed to be in an irrevocable trust. Um, it's, this is going to be a nightmare. Uh, so that's a, that's an exceedingly complicated instance. Um, but even in more mundane circumstances, there's, there's reasons to try to talk to someone about it, uh, to, to take advantage of some of the benefits.

37:19 I'm just thinking of step up in basis as a simple example. I'm sure there's a myriad of other things. I mean, the real quickly, the process is five steps and it sounds simple. Inventory, what did the deceased person own? You know, what's out there? Is it in a bank? Is it in a brokerage account? How is it owned? Is it individual joint in a trust? Does it have a beneficiary designation? That's the inventory process. Truthfully, that's going to take a month or two because not everybody keeps really good records of what they own. And then you have to wait for a statement to arrive to try to figure it out. Yeah. You know, so you've got a month. You know, sometimes people get stuff electronically and you might not see it for a while.

38:02 Uh, you may not get access to the account because once the person dies, so, you know, it's their own login, it's their own login. And for someone else to use the deceased login technically as a crime, it's criminal fraud. You're not supposed to do that. Lesson number one, if you have accounts, uh, and you're married or you have a child, who's your person, try to get them a separate login as a durable power of attorney. Or if it's your spouse as a joint account or don't put your child on as a joint account owner to get login, but you know, find somebody else, their own separate log. That's a great example though. I mean, it's so common and people don't realize some of the pitfalls that come with that. Right. We, we had a, a client years ago who lost her spouse and, and the bank closed her out from the account because it was his login go down to the bank and do things.

38:52 But it was, she thought I can't get it my own money anymore because it was his login and his login was closed once they told the bank, right. Now she could get her own login as it turned out, it turned out, you know, but I mean, it's, it's a, what if it's in one's name, both names, you know, it just is all these complexities. So that inventory is the first step. Second step is to get data death values or praise everything that can take time, especially if there's a business involved or there's real estate, uh, stocks, bonds, mutual funds, bank accounts. You know, the, the stocks, bonds, and mutual funds are pretty quick. If we know what's in the account, if we know what the holdings are, the banks, we have to write to the bank and get the data death value that can take some time.

39:33 It may be if you have a statement, but sometimes you have to wait. The timing is optimal. Yeah. Right. But I mean, you're talking 30 days anyway. And then once you have, uh, the, the appraisals done, that's when you start the work of taking the decedent's name off of those accounts. But you have to know what they own before you try to take a name off. Right. And sometimes you don't want to take their name off because if it's a joint account and the check arrives, you know, two months later as a refund for something and it's payable to the deceased, if the name's on a joint account, maybe you can deposit the check without having to go through probate. Right. So, you know, there's there, you know, anyway, retitling is the next step. Then you deal with tax returns. The estate tax return is due nine months after death.

40:14 Yeah. And that's also potentially income tax returns. Yep. And those are April 15th of the next year. So, you know, you've got a long time frame. And if assets carry over between two years, you can have more than one year's tax return. Exactly. Exactly. So you've got, you know, this timeframe that people don't recognize. Then when you get through all of that, now it's time to divide everything and distribute. In the meantime, you've got to pay, make sure all the debts are paid, the mortgage is paid off, the bills are paid and so on. So it's, it's typically a year to a year and a half long process. Yeah. Um, one of the other things I just, uh, we, I mentioned earlier is that sometimes people don't have the right person or need someone outside of family, um, to handle their, their affairs after they pass.

41:00 Um, I was talking with a client recently and they were saying, well, um, I have smart kids, but I don't want to put them in the position where they will be at odds with one another. And one's going to have the, the responsibility and one won't. And you know, that kind of thing or worse yet, I want them all to work together. Yeah. Yeah. So trust me, if they don't work well now, they are not going to work better after you die. It's going to be tell about like this. I mean, sometimes it's, it makes sense. There's reasons at times to say, I'm going to hire this out rather than do it more cheaply, but for other reasons, the dynamics you might not prefer, you know?

41:47 So yeah, you can bring in a professional trustee. Um, you know, and is that something you often do or we can act in that role, but you know, it's, it can be a bank or a trust company. Uh, you know, there are times where you want to trust company in a certain location. You know, one of my preferred, I have two, the two top jurisdictions in this country under trust law are in no particular order, Nevada and South Dakota. Um, I have an affinity for South Dakota. I've been there. I like the state of place. It's a little bit cold in the winter, just, just a little, um, but it sounds a little bit more appealing. Yeah. Um, but, um, you know, both states are excellent when it comes to trust law and, uh, there, they also have no income tax and no estate tax.

42:35 And so bringing a trust to a jurisdiction like that and having a trust company, it allows for something called a domestic asset protection trust. You can make a trust for yourself. You know, I often kiddingly say in my seminars, who here would like to make a gift to themselves? Raise your hand. And everybody laughs because they don't think they can make a gift to themselves, but they can. Yeah. But you have to have a trust based in a state like Nevada or South Dakota. Is that something you help people with? Yes, absolutely. And I, it's one of my favorite techniques is to make a gift to yourself because you're getting it out of your state. It's great for things that aren't going to appreciate like bond portfolios, CD portfolios, ladders, those kinds of things where, uh, you're not worried about capital gains, get it out of the estate now.

43:20 And if you need it in a domestic asset protection trust, it can be given back to you. Okay. That's helpful. Yeah. So, you know, those are great tools. A spousal limited access trust or another great one. Uh, and there'll be, you know, because of this bill I mentioned earlier about elimination of the estate tax. Many people in my industry are advocating, do this now, put your slat together, put your DAPT together. Uh, now, while there is an exemption because you can exempt it from not only the estate tax, but also the generation skipping transfer tax, even if they do repeal it, it is, you know, we've had four repeals of the estate tax in our history already. They will likely bring it back at some point in the future.

44:02 And so having a trust that has exemption because you acted before they passed the estate tax appeal makes a lot of sense. And then if you, uh, wait until after the repeal is, you don't have the exemption. And then if they reinstate a generation skipping transfer tax on a dynasty type trust, your kids could be paying taxes as high as 55%, depending on what rates they put in place sometime in the future. So it's, it's, it's, it's a good idea to think about that. Yeah. So I guess, I mean, you, uh, when you talk about this, you know, we, we always seem to find there's like all these layers of like, Oh, there's even more to it than we thought about. Right. Yeah.

44:42 If we were thinking a little bit about a few of these kind of superficial things of like, it might be good to talk about. And here we are with, um, you know, these kinds of trusts in Nevada and South Dakota. Um, so in any case, um, I guess, um, bottom line is, um, people need, uh, to really look at this regularly, not just once in a while. Uh, there may be occasions, circumstances here going on, maybe opportunities, uh, to come out of that. In addition, um, you know, it's, uh, maybe a good idea to think in terms of like a maintenance plan so that you can, you can update it, uh, as all these things change perpetually, you're, um, you're not in a position where it's like, where do I begin?

45:32 Or, gee, I just did that. I don't want to spend it again. You know, you got sort of maybe a more gradual, uh, easy payment structure. Right. And we're, we're expecting, you know, the, they're probably going to work with the tax cuts and jobs act 2.0, whatever they're going to call it. Uh, probably, you know, early, early summer. You'd expect far enough in advance of the midterm election. Yes. Well, we, they need something in before the, uh, before the, the budget, uh, on September 30th. Uh, so, you know, I think there'll probably be in June, July timeframe that they get something passed. And when that happens, of course, we got to wait to see what's in it to know how we have to draft around it, but we're expecting that our clients will want to put some change in place as a result of that.

46:20 And we're looking for other things. It was a big divorce case that came out a couple of years ago. We're drafting, uh, uh, to make sure that our trusts are not going to be, uh, subject to, uh, this, the implications of the Jones versus Jones case, uh, from, from Massachusetts that indicated that there might be some ability of a divorce court to say assets owned by a trust are includable or countable, if you will, in calculating what is the marital estate. And we want to make sure that our trusts are drafted around. I feel like our trust should be drafted around it, but there are going to be circumstances that are not in the drafting, but more in the fact pattern.

47:00 My child, uh, is married, but has no kids. That could be a problem under the Jones versus Jones case. So we're trying to put language in place that will eliminate that issue. Um, all these things we don't even think about. Yeah. Uh, last point before we wind down a call to action, um, you have any seminars, you have, uh, resources. I know you have all kinds of things, but what would you like to tell people to take advantage of to get visit the website. If you want to learn a little bit more, Boyd and Boyd, pc.com B O Y D A N D B O Y D p c.com. And you have seminars. The seminars are on a page called seminars.

47:41 Uh, if you click on that at the top of the menu, you can see, uh, you know, all of the seminars that we've done over the last several years, it's got some of the, you know, our announcements as to public seminars, we don't have anything scheduled right now. I just did one on Tuesday on limited liability companies. I'm likely going to redo that one short and do it again in the very near future. Uh, and then another one that we did on, uh, the, uh, the wealth protection plan, golden funnel technique that was a more public facing seminar. We're doing these so far this winter as online webinars, uh, and, uh, you know, encourage people to consider that there are huge opportunities now to get a really good plan in place that will protect your family for generations.

48:27 It's just a question of deciding to take action. And I, you know, encourage people to take a look at a website and decide if we're a good fit for them. All right. Take action. That's the bottom line here. Take action. And, and, uh, as usual, uh, we try to provide you the best content, uh, that you can make use of in all aspects of your financial planning and portfolio management, share it with others. Um, it's a must listen to content and thanks for being with us for another episode until next time, keep striving for something more. Thank you for listening to something more with Chris Boyd, call us for help, whether it's for financial planning or portfolio management insurance concerns, or those quality of life issues that make the money matters matter, whatever's on your mind, visit us at something more with chrisboyd.com or call us toll free at 866-771 -8901, or send us your questions to amr -info at wealthenhancement.com.

49:32 You're listening to something more with Chris Boyd, financial talk show wealth enhancement, advisory services, and Jay Christopher Boyd provide investment advice on an individual basis to clients. Only proper advice depends on a complete analysis of all facts and circumstances. The information given on this program is general financial comments and cannot be relied upon as pertaining to your specific situation. Wealth Enhancement Group cannot guarantee that using the information from this show will generate profits or ensure freedom from loss. Listeners should consult their own financial advisors or conduct their own due diligence before making any financial decisions.