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Making Sense with Ed Butowsky
Hosted by 35-year investment manager, Ed Butowsky, "Making Sense" is designed for delving deep into understanding investing in episodes less than 30 minutes.
To learn more about Chapwood Investments, you can visit us at our website (www.chapwoodinvestments.com).
Making Sense with Ed Butowsky
Estate Planning with Steve Boss
Ever wonder what happens to your wealth after you're no longer there to manage it?
If you're among many families in the US feeling uneasy about their estate plans, this is the episode for you! Join us as we sit down with renowned estate planning expert Steve Boss, shedding light on the importance and intricacies of setting up an estate plan. Steve has been in the estate planning industry for over 40 years.
Discover how proper planning gives you more privacy, time, money, and control over your assets. Also, hear Ed Butowsky's journey of estate planning and why Steve was the ideal choice. As a bonus, mentioning our podcast will snag you a whopping $500 discount on a consultation with Steve!
The Making Sense podcast is recorded by Chaplain Investments managing partner, ed Butowski and Jordan McFarland. If you have any questions, please email them to info at chaplaininvestmentscom.
Speaker 2:Hi everyone, welcome back to the Making Sense with Ed Butowski podcast. This is episode five, Ed. How are we doing today, sir?
Speaker 3:Doing great. I'm looking forward to the weekend. I'm going to do absolutely nothing. This weekend had a busy week, so I'm looking forward to it.
Speaker 2:Those are the best weekends. Well, Ed, we are joined by an expert in estate planning today, and folks will get that interview to you here in just about five minutes. We just wanted to recap and prime your appetite. Maybe serve as the appetizer for the meal. On estate planning Ed, I know that you're actually going through the estate planning process right now. I guess I just want to give you an open-ended question of what led you to do that and how it's been going.
Speaker 3:What led me to do it was my wife kept harping on me about do we need a trust? Because our friends had trust. We went to one estate attorney and he said you don't need to have a trust. Then everyone kept telling us no, we need one, we need one. We got a hold of this gentleman, steve Boss, who came highly recommended. We talked to him and he thoroughly convinced us that we needed to have a trust.
Speaker 3:My wife thinks I'm going to die very soon and she's got her life insurance in place. That's one thing for sure. I think she's planning on me dying soon. Hopefully that won't happen. But that's what really led me down this path. I wanted to have Steve on our podcast to go through some of the pitfalls about estate planning and how to avoid some of the issues that might have come up. Even with someone like me who's in the wealth management space but didn't really understand the benefit of a trust and why people need them and all the different kinds of trust. I think people are going to enjoy this interview that we did with him.
Speaker 2:Absolutely. One of the first reasons that Steve actually mentions is that people normally don't like dealing with their own mortality. It's good to see, Ed, that you don't have an issue bringing that to light. I definitely agree that this was a helpful podcast Listeners. I know that estate planning might not be the most fun topic on earth, but it is extremely important. I really boiled it down to a couple of benefits almost immediately that you can receive from setting up a trust and from working with an estate attorney. It all comes down to more privacy, more time, more money, more control. That is not the background of a evil dictator in a bad movie. That is what you could get and being able to set up an estate trust.
Speaker 2:Steve also did offer our guests of the show who mentioned our name $500 off a consultation with him. We don't have any say in a matter. We don't make any money from telling you about Steve. We just think he's a great guy. We think he's been doing this a long time and knows what he's talking about. Hey, money matters. $500 off, Ed. What was your takeaway from our conversation with Steve?
Speaker 3:Yeah, I think he is exactly the kind of person you want as an estate attorney. He is very knowledgeable, understands things, can talk about anything, very empathetic and does not charge a lot of money. I can tell you that right now. But this isn't a commercial for Steve, but we do want to highlight a little bit about him, so why don't we go to the podcast now?
Speaker 2:We've got a very special guest with us today. I'm going to give him an introduction here in a second, but we've got Steve Boss and then, as always, ed Butowski. First, steve, how are we doing today, sir? Just fine, jordan, awesome, ed, I know you got to be doing well, it's Friday, yeah absolutely.
Speaker 3:I'm looking forward to a nice weekend.
Speaker 2:Awesome, awesome, ed. I'm sorry to tell you a note, a trivia question. Today we're going to save this spot for an intro for Steve. So for those of you who don't know Steve, steve holds a Bachelor of Science in Aerospace Engineering with honors from the University of Texas. Beyond academics, he excelled as a three-year varsity letterman in swimming and water polo, where he served as the team captain. He was an NCAA All-American, the MVP at the University of Texas, and he won the prestigious Chester A Nagel Sportsmanship Award. Steve was then elected to the University of Texas Swimming Hall of Honor. Steve then obtained his JD from the University of Southern California at Gould School of Law and went on to receive recognition in both national and international ways. He's currently a member of the State Bar of Texas, the State Bar of California, the American Bar Association, with admission to practice before the Supreme Court of the United States. That's a lot.
Speaker 3:Steve, I did not know that. Did you know, rick Carey?
Speaker 4:Oh yes.
Speaker 3:So, rick and I, when I was much younger, I beat him when we were nine years old and swimming, but never again, never again. He went on and won gold medals in the Olympics.
Speaker 4:You're saying that many people beat him.
Speaker 3:Yeah. So, steve, we're delighted to have you here. For those of you listening and watching, when you first hear about estate planning, it sounds like boring stuff. There's just no two ways about it. I saw recently that 88% of families are not comfortable having the documents set up the right way, that there's only 22% of people that we work with that are comfortable with the documents, their wills, their estate and everything set up right. So there's a huge need for what you do, steve, and so I really just want to talk a little bit about the importance of it. You're actually doing my stuff right now, and you did a great job with it, and I wanted to highlight you here today talking a little bit about estate planning and some of the pitfalls that people make, and why is it that so many people avoid doing what they know they need to be doing?
Speaker 4:We find that, ok, erica Kneed for theantly Disabled. The prime reluctance is people not wanting to deal with their own mortality. And the second issue is they think that it's a big chore and there's just too much work involved and it's going to take too much time. And the last thing is probably reluctant to incur another expense. It's really not that expensive compared to what happens in the long run.
Speaker 4:To go ahead and do your estate plan now and we have a process in the system that you've been through at that really takes the burden off the client to spend a lot of time and effort doing it. So I just mentioned when we started to you. Your documents are essentially ready now and the next step is to arrange the signing. And it all starts with the process where we try to empower our clients with the knowledge that they need to make the best decisions for their family situation today so that somebody else doesn't make those decisions for them at some point in the future, like a judge in a probate court. And so we start with a meeting that does that, and if everything we do is on a fixed price basis that we quote in advance, and if the client agrees, we proceed in that meeting to actually design the plan and then in about three or four weeks the documents are ready for signing and the clients come in and their plan is ready and the documents become effective when they sign.
Speaker 3:Now there's a number of things that can be set up to benefit people while they're alive it's not all about when they die and there's some pretty sophisticated trusts and techniques. Can you explain a few of those where people can use this for their tax benefits today?
Speaker 4:Well, there's certain types of trust that can be used for tax benefits. There's what's called a charitable remainder trust that allows charitable deductions today against income. But, by and large, the big benefit that a plan today does while a person is still alive especially if you have a plan based on trust is that it takes care of a client in the event of incapacity, whereas a will doesn't take effect if somebody actually dies. You can actually make decisions regarding how you are treated and the care you get and your comfort level and numerous other issues that arise, if in the event of dementia or Alzheimer's, which is getting to be more and more of an issue as we have an aging population.
Speaker 2:Stephen, if I could add on there, I know a lot of times when we speak with folks and we mentioned estate planning, they kind of give us the yeah, no thanks, already have a will. Can you kind of give us the difference between a will and a trust? And and I know that kind of the obvious answer is everyone might have this, depending on you know whether they already have it. But just kind of being able to define the difference between the two of those.
Speaker 4:Well, a lot of people think of a will as a be all-in dog. I've got a will, it's just going to happen. What they don't realize and a lot of people don't concentrate on is the fact that a will in and of itself does not do that. It has to go through probate to be effective. I had a law professor that described probate as a lawsuit you file against yourself with your own money for the benefit of your creditors, and it's precisely that. And you've got to go through probate, which, at the same time you're dealing with the death of a loved one, is an additional burden. And and it's not easy and the other thing, because it is in fact a lawsuit it allows people to intervene that have griped with what's in the will, what is probate.
Speaker 3:What is this? We talk about all the time, but what is probate?
Speaker 4:Well, think about it this way I think most people are familiar with the power of attorney, and one of the state documents you need while you're alive is a power attorney that if something happens to you, like you're in an accident, in an anacoma, or you do get dementia and can't make decisions for yourself, you've already appointed an agent to do things for you to pay your bills, to manage your bank account and do a variety of other things. The problem with the power of attorney is that it terminates when somebody dies. So who makes decisions for you? Supposing you own a house and your beneficiaries' heirs want to sell it, well, there's nobody to transfer title. So what probate does is it is the court's blessing of designating somebody.
Speaker 4:In the case of a will, you name an executor and it essentially gives that executor the power of attorney for the deceit, and so they can sell property and they can collect debts, they can do all the necessary things to as if the person were still here. Otherwise there's nobody to fill that role. And so probate you file, the executor would file an application for probate of a will and the issuance of what's called letters testamentary, and there, as I said earlier, there's a lot of notice requirements, where you have to notify creditors, mortgage companies, you have to post notice so that others can be made aware of the fact that this individual has died and and if they have a claim against the estate years, who they need to contact to resolve it. And so the the attorney files the application, you wait for the certain notice periods and this all costs money, which is not cheap. It's a lot cheaper in Texas than it is in many other states, but it's still looking at three, four, five thousand dollars to probate in the state.
Speaker 4:You finally get all the notice requirements resolved. You go to court in front of a judge and the executor answers certain questions to that are required according to Texas estate code and those are on the record. If the judge agrees with everything, he issues a. An order issue for issuance of letters testamentary, which you then go down to the county clerk's office and and collect them for a small fee, and that gives the executor the legal authority that needs to he or she needs to have. You still have to do a few more things with the will. You have to file an inventory of the assets of the estate and you have to file a certain affidavits indicate you legally complied with all the notice requirements and then your executor is in charge with marshalling all the assets, put them into an estate bank account and then distributing the assets as the will provides.
Speaker 2:So, Steve, if I could kind of summarize the benefits of setting up a trust so that you can bypass probate, it sounds like okay. Fees are one, maybe two would just be complexity. You can kind of pass over having to do all the issues with time, with things like that. Maybe emotional damage, right, you typically mentioned that this is directly after someone passes. Does that sound like three good ones that you could mention in terms of benefits?
Speaker 4:Oh, easily. There's many more and, like I said earlier, a will doesn't take effect until somebody actually passes away. A trust exists today and if you're incapacitated, whether through an accident or illness, it starts to work. With a trust, you don't have to go through probate, and one of the examples I tend to use is we get clients to come in here because a loved one has died and said my dad died. He told me he was going to take care of everything and nothing's been done. So what do I do from here? And that's a case where there might not even be a will, which is a whole different discussion.
Speaker 4:But with a trust, nothing happens. Nothing has to happen for things to just go on normally and be taken care of. It's usually the analogy of like being, when the CEO of General Motors dies, retires, quits and a replacement is named and that person has all the powers and authorities of the office of the CEO. Well, trust is the same way. The trust we use generally, the trustor, the person creating the trust, becomes the trustee to manage all the assets while he or she is alive. But when they are incapacitated or died, they've already named their successor, who just automatically steps in and has all the authority that they need to manage that person's affairs.
Speaker 2:And Steve, is there a way that you have this kind of a high-level breakdown of the different types of trusts and what scenarios you've typically seen when each is best for?
Speaker 4:Well, the standard revocable living trust is kind of the, and, probably with what's called a disclaimer trust, is the so-called Swiss Army Knife of Trust Planning. And then there's some variations on that. There's things that, for example, there's what's called a Q-TIP Trust Qualified Terminal Interest Trust and one of the things that does is, if you've got a blended family, for example, the typical trust will between with a husband and wife. If the family has children of that marriage and each spouse may have a child or two of a previous marriage, the trust the married couple enters the trust life goes on until one of them dies. The surviving spouse then gets most of the benefits of the trust.
Speaker 4:But technically, because Texas is a community property state, the trust splits into two the surviving spouse's community property interest and the deceased spouse's community property interest as long with each of their separate properties. Well, if you do nothing and the surviving spouse just leaves that trust as is, that works fine. But for the fact that if the surviving spouse decides to remarry or they can change the beneficiary designations to cut out the deceased spouse's heirs, well, one of the things you can do with this type of trust is you can actually freeze the deceased spouse's assets so that they can't be changed. Now the surviving spouse can live off the income from not only his or her half that she gets, he or she gets, but also the income from the deceased spouse's assets. But they can't change the corpus and its ultimate beneficiaries.
Speaker 2:That would be a problem. Is that a common occurrence that you see coming up with a lot of these cases? Is that it kind of I don't want to say splits families, but it really does cause some heat amongst family members? Yes, I just wanted you to know the details of that in this video.
Speaker 4:Yeah, it's always a concern and there's we get clients that are totally not concerned about it because they have. Maybe they're a little bit older, the kids are all grown up and their relationship is solid and they don't worry about it. In some younger marriages it's something that definitely is a concern but, like I say, there's a solution and it makes everybody comfortable. When they make that decision at the beginning, they know what the deal is going to be as one or the other passes away.
Speaker 2:So let's go ahead.
Speaker 3:We have a situation in our family that a lot of people listening right now might have, where our daughter's going to marry somebody and we're concerned that he will have and I know he's going to listen to this, but he's going to have access that after my wife and I are gone, that we don't want him to have the ability to take over the money that we leave to our daughter. So we're concerned about that situation. I just thought I'd throw that out there.
Speaker 4:Yeah, well, there's a way to address that concern is that one option that we offer is that the heirs inherit the assets from the parent in what's called a lifetime asset protection trust. Now, lifetime asset protection trusts are with a secure year from having creditor issues attaching those assets, and so states, including Texas, don't allow them to happen. For an individual to create one. There are some states now that do allow it, but you've got some bankruptcy laws that prevent transfers within a certain period of time prior to death and things like that. But, like I say, texas doesn't allow them. But the type of trust we're talking about is not a self-settled or a self-created trust. It's one that's created by the parent in their estate planning and it goes into an irrevocable trust so that only the heir of the parent has access to it. In the event of a divorce, the other spouse cannot claim any part of that trust, and creditors can't either.
Speaker 3:Well, so I think what's obvious is everybody needs to have a conversation with an estate attorney like Steve Boss. We selected you and we're very, very happy with how the onboarding process and the price was perfect, and I just really believe that, based on this podcast and this webinar, that everyone needs to really take more seriously what they're going to be doing while they're alive to make it easier for their heirs later on in life, and I encourage everybody to reach out to Steve and give him a jingle and give him a shot at winning your business.
Speaker 2:Yeah, and I would second that. I mean I was just writing down. I'm always thinking about the benefits of something, right? So if something can get me more privacy, more time, more money, more control over something, I think it's going to be at least worth the conversation. To second Steve's work, you can find him at stevenbosslawcom. He's obviously mentioned how that process works. But last question for you, steve let's say I'm somewhere in my late 40s and early 50s. I have a large estate and all I have is a will, or maybe I just need to figure out what's going on. I know a lot of times people just need to get their whole picture under control. Talk me through what I should do next in terms of getting a hold of an attorney like yourself and going from there.
Speaker 4:Well, in our case and I'm sure there's other attorneys that are fairly similar, but a lot or not we start with a consultation that we call a family wealth planning session, which has nothing to do with financial planning or wealth manage, but it's looking at your assets and, again, the purpose is to empower you with the knowledge you need to make the best decisions on an estate plan today, so they aren't made by a judge later. Clients come into our office for that session. We collect some information from them about the nature of their assets and their family situation and there's absolutely no obligation at that point in time until we go through what we can do for them and they agree that we offer them a, give them a price and anybody that mentions this podcast or adds their involvement with that. We give a $500 discount on any trust plan that they select from us and, like I said, that takes about an hour where they can make up their mind that yes, this is something we want to do and we agree on the price. And then we continue on for another 45 minutes or so, however long it takes to actually design the plan, and the client goes home and if they have any concerns or questions or anything they can call us in any time.
Speaker 4:No additional charges, because once they agree to the fixed price, they pay half then and the other half when all the documents are signed. And as soon as we have the documents ready, we schedule a signing Now if they selected a trust plan. There's one other thing that's very important, and that is for a trust to work, assets have to be legally titled in the name of the trust, and so we will assist in that transfer. We will take care of any personal residents in Texas. We'll do that transfer for them. We provide our clients with what we call a trust funding kit, which gives you Word documents of letters you'd send to your banks, your mortgage company, your financial planner, and what to ask for and what type of documents to request to make sure the ownership or the beneficiary designations are correct, and we help every step of the way with that, as well as all part of the fixed fee.
Speaker 3:That's wonderful. I'm looking forward to that Absolutely. Steve, thank you so much for being a guest today and I hope people take confidence from your words and knowing how much you know about this and hopefully this will be the beginning of a good relationship with somebody listening right now.
Speaker 4:I really appreciate it.
Speaker 2:Jordan, absolutely. To add to that, steve can be reached at stevenbosslawcom. Again, their phone number is 214-382-3342. And I don't think we even mentioned it's also very important to keep your estate and everything updated as well. Laws often change. There's changes coming around the corner, so also just want to add in that detail as well. But, like Ed said, thanks for your time, steve. It's been great talking with you and look forward to talking to you in the future. Thank you, guys.
Speaker 1:The Making Sense podcast is recorded by Chaplain Investments' managing partner, ed Butoskey and Jordan McFarlane. If you have any questions, please email them to info at chaplaininvestmentscom. This podcast contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this podcast will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.
Speaker 2:Chaplain Investments does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.
