The Wisdom and Wealth Episode 40: Estate Planning Checklist

Today's Conversation is with Jamie Hopkins of Carson Wealth about why Estate Planning is an essential piece of financial planning. Everyone has an estate plan, whether they realize it or not. Today's conversation walks through considerations to enhance your existing situation.  And Spoiler alert! Writing your eulogy and sharing it with your loved ones may be the most valuable thing you do! Enjoy! 

See below for a complimentary copy of our estate planning checklist.

https://cloud.carsonmx.com/resource?brandid=0016g00000bSLDqAAO&guidekey=2021-estate-planning-checklist

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JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR

Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570
The Woodlands, TX 77380

Music by bensound.com

Transcript

Joshua Klooz  0:00  
Welcome to the wisdom and wealth podcast. I'm your host, Josh Klooz. Each week, I'll be leading a series of conversations with our team here at Carson wealth, which are designed to equip our listeners with the helpful insights necessary to simplify the critical decision points of life. We believe that true wealth is the thing Money cannot buy, and death cannot take away. Furthermore, we also believe our calling is to enable others to fulfill their own. And to that end, we end up

welcome to today's conversation. My name is Josh Klooz. I'm a senior wealth planner here with Carson wealth in The Woodlands, Texas. I'm joined today by Jamie Hopkins, he is a managing partner of wealth solutions with Carson wealth.

Unknown Speaker  0:51  
He is also a nationally recognized writer, researcher and educator and a regular contributor to Forbes investment news and market wash. Jamie holds a political science degree from Davidson College in North Carolina, he MBA and JD from Villanova, and also an LLM from Temple University. So I'm really excited to dive into our subject today of estate planning, and the different checklists that our friends and neighbors can utilize to benefit them and their unique situation. Welcome doing. Hey, Jascha, thanks for having me on. And yeah, it's, I love this topic, we're talking about estate planning. And as you kind of alluded to, and covered my background, I, you know, I'm an attorney by trade, I still active and, you know, take part of the American Bar Association, still licensed in Pennsylvania, New Jersey, active with the bar and, you know, started off the, in the state planning world and done a lot of writing there. And, you know, it's near and dear to my heart, I don't always tell the story. But like, why should we care about this, you know, the reason I really entered in this profession was because of my own personal family and my dad passed away when I was eight. And I've just learned a lot from, you know, watching the trials and tribulations of a non well plan to state at that point, you know, and growing up and, and seeing the challenge is just lacking, you know, planning around that even a will or life insurance to deal with any of those situations. So, this has always been near and dear to my heart. And I think for a lot of people, it's, it's one of those topics we don't like to talk about, because it brings in our own mortality. But it is really important that we deal with this, it's a family issue more than a personal issue, I often say.

Joshua Klooz  2:35  
We were blessed to have you. And again, this is the beginning of the conversation, but also to put a little bit of a finer point on some of the items that we have within the checklist. So the first piece that will we'll jump off with is why is this important now, and primarily that is because of some of the changes that are going on in Washington, DC. We'll handle that at the end. But I think that just highlights why you want to have this part of your financial plan in order before something out of your control takes place.

Jamie Hopkins  3:09  
Yeah, it's a it's a great point. You know, right now, what we're seeing is a lot of talk about infrastructure bills, tax bills, estate planning, changes, retirement planning changes. And when you look at all that together, it just makes so much sense to do a review of your plan. And if you don't have a plan that you would feel 100% comfortable about if you died today or tomorrow, it means you have to go back and review it. And that's just the reality. It's not an opinion that you know, you don't want to leave your family like that. And that's always how I push on people is it's not about you, right? It's about your loved ones when it comes to estate planning, and how and I often ask this question, somebody says one of the best ones I ever asked around estate planning, which is, how do you want to make those people that you care about feel when you pass away? Do you want to make them feel that everything is a mess? And they can't find documents? And they don't know what to what what to do? Or do you want them to feel a sense of security and comfort? And that you know what, this is really hard, but we plan for it? And that's really up to you? Right? I mean, how do you want your family members to feel when you're gone? versus, you know, just not really thinking about that aspect when you're doing your planning

Joshua Klooz  4:20  
absolutely even encouraged me from a psychological perspective of dad of four. I don't want to saddle those kids with any, you know, false beliefs about the industry at large like this. There are answers there are solutions. And I want to be a wise responsible steward today. But what we'll jump off with taking stock of what you own, and you know, Jamie, can you please give us your take on simple ways to do that any analogies that you have or anything that you have seen done? Well, from your perspective?

Jamie Hopkins  4:57  
Yeah, and I like that. starting point. So you always have to start somewhere, is there a perfect spot to start with planning? Not always. But there's there's a good guideline. And I like the take stock of what you own. And to a large extent, my analogy there is we need to know where we're coming from to know where we can go. And so if I don't know, the assets that you have, and I would say, Here, too, you know, goals fall into this, what's the existing plan? Those are all parts of what you know, what do you own? I mean, it actually can go much broader than just thinking, what are your investments in your dollars in the bank? And there are assets that people don't think about? I have done a lot of writing and research, and I've been involved with some laws that have been passed out there on this topic, but digital assets, what's your digital footprint? And I know, for a lot of people, you know, 15 years ago, almost when I started first writing on digital assets, and talking to people about it, I got a lot of pushback that people were going well, you know, Facebook's not really important, I don't need to leave that to anyone. And my email is not all that important. And today, I get a lot less pushback on that when doing estate planning work, but it still exists. And the reality is, though, we've digitalized so many of our assets and email is so important and online bill pay and just access to your accounts. Fraud is a big thing online. So if you don't lock down those accounts after the first spouse passes away, or you end up in a hospital for eight months, that can impact your business, your family members, your credit, their surviving spouses, credit the kids. And so that's all part of this, right, you got to look at those assets, that it might be more difficult. And then things you know, business interests, whether you own some type of patent or intellectual property, which can be difficult to manage. Thinking about things a little further, your retirement accounts are obviously big ones. And the rules with the secure Act changed tremendously, just two years ago. And really, those rules are kind of some of those rules are really in effect, and, and have real term implications for the first year ever, and 2021. So you start putting all those together. So let's walk through figure out what assets we have, what other things might not immediately pop up the mind, know where they are, right and start pulling those together? Because I might know right, Josh, you said I've got four kids, I might know that you that all four kids or you have email addresses, but I might not know how to get to them. Right. And that's a whole other aspect. You know, you might tell me also, I have cryptocurrency, right? And, you know, I know some people have it, some people don't. But you know, you might have a hard drive with it, you might still have it online somewhere. So how do we access that because it could be you know, have tremendous value to you and your family.

Joshua Klooz  7:39  
That's an expensive password, by the way. So I think that gives us a good framework to start out from, the next piece that we look at is comparing the estate planning options at your disposal and a will versus a trust, and often all here had took care of that when the kids left the house and I don't need to revisit it. Can you walk us through some of the things we should consider?

Jamie Hopkins  8:08  
Yes, when we look at different options, the first one is everybody has an estate plan today, everybody. And I know sometimes people push back and they go, Well, you know, I don't and I go we do. It's just not a good one. So we have default state succession or intestacy laws across the board. And so if you don't have the right documents, and will and trust and beneficiaries in place, powers of attorney, the laws will apply. Now the issue with relying on that as those were made to service is broad of a group as possible in the simplest form as possible. So once you take them to individual situations, most of the time, they don't work that well. They don't work for second marriage situations. They don't work all that well. When you have minor kids, they don't work all that well, when you have business arrangements. And so everybody's got an estate plan and a transfer plan by default. But is it a good one? So we always start there, and we work back? Then you look at things, even though I run into people that say, Yeah, I want to work with somebody and I got a trust in place. And then I asked them, Well, do you have a will to and the goal? No, I don't have a will. And then I'd say we have minor kids, right? Yeah, well, then you need a will. These are not usually one or the other. It's usually, you know, we start with a wills a very basic piece. And then we start building off of that to a large extent, that's the foundation of our starting point. And then maybe there is a type of trust that works best in your situation. Maybe there are transfer strategies that we're going to use and maybe there's businesses that we're going to retitle or redo the business, combine them with other things, maybe we'll set up a new business entity. beneficiary designation reviews is always important because those are assets that are passing, typically under the law as a contract. So you think about life insurance. You think of Got your 401 K, your IRA, your will doesn't have a lot of impact on that the state succession laws don't have a lot of impact on it. It's how you filled out that beneficiary designation. And so there's one major issue that occurs there all the time is, you have a couple, they get divorced, even through the divorce proceedings, they might split up some of those assets. husband never goes and changes the beneficiary on his 401k dies, and it goes to the ex spouse after getting remarried and having five kids, right, and it goes to an ex spouse from 20 years ago, because you never filled out the paperwork correctly. Those are the type of mistakes that really set you back. So you know, I think some of the basic ones, right again, wills, trusts, powers of attorney beneficiary designations, if you're not having those conversations, you don't feel good with all of them definitely need to go back to the plan and review them.

Joshua Klooz  10:50  
If you bring that up, there's two other entities and or people we need to address here and that of the executor and the trustee, could you give us some implications of what those roles have on your estate, and how you leverage them to your benefit? Yeah,

Jamie Hopkins  11:09  
so those can be bigger decisions. And you might think immediately, the executor and the trustee have a lot of authority and control. Now they're supposed to operate as fiduciaries for your estate or the trust. And that brings a lot of restrictions to them. But at the same time, they have a lot of flexibility in how they go about carrying out the will or wishes or how you've set out transfers. And there are abuses that occur sometimes because it wasn't well thought out. There are times where somebody might give a trustee the ability to make gifts, out of the trust to the beneficiaries. And all of a sudden you see them gifting, you know, not equally not fairly across the board. Because you get you wanted to pass along a lot of discretion. But then all of a sudden, you forgot that you left that to your brother, and your brother is gifting most of the assets to his kids and not your sister's kids. And those are the types of things that occur. And often it's very legal, it's just, it feels like abuse in the sense of is probably not what the deceased person would have wanted to occur. But legally, they're not actually pushing the bounds, they have the authority. And so you see that often in family disputes. And I know a lot of times people think my family won't do this. Every great family has been pulled apart by money before and estates. And it's hard, and it does destroy families. And people are always shocked by it, but it happens and it's very upsetting. So that is a big piece of it. So executor, you can name in your will, you can have a successor executor, you could have dual executors, I know that I sit on one where I'm a dual executor with somebody else. And it's because they wanted some of my legal knowledge with it along with like the personal touch of the other person that's on it. Trustees, you have a lot of options. Most people pick family members, I just brought up one of the downsides of family members, though is that there's an emotional component. Now sometimes that's good, because they'll follow the spirit of what was trying to be done. And then sometimes though, they won't, they'll self deal because they have an interest in this asset, perhaps. And so then you start getting a little bit of self dealing, but while maybe even legal, can't fully stop it. And then you can also get a corporate executor. And so if you really want it to follow the black letter of the law, follow all the tax laws correctly, not run into problems and you know, have insurance to cover issues and II know you can hire corporate executives. The downside of that is it costs money, you gotta go vet them and pick one you want. And they will follow exactly or closer to exactly what are the trust documents say, and I always give this example is you know, Josh, you set up a trust, and you leave it to your grandkids, and you say you can use the trust money for school. Right. And then all of a sudden, one of the grandkids comes in, they go, I want to go to summer camp and I want to go to summer music camp, but I don't have enough money to go. Trustee looks at it says that's not school, it's a summer camp. And they go while we want to go learn how to pay play piano. And they go Yeah, that's great. But it's not a school, we can't go to that camp, we're not going to give you the money. But grandma was a professional piano player, do you think grandma would have meant under this trust that we could give money to go to a summer camp to learn how to play piano and give a distribution for that? Of course, right? I mean, that's squarely within what you probably meant, but the place might not qualify as education in school under the distribution. Now it feels a family member would they have made the call and probably given out the money probably so you can run into those situations where you know, a corporate trustee might not adhere to the spirit of the underlying conditions that were drafted. So those are big decisions. And I don't think there's always a right or wrong answer but those are things you have to think about in your own situation? Do you have trusted family members and friends? I also think a good question here for family members, because I've run into this a lot is make sure you ask family members before you just pick them as your executor or trustee. Not not every case does a family member want to be the executor trustee. And I, you run into that all the time, they just oh, well, you know, my sister Katie's the responsible one so that all four of the siblings pick Katie. And it's like, well, you know, I'm not sure Katie wants to run for estates, if we all predeceased her. So maybe we should ask

Joshua Klooz  15:34  
her first. That can lead to another conversation, that might be uncomfortable, too. But yeah, just kidding. The next piece that I've actually heard this, more commonly than you would think, outlining your funeral arrangements, as part of the state estate plan and taking that added stress off the table for family members. Have you seen that done? Well? Have you seen that done poorly? What's your sense about that?

Jamie Hopkins  16:01  
Yeah, this is something if you work with a good attorney, they'll walk you through this, that it is useful to figure out, you know, how do you want to be buried, what do you want lay that out how you're going to fund it. And some people used to put all of that into the will itself, it is okay to do that, you probably also need to just outline it elsewhere, too, and include it in a document somewhere. One of the issues is if you're actually going to rely on the will itself that has to go through probate. So until you kind of get there and the court says, Hey, this is a good invalid, well, we're going to start to enforce it. Things that are written about your funeral aren't necessarily like binding on anyone. And so it is good to outline that separately, I often say to so that your family members actually just have it your your funerals hopefully going to occur far, far, far before. Right? Your estate starts getting liquidated. And so those that's something you want to consider right is where do you want to put that information? There's been some very interesting, I know, this wasn't the purpose of there's been some very interesting funerals done out there. There was a Star Wars one, where they, you know, they paid for everyone to they actually part of the estate, they actually set aside money to cover costumes for everyone. So they dressed up as Storm Troopers and everything and carry the person and you're reasonable funeral expenses are deductible, whether or not that counts is reasonable, I don't know. But reasonable pertains to the person in the situation. So for instance, Michael Jackson, I think there was a story, I don't remember the dollar amount. So this is not an official one, but somebody could Google it. But you know, he spent $100,000 on a casket or something. Right? And I mean, probably for him, that was not a lot of money, right? For that type of lifestyle. But for you and me, it probably would not be a reasonable funeral expense to buy a gold casket and but you know, those are all things to consider how much money do you want to spend? How are you going to finance it? Do you want to be cremated? Buried? Do I already pre pick out burial plots? You know, for instance, my my father, I mentioned earlier passed away I was eight, and my grandparents bought plots right next to him. So they're all three buried together, which is actually created some interesting family dynamics, because there's actually no more plots there. So nobody else either that I think that's it's always something to consider, right? You and, you know, how do you want to, you know, move forward with that. But it's an important decision. And for people who are still alive, right? Have you considered the dynamics of that and the impact it will have on family members?

Joshua Klooz  18:34  
Personally, it's just one more way in which you can ensure that you have a positive glide path to the estate plan being executed? Well, right. I would never want one of our clients, one of our neighbors to overlook that. And then it negatively affects the process in other ways, right? Or is a speed bump? So it's definitely something that we probably overlook, but shouldn't?

Jamie Hopkins  19:02  
Yeah, it goes back to that question I asked before, right. How do you want your family members to feel when you pass away? Do you want them to feel that they have to go figure out what to do with every single aspect, how you want to be buried and have those conversations? Or did you lay it out? And they, you know, they we know exactly what Jamie wanted here, right? He wants to be cremated and spread over the football field of Notre Dame. And he already arranged that. I mean, that's probably not a real thing. Right. But, you know, like you that it's already done, and that you take that burden because you know, for everyone who's experienced loss and probably most people listening to this have this the least time where you want to start like planning things and calling people and asking about pricing and getting quotes and you know, you don't want to do any of that. Right that right like you're in a different mode. And I think that's the last thing you want to have to do is worry about all of that. So it's a step further ahead. It's one more thing that you've done right as it as a lasting gift to your family.

Joshua Klooz  20:00  
Other things that occurred to me too, from personal experience, I was blessed enough to have a hand in writing my mom's eulogy. And as I'm looking out our kitchen window, I couldn't help but wonder, what what would she want me to say? What are the pieces that I'm missing? So it just goes back to you know, hey, no detail is too small. Because in the moment, it turns out to be very meaningful, as you look back on it, and, you know, hopefully, you know, I did justice there. But the same token, I asked, right, like, I'm sure someone will appreciate it,

Jamie Hopkins  20:39  
you did bring up two interesting things right there, too, which is, you know, our CEO and founder of Carson, right, Ron, he, he actually tells people to write their own eulogy, it's part of a process really for, for figuring out your business and your life and how you want to live. But it is, there are people that write their own eulogy. And, you know, that can be nice. The other thing, though, that is more common, is there's something called Five Wishes. And one of those things actually includes what are the values that you would like to pass on to your family, and actually to write those down, you know, as part of a as part of your estate planning process? And there are a lot of people that actually do that, you know, it's it kind of, there's some religious elements that certain religions have talked about that and right, and that transitioning the value is part of your legacy. And so actually putting that down into writing, that was actually kind of where Coat of Arms came from, for people, right? It was part of that right? Well, what was the what were you trying to show right? That it was a snake or a bird or a hit a hammer, and that actually passed over some of the core family values to the next generation?

Joshua Klooz  21:49  
The stories are so powerful. There's typically a story behind each and every last one of those principles. Awesome. I can talk about that all day. In, you know, shifting gears a little bit, how do you hire an estate planning attorney? You know, I already don't want to do this to begin with, because I don't want to think about my own mortality. And you know, I'm comfortable with the dash between my birth year and my out here, right? How do I hire somebody to help me draft all of this? What are the things I should consider?

Jamie Hopkins  22:25  
Yeah, I mean, you have to find somebody you trust and trust isn't easy. And recommendations here are so hard. I talk about this, both in the financial world. And the estate planning world is like the core of an estate planners work kind of occurs when you're gone. So like, you can't give a great recommendation about how good it was because literally, they're gone. You know, and some of that is you've got to talk to somebody that you feel understands you and your situation. So I'll give a couple examples of this. Right? So if you walk into an estate planning attorney, and you're younger, let's say you're 35 years old, and we mentioned cryptocurrency before and you say I've got a lot of crypto and I'm interested this I've got an online website. And you know, I build Etsy tables, and this is my business and the estate planning attorney says what's Etsy, and I don't really work with crypto, you just don't have a match right now is are there illegal work there documents? Are they going to be okay, maybe. But I do think it's important that there's some notion of that now, there are estate planning attorneys that are really good with farmers and understanding the different local rules around tax credits and bases rules and what you can step up what you can't, as it relates to passing over family farms or businesses. So again, if that's your situation, you're going to want to look for somebody with that expertise. We were talking pre called to, if you have international assets or family members, like I have a lot of family members that live in the Netherlands. That's where my aunts and uncles live. And right, the complexity that comes along with, you know, estate planning, estate taxes, gift taxes, as it relates to multi Country Planning. Well, if you're not working with people who do that, you're going to miss things, right? So part of it is not just right, can they do the X's and O's, but is their knowledge area, like my life? And I think the other one is, I mean, I always tell people to ask for referrals. I think it's just very hard in the estate planning world to get great referrals. It's not, you know, not impossible, but I think it is challenging. And same thing with the you know, kind of retirement planning. We don't know if you've had a good retirement, we get through it. And at that point, you might not be the best referral source of all time. And, but those are still useful things to do. I would say when I when I look at people, you know, the good news with estate planning attorneys is their attorneys. So they already have a check of credibility. They've gone through some bar exam. I do tell people you know, if you're really looking for people look for people with, you know, experience and a team, and that's hard in the estate planning world and that It's not meaning that solo practitioners aren't great, I use the solo practitioner, but I'm caveat in this with, if you have stuff that you want your kids and family members to be able to go back and get help on, I think that's an important part of the decision, right? Because if I hire a 72 year old estate planning attorney who might be great, but he's a solo practitioner, I'm, you know, the, you know, in 30 years, who am I going to be working with? I'm actually not going to be working with that person anymore. So will they be? Or will that organization be there, because if not, I'm going to have to find a second maybe a third estate planning attorney. And that's not necessarily what I want to do. Again, that doesn't mean they're not great. Now, if you're 75 years old, and you say, I know a seven year old estate planning attorney, and he's going to develop my stuff, and I feel comfortable with that. Great, but I do think those are always important things to consider when you're looking for somebody is what happens later on when I need to update something. And if I'm working with one person who may or may not still be in business at that point, that's a concern to me, because then you gotta go through this whole vetting process and looking around again.

Joshua Klooz  26:09  
That's one of the reasons I'm at Carson is I wanted to be able to answer my friends and neighbors questions at one table, whether it's tax, legal, financial, I want the ability to review that maybe not necessarily draft everything in house, but review every aspect of it with a critical eye and make sure that they're taking care of there's so much time and frustration lost, you're running between appointments. And no one centrally quarterbacking the process often. So it's very helpful to keep that in mind. When you look at revisiting an existing estate plan, and I wanted to make sure we save enough time for this, you know, because we've got potential changes coming from Washington DC. We can start there, we can transition into it. But what would be your preference to go forward as we see the landscape right now?

Jamie Hopkins  26:57  
Yeah, so let's hit the revisiting estate plan real quick. And we'll we'll work ourselves into some of the stuff out there, as it relates to potential changes. So luckily, with a state plans versus investment plans, financial plans, you know, we're financial planning probably should be something you're looking at every single year, right. And if you're hired a financial advisor or planner, you're probably doing quarterly meetings, semi annual annual meetings. The good news with an estate plan is we don't really have to do that. We're not typically doing quarterly check ins. The reason is that we draft our wills and our documents to be our final Will and Testament, right that it's supposed to be able to last the test of time, understanding assets are going to come and go, that our wealth is going to go up and down the tax laws are going to change and that we've built a plan, right, that is certain enough to get us to where we want to be, but understanding that it needs flexibility, and that things are going to change along the way. And so often laws can change in our state plan could just keep on going. Now there are some major life things that can cause us to step back and reevaluate the plan, right? The death or birth of family members, right? We lose a family member or spouse, we lose a kid, we have a new kid, those things can reshape our plan, we might have to go back and redraft language change beneficiaries. Those are monumentous life occasions that can disrupt the estate plan. Moving This is a big one. It's actually not hit on enough. If you relate, relocate to a new state, or as we talked about country even more so. But if you relocate, you need to redo your estate plan or at least review it. Why estate planning documents or state law driven documents. So the document laws around what is a proper will and trust and Trustee here in Pennsylvania is not the same rules that apply in Nebraska or Texas, Alabama, Mississippi, Florida. So all those states have different rules. Louisiana has very different rules. So if you are moving from state to state, right, you do need to go back and look at that. And so yes, all you laughs Louisiana is our only state that follows a completely different system of laws in the United States. And the reason was, it was French. And so it actually harkens back to right civil law versus common law, etc. But it does have extremely different rules even there's some forced forced transfer of assets to surviving spouses there which no other state has. And so moving from state to state is a big one if you inherit money, or if laws changed substantially so two years ago end of 2019 secure Act passed secure Act changed the distribution rules for inherited retire I'm in accounts, my opinion is almost everybody with a decent sized retirement account really would need to go back and look at their beneficiaries at a minimum. If you put those assets into trust, you absolutely need to go back and review your estate plan. And then leading into right now we have, you know, Congress and President Biden's administration talking about estate planning changes, you know, changing the lifetime exemption amounts. So perhaps bringing that way back, or maybe halfway back from where it used to be. We see a new tax bill that just came out of the Ways and Means Committee a couple of weeks ago, that, you know, that won't be passed as it's written. But that gives us now a framework of something that could move forward. We've got an infrastructure bill out there. And we do have another retirement bill that came out of the Ways and Means Committee this summer. Now, when people look at all of those pieces, sometimes people look at one bill, and they say, Jamie, tell me about this bill. And I always caution everybody that right now, you almost have to look at those four bills as one, even though they're all separate. But that would be like, you know, me saying to you, Josh, like, well, you have this meeting with Jamie. Right now, you're on this webinar. And that's not impacting what you're doing in the next hour? I mean, of course it is. It impacted your schedule. Today. You're thinking about this when you're in the thing before this. And that's exactly what's happening in DC. They're not ignoring the fact that they're working on two bills at the same time, and they want both of them done. These are all moving pieces. And yes. And we see an infrastructure bill that has both Democrat and Republican support. And then we're like, well, the tax bill doesn't have it. And there's kind of this oh, well, we're not voting for the tax one. But we're gonna vote for the infrastructure. Well, Democrats are voting for both of them as one thing, right, Republicans are saying, Oh, we're not going to vote for that other one, but we are going to vote for this one. But they know what's happening over here. They're in the same conversations. And so those include estate planning, changes, retirement account planning, changes, RMD changes, so forced out distributions, which then impact your estate plan, they include changes to taxable income, corporate tax rates, all that impacts how much money you have, after taxes. So that all impacts your future. So there's a lot going on out there to consider, we could dive into, you know, maybe two or three of the most meaningful ones that I worry about, if you want as a follow up.

Joshua Klooz  32:33  
Absolutely. Take it away on that. On that is

Jamie Hopkins  32:39  
I'll start with some of the broader pieces, the ways and means on the tax I kind of ended with this will pull right back into taking us back to the 39.6% ordinary income rates, there was a proposal, President Biden had talked about putting capital gains rates all the way up at 39.6. And we didn't get that in here. So I think a lot of people looked at that and breathes a sigh of relief, highest capital gains proposal in their 25%. So it is up 5% from the current. And then corporate rates, again, President Biden had talked about maybe a 28% rate, I think, is 26.5% in this proposed bill. So those are the tax increases, that could decrease just the amount of money you're saving. So your long term projections, those obviously have a big impact on estate planning, because they impact how much money you have. Now, again, these are proposals, they're not final, it's not moving into law. So we've got to wait and see if this can pass at all. Then we go to a different piece, which is the estate planning portion. This is technically a separate bill that is in front of Congress to that would remove step up in basis at death for a bunch of assets. And that's a big one. And so what do we mean by that I buy $100 worth the stock, it grows to 1000. Typically, when I die, I then get a step up and basis at death of that meaning my kids can inherit that $1,000 of stock with a basis of $1,000. So if they go sell it, they don't own any income taxes, capital gains on that. This has been discussed for a while now. So removal of that would mean I buy $100 stock, it grows to 1000 I die, my kids still get $1,000 stock, but they have a basis of $100. So if they go out and sell that $1,000 stock, they have $900 Again, and they pay capital gains, presumably on that 900 Well, you can see the difference there, right. If I removed step up and basis a lot of people will pay more taxes on assets to pass over. Now the bill as proposed out there would still keep some pretty significant step up capabilities in there a couple million dollars, perhaps per family that's kept in there. So it might be up to two and a half million I think that they'd still allow step up to so if you have an estate below two and a half million, it really wouldn't impact you in To change now for larger businesses, business owners farms, even though they've talked about building an exception for family farms into the bill, those would have a big impact. And the reason that they're looking for that is why tax revenue. It's a tax revenue generator, plain and simple. And I don't know that that's going to pass, but it's something to keep your eyes out on. Now, I this is an opinion part. So you put the Asterix around it, I do believe eventually in my life, I'm going to step up and basis go away. Again, there have been times during US law when step up and basis didn't exist, there will likely be times again when step up and basis don't exist. If you go back to when, you know, President Trump and the Republicans passed tax cuts and job Act, the end of 2017, one of the earlier provisions of that bill included removing step up and basis. Right Republicans had drafted that into a version of the bill. Fast forward four years later, we've got Democrats drafting into a form of the bill, why both of them are looking for tax revenue when they're trying to spend in other places or cut in others places and estate taxes are one of the numbers you can play with. The last one I'll bring up is it is likely to see tax cuts and job act extended the lifetime exemption amount for estate and gift transfers, in essence, up to $11 million per person, right now, it's up to 10 million that's indexed for inflation. And I don't have the 2021 number off the top of my head here. But you know, couples 22, almost $23 million, you can pass before owing estate taxes, that was set to expire by 2026. Meaning if you died after 2026, and you didn't transfer assets, you'd be back to the 5 million index for inflation. It is likely the tax bill has talked about going back to the 5 million that would more or less just accelerate the close, you know that time period from what is next year 2022. So ending in 2022 versus 2026. So that one is set to expire, it's been floated out there. So if this bill were to pass for the end of the year, the one thing that might spur people on is depending on how it's drafted, there might be some large transfers that occur by end of the year to use up any of that existing unused exemption amount before it goes away. So those would be three major ones that are kind of floating out there. As it relates at the federal level to estate taxes. I know it's a lot. But those bills are hundreds and 1000s of pages long if you put them all together. So I think in three minutes or five minutes, however long I went there, it's a pretty decent over

Joshua Klooz  37:41  
the you from your vantage point that seriously any changes to the existing stress framework that are available to us. From what you're seeing right now.

Jamie Hopkins  37:53  
So there are some pretty major trust provisions. And one of the bills out there right now, which would have some forced recognition of gain insight of trust. There are three different proposals out there all of them with different timelines and what would be forced. That is an interesting concept, though. And obviously there is, you know, there, there's some interest in it, again, for recognition of gain insight of a trust with me, we put some growth assets, capital assets in there, they're appreciating in value. And one of the concerns that DC has around this from a tax perspective is some assets and businesses get placed inside trust, you don't see taxable income coming out of them in there. And we just get this kind of transfer of wealth that's not really being taxed, and you know, the time period in which they want it to be it doesn't make it non taxable. I mean, that's one misconception a lot of people have about trusts, right? That somehow you you put assets in trusts and they don't get taxed. It just changes the time period sometimes and where they get taxed. And so there's some proposals out there to force recognition of gain along different time periods inside of trusts that would have a big impact. Not very many of them. Those proposals would be immediate, they're more like five years out, 10 years out, 30 years out. So there would be some run room. But if one of those gets passed, it would be a serious hurdle for some trust, because some of them we can't go back and fix. I mean, we're just living with new rules on a trust that we drafted that's irrevocable or the, you know, if your revocable trust are funded with assets, we're not gonna be able to move easily. So those could create some real headaches. I think estate planning attorneys in all honesty might be happy about that. It will probably keep them employed. You know, it's it would be a lot of work, if any of those paths I know and I try not to put numbers around things I think are likely or not likely to pass too much. I would say those right now when you saw the attack spill come out seem less likely than they did in the middle of the summer when they felt more likely, I think more of the focus is going to be getting on a tax bill done. But, you know, I don't, I can't predict what Congress is going to do. And if that was my life, I, you know, it'd be a very tough life to live.

Joshua Klooz  40:20  
But I think we've given our listeners and viewers quite a bit to consider hopefully, this has been helpful and definitely given you a broader perspective of how to go about this process and review the process. Thank you again today for your insight to me, we appreciate it so much.

Jamie Hopkins  40:40  
Yeah, thanks for having me on. And, you know, my closing remark to everybody that listened to the entire thing would be, it means you probably need to go review your estate plan, if you could make it through a full 40 minutes of estate planning conversations, because you were looking for something, there's some uncertainty in there, you're interested. So take that next step, reach out to somebody, whether it's Josh or somebody else, and, and just start working on figuring out what you need to do to make yourself feel better. And if you can't answer that one question we started with, right? You know, I guess you could probably phrase it in two ways, right? How do you want your family to feel if you were to pass away tomorrow? And how would they feel if you passed away tomorrow, and if those aren't aligned, there's work to do.

Joshua Klooz  41:19  
And, again, as we wrap up, if there were two things that we here locally in The Woodlands office could leave you with its first as Ron Carson, our founder says true wealth, the thing that Money Can't Buy, definitely a takeaway. Second, we believe our calling is to enable you to fulfill your own. And we want to equip our neighbors with the resources necessary to simplify in many of these decisions, processes, right. That process never gets old, either way. So we trust that the data has been informative for you and your situation. And you know, if there's other questions that you've got, please feel free to hit our general email with info Houston at Carson wealth.com. And you can reference this webcast. Thank you again, and we hope to see you all soon. Have a great day. Well, that is all for today. We appreciate your time and trust that you were better equipped to steward both your wealth and your financial resources. If you have questions or suggestions for a future topic, please direct those to info Houston at Carson wealth.com Thank you again for joining us today. May you and your family encounter truth, beauty and goodness in the opinions voice and wisdom while podcasts that advisor and host are for general information purposes only, and are not intended to provide specific advice or recommendations for any individual. Past performance is no guarantee of future results. All indices are unmanaged and may not invest into directly. investing involves risk including possible loss of principal strategy as your success what protects against loss to determine what may be appropriate for you. Please consult an attorney, accountant, financial or tax advisor prior to investing securities and advisory services offered through Sutera advisory networks LLC, broker dealer and a registered investment advisor member of FINRA SIPC investment advisory services also offered through CWM LLC, an SEC registered investment advisor to Tara advisor networks LLC is under separate ownership from the other name. Joshua Klooz is a non producing registered representative of Sahara advisor networks LLC. Our local address is 78 US landing sweet Fox Woodlands, Texas 77380. Generally, a donor advised fund is a separately identified foreign or account it is maintained and operated by section 501 C three organization which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes contributions the organization has control over it. However, the donor or the donor's representative routines advisory privileges with respect to the distribution of the funds and investment of assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though money may not be dispersed in charity.

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