Protect Your Family, Mitigate Taxes and Preserve Your Wealth

00:00:00.000 | Would it be fair to say anyone who has assets, children, or preferences on what happens to them

00:00:06.320 | should probably have a will or...?

00:00:09.760 | Every adult does need a will. You should have a will on your 18th birthday. Are you going to?

00:00:14.320 | Is that what you're going to be first thing in line, Monday morning, your 18th birthday? No,

00:00:17.680 | let's be realistic. But every adult should have a will. There's no minimum asset thresholds.

00:00:21.840 | And like you said, even if you don't have this huge amount of assets, you don't have children,

00:00:25.920 | you still have final arrangements, and you still have some property that you will dispose of,

00:00:30.640 | whether it's high value or sentimental property, you need a will. Every adult needs a will.

00:00:35.600 | I wanted to talk to someone who I think really understands

00:00:38.880 | all of the advanced tactics people are using to both avoid taxes now,

00:00:43.440 | avoid taxes in the future, be able to transfer money to their children.

00:00:47.440 | The estate tax is, it makes all other taxes look low. So just the federal tax rate alone is 40%.

00:00:56.320 | It does graduate, but it gets to 40% pretty quickly. And that's just federal. So then you

00:01:01.120 | can start to layer on state taxes on top of that, and it can get much, much higher. Now,

00:01:06.000 | some of these state estate taxes actually start at levels below this 12 million,

00:01:10.160 | depends on a state by state basis. But the federal is the most punitive. And that's primarily what

00:01:15.440 | people are concerned about is if they're trying to pass on as much of their hard-earned wealth to

00:01:19.680 | their kids or grandchildren, how do they work around the estate tax? And this is where estate

00:01:25.920 | planning comes into play. Hello, and welcome to another episode of All The Hacks, a show about

00:01:31.280 | upgrading your life, money, and travel. I'm your host, Chris Hutchins, and I'm excited to have my

00:01:36.560 | first two interview episode today. We'll first talk about estate planning with Patrick Hicks,

00:01:42.160 | a lawyer who recently became the general counsel for Trust & Will. Now, if you're not familiar with

00:01:47.280 | estate planning, think of it a little bit like risk management for your family. It's a way to

00:01:51.680 | protect and guide your loved ones should you die or become incapacitated. Now, I know that's not

00:01:57.120 | the most exciting topic for a dinner conversation, but I promise it's an important one and we'll get

00:02:02.400 | into some really tactical advice. After that, we'll talk to Mani Mahadevan, who runs a company

00:02:07.360 | called Valor, which is really democratizing access to the kinds of trusts that wealthy people use to

00:02:12.960 | limit the taxes they pay. It was so fascinating to hear about some of the crazy ways that people

00:02:18.240 | avoid giving the IRS more money. I know this is a longer episode, but both of these conversations

00:02:23.600 | were on similar topics and were so interesting that I thought it would be worth combining them

00:02:28.160 | into one. So let's jump right in. Patrick, thank you for being here.

00:02:37.520 | Happy to be here and speak with you.

00:02:39.840 | You know, I just spent some time talking about some of the aspects of how people and their

00:02:44.560 | families can start to protect themselves, their documents, and I didn't spend as much time on

00:02:50.160 | the legal side of things. So I think most people have heard of the term will and I've written about

00:02:56.480 | it a bit and we've mentioned it in the past. Maybe we could just start at the basics about

00:03:01.520 | what kind of is a will and who needs one? Yeah, that's a great question. So a will is a

00:03:07.280 | fundamental estate planning document. And once you have all of your decisions made and your

00:03:12.080 | intentions and your preferences, it's these legal documents are the ones that actually make them

00:03:15.920 | legally binding, enforceable, and valid. So that's the difference between I have a desire

00:03:20.480 | and now I actually have an enforceable legal decision. That's the estate planning documents.

00:03:25.280 | And the will is the cornerstone, fundamental estate planning document. It's incredibly old.

00:03:30.800 | It's been around the concept of a will since ancient Greece, but the will as we know it today,

00:03:36.480 | even that the origins kind of trace back to the 16th century. Henry VIII was the king when they

00:03:41.600 | passed the Statute of Wills Act that set a lot of the requirements that we're still working with

00:03:46.000 | today. So that's how long a will has been part of estate planning in modern society, if you can

00:03:50.800 | really call the 16th century modern society. We're still using the same rules. So I guess I got to

00:03:55.040 | give them a little bit of credit. Wow. I didn't know the history. Are there

00:03:58.480 | a handful of things if you went through a list of like what are the main components of it,

00:04:02.800 | the decisions that you want to think about before creating one?

00:04:06.320 | Yeah, absolutely. So a will, because it is a very fundamental document, it handles fundamental

00:04:10.480 | needs. And there's three primary needs that every will will handle. And the first is it will

00:04:15.200 | dispose of your assets. It will say where your things go, who gets what after your death. And

00:04:20.400 | a will only applies at death, but that's what it does is it transfers your assets after death.

00:04:25.360 | The second thing after disposing of your assets is it will choose who will care for your children.

00:04:30.720 | Now your children are not assets. You don't dispose of them in quite the same way,

00:04:34.320 | but a will allows you to nominate someone who can care for your children to serve as their

00:04:38.240 | guardian. And the last thing that a will does is allows you to specify your own final arrangements,

00:04:43.200 | your burial preferences. Do you want to be cremated, buried at sea, blasted to the moon,

00:04:47.600 | whatever it is that you want to do, a will lets you select those three things.

00:04:51.680 | Dispose of your assets, someone to care for your children and your final arrangements.

00:04:55.680 | Those are the core functions of a will.

00:04:57.680 | Would it be fair to say anyone who has assets, children, or preferences on what happens to them

00:05:04.000 | should probably have a will? Or what would happen if I wrote a document, it wasn't fancy,

00:05:10.960 | and I emailed it to like three friends that just kind of said, "Here's what I want to do."

00:05:14.960 | Does that work in place of a will? Or what's kind of necessary for this to all play out

00:05:20.880 | how you want it?

00:05:21.600 | Yeah, those are great questions. So the first one is every adult does need a will. You should have

00:05:26.160 | a will on your 18th birthday. Are you going to? Is that what you're going to be first thing in

00:05:29.440 | line Monday morning on your 18th birthday? No, let's be realistic. But every adult should have

00:05:33.280 | a will. There's no minimum asset thresholds. And like you said, even if you don't have this huge

00:05:38.240 | amount of assets, you don't have children, you still have final arrangements and you still have

00:05:42.640 | some property that you will dispose of, whether it's high value or sentimental property,

00:05:46.960 | you need a will. Every adult needs a will.

00:05:49.760 | But if you don't have a will or if you're looking to kind of create your intentions without a will,

00:05:54.240 | it starts to get a little dicey because you can send that email or even draft a letter to your

00:05:58.640 | friends and say, "In the event of my death, I want this to happen." And the question is,

00:06:02.720 | is that legally valid and enforceable? Is that enough for your preferences to be given actual

00:06:10.560 | weight in the eyes of the law? And in many times, unfortunately, the answer is no. And so when you

00:06:15.440 | have that result, you may think you have a plan, but the law disregards your plan and you wind up

00:06:20.480 | dying with no estate plan at all.

00:06:22.880 | And so let's take an example. Somebody has $50,000, one child, and a strong desire to be

00:06:29.920 | cremated, but no will, no email sent to anyone. Maybe they've told their spouse what they want,

00:06:36.960 | or maybe we can go through whether they do or don't have a spouse. But what would happen? What

00:06:43.600 | would happen to that $50,000 without a will? What would happen to their child and who makes

00:06:48.800 | the decision on what happens to their remains?

00:06:50.880 | Yeah. So if you die without a will, that's known as dying intestate or

00:06:54.880 | intestacy is the process that you go through. And that simply means that you have no will

00:06:59.520 | at death. And every state has a set of laws that will apply that says, if there is no will,

00:07:05.040 | here are the default laws. And those default laws attempt to kind of fill in all those holes.

00:07:10.080 | So it will say who's responsible for making decisions or where assets might go or who

00:07:14.800 | might have priority to care for children. So it's an attempt to fill in those gaps,

00:07:19.680 | but it's not a perfect solution by any stretch. In your situation, that $50,000 would most likely

00:07:27.040 | be split between the surviving spouse and their surviving child. So $25,000 to each of them.

00:07:33.520 | And that's just that default law. Now, that spouse might be the person who has the

00:07:38.160 | presumed authority to make decisions who could say, "Hey, I happen to know that this person

00:07:42.640 | wanted to be cremated. So we're going to choose cremation." But if they don't know that,

00:07:47.120 | or if they disagree with that, if you've never expressed that preference at all,

00:07:50.720 | that spouse may have the legal right to act, but they don't have the knowledge of what your

00:07:54.960 | preferences are. So you have to have both sides. You have to have clear intentions and you have to

00:07:59.760 | have legal authority. And without a will, you're really running a risk that you don't have either

00:08:04.000 | of those. And if you didn't have a spouse, what happens to children or assets? Or if you don't

00:08:11.680 | have children, what happens to assets? Yeah. So if you don't have a spouse,

00:08:15.040 | you don't have children. Most of these state laws, what they have is a set of, essentially,

00:08:19.040 | an if-then statement. So if you have a spouse, everything goes to your spouse. And if you have

00:08:22.880 | a spouse and one child, it's divided equally. If you have a spouse and two children,

00:08:26.640 | it's just kind of corresponding, cascading set of decisions. But if you really boil it down,

00:08:32.640 | all of these laws basically say assets pass to your closest living relatives.

00:08:37.840 | So if you have a spouse, maybe your spouse or your kids, and if you don't have one,

00:08:40.880 | it might be your parents or your siblings. Maybe you can go out to your grandparents

00:08:43.920 | and your cousins. So if you're really isolated and don't have close family,

00:08:47.360 | it might still pass to your cousins. The problem is getting that process completed,

00:08:52.640 | getting to that finish line could be a difficult step. And it's just sometimes,

00:08:57.280 | by the time the assets get to that cousin, the assets might even be depleted by fees and expenses.

00:09:02.160 | And so you're really starting to eat into the beneficiary's actual receipt of funds from your

00:09:07.440 | estate. And I assume if you had neighbors who were kind of unofficial godparents to your children,

00:09:14.080 | and your desire was, "I wish they could take our kids," and you didn't have a will to state that,

00:09:19.280 | I imagine that would probably be a difficult thing because neighbors and friends probably

00:09:24.400 | aren't in the kind of statutes of if-then statements. Right, absolutely. And so if you

00:09:29.920 | have assets you want to leave to your neighbors or your close friends, the law just doesn't look

00:09:34.560 | at that at all. It's either a family member or you're not. So if you have something like that,

00:09:38.880 | you really critically need an estate plan in place. But with children, it's even trickier

00:09:43.760 | because ultimately the court is compelled to do what is best for the child. So even if as a parent,

00:09:49.280 | I say, "I want my neighbor to care for my child," and the court will look at that and it's very

00:09:53.840 | unlikely. But if the court says, "Hey, this is a really bad decision for some unknown scenario,

00:09:59.200 | maybe the neighbors have developed a drug habit or something like that that is unknown to me,"

00:10:04.400 | the court can actually step in and say, "We're going to overrule this decision and we're going

00:10:08.160 | to pass the children to someone else." And it kind of leaves the court with almost too many options.

00:10:14.400 | Should we give it to a family member? Should we give it to close friends or does the child fall

00:10:18.720 | into the system, the foster care for the state? It's almost too open-ended and it leaves your

00:10:25.280 | children with no certainty. And what's already, if you think about a tragic time, the loss of

00:10:29.280 | a parent, it's a lot for a child to be expected to bear. Wow. So it's pretty clear that

00:10:34.480 | everyone probably needs a will. What would actually happen, I'm just curious, if you

00:10:40.080 | were in debt? Let's say someone actually had the opposite of ads, they just had liabilities.

00:10:44.880 | Is that a rare circumstance where if you had no kids, no spouse, no desires for your remains,

00:10:52.320 | it might be better to not specify who takes on those liabilities? Or what happens when

00:10:56.880 | you die with credit card debt or a mortgage that you don't have enough assets to cover?

00:11:00.720 | Yeah, that's a great question. So there's two types of debt. The first type is known as recourse

00:11:05.120 | debt. And that's something that might be like your mortgage on your house. It's actually tied

00:11:09.360 | to a specific property. And so that debt is associated with that property. If you want to

00:11:13.920 | leave someone that property, they take it with that debt. The other type is something like maybe

00:11:18.480 | your credit card bills. And that's just as a personal promise to repay that debt. The benefit

00:11:23.040 | of that second type, your credit cards, any sort of normal outstanding loans, they don't evaporate

00:11:28.960 | that death. They can be paid off from any assets in your estate. But if there are not enough assets

00:11:34.240 | to pay down those debts, those debts just go away. They don't get passed on to your heirs.

00:11:39.280 | As a general rule, there's some weird exceptions that might pop up here and there. So it's not

00:11:43.200 | always a black and white scenario. But generally, you don't have to pass on liabilities to your

00:11:48.400 | children. But you still need to account for that plan. Because if you don't have that accounted

00:11:53.680 | for as part of your estate plan, you can actually have a creditor who will come in and say, well,

00:11:58.320 | we're going to open up the probate proceeding, for example. And we're going to call the shots.

00:12:01.840 | And we're going to run the show. So it may still not be in your best interest.

00:12:04.960 | Even if you don't have significant assets, everyone has something of sentimental value,

00:12:08.480 | whether it's a photo album or old furniture in your house is an antique. And it's something

00:12:14.960 | been in the family a long time that a creditor is going to say, well, that's $50 at a consignment

00:12:20.480 | shop. And they're going to look at it as dollar amounts. And it's going to deplete what could be

00:12:24.240 | sentimental inheritance to your children, for example.

00:12:27.040 | So I think that makes a lot of sense. Will, seems to be something that everyone listening should

00:12:32.880 | have, at least over 18. What about all of these other documents? So I've written in the past about

00:12:39.920 | the full estate plan. And I know in California, that's sometimes something that has to do with

00:12:45.920 | avoiding probate. I don't generally know across the country what all the rules are.

00:12:51.120 | But what would you say is the kind of core difference between an estate plan and a will?

00:12:56.880 | And who needs to make the upgrade? Yeah, so I think the best way to think

00:13:00.880 | about it is an estate plan is a set of documents. And then a state plan can contain a variety of

00:13:07.040 | documents depending on your particular situation. Most typically, an estate plan will have at least

00:13:12.240 | a will and a set of healthcare documents, maybe a power of attorney or a living will

00:13:16.720 | or advanced healthcare directive, something like that. So that set is really the fundamental

00:13:21.120 | building block of an estate plan. You can also add additional documents. So a trust,

00:13:26.160 | a living trust, for example, is a very common additional document to be included in an estate

00:13:30.880 | plan. And if you start getting in more complex situations, you might have other types of trust,

00:13:35.040 | maybe your asset protection trusts or really charitable giving trust, anything like that,

00:13:39.280 | that are really specific tools for specific use cases. Not everyone's going to have those as

00:13:44.160 | part of their estate plan. But if you have that need, it is a great fit for your situation.

00:13:49.120 | But that core set, will and healthcare documents. So fortunately, we're going to have Monte from

00:13:54.880 | Valor on the show in a little bit. So we don't have to get into a lot of those complex things.

00:13:59.920 | But I do think it would be good to walk through the basic documents. I know,

00:14:03.600 | even I originally got confused when I was like, "Okay, so there's a will and then there's a

00:14:08.320 | living will. And it turns out the living will is not the same thing as what you think of as a will.

00:14:12.640 | So maybe we could just kind of step through the common components of an

00:14:16.000 | estate plan and maybe start from the most common. So you said these kind of healthcare documents

00:14:21.040 | and move towards and maybe end at the living trust and talk about what they are and who might need

00:14:27.440 | them. Yeah. So you have the will. The will, the fundamental document, dispose of your assets at

00:14:32.000 | death, nominate guardians for children, final arrangements. A will only applies at death.

00:14:37.600 | It has no impact on you during your lifetime. Where you fill that out or kind of compliment

00:14:43.040 | a will is with something known as healthcare documents. And this might be this group of

00:14:46.880 | documents is sometimes known as healthcare documents or disability documents, incapacity

00:14:51.120 | documents, a variety of names that might apply here. And within that group of documents, you

00:14:56.480 | typically see something called a power of attorney. And then you see a healthcare directive or a

00:15:01.040 | living will medical directive. Again, there's a lot of interchangeable terms here, but the basic

00:15:06.480 | concept is these healthcare documents. These apply during your lifetime. So a will applies

00:15:10.880 | after death, but healthcare documents apply during your lifetime and allow you to make decisions for

00:15:15.440 | what should happen if you are alive, but unable to speak for yourself. So maybe you've had, you

00:15:20.480 | know, a medical emergency, you're incapacitated, you stepped off the curb and got hit by that

00:15:24.320 | proverbial bus, whatever it is that you're unable to make a decision for yourself at that time.

00:15:29.280 | These documents can step in and kind of fill in that gap and either speak for you or nominate

00:15:34.480 | someone else to make decisions on your behalf. Okay. And what kinds of decisions can you make

00:15:40.080 | in advance? What do you need to specify? Kind of what goes into the nuance of creating them?

00:15:44.640 | So each document does a little bit, each document does one thing a little bit different than each

00:15:49.280 | other document. So that's why they're typically kind of coupled together as a set. The power of

00:15:53.680 | attorney handles your financial affairs and essentially it's everything that's not medical.

00:15:58.000 | So it ranges from banking and taxes to real estate, anything that you need to do as a

00:16:02.320 | transactional matter other than dealing with healthcare, that's where the power of attorney

00:16:06.320 | will fill in. And this essentially allows you to designate someone else to sit in your place,

00:16:11.360 | step into your shoes and make decisions on your behalf. That's great to cover a wide range of

00:16:17.200 | really common needs. The healthcare side, you have a set of documents known as either a living will,

00:16:23.280 | an advanced directive, a medical directive. Again, a lot of different terms can be used

00:16:26.880 | interchangeably. And these do two things. One, they specify your medical preferences. So what

00:16:32.720 | type of care do you want to receive or not want to receive? You can make choices for yourself.

00:16:37.360 | But the second thing they do is they nominate someone else again to fill in those gaps.

00:16:41.840 | So if a decision has to be made and you have it spoken in advance, who answers those questions

00:16:47.280 | for you? And that's the medical side that pairs with the financial side. Both of those two

00:16:52.480 | documents together comprise the healthcare documents as a single unit. And I know for

00:16:58.400 | having filled out these documents, one of the big decisions you often talk about is

00:17:02.560 | kind of plans for life support. So for anyone listening, and you're kind of thinking,

00:17:06.800 | "What kind of decisions would I want to make?" It's if you were in a coma, how do you want to

00:17:11.200 | treat that? What kinds of... The options are often like, "Go at all expense to try and prolong my

00:17:17.760 | life." Or if a doctor determines that we've done kind of as much as is reasonable, "Don't keep

00:17:23.280 | going." So those are the kinds of decisions that you might have a different opinion on than

00:17:27.280 | whoever's in charge. And you can specify in advance. Yeah, these are inherently personal

00:17:33.200 | decisions. And so your choice is specific to you. No one else can make the same choice that

00:17:37.440 | you would in that circumstance. They're also very difficult decisions. And so it's unfortunate for

00:17:42.560 | anyone to be asked to make a decision with no guidance. That can be just incredibly overwhelming

00:17:47.920 | for that individual to think, "What am I supposed to do? Am I going to hold a plug or leave them on

00:17:52.800 | life support?" I mean, they can carry that doubt and potentially guilt for the rest of their

00:17:57.600 | lifetime worrying if they made the wrong choice. So it's not always something you do for yourself.

00:18:02.000 | It's really important for you to do this to think about those who are also still alive and making

00:18:06.480 | decisions for you and what the benefit you can provide to them. And who would make that decision

00:18:11.360 | absent these documents? If I hadn't nominated someone to be my healthcare... I'm guessing

00:18:16.320 | the law stipulates, "Okay, if you have a spouse, the spouse makes a decision." Is it the same thing?

00:18:20.800 | The closest living relative is kind of the person who gets to make the call?

00:18:24.160 | It does. And it follows the same set of rules. They're different rules, but they're the same

00:18:28.480 | structure, at least. So it'd be your spouse, your kids, your parents, closest living relatives. But

00:18:32.240 | you can get into a situation if you have three kids and they're equally entitled to make a

00:18:35.840 | decision and they disagree, what happens then? So it can be very important because you have to make

00:18:41.280 | one single decision. And in many cases, you don't have time to work out a dispute or go to court,

00:18:46.960 | get a court to intervene and make a decision on behalf of the three kids. Some of these decisions

00:18:51.280 | are very urgent. So having a plan is really particularly important for healthcare decisions.

00:18:56.400 | We've got a will, we've got your medical and your power of attorney documents to cover your

00:19:00.800 | finances. What are other things people should be considering when it comes to their estate planning?

00:19:06.400 | So the other core document that many people should look at is a trust.

00:19:10.000 | And when I say trust, I mean a revocable living trust. There's a whole wide range of trusts,

00:19:16.400 | but we're talking about a revocable living trust. The revocable part simply means that it's able to

00:19:20.720 | be amended or changed or even revoked during your lifetime. And the living part just simply means

00:19:25.120 | you create it while you're alive. So it sounds kind of complicated, but it's the workhorse of

00:19:30.640 | modern estate planning. That is the document that the majority of individuals who look to add

00:19:35.920 | something beyond a will will look to add a revocable living trust into their plan.

00:19:40.080 | Like the will, it allows you to make decisions after death, but it also applies during your

00:19:46.160 | lifetime. So a trust kind of blurs the line. It allows you to handle some of those lifetime

00:19:51.120 | incapacity issues, but also allows you to plan for what happens after death, where your assets should

00:19:56.080 | go, who should be in charge, things like that. I'll just flag for anyone listening. A lot of

00:20:00.480 | times, we've all seen some TV show or movie where some kid gets a trust fund and there's

00:20:05.600 | tens of millions of dollars. And I think my original knowledge of it was like, "Trusts are

00:20:10.720 | just for millionaires who have so much money that they want to limit how much goes to their kids."

00:20:17.040 | I've learned over time that that is true. There are lots of trusts. They're actually usually more

00:20:22.720 | the irrevocable kind that have a lot of different tax and tax avoidance often benefits. And we're

00:20:29.120 | going to talk about those a little bit later because I think it's really fun to understand.

00:20:32.800 | But the revocable or irrevocable trust is really not a thing just for people with millions of

00:20:38.560 | dollars. But who should be thinking about this? When does it make sense to say, "Okay,

00:20:44.640 | a will and some of these healthcare documents is not enough. Let's look at the trust."

00:20:49.760 | Yeah. So there are a few reasons you might want to look to add a trust to your estate plan.

00:20:54.640 | And the first, if you focus on what a trust does, a trust gives you more control over the

00:20:59.360 | distribution of your assets. When and how those assets are distributed to your beneficiaries.

00:21:04.480 | So this might be useful if you have young children, you might want to look to add a trust

00:21:08.240 | because that allows you to say, "Hey, I want my assets to go to my kids, but maybe not at age 18.

00:21:12.960 | I want them to go at age 25 or split half at 25 and half at 35." You have a little more control

00:21:18.880 | over when and how assets are distributed. Similarly, if you're in a blended family or

00:21:23.280 | if you're a second marriage situation, a trust allows you to do a little more in terms of,

00:21:27.120 | "I want to support my spouse, but I want to ensure that ultimately those assets

00:21:31.200 | pass to my children. I don't want to worry about leaving everything to my spouse. And then my

00:21:35.360 | spouse either getting remarried or leaving everything to my stepchildren with my kids

00:21:39.600 | receiving nothing." So those kinds of complex family dynamic situations, it's a great option

00:21:44.560 | for a trust. Beyond that though, a trust has one feature that a will does not. A will goes

00:21:51.360 | through probate after death and it becomes essentially a public document. And a trust

00:21:55.920 | stays private. So if you want to have a little privacy in your affairs, particularly after your

00:22:00.400 | death, a trust gives you that and a will simply does not. But the primary reason for most people

00:22:06.000 | to look for a trust is to avoid probate entirely. And that's something that a will, by nature of a

00:22:12.160 | will, it goes through probate and a trust just simply bypasses the probate process entirely.

00:22:17.120 | That can be a massive savings of not just time and effort, but money for a whole lot of people.

00:22:23.280 | So I have a couple questions there. One, what is that general cost? And two,

00:22:27.920 | at least in California, I've always heard this, "If you have less than $100,000 in assets,

00:22:34.240 | a will can avoid probate. So think about a trust when you cross that threshold."

00:22:39.920 | Is that still true? And what does the process look like?

00:22:43.120 | Yeah. So the probate process, it deals after death. It allows you to essentially

00:22:47.760 | prove that the will is valid, appoint the executor, carry out the terms of the will.

00:22:51.920 | It seems like an orderly process. It's anything but. It can take, you know,

00:22:58.080 | measured typically in months or years. In California, a two-year probate is close to

00:23:01.920 | the norm these days. So the fees involved with probate, they vary by state, but then they also

00:23:10.560 | vary by the facts of your particular estate. In California, the threshold was recently raised,

00:23:16.880 | and it's now 184,000 of whether or not you can have some sort of short-form probate or if you

00:23:22.480 | have to have a full probate. Once you reach that threshold, the amount that you're actually going

00:23:27.440 | to pay in terms of fees and expenses, it's basically a percentage of the overall value

00:23:32.080 | of your assets. But as a quick example, if you have a million dollars of assets in California,

00:23:37.680 | you might look to pay maybe $50,000 of fees all out the door to get through the probate process.

00:23:45.280 | And just to clarify, that million dollars is the gross value of your assets. So if you own a home

00:23:50.160 | and you're heavily mortgaged, you maybe have a million-dollar home and 200,000 of equity,

00:23:54.320 | you're still paying that 50,000 on the full $1 million value. You don't just look at the net

00:24:00.320 | value of your assets. That $50,000 can be a pretty heavy bill for someone to pay on top of their

00:24:06.080 | ongoing costs to maintain their standard of living. Where do those assets, they just pull

00:24:11.120 | those assets to pay for probate out of whatever you had in your bank account and whatnot and sell

00:24:16.720 | your investments and that kind of stuff? Yeah. If you have liquid assets available,

00:24:20.240 | they'll come from that. Otherwise, you might be forced to mortgage a house or even sell assets

00:24:24.880 | that are illiquid in order to generate these funds. And that can happen. You do see surviving

00:24:30.240 | spouses who have to sell the family home because they cannot come up with the cash to pay for

00:24:35.440 | probate or they can't maintain the mortgage payments after death, particularly with a loss

00:24:40.240 | of a source of income. So life insurance proceeds, it's a great opportunity to pair life insurance

00:24:46.560 | with your estate to ensure that there is cash available. But if you don't have that cash

00:24:51.440 | available, it's coming from other assets. And ultimately, it's going to reduce the amount

00:24:54.800 | that passes to your beneficiaries. So California, in many different ways,

00:24:59.280 | is a unique state. How do the other kind of 49 states and commonwealths and territories compare

00:25:07.360 | in terms of a hard threshold where things get really complicated? Or do many states offer that

00:25:16.080 | kind of short form version of probate that maybe isn't as daunting or expensive or timely?

00:25:21.840 | Yeah. Most other states are not quite as burdensome as California with respect to probate.

00:25:27.040 | California, if it's not the worst, it's competing up there with maybe a couple other states to be

00:25:31.600 | among the worst states in terms of probate. A lot of other states, it's a more streamlined process.

00:25:37.200 | It's maybe closer to filing your tax returns. You're filling out some documentation,

00:25:40.560 | submitting it. You got to have a lot of records to back it up. It's not quite as burdensome.

00:25:44.480 | It doesn't take as long. It's not nearly as expensive, but it's still not enjoyable.

00:25:49.360 | And so you have to bear in mind that you're doing this immediately following a death.

00:25:53.200 | So there's a lot of emotion going on, a lot of just mental struggle happening. And then,

00:25:57.440 | "Hey, let me go fill out this really complicated equivalent to a tax return."

00:26:00.960 | It may be easier than California, but it's still something that a lot of people might look to avoid.

00:26:06.000 | Without the fees of $50,000, you can definitely get away in a lot of other states without a trust.

00:26:12.080 | So you don't necessarily have to have a trust in every state, every situation as a universal rule.

00:26:18.880 | Many people still want to trust because it does have other benefits outside of probate. Those

00:26:22.800 | additional control over distributions and the privacy benefits, but it's not necessarily the

00:26:27.920 | probate factor alone requiring the use of a trust. Are there other states that if someone's listening

00:26:34.080 | and in that aren't California that are equally challenging or maybe not as challenging,

00:26:38.800 | but states where a trust might make a little bit more sense?

00:26:41.600 | Yeah. So there are a couple of states. So New York is actually fairly difficult,

00:26:45.600 | not surprising. It has a lot in common with California. You also get some interesting

00:26:49.680 | things like Cook County in Illinois, not the whole state of Illinois, but Cook County in

00:26:54.080 | Illinois can be difficult to go through the probate process. So as a general rule, if you're in a

00:26:59.040 | bigger city or a higher net worth area, you tend to have a little bit more going on. The courts

00:27:04.960 | might be more congested. So the whole process just gets a little more bogged down. If you're in the

00:27:09.760 | Midwest, most of the states that tends to move a little more efficiently. So if you aren't sure

00:27:14.800 | what your local rules might apply to you, just think about what it looks like if you were to go

00:27:18.320 | to the county courthouse and try to get any sort of application. Is that relatively easy or is that

00:27:22.400 | something you don't want to look forward to doing? And that should give you a direction of which way

00:27:25.840 | to lean on how bad probate might be. I've gone through a couple different

00:27:29.040 | processes in my life setting all these documents up. One time I had a legal benefit at work where

00:27:35.920 | it turns out I could enroll. And I just did it for one year. I paid a couple, maybe $15 a month.

00:27:41.040 | And at the end of it, I was able to go hire an attorney to drop these docs. And then full

00:27:46.480 | disclosure, once we had our first child, I used trust and will. And that's how we put together

00:27:52.160 | our whole estate plan. And I'm a big fan of the product. I'm not getting paid. You guys didn't

00:27:57.760 | pay to come on. I just like the product. I've talked about it before. I am curious for people

00:28:05.840 | listening, when does it make sense to download the template of a will that I'm sure there's lots of

00:28:12.560 | free legal will templates? Maybe even the state provides one. When does it make sense to use a

00:28:17.520 | service like trust and will or others that help you automate and create documents that you don't

00:28:23.040 | have to fill out yourself? And when do you get to the point that it makes sense to work with an

00:28:27.600 | attorney to drop something a little bit more custom? Yeah. So the hard part of trusting any

00:28:35.040 | sort of free document is knowing, is this actually valid? Has this been updated? Does this reflect

00:28:40.480 | the current laws? If I create this document, do I get what I think I'm actually expecting

00:28:46.560 | to receive here? I would say what you're paying for, but that's nothing. So are you really getting

00:28:50.560 | what you're expecting there? And unfortunately, I've looked at many of these free templates and

00:28:54.000 | sometimes they're just not valid. So there's that huge risk there of what you get. Some of them are

00:29:00.080 | good. So I'm not saying it's impossible to do it. And in some states, you can just pull out a piece

00:29:04.000 | of paper and handwrite your will and you're good. You're out the door. The mechanics of it are less

00:29:08.400 | difficult than somehow knowing what to say to carry out your intentions. So that's where you

00:29:13.280 | might want to look at something like Trust and Will. And if you need to make a quick comparison,

00:29:16.240 | Trust and Will is kind of like TurboTax for state planning. So yeah, you can download the forms in

00:29:20.560 | the IRS and fill out your 1040 on your own, but most people would rather have a guided experience

00:29:27.840 | through a tech platform like TurboTax. It just seems to make it all a little more

00:29:32.080 | comfort inspiring. You get more peace of mind, a little bit easier.

00:29:36.480 | Trust and Will, we really handle most needs for most people where we really start to have some

00:29:41.280 | situations where you might want to go to an attorney. If you have really complex situations

00:29:45.360 | or if you're expecting a fight after your death, it's probably worth it to go see an attorney.

00:29:50.160 | Or once you get into really high net worth individuals, if you're over about $5 million,

00:29:55.120 | we can still handle that at Trust and Will. Our documents are sophisticated enough to handle those

00:30:00.000 | situations up to and including a taxable estate, 12 or 15, $20 million of total wealth.

00:30:06.240 | But you're probably going to get a better value if you actually go and pay the $5,000,

00:30:09.360 | $10,000 to have a custom document drafted by your attorney. $5,000, if you have $20 million in the

00:30:14.880 | bank, not that big of a blow to you. But $5,000, if you maybe have $500,000 in the bank, it starts

00:30:20.080 | to be a little harder to swallow that bill. That's really where Trust and Will fits in for most

00:30:23.920 | people. Any other circumstances that might make someone say, "Okay, maybe working with an attorney

00:30:29.280 | does make sense?" Well, special needs children is a particularly difficult situation. There's

00:30:33.680 | a specific type of planning that can be done for that. Trust and Will doesn't currently offer that,

00:30:37.920 | although that's something that's on our roadmaps. We hope to have that offered soon.

00:30:41.280 | But that particular situation, if you want to account for a beneficiary who has special needs,

00:30:45.920 | it's a great option to go say, "Hey, maybe an attorney is better for my use case." Beyond that,

00:30:50.800 | if you have things like a prenup that requires certain payments to be made at death, or even a

00:30:56.160 | divorce decree or a marital settlement agreement that says, "Upon my death, I ensure that I'm

00:31:00.560 | going to leave X amount to my former spouse." You may need to have custom language inserted

00:31:05.760 | into your documents. Typically, only an attorney can provide that and ensure that the language in

00:31:10.480 | your documents complies with the requirements of that prenup or that marital agreement.

00:31:14.480 | If you have a situation where you may think everybody's unique, and I don't want to say

00:31:19.280 | anybody is boilerplate, no one's template. But if you have a situation where you go,

00:31:23.520 | "I just feel like I'm not a good fit for this particular reason." You get that tingly feeling,

00:31:28.640 | that might be enough to at least call an attorney, see what they say. Maybe you could find some

00:31:32.880 | help. Maybe they go, "Oh, yeah, I can easily handle this. It's not a problem." And you get

00:31:36.000 | a little guidance from them. But you kind of maybe use your own best judgment. If you feel that you

00:31:41.360 | aren't going to be a good fit, you probably are worth paying a little bit more just to get the

00:31:45.280 | peace of mind of having an attorney involved. Are there any financial or tax benefits other

00:31:50.320 | than avoiding probate costs that come with setting up a will? Or sorry, come with setting up a trust?

00:31:56.960 | So trust can have some tax savings opportunities, both on a federal state tax or even a state tax.

00:32:04.480 | For most people, that's not applicable. The current federal state tax thresholds are so high

00:32:09.440 | that it's just not something most people have to care about. But a trust can be used to at least

00:32:13.520 | efficiently pass assets without incurring additional taxes. So if it's something that

00:32:18.480 | you're concerned about, it can do that. But on the flip side of that, the trust also doesn't

00:32:23.360 | really incur any additional taxes. While you're alive, a revocable living trust is essentially

00:32:28.560 | disregarded from federal tax viewpoint. It's your alter ego. It's moving assets from your left pocket

00:32:34.240 | into your right pocket. You don't need a new taxpayer ID number. You don't have to file a

00:32:39.040 | separate tax return for assets in your trust. It's known as a grantor trust. But that just means

00:32:44.480 | it's no change. So it's held in this vehicle of a trust that provides a lot of benefits,

00:32:49.520 | but it won't negatively impact your tax status while you're still alive.

00:32:53.360 | As someone who's gone through this process, usually you fill out a form, sign it, send it in,

00:32:59.280 | the bank and the account now has a new title, but it's still your same account. You still get

00:33:03.680 | your debit card with your name on it. It doesn't really change a whole lot. So I think when it

00:33:08.160 | comes to a lot of the trust we'll talk about in a bit, the irrevocable ones, that changes a lot of

00:33:13.360 | things. But in this circumstance, I think it just, it feels more fancy and technical because of the

00:33:20.400 | way we've seen it in the media about kids with trust funds than it is actually more a document

00:33:25.440 | to kind of just keep things more organized. But one of the questions that you have to figure out

00:33:31.520 | is who's going to be the trustee of the trust if you were to pass and usually that is you and your

00:33:40.960 | spouse might create it and the spouse takes over. Can you talk a little bit about that decision?

00:33:45.760 | Because I think some people listening are probably going to go through this and have to think, "Okay,

00:33:49.360 | who is going to manage these financial affairs? And let's say my kids are young and they're not

00:33:54.000 | ready for the money. What happens to it? How do those decisions get made?"

00:33:57.600 | So the trustee, they're kind of like the CEO of the trust. They have a lot of administrative and

00:34:01.920 | financial responsibilities. And that includes everything from keeping records, paying taxes

00:34:07.760 | after death, making sure the distributions are actually made. They also work with a lot of

00:34:13.040 | professional advisors, whether it's a lawyer, an accountant, somebody like that. They have a lot of

00:34:18.080 | maybe more sophisticated requirements. And so you also want to make sure that you have

00:34:24.000 | someone that understands you and your decisions because they still have to exercise their own

00:34:28.000 | discretion. Sometimes it's not a black and white decision. The trustee has to make a choice.

00:34:32.640 | You want to make sure that that choice that is made is one that you would agree with.

00:34:36.800 | So choosing someone who can handle all of those duties well, it can be difficult.

00:34:40.960 | You're right. Most people do look to name a spouse or a child or a family member as their

00:34:44.960 | trustee. But if you don't have a spouse or if your children are very young, they may not be

00:34:49.440 | good choices. You can look to name a sibling or a parent, but is that the right person?

00:34:55.840 | It's ultimately going to depend on what's right for you. The most common choices are spouse and

00:35:00.240 | children and other near family members, close friends are a common option. There are business

00:35:07.280 | partners that you can choose if you have a close working relationship. But if none of those apply,

00:35:11.680 | there are professional fiduciaries or even a bank who can step in and serve as trustee.

00:35:16.880 | They charge a fee for it, but it's more of a corporate approach. You know what you're getting,

00:35:21.280 | you're opting into. I am choosing to have this bank serve as my trustee. They're going to make

00:35:26.640 | very corporate decisions. But sometimes that's good if you don't have another alternative that

00:35:30.720 | you can comfortably rely on to fill in and make those decisions for you.

00:35:34.080 | For our circumstances, we didn't want to leave our children who right now are one about to be

00:35:41.360 | born and two years old with money at that age, which I don't even know if you could legally do.

00:35:46.560 | So this person was going to have to manage our assets until the right age, which meant

00:35:51.920 | managing the investments. What happens when the funds that you're invested in pay dividends? Do

00:35:57.680 | you reinvest them? When do you change asset classes? If you look at a trust that was maybe

00:36:04.240 | written 10 years ago, you probably never thought maybe you'd want to invest some percentage of

00:36:09.200 | your portfolio in cryptocurrency, but now you might. So for us, we thought about who can make

00:36:15.200 | those kinds of investment decisions. And it was just a very different calculus than who do we

00:36:20.640 | want to take care of our children? Those are just fundamentally very different. And so we didn't

00:36:27.840 | choose the same person for that. And it was much more of an investment kind of mindset that we

00:36:33.200 | wanted someone to think about and be fair with money. Because I think, am I right calling them

00:36:39.040 | HIMSS clauses? There's like a phrase of what kind of discretion you give the trustee over things.

00:36:45.360 | And that kind of really helped me think about who could make those decisions.

00:36:48.880 | Yeah. It's a really important point. And it is a HIMSS clause, H-E-M-S,

00:36:52.400 | health, education, maintenance, and support. You can talk to your favorite lawyer about it, but

00:36:55.920 | it provides certain instruction as the terms of when assets can be paid out to a beneficiary or

00:37:01.120 | when assets have to be held in the trust. But the bigger point is the person who fills the role of

00:37:07.280 | the trustee best for you may not be the person who fills the role of guardian or fills the role

00:37:12.720 | of executor, fills the role of your power of attorney. So the default many people think is,

00:37:17.920 | "I'm going to name my spouse for everything." But that may work, but maybe your spouse isn't

00:37:23.040 | the person who wants to handle these complex financial situations. So maybe you want to name

00:37:27.040 | your spouse to care for your children, obviously, and make personal decisions for you. Maybe you

00:37:31.360 | want to name your brother who's a tax lawyer to handle your financial investment decisions if

00:37:36.160 | that's more suitable for your particular needs. So you don't have to name one person in every

00:37:40.800 | role. You can name individuals that are suited for each particular role. You want to make sure

00:37:45.120 | they're kind of coordinated and able to work together. But each role should be kind of accounted

00:37:49.680 | for different or as a one-off, if you will. So it can be someone that serves another role,

00:37:54.800 | but it doesn't have to be one person filling every fiduciary role throughout your estate plan.

00:37:59.200 | And one thing we did, which I think isn't required, but we kind of wrote a side letter

00:38:05.920 | for the successor trustee because they have this ability to control the health, the education,

00:38:12.800 | the maintenance, how much... Do the kids go to private school or not? That's a financial decision.

00:38:18.080 | The trustee would get to decide that. So we just wrote a letter to that person and said, "We want

00:38:23.040 | you to know that here's how we would think about spending money on our children. Would we want them

00:38:29.040 | to have some money to go on vacations or study abroad?" Things like that, where it was less

00:38:35.440 | about we thought this person would make the wrong decision, but we just wanted to make it easier for

00:38:39.760 | them to make the decision we would have made. So while I don't think you guys have built in a

00:38:45.520 | feature to write a letter to a friend, which doesn't really need a product, but that is

00:38:49.920 | something that we did on the side, just to make sure that we weren't doing what a lot of people

00:38:54.800 | do. And if you Google online, there's some crazy Reddit posts about people saying, "Well, did you

00:38:59.920 | decide that my kids will only be able to pay for... The trust will only pay for their college if they

00:39:05.440 | get above a 3.7." And then someone said, "Well, I don't know. What if it's a 3.6?" And you get into

00:39:11.760 | these really tough situations where if a kid were to get sick or have an accident, maybe their GPA

00:39:17.520 | drops. Now you don't pay for their college. And so we took the approach of not trying to outline

00:39:23.440 | every little nuance of everything that would happen, but to choose a person we trusted

00:39:27.520 | and give them some guidance and give them the discretion to make those decisions.

00:39:32.000 | That's always been my professional recommendation. It's really hard to predict the future,

00:39:36.800 | but it's a lot easier to find someone that you trust and give them direction.

00:39:40.720 | And then ultimately, you're just relying on them to make the best choice that they can.

00:39:44.480 | As a parent, that's all you're trying to do every day is make the best choice that you can in a

00:39:48.480 | situation. Nobody knows what next year is going to be like. If you'd asked us 5 years ago, "Were

00:39:52.320 | we going to have a global pandemic?" No one would have raised their hand. If those of you who did,

00:39:56.800 | we would have looked at it with skeptical eyes. But you can't predict the future. But what you

00:40:01.280 | can do is you can pick people you trust. And if you can do that, and you can give them the guidance

00:40:05.920 | in that letter of instruction, it may not be legally binding, but it's helpful. And sometimes

00:40:10.240 | helpful is all you need. Do you have to tell or do you recommend telling all of these people this

00:40:15.520 | thing? I know that one of the decisions that we had to make was, "Gosh, who we might want now?"

00:40:20.960 | We actually thought about it in hindsight. We said, "Gosh, if we had to make this decision

00:40:24.400 | 5 years ago, some of those people are people that we're not as close to anymore."

00:40:30.800 | Or maybe something happens to them. And we thought, "Gosh, if we tell the person who

00:40:35.280 | is the trustee or the guardian now, and then we change it, that's going to be pretty awkward to

00:40:40.080 | be like, 'Hey, I know for the last 4 years, I've thought you'd be good to manage my affairs.'

00:40:43.920 | I changed my mind." Is this something you have to tell people about?

00:40:47.600 | You don't have to tell anybody. You don't have to. But generally, it's a good idea to tell people.

00:40:53.840 | And when I say good idea, what I mean is having that conversation in advance is one of the easiest

00:40:59.600 | ways to avoid conflict or disagreement or dispute after death. You save so much hassle by having

00:41:06.480 | that conversation up front. It's not easy. People don't want to have that conversation about death

00:41:11.200 | in most cases. But it also doesn't have to be hard. It can be as simple as, "Hey,

00:41:15.920 | I've created an estate plan, and I've named you as trustee. Are you okay with that? Also,

00:41:22.240 | here's where my documents are in case something happens to me." You don't have to get into the

00:41:26.320 | details, but you can at least inform people of the decisions. And if those decisions change later,

00:41:31.440 | it can be as simple as, "Hey, I've updated my estate plan. I've named someone else as trustee

00:41:36.720 | to fill these needs right now. But I still have these documents in this place." Or, "You're still

00:41:41.200 | serving as my power of attorney." Whatever the update may be. People respect the information.

00:41:46.880 | It's ultimately your choice. And is it worth trying to save an awkward conversation now

00:41:53.120 | if you know that the likelihood is that you're going to wind up having

00:41:56.240 | your family, your heirs, your beneficiaries dealing with that situation later on?

00:42:00.000 | Most people, when they think about it, say, "I'd rather just go ahead and get this out of the way

00:42:03.920 | and have maybe an awkward conversation. But I know I'm not going to have a fight that I'm leaving for

00:42:08.720 | my family after my death." "I created my estate plan. Things change in life. How do you think

00:42:14.000 | about when it makes sense to update them? Is that something you do every year or every time you have

00:42:18.560 | a major life event?" Many people think of estate planning as a one-and-done situation. Unfortunately,

00:42:24.640 | it's not that way. Estate planning should be something that evolves with your life. What's

00:42:29.760 | good for you now may not be what's good for you in 5, 10, 20 years from now. Your estate plan

00:42:35.200 | should change as your life changes as well. There's a simple rule at Trust & Will. We think

00:42:39.600 | that after any major life events, you should look to update your estate plan. If there's been a

00:42:45.280 | birth or a death, a change in marital status, anything like that, take a look at your estate

00:42:49.360 | plan. But even if you haven't had any major changes and you look at your plan and you go,

00:42:53.600 | "Everything's about how I still want this to be," every 3-5 years, it's worth just reviewing your

00:42:59.680 | plan, maybe even refreshing it because the laws do sometimes change. You want to make sure that

00:43:04.080 | you don't have a stale or an outdated plan. You want to make sure that your plan continues to

00:43:08.240 | represent your interests and your desires. Any major life events, every 3-5 years, or if you

00:43:13.600 | have some specific change, you need a new guardian, anything like that, go ahead and take a

00:43:17.360 | look. Update your plan. It's really not that hard to get a plan updated once you have the first plan

00:43:21.360 | in place. Great.

00:43:22.960 | And you just mentioned where you keep the documents. I'll share a company that I started

00:43:29.120 | using on my own called Trustworthy, which is basically this family operating system where

00:43:34.560 | you store all the documents that, while you're alive, are great for just managing between your

00:43:40.000 | partner. And were you to pass, you can actually nominate people who find out in advance that

00:43:47.120 | were something to happen, they could reach out to the company and get access to.

00:43:50.800 | So we've put things like our estate plan, our insurance documents, just where we hold bank

00:43:56.560 | accounts and financial accounts, all those kinds of different things we put there. And then just

00:44:02.960 | sent a few friends that we trusted. Here's where they are. If something happens to us,

00:44:07.200 | you know where to get them. So that's another company like Trust and Will that I use.

00:44:12.480 | So my Trust and Will docs are in my Trustworthy account online.

00:44:16.480 | That's great. Trust and Will, we've recently added the ability to upload additional documents to be

00:44:21.760 | stored with your estate plan. It's a slightly different approach. Ours is typically focused

00:44:24.960 | more on the estate planning side. But the ultimate goal is to make sure that all the documents that

00:44:29.200 | you need, which includes your estate plan and things like your insurance documents,

00:44:32.640 | other important information, they're available to the people who need them.

00:44:36.000 | So absolutely, find a solution for that because having a will is the first step.

00:44:40.560 | But having a will that no one can find doesn't do you any good.

00:44:43.760 | You need to make sure that people know where that is, how to access it when they need it.

00:44:47.760 | So it's important to have the document, but make sure that it's also still accessible when it's

00:44:51.760 | needed. I've talked to a few people that have gone through this process. And unfortunately,

00:44:56.320 | they got held up at the last step, which is getting all these documents signed and notarized.

00:45:01.680 | It's been a couple years for me. Has anything evolved in the world of online notaries,

00:45:07.200 | such that getting your documents signed and executed in a way that they're

00:45:11.600 | enforceable by law is easier than driving to a notary or having a notary come to your house?

00:45:17.840 | A little bit, but not enough. Estate planning, particularly wills are the last lingering

00:45:23.600 | holdout in e-signatures and electronic notification online notarization.

00:45:27.840 | You still typically have to have a paper document that you physically sign

00:45:31.760 | with physical witnesses watching you sign it and take it to a notary.

00:45:35.600 | It's very old school, very complex. There has been some improvement.

00:45:39.200 | There are up to about 10 or 12 states now that have digital wills and the electronic will law.

00:45:44.400 | So you can create and sign a document entirely digitally and make it a valid will.

00:45:49.200 | It looks like that's going to be a continuing trend. And so hopefully,

00:45:52.880 | more and more states will have that each year, but it is a slow process.

00:45:56.560 | So it's still not the easiest thing to do. But it's also not that hard. You can go to a FedEx

00:46:03.120 | store or something like that, pay a few bucks, get a notary, AAA store, ARP office. There are

00:46:08.320 | lots of places to get a notary who can help you out. So the little bit of effort you have to put

00:46:12.720 | in, it's more than it should be, but it's not enough to let you avoid having a plan in place.

00:46:17.600 | That makes a lot of sense. Ask your bank. Some banks I've found are willing to do

00:46:23.200 | notarization for free. Some of them are only willing to do it on non-estate planning related

00:46:27.920 | documents. So we were fortunate when we were doing some stuff with real estate that Wells Fargo was

00:46:34.080 | willing to notarize things for free. We were unfortunate that they were not willing to

00:46:37.520 | notarize any estate planning documents. So we did a search on Yelp. We messaged some

00:46:43.680 | mobile notaries and I was surprised that it was less expensive than I thought to get it all done

00:46:48.000 | at once. We actually walked across the street to our neighbor's house and did it all there.

00:46:53.360 | So we weren't asking them to be our witnesses and having to drive down. So that's another option

00:46:59.360 | for anyone listening. Are there any other outside of the basics of document creation and some of

00:47:07.680 | the stuff that I've written about or talked about that you think people should be thinking about?

00:47:12.960 | Let's call it other tips, tricks, hacks on protecting your family,

00:47:18.400 | things that you've picked up along the way that are worth sharing.

00:47:20.480 | Well, I think the recommendation that I always give is to have that discussion upfront. Tell

00:47:25.600 | people what your plans are. And if you have a plan, let people know, "I have a plan.

00:47:29.680 | Here's where it's located." Maybe fill them in on some details. That is the number one tip.

00:47:34.400 | But beyond that, you can really consider the importance of having backups plan in place.

00:47:40.080 | You want to think about trying to over-plan rather than under-planning for any situation.

00:47:44.720 | So your situation is unique. What I plan for may not meet your needs. What you plan for may not be

00:47:50.800 | appropriate for my needs. So if you are worried about some particular specific scenario that may

00:47:56.400 | only apply to you, or even if it may never apply to you, but it's just this nagging doubt in your

00:48:00.640 | head, plan for it. Put a provision in place that will buy you that peace of mind just to know that

00:48:06.320 | you have something there. That peace of mind, that self-confidence that is worth its weight in gold

00:48:11.440 | for so many people. The relief that people feel once they've completed this process, they then

00:48:16.400 | wonder, "Why did I put this off so long? This was A, not that hard. And B, I feel so much better."

00:48:21.600 | But the last tip to make sure that your family has a plan in place as well. So if you have kids

00:48:27.920 | and they're getting to the age of 18, talk to them about estate planning. It's awkward. It's

00:48:31.760 | difficult, but you're a parent, you have to guide them into becoming adults as well. But if you have

00:48:37.200 | siblings or parents that don't have a plan, guess who's going to be stuck dealing with that mess?

00:48:41.360 | You are. So yeah, it's a bit of a self-interested conversation, but talk to your family members.

00:48:46.800 | Do you have a plan in place? What do you want to happen? You can start that conversation

00:48:51.280 | and ultimately not rely on them to start it, but you can start that conversation and you're still

00:48:56.800 | both going to be better off for having raised the topic with your family members as well.

00:49:00.800 | Any tips for that conversation? I imagine at least in my circumstance, my parents had never

00:49:06.560 | really talked to me about their plans or anything like that. But I can see how it can come off a

00:49:11.600 | little bit like, "Hey, how much money am I going to get when you die?" That kind of conversation.

00:49:15.760 | Any suggestions for broaching the topic in the best way possible?

00:49:21.120 | The easiest way to raise it is to start with yourself and say, "Hey, I've created an estate

00:49:26.000 | plan. Here's where it's located." But it made me think, "Do you have an estate plan?

00:49:30.480 | What can I know to ensure that your wishes are carried out after your death?" And that's the

00:49:35.840 | focus is what can I do to ensure that you get what you've planned for? You don't have to talk

00:49:40.720 | about specific assets. And if it comes up that like, "Hey, you've been named as my guardian

00:49:45.280 | for my children," then you can have the conversation of, "Okay, well, what would you like to happen for

00:49:50.160 | your kids? Would you want them to go to private school or public school? Do you want to go to

00:49:53.600 | summer camp? What should you tell me that I can be as best a guardian as possible for your plans?"

00:49:59.600 | Ultimately, you're trying to learn how to fill that expectation as best as possible.

00:50:04.880 | And if you focus on it that way, most people don't see that as, "Oh, you're trying to figure

00:50:09.200 | out what you're going to get when I die." It's not money-grubbing, greedy. It's really, "Oh,

00:50:14.000 | how can I help you out with this?" And it tends to be received a little bit better.

00:50:18.080 | That's really helpful. Big shout out to Trust & Will for partnering with us to get everyone

00:50:22.960 | listening who wants to sign up a discount, allthehacks.com/trustandwill and you'll get

00:50:28.400 | 15% off any estate plan. Really appreciate you guys doing that. Anything else to share before

00:50:35.360 | we wrap up? I always like to emphasize that Trust & Will has a wealth of resources available

00:50:41.200 | to learn about estate planning. So if you have questions that haven't been answered today,

00:50:44.560 | you're not sure what your next step should be, head to Trust & Will, check out those resources

00:50:48.640 | and make sure that you feel empowered to take those next steps with your estate plan. Ultimately,

00:50:53.040 | it's your plan, it's your needs. And if you feel good about the decision that you're making,

00:50:57.600 | that's a win for everybody. So check it out. Trust & Will, that resource library is easily

00:51:02.000 | available. Don't even have to sign up. There's lots of resources available for you there.

00:51:05.840 | Yeah. Just to be clear, those resources are free.

00:51:08.000 | Absolutely.

00:51:08.400 | They're just on the website for anyone to read.

00:51:10.080 | Yeah.

00:51:10.320 | Awesome. Patrick, thank you so much for being here.

00:51:13.440 | I love it. It's been great. I enjoy speaking with you.

00:51:15.440 | When we think about trust, we think about more advanced things. And so I'm not the expert here.

00:51:20.880 | I wanted to talk to someone who I think really understands all of the advanced tactics people

00:51:27.040 | are using to both avoid taxes now, avoid taxes in the future, be able to transfer money to their

00:51:32.800 | children. So I'm really excited to bring on Mani from Valor, who has built an entire business

00:51:39.040 | around this that's really interesting. Mani, thanks for joining me.

00:51:41.840 | Really appreciate it, Chris. Excited to join you. And I'll give you a little bit of context on

00:51:47.840 | those things that you're talking about. And so to give you context on ourselves,

00:51:52.800 | at Valor, our entire idea is how do we use technology to make these tax and estate planning

00:51:58.480 | tactics more accessible so that everyone can build wealth more efficiently?

00:52:02.080 | And the problem we're solving is most of these things, your audience may know about it,

00:52:06.400 | you may know about it, but it's a black box to most people. But let's start at the top of

00:52:11.520 | what is tax planning and estate planning, which you've both mentioned.

00:52:14.800 | When most people think about tax planning, it's how do they use legal tax rules,

00:52:19.760 | things that the IRS has okayed, or the government has okayed, to reduce their taxes? So this could

00:52:25.120 | be their taxes on their salary, their capital gains, their stock they've received from their

00:52:30.000 | company, or their side hustles. It's how do you take advantage of whatever rules and opportunities

00:52:34.960 | the government has laid out to reduce your taxes so you can keep as much income for your use during

00:52:40.400 | your lifetime? That's kind of what tax planning is really focused on. Now, estate planning is

00:52:46.800 | thinking about a little bit longer time horizon. It's taking the assets and the wealth that you,

00:52:51.440 | your family have built up, and how do you pass on as much of that as possible to the next generation?

00:52:57.040 | And kind of the big constraint here is the lifetime gift exemption. So I know this is

00:53:02.800 | something you probably know about, Chris, but in the US, you're allowed to give, there's a

00:53:08.560 | limitation on how much you can gift in assets to other people before the government starts to tax

00:53:13.840 | it. So as of now, the individual limit is a little above $12 million. So that means as an individual,

00:53:21.440 | you can give $12 million, or as a couple, a little above $24 million before the government starts to

00:53:27.200 | tax your assets with the estate tax. - Which is a really high rate, right?

00:53:32.560 | - Yeah, the estate tax is, it makes all other taxes look low. So just the federal tax rate

00:53:38.800 | alone is 40%. It does graduate, but it gets to 40% pretty quickly. And that's just federal. So

00:53:46.800 | then you can start to layer on state taxes on top of that, and it can get much, much higher.

00:53:51.760 | Now, some of these state estate taxes actually start at levels below this $12 million,

00:53:56.080 | depends on a state by state basis, but the federal is the most punitive. And that's primarily what

00:54:01.440 | people are concerned about is, if they're trying to pass on as much of their hard-earned wealth to

00:54:05.600 | their kids or grandchildren, how do they work around the estate tax? And this is where estate

00:54:11.920 | planning comes into play. So it's a little bit different time horizon of, are you focused on,

00:54:15.680 | how do you maximize assets for your use? Or how do you maximize assets for future generations,

00:54:20.720 | or some combination? And that's where more of these different structures come into play,

00:54:25.600 | like irrevocable trust. - Yeah, and we've talked a bit

00:54:28.800 | earlier about the basics of estate planning. And I think what you're doing is interesting,

00:54:33.920 | because it marries the two a little bit. Some of the tactics that we'll talk about are things that

00:54:38.720 | you might be able to use, even if you're nowhere close to hitting $24 million with a spouse. And

00:54:45.360 | some of them might be less ideal, or not worth it if you're not that close. And just so everyone

00:54:51.600 | knows, I'm not an attorney. Monte, I don't think you're an attorney. This is not meant to be

00:54:56.080 | personalized financial or tax advice. But we're just gonna explore some of these tactics that I

00:55:01.760 | think are really mystified. You hear trust and people are like, "Oh, they're so fancy." I just

00:55:06.960 | wanna break down a bunch of them and walk through them so people understand what they are, how they

00:55:11.520 | work, how people are legally either avoiding or postponing taxes, and for many people, how they

00:55:19.920 | could fit into their lives and when they make sense. - Yeah, that sounds great.

00:55:24.240 | - I wrote a newsletter a few months ago, and I did my own research. And I'm not the expert

00:55:29.120 | like you are. And I found... I'd known about a few of these, and I wrote about Gratz,

00:55:34.400 | and Charitable Remainder Trusts, and Islets, and Family Limited Partnerships. Those are the

00:55:39.040 | things I highlighted and wrote a paragraph on. And even in just preparing for this interview

00:55:44.000 | and looking at your company, I realized, "Gosh, I really didn't know what I was talking about then."

00:55:47.520 | And I caveated it with, "I don't know what I'm talking about, but this is my quick research." So

00:55:53.440 | I'm glad we can clear things up. So maybe we start with Charitable Remainder Trusts.

00:55:58.240 | - At a high level, Charitable Remainder Trusts are typically used for people when they're selling

00:56:04.000 | highly appreciated assets, because you can take advantage of... Their core thing is their tax

00:56:10.560 | exempt structure. And the easiest way to understand these, and the most relatable thing is, for most

00:56:15.440 | people is, Charitable Remainder Trusts are very similar to a standard IRA that most Americans use

00:56:21.760 | to build their wealth. IRAs, just as a quick reminder, it's Individual Retirement Accounts,

00:56:28.080 | and the core benefit for most people is that you can contribute between $5,000 to $8,000 per year

00:56:33.520 | to your IRA, and the assets grow in your IRA on a tax-free basis. Until you take money out of the

00:56:40.960 | IRA, you can buy and sell the assets, and you won't pay taxes. And this is to the power of compound

00:56:47.600 | wealth, which your audience obviously knows a lot about. It creates an incredible amount of wealth

00:56:53.920 | for people over a long time period. Charitable Remainder Trusts are very similar to that. They're

00:56:58.800 | also a tax-exempt structure where assets that are sold in the trust, you don't pay taxes on

00:57:04.880 | until you receive a distribution from the trust. Now, the big difference and where this comes into

00:57:12.720 | play is, there's a couple key differences. One, you can contribute an unlimited amount of assets

00:57:17.040 | to a Charitable Remainder Trust instead of being limited to $5,000 to $8,000. So kind of a common

00:57:22.160 | use case is if someone has paid off the mortgage on their house that they've lived in for 20 years,

00:57:26.880 | and they want to sell it. They can't put it into their IRA, but they could move that house into a

00:57:33.040 | Charitable Remainder Trust and then sell it and avoid the taxes on when they sell their house and

00:57:39.440 | reinvest that money. So just to take kind of a quick example, let's just say the house is worth

00:57:44.880 | a million dollars. And to keep numbers simple, their cost basis was close to zero when they

00:57:50.880 | bought it. So they bought in a really great place that's exploded in value. If they lived in

00:57:55.760 | California, they would probably, when they sell it, pay 35% or $350,000 in taxes and take away

00:58:03.280 | 650 grand if they didn't do anything. But instead, if they put it into a Charitable Remainder Trust,

00:58:08.880 | they would upfront get about 10% of that value as a charitable deduction to write off their income.

00:58:14.240 | So $100,000 charitable deduction. But critically, when they sell that million-dollar home,

00:58:19.920 | the trust wouldn't owe any taxes on it. So it would keep a million dollars to reinvest,

00:58:24.720 | to put into the market, or any of the other investment options that they're looking at.

00:58:29.760 | And just kind of with simple math of if a million dollars invested at the market versus $650,000,

00:58:34.480 | you're going to generate a lot more income and wealth for yourself. That's kind of the key piece.

00:58:40.800 | So let's say you work at a company, you've got some shares. When they were granted to you,

00:58:45.120 | they're really inexpensive and you exercise them. Now they're worth a lot. Yeah,

00:58:49.520 | you could pay taxes and invest it. Or you could contribute these to a Charitable Remainder Trust

00:58:54.800 | and then not pay the taxes because it is a charitable vehicle. And you get a deduction

00:59:00.240 | for that donation. And then the trust can use that full million dollars to keep investing it.

00:59:04.400 | So if you otherwise were going to donate a million dollars to charity, that seems comparable. But can

00:59:11.360 | you talk a little bit about how this is not just something that is beneficial to charity, which it

00:59:16.880 | is, but it also is beneficial to you? Yeah, it's a great question. This is where a lot of people

00:59:23.200 | wondering like, why is it called a Charitable Remainder Trust? And kind of the way that this

00:59:26.880 | works is every year from a Charitable Remainder Trust, or at least annually, you're allowed to

00:59:31.200 | take money out of the Charitable Remainder Trust. That amount is set up front when you create the

00:59:36.400 | trust of what percentage of trust assets it is. But that's kind of the critical thing is the core

00:59:41.280 | part of this is that you're expected to get 90% of the value out of the trust, and the charity is

00:59:46.960 | expected to be left about 10%. And that 10% that you leave behind, this is what enables the structure

00:59:54.640 | to stay tax exempt, so assets can grow. And you only give that 10% at the end of the trust term.

01:00:01.040 | And for most folks, this is at the end of their life. So they'll take their highly appreciated

01:00:07.360 | equity in the company, they'll put it into Charitable Remainder Trust, they'll sell it,

01:00:11.360 | they'll keep that entire principle in the trust, reinvest it, and then every year,

01:00:16.960 | they can start to take distributions from that trust. And then at the end, they'll leave a

01:00:22.400 | little bit piece when they pass away, that'll go to a charitable cause that they care about.

01:00:27.600 | So it's kind of a... The easiest way to think about it is the government is giving you kind

01:00:32.240 | of a 0% interest loan on your taxes, so that you can reinvest it in the market in exchange for

01:00:36.960 | leaving a small percentage for charity at the end of the trust.

01:00:40.320 | Yeah. And I've seen the calculators you make on your website. And because you're able to

01:00:46.480 | invest money without paying taxes and grow it along the way, it turns out you end up

01:00:53.280 | over your lifetime, usually with more money coming back than you would have otherwise.

01:00:59.120 | So you actually... The charity benefits and you benefit.

01:01:02.800 | Yeah, that's 100% right. If you're selling an appreciated asset, or if you live in a high

01:01:08.960 | tax state, you will come out ahead personally by using a Charitable Remainder Trust to sell

01:01:15.040 | the asset and do the money that you receive over time by being able to avoid that taxes.

01:01:19.520 | And as like a cherry on top, a charitable cause will also benefit. But even if you ignore that

01:01:25.680 | piece, you will personally benefit. And if you really care about the charitable cause,

01:01:29.600 | then it's a real kind of win-win all around.

01:01:32.240 | Now, I know what you give up is a little bit of liquidity. So can you talk about the trade-off is

01:01:37.440 | that million dollars in my example, you can't take it all out next year if you wanted it.

01:01:43.040 | Yeah, exactly. It's a great call out of... The way these Charitable Remainder Trusts work is

01:01:48.000 | every year you can take out a certain percentage of the assets. This is the downside and the benefit

01:01:53.760 | is if you sold all those assets personally in your name, that $650,000 after taxes,

01:02:00.480 | you can pull it out and do whatever you want with it at any time. The Charitable Remainder Trust,

01:02:05.280 | you can only withdraw a certain percentage per year. That percent depends on how long you set

01:02:10.320 | the trust up for. But let's just say you can pull out 10% a year. Instead of if there's a million

01:02:15.280 | dollars in the trust, that means you can pull out $100,000 that year. Now, that means that you don't

01:02:20.400 | have access to that full $650,000 or a million dollars. So you have less upfront liquidity.

01:02:25.760 | And this is one of the key trade-offs you're making, is you get less upfront liquidity

01:02:30.400 | in exchange for your assets being able to stay in a tax-free environment and continuing to

01:02:37.280 | compound and grow on a pre-tax basis. So it's a little bit of the, "Do you need the money now,

01:02:43.280 | or are you trying to create more long-term wealth?" And that tilts the, "Should you sell it

01:02:47.760 | in your name or should you use this structure?" And it's not all or nothing. So if in a given year,

01:02:52.720 | you were to make $2 million, you don't have to put all $2 million in any of these vehicles. You

01:02:57.520 | could put 10% of it or 20%, correct? Exactly. So for instance, we have some

01:03:03.440 | customers who are tech employees. And as part of the IPOs last year, they had a couple million

01:03:09.760 | exit for their assets. And they ended up putting 50% into a shareholder remainder trust.

01:03:15.520 | And then they sold the other 50% in their own name to buy a home. So it depends. It's not all

01:03:20.320 | or nothing. And there's also one of the big benefits of these shareholder remainder trusts

01:03:24.640 | is you don't have to put in all the assets up front. You can add assets. You can put a little

01:03:29.680 | bit of assets initially. You can add assets a year from now, two years from now. They're fairly

01:03:34.480 | flexible. So you don't have to make the decision up front. Now, this is an irrevocable trust,

01:03:41.440 | which is part of why you get these tax benefits. So once you do put assets in,

01:03:46.480 | you can't decide to change your mind after the fact. But you will start to get those distributions.

01:03:52.880 | And you don't have to make that big decision up front. You can set up, put a little bit in,

01:03:58.320 | add more over time, or you can split your shares up. So it's fairly flexible that way.

01:04:03.360 | And ultimately, what people do just depends on your life situation. Do you have a lot of

01:04:08.160 | big purchases coming out? Or life events changing in your life? Do you plan to take some time off?

01:04:12.880 | Or do you not need the money and you want to reinvest it and create more long-term wealth for

01:04:17.040 | years down the line when your kid's going to school or you want to take a couple years off

01:04:20.560 | from working? That tends to be very situational dependent based on the person, their lifestyle,

01:04:25.920 | what their needs are. One quick follow up. So yes, it's irrevocable. You can't take the money

01:04:29.840 | out. But how much control do you have over the investment? Can you set it up in a way that you

01:04:34.480 | have just a brokerage account and you can go in and trade and buy anything? Yeah, you can be in

01:04:40.800 | charge of making your own investment. You can set it up to have a robo-advisor control it. You can

01:04:46.720 | set it up so that you're making those investments. Charitable remainder trust, one of the great

01:04:50.720 | things is you can invest in almost any asset. There's really just two restrictions. And this

01:04:55.680 | is similar to self-directed IRAs for people that are familiar with it. There's what's called a

01:05:00.880 | self-dealing prohibition where you can't invest in assets that you will personally benefit from.

01:05:06.320 | So for instance, the charitable remainder trust could invest in a rental property for real estate,

01:05:11.040 | which it's allowed to do, but you couldn't buy a rental property and then live in it yourself.

01:05:15.600 | So as long as it's a passive investment, you can invest in it, can invest in real estate, stocks,

01:05:22.160 | crypto, do angel investments for people in tech. There's a huge myriad of opportunities.

01:05:30.320 | And really the restrictions are self-direct is self-dealing and taking leverage. You don't want

01:05:35.680 | to create debt inside of the charitable remainder trust. So you don't want to be taking high

01:05:41.920 | leveraged options or trades like that. But otherwise, it's a fairly flexible, which...

01:05:47.520 | So for most people, they don't have to change their investment philosophy or what they want

01:05:51.040 | to invest in or who's managing their investments. It fits into their lifestyle that way.

01:05:57.520 | Awesome. Okay. So that's charitable remainder trust. I know grats are similar in that you

01:06:03.520 | often want to donate highly appreciated assets. Can you talk a little bit about how they're

01:06:07.360 | different? Yeah. So one key thing is, in most cases, the people that are benefiting from the

01:06:14.000 | charitable remainder trust are the same people who put the assets in. So if you set up a charitable

01:06:18.400 | remainder trust, in most cases, you're also going to be receiving those annual distributions from

01:06:22.800 | the trust and benefiting personally, financially. Grats, that's kind of in the tax planning

01:06:28.160 | situation. Grats fit more into the estate planning bucket of solutions, where grats are focused on

01:06:34.880 | how do you efficiently pass on assets from one generation to the next and are really focused on

01:06:40.480 | minimizing your estate taxes. So just to start with, grats stand for the grantor-attained annuity

01:06:46.960 | trust. And kind of an interesting aside, the way that they were created was the previous favorite

01:06:53.440 | estate planning tool was called a GRIT, and Congress tried to outlaw GRITs. And when they

01:07:00.320 | changed the legislation to outlaw GRITs, they actually created a loophole that enabled grats,

01:07:05.600 | which are significantly more exploitative towards avoiding estate taxes. So they took a broken

01:07:13.760 | system, they tried to make it better, broke it and made it worse. Now, how do grats work? Grats

01:07:20.720 | enable you, they essentially take advantage of, in most cases, an arbitrage between what is the

01:07:25.360 | government's discount rate, or what is the government's assumed growth rate of assets,

01:07:29.600 | and what do you actually achieve? So let's take kind of an example of saying you're starting with

01:07:34.880 | a million dollars, and let's say the government's interest rate is 2%, where it was not that long

01:07:40.720 | ago. Obviously, things are changing pretty quickly right now. So the government is assuming that

01:07:47.120 | a year from now on that million dollars, you're going to gain 2%, or $20,000. Now, and the way

01:07:56.480 | a grat is set up is that the grat, you set up for a number of years, and let's just say you set up

01:08:01.520 | for two years in this example, it is going to pay you a, what's called an annuity stream, which is

01:08:08.000 | why it's called a Grants Retained Annuity Trust, it's going to pay you a set amount of money.

01:08:13.120 | Let's just say it's going to pay you $500,000 for two years. So in year one, it pays you $500,000.

01:08:20.800 | Now, the government is going to assume that there's $520,000 left in the trust, because they

01:08:27.040 | assume assets grow at 2% a year. And then in year two, it's going to pay you another $500,000,

01:08:32.640 | and it's going to assume that there's that $520,000 grew to $530,000 after, and left $30,000

01:08:42.560 | behind. That $30,000, from the government's point of view, is going to, in most cases, it's your kid

01:08:48.560 | or whoever you're trying to have inherit your assets. So the government assumes $30,000 passed

01:08:53.520 | on to your kid. Now, the reality that most of us know is your assets are probably going to grow

01:08:58.800 | faster than 2%, right? The historical market return of the S&P is a little above 10%. So let's

01:09:04.640 | say your assets are actually growing at 10% a year. So after year one, that million dollars

01:09:09.920 | is worth $1.1 million. Okay, you lose $500,000. There's $600,000 left. After that second year,

01:09:17.520 | when there's $600,000, there's now $660,000 left. That $500,000 then comes back to you,

01:09:24.720 | and then there's $160,000 left in the trust. The government, from its calculations,

01:09:30.800 | only says that you gifted $30,000 to whoever is the inheritor or the beneficiary of your grant,

01:09:38.560 | even though you passed $160,000 on. So this is where you can essentially pass on, in this case,

01:09:44.640 | $130,000 estate tax-free from a federal standpoint. And the big advantage here is the higher you can

01:09:54.560 | grow your assets than the government's interest rate, the more you can pass on and avoid the

01:09:59.360 | estate tax. And this is kind of your comment on highly appreciated assets, why it's become

01:10:05.280 | so valuable. If you take, let's just say, startup equity or something that has a low

01:10:09.600 | current market value, but you feel like there's a good bet in two years it's going to be worth

01:10:13.440 | 10 or 100x that value, the government's assuming if you put it in, it's worth $10,000 today.

01:10:20.080 | And let's just say, three years from now, it's going to be worth $10 million. The government

01:10:24.800 | is assuming that $10,000 is growing at 2% a year. So it's negligibly going to be worth

01:10:29.920 | nothing in 10 to $15,000 in three years. All of that upside passes on without paying the estate

01:10:37.040 | tax. That's so interesting. So it's probably not a tool that's useful to the average person who's

01:10:44.160 | not even coming close to $24 million. But if you own a business or you own a piece of a business

01:10:50.240 | that's worth 10s or 100s of millions of dollars, or you think you might, it could come into play.

01:10:56.320 | But the purpose of this conversation is not to necessarily share every tactic that everyone

01:11:01.520 | listening can use, but to unveil the mystery behind some of these things we hear about.

01:11:07.040 | And so it's fascinating to hear how... And your example, by the way, was just for 2 years. I

01:11:13.760 | assume if we continue that example for 20, 30 years, the compounding of the S&P at 10%

01:11:22.320 | leaves a whole lot more than $30,000 or what would have grown at 2%.

01:11:26.640 | Yeah, exactly. Every year that you do this, you're able to leverage the difference between

01:11:32.080 | the government's assumed growth rate and what you can get to pass on even more value.

01:11:36.080 | To this example, one of the more prominent examples was when before Facebook IPO'd

01:11:42.160 | Mark Zuckerberg, Sheryl Sandberg, Dustin Moskovitz, they all set up grats. They took

01:11:48.240 | the pre-IPO price of their Facebook shares, they put those shares in, they set up for I don't know

01:11:54.720 | how many years. And then after the IPO, when the price popped of Facebook, all that appreciation

01:12:01.120 | was able to pass on and avoid the estate tax. So this is to your point of if you have a family

01:12:07.440 | business that's worth eight or nine figures, or you're already above that, it's a really powerful

01:12:12.800 | tool to minimize those estate taxes and preserve as much of your hard-earned income for future

01:12:19.760 | generations. That's so fascinating. Okay, we got a lot to get through, but I want to come back to

01:12:25.360 | charitable lead trusts and less about appreciated assets, but still helpful to avoid taxes in a

01:12:31.920 | high-income year. Can you talk a little bit about those? So charitable lead trusts are... The long

01:12:39.200 | name of it is charitable lead annuity trusts. And this is a really powerful tool if you've got a big

01:12:44.240 | bonus or short-term capital gains or high ordinary income to be able to write off your income today.

01:12:50.560 | And the way that this works is you set up this charitable lead trust for a number of years,

01:12:55.200 | let's just say 20 years, and you're putting money into, let's say you put a million dollars into a

01:13:00.480 | charitable lead trust. You get a million dollar charitable deduction today to write off your

01:13:05.680 | income, but you're not giving that entire million dollars away now, you're actually able to reinvest

01:13:11.760 | it. So you're able to take that million dollars, you put it in charitable lead trust, you put it

01:13:16.240 | into the market where it's going to grow 10% a year, 8% a year, whatever you assumed is,

01:13:21.840 | and you get a charitable deduction now. Probably wondering like, why would you get a charitable

01:13:25.840 | deduction now if you're not giving away the money? It's kind of similar in some sense to

01:13:30.080 | a donor advice fund, where with a charitable lead trust, you're promising in the future years to

01:13:36.000 | give away a set amount of money to a charitable cause. So it could be a donor advice fund,

01:13:41.360 | could be a foundation, could be the American Red Cross, but you're promising to do that in the

01:13:45.520 | future. And so you can say that in year two, I'm going to give $10,000, year three, $15,000,

01:13:52.080 | year four, $20,000. And when you are setting up this charitable lead trust, essentially the

01:13:57.120 | government is taking their interest rate, and they're figuring out what is the present value

01:14:01.760 | of their future donations. And so they're taking that and they're giving you an upfront charitable

01:14:10.000 | deduction for the present value of those future charitable deductions. Now, a big part of this

01:14:15.360 | advantage is that discount rate that they're using, it's again, to the same kind of example

01:14:22.560 | as a grant, it tends to be lower than what you would be able to get if you invest your assets

01:14:26.720 | in the market. Right now, it's 2.2%. And I'm willing to bet that the markets are a little

01:14:33.440 | bit choppy now, but in a long time horizon, most of us would hope to achieve a better than 2.2%

01:14:38.400 | return in the market. So you're able to write off your high tax income now,

01:14:43.760 | reinvest that money in the market, and give those charitable donations in the future.

01:14:49.520 | And any appreciation above what is donated to charity, you're able to at the end of the trust,

01:14:55.680 | so in 20 years in this situation, keep that money for yourself, or have that money returned back to

01:15:00.960 | yourself or future generations. So it's a great opportunity for folks that you can write off high

01:15:07.600 | tax income now, reinvest that money, and then give to charity later in the future. And if people are

01:15:14.960 | just also charitably inclined, it's a really good way to set aside money to go to a charity in the

01:15:22.320 | future. Very comparable to a donor advice fund, except it also has some tax planning and estate

01:15:29.200 | planning benefits if those matter to you as well. But it also just guarantees that, hey, this cause

01:15:34.720 | that you care about, you're going to set them up to receive X amount of money for how many ever

01:15:39.760 | years you set up the trust. So it has a lot of purposes, but it's really underutilized for folks

01:15:46.400 | who have a big bonus or a high tax year. I know the assumed interest rate affects

01:15:52.320 | everything and the government's interest rate changes. But if you take an example of a million

01:15:56.400 | dollars, you get that full write off, you put a million dollars in a charitable lead annuity trust,

01:16:01.840 | you're going to end up donating probably at least a million dollars to charity.

01:16:06.960 | But because of the arbitrage, do you end up getting back a million dollars?

01:16:12.800 | What ends up coming back, kind of ballpark it over 20 years or whatever is the easiest example?

01:16:18.320 | Yeah. I mean, the easiest way to think about this is the longer you set this structure up for,

01:16:23.520 | and the faster your assets grow, the higher the rate. So if you set this up for 25 years and your

01:16:28.960 | assets are growing at 10% a year, you may get a 50% return on your capital than if you had done

01:16:35.440 | nothing at all. So it may be an additional $500,000 in absolute cash that you're going to get on top

01:16:41.840 | of that kind of whatever that million is going to compound to.

01:16:45.520 | In a circumstance like this, I would give away a million dollars into a charitable lead annuity

01:16:51.520 | trust. There would be donations made over the years and I'd get the remainder. Had I not done

01:16:56.800 | that, I would have paid taxes. And I probably, if you're in the highest brackets in California,

01:17:02.400 | I might have paid half a million dollars in taxes and I'm left with half a million to invest.

01:17:07.760 | Would I have been better off ever? If I don't factor in the charitable donation,

01:17:12.720 | do I actually ever end up being better off over a period of time? If we assume a higher interest

01:17:18.640 | rate, like you said, 8%, 10%? Yeah. I mean, this is where you can

01:17:22.560 | generate an additional half a million dollars. And this is the whole point. Take your situation

01:17:27.760 | that you brought up. If you're in a high tax rate place like California, you earned a million

01:17:31.920 | dollars. You may pay literally half of it or more, the government. So you only have $500,000 to invest

01:17:38.400 | versus if you're able to avoid taxes on that million dollars. If you have $500,000 in the

01:17:43.680 | market versus a million dollars being reinvested in the market, that million dollars is going to

01:17:50.240 | create a lot more compounding wealth. That million dollars, you're going to give some of that to

01:17:56.400 | charity every single year. But just that million dollars compounding at 8% or whatever our assumed

01:18:02.080 | growth rate is here, it's going to over a long period, over 20 plus years, 25 years, it's going

01:18:06.560 | to create a lot more wealth. For 25 years, taking a base case, you'll probably create an additional

01:18:11.280 | half a million dollars of wealth for yourself after taxes.

01:18:14.240 | Not factoring in the fact that you're generating probably at least that or more in charitable

01:18:20.080 | contribution. Yeah. So it's really like you're

01:18:23.360 | creating an additional half a million dollars of wealth for yourself, plus you're creating

01:18:26.880 | probably $1.2-$1.3 million in charitable causes to help advance things that you personally care

01:18:32.720 | about. So you're doing good in the world, you're creating wealth for yourself. It's a really

01:18:37.360 | powerful combination. And I don't know why, but for some reason, it seems like every time I talk

01:18:41.520 | to someone from New York, they all seem really excited about islets, which I know are related

01:18:47.200 | to life insurance. Is it as awesome? Is there a reason why it's so great in New York? What's

01:18:53.200 | the... I don't understand, as I read them, why they are as cool as some people make them sound.

01:18:59.280 | Yeah. So insurance is its own interesting niche, but a world where there's a lot of tax

01:19:08.640 | opportunities. Now, a big advantage of islets, the core thing is it tends to be more of an

01:19:13.920 | estate planning structure. The big advantage is you can buy... Essentially, an islet stands for

01:19:19.680 | irrevocable life insurance trust. And what you're really doing is you're buying life insurance,

01:19:25.360 | you're putting it into this irrevocable trust. And so you're really gifting the benefits of life

01:19:30.320 | insurance. So i.e. the payout when you pass away to your kids or spouse or whoever it is.

01:19:36.880 | The big benefit is hopefully when you buy your life insurance, your risk of dying is pretty low.

01:19:43.280 | So your life insurance is valued at a pretty low rate. So let's say it's worth $100,000 now.

01:19:48.800 | It's worth $100,000, you put it in this irrevocable trust. Over time, you will continue contributing

01:19:54.640 | the premiums towards the life insurance and that money in the life insurance is being reinvested

01:20:00.480 | in the market or it's increasing the value of the policy as you naturally get older.

01:20:04.240 | And let's just say when you pass away, it's worth $5 million. That $5 million doesn't count towards

01:20:11.120 | your state gift limit. Because you contributed the asset when it was worth $100,000, it only

01:20:16.720 | counts if you give a $100,000 gift to your kids or your future generations, even though when you

01:20:22.560 | pass away, it may be worth $5 million. That's the key benefit is you're able to essentially lock in

01:20:29.600 | a low gift value and allow it to appreciate over time. Now, why is it so big in New York? I don't

01:20:36.000 | know. There's also a big thing to kind of probably watch out with life insurance is there's a lot of

01:20:40.640 | people who take a lot of cuts of the pie when they're selling it to you. And it tends to be

01:20:44.640 | really lucrative for brokers, agents, advisors. So people do love to sell life insurance because

01:20:51.360 | they know they're locking you in for a really long time horizon. And so there's a lot of

01:20:55.600 | commission that gets spread out. I don't know if that impacts New York, but it is definitely a

01:21:01.840 | powerful tool. But I don't know if it's quite as important for folks who aren't worried about the

01:21:08.720 | estate tax to start with. Yeah, my advice for life insurance has always been that term life is like

01:21:14.880 | the thing that makes sense for almost everyone. And unless you're working with an accountant and

01:21:19.680 | an estate planning attorney that together decide that there's some more complex way to take

01:21:24.720 | advantage of whole universal etc. life set in a trust or even... And we won't go into it now.

01:21:31.040 | But private placement, life insurance, these other things. One, stick to term life. And two,

01:21:36.880 | almost all the other strategies are not really as beneficial unless you're kind of at approaching or

01:21:43.280 | over that 24 million estate tax limit. Yeah. Yeah. And that's... I mean, this is like 100%

01:21:50.000 | agree with that. I think in most cases, people a lot of times overthink this or they get sold to.

01:21:54.880 | Most cases, people should just do kind of the standard, right? Like this term life insurance,

01:21:59.600 | you know what it is, you know what you're getting, you're not being sold to and kind of being ripped

01:22:02.800 | off. And unless you have really particular needs, or a team that's getting each different answer,

01:22:10.320 | where it's like PPLI, etc, which makes sense in certain situations, it's better to keep it simple.

01:22:15.920 | I agree. I even had a listener send me an email and say, "Hey, I spent the last 10 years selling

01:22:22.080 | whole life. Please don't tell anyone on your show to buy it. I won't name who they are because I

01:22:26.800 | don't want to get them in trouble with their job. But even a guy who sells it said he wouldn't

01:22:31.680 | recommend it." So... And ultimately, what I understand is with this estate tax limit,

01:22:37.600 | all of the estate tax planning tactics are really just about trying to take a bigger amount of

01:22:43.760 | money and fit it into a smaller amount now so that you can donate it when it's less and counts less

01:22:50.160 | towards your limit. Another one that I know I found, which is outside of the kind of trust world,

01:22:55.760 | so I'll do my best to explain it, is around setting up a partnership or an LLC for your family.

01:23:02.480 | And the way I understood it was, you create this LLC, you put assets in it, or a partnership,

01:23:09.120 | and you give the value of that business goes to your heirs, but the control of the asset stays

01:23:17.680 | with you. And so the IRS will give you this benefit of saying, "Oh, well, if you're giving

01:23:22.960 | your children a business that has $50 million, but you control all of it, and they don't get

01:23:29.360 | to choose what happens, well, you could lose it all. You could make terrible investments.

01:23:33.280 | So we're going to give a huge discount." And I don't know what that discount is. Let's call it...

01:23:37.120 | I think it's closer to like 80%. So now you're able to say, "Oh, I'm giving my kids a $10 million

01:23:43.600 | business instead of a $50 million business." And then when you pass away, well, the control is

01:23:49.920 | transferred. And so my understanding is that all these estate planning tactics are like,

01:23:55.040 | "How do you find a way to give large sums of money, either now or in the future,

01:23:58.480 | today, when you can price them or value them at a lot less?"

01:24:04.400 | Yeah. And there's really kind of... That nailed it on the head. And there's kind of three

01:24:08.080 | descriptions people often call this. They call it of like, "How do you freeze? How do you gift

01:24:12.640 | values?" And it's called the freeze. You freeze it at its current value when you expect it to

01:24:17.280 | appreciate it in the future. So you gift... Let's just say you have startup equity or something you

01:24:21.600 | expect to appreciate significantly. You gift it at the value, at the low value today. And then when

01:24:27.200 | it appreciates in the future, it's already in the ownership of a trust or your kids. And that future

01:24:32.720 | value doesn't count as your gift value. So that's the freeze. There's also a term called the burn,

01:24:37.600 | where it's how do you... Whether it's you paying taxes, this is where grats come into play.

01:24:42.080 | So in a grat, even though the assets, some of the money is coming back to you, all the

01:24:48.160 | appreciation passes on to your kids, you are liable for the taxes that are paid on assets,

01:24:54.880 | income realized in the trust. And the big advantage of this is you're literally... By

01:24:59.120 | paying the taxes personally, you're reducing the value of your estate. So in other words,

01:25:03.760 | you're burning down your estate. And then kind of the third category is discounting. And this

01:25:08.320 | is where it's whether it's control with kind of these family partnerships of... You can do all

01:25:13.440 | sorts of... Structure these things in all sorts of different ways, whether it's control, or it's

01:25:18.480 | hard to value asset, or you reduce the intangibles. How do you reduce the value below what you probably

01:25:26.400 | think it's worth or what you can actually realize in the market? There's kind of a famous example

01:25:30.640 | where Phil Knight, the founder of Nike, took Nike shares, put it in an LLC, and then he gifted parts

01:25:39.280 | of it over time to his son. And each time he gave it to his son, it was at a discount because it was

01:25:45.040 | a non-controlling interest. And so he's able to take something like a 15 or a little bit higher

01:25:50.320 | discount on those assets, even though Nike shares are very liquid. We can sell them at any time in

01:25:55.440 | the market, but because it was part of this structure, they're able to discount it. And so

01:26:00.960 | as a result, from an IRS standpoint, he was giving less value, which means there is less taxable

01:26:07.520 | gifting that he had to pay to the government. Yeah, I'm holding this document up here that I

01:26:13.600 | got from Morgan Stanley at a conference... Not a conference, like a talk once.

01:26:18.720 | And it's like, "Here are the better outcomes of using all these strategies." And in this case,

01:26:22.720 | it's a crazy one that I'll just run through. Not the numbers, but it said, "If you just set up a

01:26:28.240 | basic revocable trust and you transfer money, and you have exactly $45 million, by the time your

01:26:35.520 | children get the money 30 years later, you're going to have $281 million, but you'll pay $112

01:26:42.480 | million in taxes, and they'll only get $190 million." And they're like, "But if you go

01:26:48.080 | through..." And in this example, they set up a family limited partnership, a GRAT, and a revocable

01:26:53.440 | trust, and then two defective irrevocable trusts. So it's the most complex, insane example that...

01:27:00.160 | By the way, if you have $45 or $50 million, you're probably working with someone to do stuff like

01:27:04.960 | this. But at the end of the day, it says, "Your net estate post-tax with this example was $500

01:27:10.960 | million versus the $198 million that you would have paid in the previous example, netting you

01:27:17.520 | an extra $300 million." So these are just... We talked about some of these strategies.

01:27:23.200 | And while they might not practically be relevant for most people listening,

01:27:27.600 | it's pretty crazy to dig into the way they work for certain people and how they're able to unlock

01:27:34.880 | in this case, hundreds of millions of dollars of value. There's one more thing that you guys do

01:27:39.840 | around stretch IRAs that I think might actually benefit people who are in circumstances like this.

01:27:47.440 | Correct me if I'm wrong. Do you want to talk a little bit about that?

01:27:50.400 | Yeah. And just before I get into that, to your point, it's kind of crazy. There's a lot of

01:27:55.840 | these things like the Black Arts, where people you hear about these trusts, and for most people,

01:28:00.400 | they don't mean much, but the returns are pretty incredible. In that situation, it's an additional

01:28:05.200 | $300 million on $200 million of assets. And these things, whether you have $50 million or a couple

01:28:12.960 | of $100,000, there's a lot of these opportunities. Now, the big challenge for most people is...

01:28:17.600 | Kind of a sad fact is the US tax code for the last 50 years has grown by 150,000 words a year.

01:28:24.960 | What that practically means for you, your audience, they're smart, they're trying to learn

01:28:29.440 | these things. There's just no way you can keep up. And so what this means is unless you have that team

01:28:34.720 | of lawyers and accountants, you're going to miss out on these opportunities and you're going to

01:28:38.880 | significantly fall behind. And that's kind of... I mean, not to get too biased, that's the problem

01:28:45.200 | we're trying to solve is how do we use technology to help people find and take advantage of these

01:28:48.880 | opportunities? Because otherwise, the tax code is not built for someone who doesn't have high

01:28:54.160 | nine figures. It's funny, you mentioned someone who has $50 million. Most of the situations we

01:28:59.200 | see in this world is there's folks with that, they don't actually have access to good folks in this,

01:29:03.760 | because it's one of the hardest things to get access to is high quality folks who can help you

01:29:07.920 | with this tax and estate planning. Because guess what? All the family offices with billionaires,

01:29:12.880 | they tend to snap up the best folks in those spaces because it's just so valuable. You're

01:29:18.000 | talking about those results that you're seeing there, that's hundreds of percent of additional

01:29:21.360 | value for your children. If you're a billionaire, what price aren't you going to pay? And there's

01:29:26.400 | no way that me or you or your audience can compete on a per hour basis or salary to hire that best

01:29:32.240 | person that that billionaire wants. And so that's kind of... It just creates this huge

01:29:37.200 | challenge for folks to take advantage of this stuff, despite how meaningful it is.

01:29:41.760 | But jumping to the stretch IRA piece, this is probably one of the most applicable things for

01:29:51.600 | most people of tax planning opportunities. For context, most Americans, when they're building

01:29:58.800 | wealth for their retirement and their financial safety net, they use either a standard IRA or a

01:30:05.120 | Roth IRA. These are trusts, they're actually irrevocable trusts that the government has

01:30:10.800 | specifically created and outlined benefits for to help people better save assets for their retirement.

01:30:17.360 | And with a standard IRA, it allows you to contribute pre-tax money and it allows the

01:30:23.280 | assets to grow in an IRA on a tax-free basis until you start taking withdrawals after you're 59 and

01:30:28.800 | a half. Now, historically, when people pass away and they have an IRA with money, they would do

01:30:36.560 | what's called over a stretch IRA or a rollover IRA, where let's say it was my parents. Their IRA would

01:30:43.120 | roll into my IRA. And so it would stay on a pre-tax basis, and it would keep growing and

01:30:48.480 | compounding. And I would wait until I'm 59 and a half to start taking distributions and paying

01:30:54.560 | taxes. Now, in 2020, there was a law called the Secure Act passed, which essentially stopped

01:31:02.320 | people from being able to roll over their IRA between generations. So now instead of my parents'

01:31:07.520 | IRA being able to roll over into my IRA, I have to keep it in their account and I can keep it in

01:31:13.680 | their IRA for a max of 10 years. And then when I do withdraw it, I have to pay ordinary income tax

01:31:19.040 | rates on all the withdrawals. So if you're in California, New York, you may be paying 50% to

01:31:24.400 | 55% of those assets. The solution that's come about since the Secure Act was passed in 2020

01:31:33.920 | is people taking their parents' IRA, being willed and rolled over into a charitable remainder trust.

01:31:40.640 | And the big benefit of this is when it passes the charitable remainder trust,

01:31:46.240 | it can remain in there for more than 10 years and keep compounding on a pre-tax basis.

01:31:51.440 | So you get a lot of the benefits of the stretch IRA, where instead of rolling over from my parents'

01:31:56.640 | IRA to my IRA, it is rolling over from my parents' IRA to my charitable remainder trust,

01:32:02.880 | but can keep growing on a pre-tax basis and isn't constrained to 10 years.

01:32:06.960 | And once it's in the charitable remainder trust, the appreciation after that rollover

01:32:14.400 | isn't taxed at ordinary income rates. So that appreciation isn't going to be taxed at 50%.

01:32:18.160 | If you're in California, it'll be taxed at 35% long-term capital gains.

01:32:23.360 | So you get more pre-tax growth, as well as you can pay lower tax rates on the withdrawals.

01:32:28.960 | So we see a lot of folks who are, parents are getting elderly and they're planning for how do

01:32:35.920 | they pass on these assets, particularly a lot of financial advisors who are trying to help their

01:32:40.160 | clients for intergenerational planning, really roll this out to their clientele for them to help

01:32:47.200 | create more wealth in the family, preserve that. And it's also right now, it's because it's

01:32:51.680 | Secure Act was just passed in 2020, most folks aren't aware of the best way to deal with it.

01:32:58.000 | Because again, unfortunately, the tax code isn't accessible. And so you've got a lot of folks where

01:33:02.800 | they have money or they've earned, they've contributed money to their life, but it's

01:33:07.600 | really hard to figure out what do I do? And even though it is meaningful, it's a tough challenge.

01:33:13.920 | I mean, you said some of the tax code is not accessible, but on top of that,

01:33:18.000 | a long time ago, before I think the kind of myths of the kind of tax avoidance trust to

01:33:23.840 | avoid state taxes, which we won't get into now, because I think it kind of came out that a lot

01:33:28.560 | of states outlawed them. I was looking into this and I realized, "Oh, wow." One of the reasons that

01:33:34.800 | this isn't easy for people to do is that the cost to administer these trusts and to set up the trust

01:33:40.560 | were so high that I spent all this time talking to someone and found out, "Wow, this is a great way

01:33:45.600 | to maybe avoid high California taxes," only to find out they were like, "Well, it's going to

01:33:50.560 | cost us $25,000 to set up a trust, and you're going to pay 1.5% a year for someone to manage

01:33:56.080 | and administer it and do the investments." And I was immediately like, "Well, you should have said

01:33:59.680 | that upfront because we're not talking about... I didn't have enough money for that to make

01:34:03.760 | any difference." But can you tell us a little bit before we wrap about how you guys are trying to

01:34:11.280 | make this a little bit more accessible and affordable, especially for people that might

01:34:16.720 | benefit from the charitable remainder, the charitable lead trust, which aren't necessarily

01:34:21.760 | tools for people with $24+ million? Funny enough, the situation you talked about,

01:34:28.000 | that was the reason I started the company, was I went through that exact situation.

01:34:31.760 | And when I saw lawyers' costs and accountants' costs, it's what actually made it the ROI negative

01:34:37.200 | for me to set it up. And going through that process, you realize there's a better way to do

01:34:42.160 | it. And so the idea behind Valor is we've automated a lot of this setup and administration for these

01:34:47.600 | charitable remainder trusts, charitable lead trusts, and graphs so that there are no legal

01:34:52.560 | fees upfront. So instead of paying that lawyer $25,000, you're avoiding that. And then also the

01:34:57.840 | kind of annual fees to administer these trusts, we've dropped those. Compared to that situation,

01:35:04.160 | we're less than a sixth of their cost. Compared to most of the other folks we see in the market,

01:35:08.160 | we're less than half the cost. And the whole idea is by dropping these costs, we can make the ROI

01:35:13.120 | worthwhile for more folks and help them build more wealth. And we've kind of obviously both

01:35:19.120 | been building companies in this space. The whole premise of fintech is that you can create more

01:35:24.240 | value. You can use technology to enable others to build wealth more efficiently and open up

01:35:29.120 | opportunities. And that's kind of what we're doing here is how do you take these kind of black box of

01:35:34.160 | irrevocable trust and wealth building structures that historically have only been available to

01:35:38.400 | those with nine figures and help everyone build wealth. Yeah, it's fantastic. The blog posts you

01:35:44.720 | guys have written on the Valor site are great. They go into more detail than most companies do.

01:35:48.960 | I'm going to link to a handful of them in the show notes so that people can go check them out.

01:35:55.440 | If they have any questions or want to reach out to you guys, where should people find you?

01:36:00.320 | Valor.io, V-A-L-U-R.io. Always happy to chat with folks there to answer more questions. We have,

01:36:07.920 | as you mentioned, a lot of content. We take calls with folks to help walk them through

01:36:12.960 | and understand these structures as well. So that's the best place to reach us.

01:36:16.720 | Awesome. Thank you so much for being here.

01:36:19.520 | Really appreciate it, Chris. We appreciate your time and love your podcast.

01:36:32.720 | [Music]

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