Setting Up a Living Trust (Estate Planning FACTS)

hi Clint Kunz here with Anderson business advisors and in this video we are going to discuss living trust and have any proper estate plan alright let's get started [Music] so there's a lot of information out there in the internet how to properly plan for your state maybe you've talked to your parents before or you're friends and they've given you some advice well I can tell you this that there's a lot of misinformation or people will steer you I think down the wrong road when it comes to estate planning because maybe they just don't know or they have some other incentives in mind like for example if you go to an attorney and you ask them how is the best way to plan for my estate a lot of attorneys will tell you to create a will now I'm sure many of you are unfamiliar with the will and how it works and if you're not well I'll give you a few examples here of how a will works typically a will only operates when you die so there's no benefit while you're alive to having a will it's designed specifically that when you pass on it's going to ensure that your estate is distributed to those beneficiaries who you designate in your will now therein lies the problem in order for the assets to get to your beneficiaries yeah you have to die but B you're gonna have to go through probate because that is the legal process through which a will operates now if you haven't been through the probate process before it's not an enjoyable experience and here's why number one you're gonna need an attorney now I don't know about you but most attorneys do not come cheap especially when it comes to probate that's why so many of them will create wills for to $300 because they're viewed as a loss leader that when you pass away your family will come back to that attorney or their law firm and you'll ask them to handle the probate and that's where they're gonna cash in because they're gonna have to handle that filing for you walking you through the entire process which sometimes can take up to nine months or if somebody's disputing it we can be in in probate for three four five years or maybe you have a rogue executor someone that seizes an opportunity to make money off your estate because they can charge to handle your estate if it's your wills and set up appropriately or properly to stop them from charging I know my own family my uncle charged over seventy five thousand dollars to administer my grandmother's estate in a probate and it took over almost five years and all she had was two pieces of property in five financial so probate can create a lot of problems for people so you want to avoid probate because of the costs not to mention that it's public knowledge anybody wants to know what's in your estate all they have to do is look at the public probate filing and they can see it because it's all the public disclosure that comes with that now there's other things as well that are negatives when it comes to probate such as ancillary probate get this if you're a real estate investor and you own property in three different states and you pass away and all you have is a will your rest assured that your family will be involved in triple the probate fees because you cannot probate property in Florida if you live in California you actually have to start a new probate in Florida just for that probate Florida property otherwise there's no way that'll get passed on to your beneficiaries so what I always tell people is that you should avoid the use of wills as your primary planning objective what I like to use is a living trust and the reason I like to use a living trust is that it bypasses probate altogether now what's key here is you have to get this entity set up ahead of time you have to set it up while you're live of course and then you have to fund the trust you know people often say well how does that work I said well I mean it's a revocable document so you set it up you specify how you'd like to have your estate distributed when you've passed on and many times the way it's set up if they're a married couple you'll have this one trust right here it's called a joint trust and it'll be for both both spouses and you'll put all of your assets into the joint trust and then when the first spouse passes away the survivor has it all and then when the survivor passes away then the assets will be distributed down to your beneficiaries and this is where you put in a set of instructions on how they're to receive the funds maybe you don't want them to have all the funds outright you want to stretch it out for a period of years you can do that you want to incentivize them to go to college to start their own business you can put all of that into the trust so this is really important when you're thinking about your estate who do you want to receive your assets and then how do you want them to receive them for example my son Carter is currently in law school and my wife and I trade you were out at dinner with him one night and he said to me brought up the estate plan of all things he said well dad I know where the trust is located but am I the trustee and I started laughing I said what makes you think you would be the trustee he said well I'm going to law school I said what does that mean you're you know your sister she's not capable and he said well she's not in law school I said so does that mean she's not capable they said well I might know more and I said no no you don't know what you don't know was a problem say Carter what is your experience in real estate we have over a hundred properties how would you manage those and he just looked at me I said okay and I went on I asked him a few more questions about real estate and I said Carter most of our state is real estate you're not qualified to be the trustee and he's just staring at me and I said that doesn't mean you'll never be qualified but right now you're not and so at a future date when I think you're qualified I can always change this document and make you the trustee make your sister the trustee as well so both of you will be together as Co trustees but here's something else Carter you're not going to get all the assets out right because we're gonna we have them held in trust for you and your sisters for your sister's benefit for your lifetime and then your children's lifetime and their children's lifetime because what I'm building here is a legacy of wealth for you I don't want you to be able to take all those assets out and he's just staring at me shocked that I that that I would hold the assets and Trust and not allow him to have them to do with what he wants but I explained I said so many things can happen in your life you could go through a divorce you can be involved in a lawsuit and then you could lose all of those assets so what I want to do is preserve them for you to make sure that that doesn't happen and more importantly I want to ensure that you respect these assets that you don't look at them as something to use to get a Mercedes SLK 500 or whatever the top-of-the-line car is because you think that is more valuable than having a piece of property that will generate income for generations so that is why we've created the trust in that manner now I've just explained to you how I've created my trust in a simplistic term but you can create yours any way you want but as you see is that it's very important that you have this set of instructions maybe you have children from a prior marriage and we have other issues there as well you want to take care of so when the first spouse passes maybe you want to ensure that assets are held over here for these children so you can get as complicated as you want with this document and that's why I tell people this is the document you want to ensure that you create to hold all of your assets and then when you've passed on and then your spouse passes on everything that's inside of hereby passes probate and you don't need to bring an attorney in and pay the exorbitant fees to distribute out these assets to your beneficiaries per the terms of this trust agreement now when I talk about you know holding the assets in the trust what does that really mean well let me put it in a different context for you think of it like this let's assume that you're gonna move and you've seen those pods before right that you can put all your stuff in so here's your house right here and you decide it's time to move you're gonna move to a new property so you bring over one of these pods and you take all of your effects in your house all right you put all your TVs inside of here you put your couch inside of here as well your kitchen table with its chairs go inside of here you name it your bed is inside of here everything you own is now placed inside of this pod now when it's time to move it on a truck comes over picks up the pod puts it on the the truck alright and it's gonna drive it to to your new location and all of your stuff is gonna move along with that well the pod right this is equal to a living trust all right it's just like a pod what you want to do is you want to put all of your stuff into the living trust so if you have LLC's they're gonna go inside of air your bank account will be inside of there your personal residence will be inside of there your corporation will be inside of there all of those assets get stuck inside of that trust so wherever you go during your lifetime let's say I'm living in Washington right now and then I move to Wyoming alright well my living trust goes with me and everything that's held inside of it we'll go with go go to to Wyoming or wherever you go as long as you have your trust fully funded then it holds it's like a potted hole all that stuff let's say we take off and we forget to put inside our kids bicycle right that's left outside of our pod now what happens with that bicycle well somebody's gonna have to go and pick up this bike and catch up to the truck move it over and put it into the pod to make sure it gets to its final location well it's the same way with the living trust if you leave an item outside of your living trust let's say we left outside of our living trust a secondary residence we have in Palm Springs California well all of these assets that are held inside of the box they bypass probate all together you know probate there but this asset since it wasn't inside of the living trust this will have to go through probate now we don't want to fall into that position if we don't have to that's why you always want to make sure you get everything into your box into your pod so it just moves right on down the road and there's no hassle involved or no extra added cost because think about it if you had to go get it out hire a delivery man to go out and pick up this bicycle and catch up to the truck he's gonna charge you some money maybe charged more hundred dollars to pick up this bicycle to go catch up and put it in the pod same thing with this house for probate what they're gonna do is they're gonna say alright well everything's supposed to be in the trust because that's controlling how the assets are going on to the beneficiary so we're gonna probate this house and put it into the trust we're gonna catch up to where the trust at and make sure it gets dumped inside of there so whenever you create a state plan not only you're creating the living trust you're also gonna create a pour-over will so this is a will right here as a backup document to handle the bicycles the things that don't make it into the trust because you forgot to do it during your lifetime in addition to that you want to make sure that you have a a living will in addition to your trust so these are the other documents that every important statement a state plan should have you want to have a living will alright that is a document that describes how your fare should be handled in the event you're an irreversible vegetative state what I mean Affairs I mean personal affairs do you want to have a hydration food pain medication so this is important when do you want them to pull the plug you want to have the medical power of attorney this has given someone the power to deal with a dollar the doctor to make medical decisions on your behalf you want to have a financial power of attorney financial POA is going to give someone the ability to handle assets that are outside of your trust that we're not placed in there and deal with those financial accounts when you're an irreversible to handle them on your own so that's an important document to have and as I said you got to have the will and whenever scheduling gifts this is really cool because with this document as well that goes in your estate plan it takes care of all the little things let's say you have a watch or firearms and you want them to go to specific individuals when you passed away well that's what you can do you can put it down on the schedule of gifts you write them out on there and when you passed on then those are the gifts that get made first because you can't believe how many people fight over the stupidest things because they have sentimental value to them so you want to make sure you have that addressed ahead of time before you passed and you've listed that out during your lifetime who's to receive receive those specific items and the best part about it you can change it at any time and so if you're your kids you know start to ignore you just say hey send them over a copy of the schedule of gifts and say you know what you used to be on here now you're not because I haven't seen you in two months so there's some control their schedule I guess will financial monetary medical by our attorney living to living well these are all key documents every estate plan must have in addition to that most important living trust that bypasses probate preserves your estate allows you to control it after you've passed on by having provisions in there that describe how the assets will be distributed to your children as real estate investors I can't employ you that this is one of the most important documents you'll create because those assets that you're acquiring today that you're building up who is gonna run them for your family in the future that's gonna be handled by your living trusts my name is Clint Kunz with Andersen business advisors [Music]

Channel: Clint Coons Esq. | Real Estate Asset Protection

Views: 397,021

Keywords: setting up a living trust, estate planning, living trusts, do i need a trust, living trusts explained, do i need a trust or a will, why do i need a living trust, living trust vs will

Id: re8ufXf1LPA

Length: 13min 47sec (827 seconds)

Published: Wed Jul 10 2019