Tag: tax planning

Want to Lose More Than 50% of Your Retirement Savings? Don’t Watch This Video

user 0 Comments October 22, 2023 Retire Wealthy Tips for Retiree's

I don't care if you have $500,000 or a 100 million this video can help you I'm going to give you six reasons of why you may want to consider a trust as part of your retirement plan and exactly how it can benefit you and your family I'm not a lawyer and thank goodness for that but everything we're going to talk about today is to help you understand how trust can benefit you from a financial planning perspective we want to help you protect your assets pay less taxes and make sure there's more money left for those that you love and if you have a worth of 5 million and above stick around to the end of this video because I have a special bonus for you all right let's jump right to it so high level we have two types of trusts we have a revocable trust and an irrevocable trust now in reality there are hundreds of different types of trusts possibly thousands of them the concept of a trust goes back thousands of years but high level without getting into the legal definitions and boring you with some of the granularities of what a trust actually is and the different types and the definitions we want to keep this high level and make sure you can apply it to your particular situation so revocable trusts are money that you can access you have no creditor protection and they are inside of your estate then you have the irrevocable trust which is outside of your estate so when you put money into an irrevocable trust you have to gift it into that trust you lose control over those assets but by losing control it is now out of your estate you do have creditor protection because you no longer own that asset so we're going to talk a little bit more about this as the video goes along but understand high level there are revocable trusts no creditor protection you can access this money but the primary purpose is this helps to avoid probate irrevocable trusts are money that's outside of your estate you'll pay no estate taxes but you cannot access this money the trustee that you assign upon creation of the trust is the person who manages those assets can make distributions to whomever you've named as the beneficiary of the trust okay so I promise you I'm not going to get too deep here I just want to go over this concept because it will apply when we go through the benefits that we're about to get into some of you may have seen this but this is the national debt Clock we are spending $2 billion on interest on the national debt every single day in this country we're adding about $800 million per hour to the national debt so how does this impact you well right now per person in this country you can die with about $12.92 million before you pay any estate tax that's about 2584 million per couple but I want to take you on a little journey through history going back to the year 2000 you could die with $676,000 and that 1,000 above 675 you would actually owe 55% estate tax on so think about this if you died with $2 million everything above 675 you would owe 55% on now what if some of that money is Ira well then you also owe income tax on that money and if you pass it on to a grandchild you could very possibly ow generation skipping transfer taxes on that money you're talking 80 90% possibly even more completely gone of everything you've left now our estate taxes going back to the 2000 levels I don't know but my point here is we're paying $2 billion a day in interest we're adding 800 million per hour to the national debt at some point it's likely that politicians are going to come after the people that have money increasing the estate tax is one way they may do that so the information that we're sharing today for some of you out there that have accumulated very uh large amounts of wealth or own businesses it may absolutely apply to you right now in 2026 the estate state tax thresholds are coming down they're being cut in half essentially so you can die in 2026 with $5 million per person which is adjusted for inflation it's going to be probably somewhere around 6.2 or 6.3 as a married couple you're looking at about 12 12.5 somewhere in that range anything above that 40% goes to the government so the first reason why you may want to consider a trust for your family for the wealth that you've created is if estate taxes come down to a level of wealth that you exceed or if currently exceed the thresholds for the estate tax to be applied the government may take 40 50 60% whatever they deem is inappropriate estate tax rate from your estate in addition to that there are 13 states that impose an additional estate tax so the one I'm talking about is at the federal level but there are 13 states that also impose their own estate tax so you need to speak to a lawyer you need to include your financial planner but this is where the irrevocable trust comes in handy there's a lot lot of ways to do this a lot of times people use life insurance or they make gifts into the irrevocable trust to buy life insurance to leverage those dollars or we just start on a gifting strategy over time to get money out of the estate so this is why the irrevocable trust is out of your estate because once that money is gifted it can no longer be taxed at estate tax levels either at the federal level or the state level so one of the big reasons people use irrevocable trust is to get money outside of their estate so the government cannot tax it but also to create creditor protection the second reason to consider a trust applies to almost everyone to avoid probate so probate is the process where the court follows your wishes if you have a will and distributes your assets if you don't have a will you die what we call intestate and then the Court decides without your wishes being known where your assets are to be distributed so if you die right now and you do not have assets inside of a living trust or any type of trust let's talk about your home for example then that is part of the public record your investment accounts uh your bank accounts your jewelry everything that you own except for IAS because they bypass the probate process they have designated beneficiaries but anything that goes through the court system becomes public record anyone can look it up see exactly what your house is worth what your investment accounts were worth how much you had in the bank and then they know how much money your children have inherited the third reason to consider a trust is to protect your children we live in a country where we have a divorce rate of about 50% if you pass money on to the kids everything may be fine in the marriage right now but down the road they get a divorce it's possible that half of your money will go to your child's future ex spouse if you don't want that to happen a trust could have Provisions in it that protects your child from divorce and his or her spouse receiving half of your money along the same theme of a divorce it could be creditors that are coming after your child because possibly there's a judgment against them they've been sued well without a proper trust in place with the protections the provisions written into that trust then your children could lose that money to some type of judgment could be a car accident could be a bad business decision could be uh something that they've done where they are personally liable those creditors could come after their assets and if that money is in their bank account it could be subject to complete loss the next reason is to actually protect your kids not from creditors or divorce but to protect them possibly from themselves even your spouse may fall into this category so you can have Provisions built into that trust that say an annual income of x% must be provided or they're not able to access the entire Corpus of the trust or principle that has been deposited into that trust until a certain age you can even name a co-trustee along with one of your children to make sure that there's some oversight with the decisions that are being made now if you don't care if your kids go out and buy Lamborghinis and throw wild parties then don't consider this a a good reason but if you do and you think it may be wise to have some Provisions in there at least to a certain age a trust is an excellent tool to accomplish that work the next reason is for your retirement accounts so inherited IAS don't have the same level of creditor protection that traditional IAS do or rollover iaas do now Ira protection from creditors varies by state so you want to make sure you understand what level of protection you have in your state for your IRA and that they may be different for your traditional IRA that you open and contributed to as well as it may be different for the 401K that has gone into what we call a rollover Ira but when IAS are inherited for the most part you lose creditor protection there may be some variances across states make sure to look into this but if you want your inherited IRA that you receive or you give to your children or possibly that you're going to receive from your parents you should look into a very specific trust that is designed to house IR IRAs you want to make sure it has specific language in this you want to work with an attorney who has drafted these trusts before and understand the correct wording because since the secure Act passed if you do not have the correct wording an institution can refuse to roll the money into that inherited IRA or to accept that Ira into that trust I've seen it happen with a client who did his own trust trying to save a little bit of money the language wasn't in there correctly he passed away money tried to go into the inherited IRA when the daughters accepted it and and it was rejected hundreds of thousands of dollars in taxes were due the last reason a trust could benefit you and your family and this is not an all-encompassing list there are plenty of other benefits and things to consider when it comes to placing a trust as part of your retirement plan but it's to create generational wealth usually a dynasty trust is created for this and I mentioned earlier in this video The Generation skipping transfer tax so when money goes to a skip person which is two generations Beyond you so your grandchildren your great-grandchildren the government imposes a generation skipping transfer tax which is an addition to the estate tax on the transfer of those funds so using your GST generation skipping transfer tax exemption as part of an overall Dynasty trust can help reduce or eliminate the impact of that tax now the law is very muddy here um you want to work with a qualified professional to help implement the right tools so you have the right language and the right tax returns are filed to make sure that you are in complete compliance with the law because there is a higher possibility when you have this type of wealth to be audited so make sure you're working with people who know what they're doing and again make sure to include the financial planner because after all the legal work is done there are still administrative items that need to take place there are financial planning considerations and if you have these different professionals not working together with one another you have a huge potential hole in your retirement plan all of this is step five of what we call the retirement success plan where we work with you and your attorneys to help build the financial plan they draft the documents we execute the financial plan so we have more videos on the channel about step five estate planning as part of our retirement success plan and now on to the bonus so if you have a net worth of over $5 million I'm sure you've heard of the certified financial planner professional but what you may not have heard of is the cpwa the certified private wealth adviser professional profal so this is a designation that myself has completed and also Ed Rossy here at our firm Ed and I both completed this program through the Yale School of Management and the designation is overseen by the investments in wealth Institute and the curriculum is designed specifically for those with 5 million and above so if you think of the cfp designation it's a very broad range of topics very very valuable but it goes very shallow on all of these different topics for the most part or at least compared to the cpwa the CP wa goes tremendously deep on a more narrow set of curriculum but it's designed specifically for those who have net worths of 5 million and above so if you go to the cpwa website you can probably find one in your area if you can't do that or you want to give us a call we're here to help but for this type of planning I would recommend working with a cpwa professional if you have a net worth of over 5 million is opposed to a cfp [Music] professional [Music]

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