Estate Planning Strategies for Wealth Preservation Explained

[00:00:00]Celeste and Chris welcome to the better well show thank you so much for having us yeah thanks really appreciate it this one's going to be fun because we're going to dive right into the deep end on how the wealthy uh protect and pass on their wealth you guys are a part of a team the robin Glennon team who work with ultra weth high net worth families you work with family offices you guys are experts when it comes to estate planning how to incorporate different life insurance strategies and we're we're going to have a fun Series where we talk about all kinds of Advanced strategies using life insurance or potentially other Investments and structures but today with you know the election coming up pretty dang quick there's been a lot of questions around what are taxes going to be if if a potentially if there's a sunset or no Sunset but one thing that we have not made a video around is talking about estate planning talking about what is what are the potential things that we should be focused on when it comes to estate planning what happens if Republicans stay or become get in power what happens if Democrats stay in power what happens with a mixed uh you know house senate president and and overall like what what are some of the consequences and so I also know that you guys gave a presentation a pretty Advanced presentation recently um when it comes to you know attorneys and advisers and you talked about estate planning you talked about some of these things and you also talked about how to incorporate life insurance and so I know this is going to be really technical but it I I think it matters for people that uh you know check the boxes but then also for the people that want to grow wealth we should think with the end in mind and if you're watching this Channel and want to to continue to grow wealth you should know this stuff so without further Ado welcome to the show and I I look forward to Rolling our sleeves up and and learning well thank you so much for having us yes so uh at Rob and Glenn we focus on Advanced planning Insurance strategies most of our clients our high netw worth our family offices so we really take a big focus on just planning we always say we're going to meet the client where they are um and many times it's from helping them from some foundational estate planning to very complex estate tax mitigation type of strategies my name is Celeste Mo as you mentioned and so I've been in this world for over 20 years Chris and I have worked together for a long time but I'll let him introduce himself yeah I know thanks so yeah thank you again Kayla for having us on the thanks for that um Celeste yeah Robin Glenn um we we are very fortunate with the with the team that we've been able to to cure it here um and how deep and Technical we can go helping families with their income and estate planning needs uh we're fortunate we're going to talk about a couple of those items today there's obviously a a world of uh a potential planning opportunities for families and uh you know we just we we just feel lucky and and we're kind of blessed whenever we get to work at the families we get to so again my name is uh Chris deagle I'm a partner here um at uh at Robin Glenn and um happy to present amazing and I will say it normally when we present to Consumers we want to start basic and and step you know step the way up when it comes to Basics to advance and I I was the one that said let's Chuck the basics out the window right now let's let's dive into the deep end our audience um doesn't always need a 101 State planning which it that will be something maybe we come out with a video in the future but I I do appreciate the your guys' technical abilities and I want to make sure that our series are for the people that really want to go deep on certain strategies so if you're watching this video uh and you have questions or you have questions about you know different strategies um that the high net worth use please put that in the comments because that will be uh what I will use to go to the table and say hey can you make a video or do you have a case study on X Y and Z and so very grateful that you're here and I look forward to jumping in I believe you have a presentation that we're going to take a take a look at and so without further Ado I'll I'll hand it over this is a presentation that we recently put together and it was originally for some it was for an estate planning group but it applies to so many clients on different levels and it's really just about protecting wealth transferring it efficiently and how you you mentioned in the beginning how to how the wealthy protect their wealth and transfer it to the next Generations and so it's taking some of the traditional estate planning strategies that we see all the time and elevating them with some other things you can add to it to make them even more powerful um so disclosure Chris and I are not attorneys or CPA y y y um please always consult attorney or CPA but so the first thing on here and many of most a lot of the audience may have heard about this already it's this estate tax exemption Sunset so what it is is that once you're over a certain level of wealth your estate at your passing or if it's a couple at the second person's passing has a tax to pay of 40% % of whatever that estate value is and right now that estate tax exemption is really high we'll talk about it for in a minute what those numbers look like but it's very high and if the depending on who the next president is or what it looks like in politics after this next election then that could change it's already set to change at the end of 2025 so if they do nothing that estate tax exemption is going to drop significantly and Chris and I are in agreement and I'm sure Chris I'd love to hear your thoughts on this that more than likely it's going to Sunset because they're not going to have a long time to do something different yeah I I I agree I think it's going to be very difficult um they do have obviously different approaches um the Democrats and you know commala are interested in maybe moving that exemption down to 5 million if you go to her website um that's what she's looking at doing but if you take it a step further when she sort of advocated for the American housing and economic Mobility act um there underneath that act they were trying to get the exemption to come down to 3 and a.2 million with a 55% estate tax rate so it's a potential significant change if they're able to get their act together uh on the Republican side with Donald Trump I think that his goal would really be to keep everything status quo um and try to keep the exemption where it is today um and basically not allowing that U that Sunset to happen all of that said Celeste I completely agree I think that whichever president gets in there it's gonna be very difficult for them to um you know get away from that get away from that Sunset they would have to have um basically Congress and Senate um all in alignment to approve a new bill around that and I think that's going to be very difficult so I think we're looking towards the sunset and I had a client recently tell me what do you mean I we work with brilliant clients they all have successful businesses they're so smart sometimes wrapping your head around the government's going to take away 40% of my family's wealth is so hard so if you imagine if you do no planning there's a potential that a certain amount of wealth at 40 to 55% would be captured by the IRS so it's really important to do planning so this next slide here just shows what that estate tax exemption has looked like through you know through the years you've seen that it was lower 2011 5 million right now in 2024 it's at almost 14 million however as we mentioned and this is per person per individual and so if there's a couple you would double the this amount and that's their exemption anything above that is what gets taxed at that 40% or potentially 55% depending on what happens today today let's just say if you're worth if you're a family that's worth $25 million you have a $25 million estate and one person dies or both people die how does that work like you don't necessarily have any trust or anything you there would be no estate tax that would have to get paid how would that work and you know uh if if one or two people died currently with today's rules the fabulous question because we have a slide on the topic so right here this graph right here shows you that first one if you have a $25 million estate today individual because their exemption is at that 13.6 million they would owe the government or at their death their estate would owe the IRS 4. 6 million assuming there's been no planning this is in 2004 what this also shows is that with that Sunset so it's set to drop at the end of 2025 if they do nothing down to about 7 million per person and so this chart here assumes that between 2024 and 2026 there's been a 5% annual growth in the estate that the estate tax exemption has gone up by 2% because of inflation and we're still only assuming the 40% estate tax so this shows that 4.6 today is 8.2 in that scenario 8.2 million in 2026 so that's a 78% increase for a $25 million estate this is for an individual and we can go through the other numbers too but I mean it's the same kind of math you can see where the difference is what it's today and what it would be in 2026 for an individual so and again I'm I'm asking this question because I want to better understand this and I'm sure there's other people that want better understand this so even though we say today if you the there's certain minimums you're saying there still is a estate tax you have to pay is that what you're saying like if I if I died at 10 million and I had a $10 million estate today like if I died I have a $10 million estate I still would pay estate taxes is that what you're saying not today as an individual because you're below that 13.6 million exemptions so today that other slide that we had looked at if we if you're below this 13.6 then you wouldn't have an estate tax anybody who has an estate as an individual above that would now couples you would have to double that amount and then so 26 27 million if you're over that whatever you're over that so let's just say they were over another 25 that that another 25 would be taxed at the 40% yep I know I I do this sometimes in presentation apologize if you're a couple and like okay I'm husband wife let's say I die we have a a state of 20 million let's just say I die my wife stays alive does does it automatically like how does that work like because we're we do we have to like die together for the exclusion to happen or like how does that work in the estate World CHR you want to you want to tackle that one on the benefits of having a spouse yeah yeah um yeah know that's a fantastic uh question Caleb so whenever you're married you do get the benefit of both exemption so celest noted about 27 m in today's world about 27.2 million doar of allend exemption when one of the spouse passes away um today what's happening is you get portability meaning you get to use your spouse's exemption that was unused when you pass away so right now that's that that is that is in law so that's an advantage for for married couple um all the way the problem is is that if the law does Sunset and then suddenly it drops to 7 million uh all of a sudden that you know that portability doesn't nearly have the same amount of power that it does today if both FES were to pass away yeah and it's not like that this grandfathered in so per perfect we let's let's move on but pretty much what's at stake here is right now there's many people that are like I don't need to do Advanced planning because the the likelihood of our net worth being over 20 some million not that likely but now that we're talking this thing is going to Sunset and depending on even who becomes in power it could even go lower than the 7 million that many people when you look at inflation and overall like you know will we'll hit that number and that could be very significant so let's let's uh continue sorry sorry for throwing a wrench but I just want logically continue to track with what what we're talking about those are great questions and you made a great point a lot of folks folks if this drops down and even goes further maybe below 7 million per person that um is going to impact a much broader audience so it's really important to be aware of what's at stake and then also what options you have right um so I had added this information here because I just thought it was it we always assume like we have all this time and we've been talking about this Sunset now for several years right Chris and all of a sudden if we were going to look from yesterday which is when I originally presented this we have 440 days 11 hours and you can see all the seconds but it'll be here before we know it I don't even know where 2024 went but you also touched on something else that's super important is that we tend to have this wait and see mentality of well it'll it'll all figure itself out and it's absolutely not true in this situation because the IRS is going to get their money one way or another I saw this interesting stat that 60 to 70% of high net worth individuals are not optimally using gifting strategies for estate tax reduction I always tell our clients your money's going to go one of three ways a time they're going to go to your family to the community if you're you know charitable or to the IRS you're in control now during your lifetime of where it goes um and so if you're not using these strategies you're giving that up I saw one other stat yesterday that I thought was really interesting is that less than 25% of families who do have a taxable estate right now so who are over those exemptions have updated their estate plan to take advantage of the exemption and that was a study by Bernstein that they um just put out very recently they they interviewed a ton of high netw worth families um and then they look through their own information so it's scary almost that they're not taking advantage of this in of you know this gift I think that you know to to add on to that um and an important component of this as well and why this is so timely to act on on now if you possibly can is that the IRS has basically said that they're not going to come back and Claw back anything that you gift even though the exemption was higher so if you're able to make substantial gifts today asist noted on this side like trying to find a way to optimally use your gifting strategy like today is really the day to start to start doing that U because again the IRS isn't going to be able to call that back great yeah let's do a presentation on that I would love and I think I can speak for many people that are watching this video love to do a case study on how someone could go about that in in in a legal way so that will be a future video if you're if you're interested in in that video and more please say so in the comments and subscribe because over half the people that watch our videos are not even subscribed to our Channel which blows my mind so if you're if you're watching this please subscribe because it helps support what we're up to and and you'll be notified when future videos Drop loving this so far so another thing to be aware of is that we Kristen I and all of our team we work with a lot of different State professionals a lot of estate planning attorneys and because folks starting to panic about oh my God I actually have to do something I waited and now it looks like this is going to happen many of them are at capacity when it comes to the amount of clients they can take on they're not I I know many here so I'm in the Dallas area Dallas Texas and I know many that are not taking on new clients so not only is the deadline coming up there may not be as many especially quality advisors to help you do the estate planning and I know in your area it's the same case right Chris yes it uh it totally is um and and Nationwide we work with families ac across the US and attorneys across the US and uh and yeah that is a that is a common theme and a common concern around the estate Planet Community about not having enough time if people are coming at the last minute to try to get these things done and the strategy that we're talking about today specifically needs time one of the strategies we're going to go through some case studies you particularly need time so that the IRS can come back and say well that wasn't done properly um so we already went through some you know this slide about how it impacts individuals um we have the same information that shows how it would impact a couple so today if they have a $25 million estate using the same example then they would not have an estate tax because they're below that exemption in 2026 they would and you can see how that looks for other estate sizes and how that is potentially going to grow I love this quote by John F Kennedy the time to repair the roof is when the sun is shining um the sun is shining for these families right now this is when they need to take advantage of this exemption it's never been this high as you can see historically when we looked at that initially so there's no better time than to start planning today and take advantage of this gift that's been um given to them so to what this presentation particularly focuses on is on a strategy around a particular type of trust it's called a spousal spousal lifetime access trust or slot that's what we'll refer to it going forward and maybe some of the audience has already heard that term slot um but we'll go into what is it you know why use it when to use it how we've used it with our clients um so high level definition a slot is an irrevocable important to know that so you can't go back and change it technically it's an irrevocable trust that's created by one spouse we'll call them the the gror or donor spouse for the benefit of the other spouse um and typically also The Heirs of of the family and this is particularly useful for high net worth couples as an estate planning tool so that's just kind of highlevel what it is um this is a typical structure of a slot and we'll just start with like the top section so we're going to start with the wife assume the wife is going to either gift or sell assets into this trust that's for the benefit of her air of her husband and her and her children a big benefit of doing this of gifting as we talked about using those gifting strategies or selling the assets into the trust is that now you start to reduce your estate so let's just say for example she gifts 5 million into this into this trust now they've reduced their estate tax exposure by that 5 million they're no longer that brings them down and the more you can do of that and still live comfortably of of course um then you are going to further reduce how much taxes your estate or your family will have to pay at both year passing if there was a couple now the benefit of a slot is that even though the wife is gifting away these assets she still has indirect access because of being married so the husband would have access to income and principle from the slat from the trust and the wife indirectly does too so even though she's gifting away the assets she still technically has access to them through her husband important key is through the husband they have to be married he has to be alive so we'll go into a little bit more on that as well but um it's really um that's the key benefit of this type of structure it's you're getting rid of stuff you're reducing your estate tax exposure but also you still technically have access to it and then at the bottom this is just a assuming now the husband created the same type of structure for his wife but there's a big beware there um Chris do you want to talk about the reciprocal trust Doctrine yeah for sure so at its at its face the reciprocal trust Doctrine says under underneath at least this type of a trust structure that if the trusts are essentially identical then you really didn't accomplish anything in the irssi they really just saying you're trying to move one thing from one pocket to the other and you know what that that doesn't count so you have to make sure that the trust have different types of powers um for the stakeholders underneath the trust so you might have U you know different powers of appointment inside the trust you might have different trustee Powers you might have different beneficiaries you need to have something substantial inside the trust that makes it different than the other trust so that you don't have this reciprocal trust issue and so when we talked about time we've even recommended trust being created in two separate years um and we're kind of running out of time to do that now so that's why this particular strategy requires time so as much as you could do to make these them the two slots different if they're being created this way so another Layman's way to look at a slat is you get the benefits of an irrevocable trust but you still get some access be if assuming you stay happily married obviously these could be problematic if you don't maybe you will touch on that maybe not but overall like it's you're getting the benefits of an irrevocable trust which I'm sure you're going to dive into but it's not like you're saying so long for the rest of my life there are options um if if a happy marriage is in your future correct yeah and I mean there's there's options for the non-happy marriage but we'll talk about it in a minute but ideally we want them to stay married because it does make it more difficult you know if if they not love it so some of the key benefit FS just to kind of reiterate you're reducing your estate taxes cuz you're gifting assets out of your state so when it's irrevocable it means you don't from an IRS perspective or tax perspective it's not in your hands in your pocket it's out of your estate so it can't be taxed as if it was um you're still getting that indirect access it also Shields it from creditors so that enhances family protection and it allows for planning for future Generations as well so you're not just protecting these assets today you're protecting in them for children grandchildren there's language that can be built into these trust to make them more what we call like a dynasty trust that protects many you know generations to come um but what we talked about you know these um slack considerations it is irrevocable so it can't be changed in the future there are you know things called decanting that attorneys can do once again not an attorney there may be ways that they can maybe reverse it but for the most part when you irrevocable you want to assume you cannot change it another key thing is to remember that the people that are gifting these assets shouldn't really be seeing the slot as a bank account you don't want to gift away so many assets that if you didn't have access to them you would be poor essentially trust poor right you wouldn't be able to maintain your lifestyle um so it's important that whenever this is done it's done with professionals including your estate planning attorney C PA financial advisor to ensure that longevity of the plan makes sense for you as well not just today um there is a possibility of a loss of access if one of the spouses dies or if there's a divorce I've been told by some attorneys that now they're building in some flexible language into it that says um your spouse at the time if you want to have that conversation with your spouse that's up to you but I feel like if you're designing a trust and it says let's see who we're married to then um that's probably difficult but it's possible to build some flexibility into the language we Ted we talked about the re reciprocal trust Doctrine and then also this is important regardless of what kind of trust You're Building selecting the appropriate trustee just think about is that person going to be responsible if it's an individual if it's a family member and my children are fighting over the money in the future do I want to put them in the middle are they going to follow up with all the tax stuff that comes with being a trustee um so there's other options right corporate trustees independent trustees and Chris anything else on the slot side that benefits her considerations that you'd want to add yeah no I think all the considerations uh you nailed it and I know we're about to kind of go into some of the solutions around that but if we went back up to sort of the benefits of the SL I just wanted to to point out a couple of things because you noted um you know allows for Generation skipping planning and also Shield assets from creditors and I think that the the the huge takeaway whenever you're using a flatter really any kind of an irrevocable trust that you're using that generation skipping planning exemption for is that it should keep it away from estate taxes for several Generations not just your own so you're really shielding the IRS from being able to tax um that from an estate tax perspective anyway for many many generations which is huge and the second part is that also applies to shielding assets from creditors that applies also to divorces of your children if they start getting divorces because those assets will be protected for the benefit of your children away from ex spouses and things like that so when you think about a slat just don't think about it just as a way to Shield at your generation you're really shielding for many many generations to come I love that I really appreciate you flushing that out because that is that's something that's very attractive to to families of like how do we really make decisions today that have Ripple effects on Generations we may never meet yeah and to your point in the beginning of how do the wealthy protect their you know their wealth This Is How They it because they're not just protecting it today they're building that Legacy wealth and protecting it for many generations to come so that's all yeah really important information Chris I'm glad you added that um so slats are great we think they're a great planning tool for the right family it always has to be make sense foundationally we mentioned estate tax estate protection tax mitigation but is it good enough or can we layer additional levels of protection into it to make it even better so one of the things that we seen with a lot of the families we work with is that wealthy doesn't mean liquid so um when there is that passing of an individual or of both in in a couple scenario many times even if there's wealth the family doesn't have just liquid assets to go pay the estate tax and the IRS is going to come for that money within 9 months and if you don't pay it they're going to start charging a lot of interest so you ideally want to pay pay it off when it's due but if it even if you have a slot and inside the slot there's business interest or just real estate that's a liquid that's not going to help with paying the estate tax so what can we do um to fix that problem and we can look at one scenario we've changed the names in all of our case studies to protect the innocent right but if we just consider the the Smith family uh Miss Smith is a widow her estate uh is about 20 million in size she did have a slot set up and there's about 12 million inside the slot but it's all a liquid business interest so right now her estate tax due is 3.2 million so what happens if she passes away and now let's assume because of Market volatility there's also been a downturn so there's an impact to their business value so with liquidity I'm sorry without liquidity the state taxes are still going to be do 3.2 million if the business value drops let's just say 30% now that the assets inside the slot have also dropped because it's that business right so instead of being 12 million it's 8.4 million and what are the airs going to have to do they're going to have to sell that business at a discounted value now and the impact is that they're reducing their inheritance maybe even losing the business whereas if they had liquidity somewhere and we'll talk about ways you you can have that the taxes are due but now instead of using the money inside of the slot they can use those liquid assets to pay the taxes preserve the business preserve their inheritance so two very different scenarios where um the slot was there but what else can we do to make it more efficient and just to be clear that you're assuming that 40% on 8 million the the 12 so right right right exactly y exactly and so just it's a good thing that they had a slat to begin with because if they didn't there would be it could be a lot more as well um corre yep yeah abely that's great yeah it could have been a lot it could have been a lot more and you know the you know the IRS I wouldn't say has great bedside manners when it comes to these things and that the estate Act is due nine months after um yeah they they pass away um and so that there's you know there's a lot of emotional stuff that goes into dealing you know just with the circumstan of loone of losing a family member much less having to figure out what in the world you have to liquidate inside of the estate to pay a tax it could be it could be homes it could be real estate interest it could be a family business you just don't know um and it can be it can be really problematic and uh and an emotional time to have to make those types of decisions I I agree I don't sorry go ahead I mean even if you're healthy selling a business within 9 months really really challenging really challenging I can't imagine like in the midst of tragedy chaos like it's it's kind of it's kind of gross and disgusting if you really think about it from a macro standpoint how many families that didn't have the right planning their whole the whole thing that they work so hard for unravels because of unintentional consequences right we sadly see all the time we do yeah and even if the family is Able by chance to take a loan out or something to help pay the estate tax that just means you've really encumbered the income of that asset now and it can cause all kinds of issues so yeah it's um it's it's tough we've seen we've seen it all we've seen even I know in Texas here there's a lot of Legacy properties land and where they've had to sell properties that have been in families for hundreds of years to pay estate taxes so definitely not the way to go you know if possible um is having something else so we've already touched on this but what does the Smith family teaches slots don't solve the liquidity issue Market volatility is a real thing especially right now that makes the problem even bigger you don't want to have to force your airs to sell assets at an inopportune time for potentially a lower value but if you do have the liquidity it can provide flexibility and it's also going to protect those those assets within the family so what is the solution or what is a solution in this scenario well enter what Chris and I love to talk about which is life insurance so we're very big on ensuring that when we do talk about life insurance one we've already done the right planning we've right sized the life insurance amount and that it fits into the planning so if you notice first we talked about let's set up the slot let's get that done and now how can we make the slot even better so this is kind of like a slot on steroids um my C my dad growing up would always tell me cash is King and that's still true today as our conversation you know that if you have that cash if you have the liquidity it's going to be much easier when those estate taxes are due so if you have a slot and you have liquidity through life insurance and we'll talk in a minute on how it works then you've taken something that's really good and really made it great for for your family or for um any if somebody's working with families as well with those families that they're working with so when we talk about how does it work because I get this question a lot both from clients from other advisers I know Chris you do too it's hard for them to wrap their mind around okay but how does a life insurance fit into all of this so sorry to all the husbands out there we're going to kill one off first here so the husband passes away first which is normal because generally the husband does tend or the wife tends to outlive the husband so let's just say husband passes away now the wife loses that indirect access to these TW what was inside the trust um no longer can receive that income principle get you know money from it as she could before when her husband was living however if we during the process of planning while the husband's alive obviously we get a life insurance policy on him at his passing those benefits or that death benefit would be paid to the wife to replace what is being lost inside of the slot and we'll see some case studies specifically on you know scenarios where this makes sense but for lots of reasons it could be just they need the income uh they're business partners they um are just not going to be able to have maintain the same lifestyle if they don't have access to that liquidity or to that money that was in the trust so you can do that for the husband and in this scenario which you're saying if if there was also one on the wife or there was two slots then the wife can have life insurance on herself as well for the benefit of the husband because we don't know what order people will pass away in unfortunately Chris anything you would add on on just the life insurance design no it's just an interesting concept if if you think about it because a lot of times people will think about an estate Equalization strategy and makeing sure that each of their children benefit equally this is almost like a like a like a spousal Equalization so that if assets are lost because somebody passed away and they don't have access to that trust anymore that they'd have that injection of cash which equalizes it out and then they're at the same position they were before so it's a huge benefit to the uh to the surviving spouse um and and and really the core of a really solid estate plan now is you is there a problem if the death benefit is higher like does that trigger some estate can that trigger some some estate um numbers or cuz I see what you're saying is the the death benefits essentially the covering um the assets and so upon death make sure that you're making that right but isn't isn't income from a a life insurance policy it's income tax free but it's not estate tax free how how do you guys go about that we would usually yeah great question we would also put it in a side of a trust um for the benefit of the but it's going to the trust that the that the other spouse can have access to the principal and interest many times it's a separate trust so you've heard of an eyet you know irrevocable life insurance trust we would put it in that so that it's not part of the person's estate but they are still a beneficiary of what's inside of the trust so there's other protection measures you can use um to ensure that it's not doing that but and remember also that taxes are paid at the second yeah yeah totally so yeah you're absolutely right so one part yeah there is no income taxes on death benefits that are paid out and because we would set it up to be owned in an irrevocable trust estate taxes also would not apply to the death benef of the life insurance policy so it's a it's a true win-win um both for the surviving spouse and then ultimately um you know the the family whenever uh the second spouse passes away and the state taxes are due y so we've already T touched on this but um what are the benefits one key thing that people kind of don't always grasp and Chris and I always struggle on how to share this is that when you're buying life insurance you're putting in a much smaller amount for a much bigger benefit there's a lot of misconceptions around pricing and we'll we'll talk about that in a minute and some of the case studies too but what one of the benefits is you can leverage some of the assets that you put into the trust into the slot and buy much larger you know um death benefit as well so it also provides taxfree liquidity for estate taxes to replace that slot value if there is a death of the spouse or when that first spouse dies um and anything else that the estate needs I have yet I don't know you Chris but I have yet for a client to come back and say no they my family had too much life insurance there's too much cash now so um we never get that complaint about the person had too much life insurance maybe when they don't have enough that's when they get mad at us but having that liquidity tax-free liquidity is a is a incredible benefit um shielding protecting the assets from that Force liquidation that we talked about and then also kind of a secondary or tertiary benefit of it all is if the policy um has some kind of cash value then the spouse would also you know be able to access the cash value in the policy and take distributions from it so kind of a very much another benefit of it um a lot of the times we are looking at death benefit Focus policies versus cash accumul policies but there is the possibility that there's some cash accumulation the last thing I'll say on this is that many times life insurance gets a bad reputation as far as you know pricing or the salesy person that's presenting it to you which we try not to do ever because that's not our focus is that at the end of the day life insurance is liquidity it's money it's almost immediate liquidity you know when claims are processed all is clear most of the time they get paid out in 30 60 days long as you know no spouse killed the other one or something like that um so that you know it's just cash it's liquidity and it's coste efficient liquidity and it's also that asset protection as we mentioned so now your family is not selling the property the business whatever it is to be able to pay estate taxes or pay whatever the estate needs at that point in time even if it's not taxes um Chris anything else you but add on the before we kind of jump into some of the case studies no I think uh yeah I think you I think you hit it on the on the head I mean at the end of the day life insurance is um it's it's a way to access cash at a discounted mortality value um right so you just let that time value money work for yourself um and in the future you have a you know a lot of cash that your family can use for um all the reasons that's going to need it yep so we can move into um some of the case studies so these are two separate families that we worked with once again names are are changed but the first one we have here we'll call them the robin family uh Mark and Lisa married both in their mid-40s not only are they married they're also business partners and they're very key to each other so if something was to happen to one or the other it could be detrimental to the businesses that they have serial entrepreneurs but recently they had sold kind of the the big business the one they had been working in the longest and after the sale of that business their estate was at approximately Le 60 million however at their mid-40s they're not ready to give up control of their assets right they still need that money that liquidity to be able to invest into more businesses um and they also had four or have four young children to still to take care of but today if something was to happen and they did no planning their state tax exposure was 133 around 13 million and growing because as I mentioned they're serial entrepreneurs are constantly investing and looking for the next big opportunity so the solution here was a slot which we advised creating in two different years they had the time to do so they transferred some of their assets into the slot not everything once again with the help of financial advisor State planning attorney we coordinated properly to ensure that they still had enough outside of their State as well um and they still had the ability to retain some control we utilized Mark's exemption so his full exemption that he has right now this higher exemption and only some of Lisas and that was just once again because we needed to ensure there was assets outside of the estate still but the big kind of thing that we wanted for them to add after doing that planning was adding these individual life insurance policies on each of them and when we did the math all the calcul ations we did 10 million on each of them reason being was that once again if something happened to one or the other Not only was were they going to lose access to the assets inside of the slot they were key to each other from a business perspective and so we wanted to make sure that there was sufficient liquidity there for that person to continue whatever you know Investments whatever other uh Endeavors they had in this entrepreneurial Journey that they've been going on for several years together so it provided liquidity for personal and business needs um and I've touched on there's misconceptions around the pricing of life insurance and so we we like to look at pricing of life insurance compared to like assets under management so investment um firms financial advisers wealth managers when you have your money invested with them there's usually an a charge to manage your assets or AUM as it's frequently um uh referred to so we look at it is on an annual basis what is the premium as a percentage of the death benefit and in this case it was 70 to 80 basis points so lower for Lisa women's life insurance is or pricing tends to be lower because we tend to take more take less risk supposedly um and then the men is higher so his was at 80 basis point when you think about it it's less than generally is being charged just to manage assets so it's important to look at what am I actually paying into this policy and what am I getting uh it's just a different way of looking at it it's it's a I've actually never heard someone reverse engineer that from a standpoint of like the premium is giving you a benefit but it technically is a cost but people are paying more than that to manage their assets and this is something that's that's a really unique way to to frame it yeah I mean it's a it's a cost but to your point there's a benefit right there's there's growth there um there's return on investment too so just a different way to appreciate where your money is going versus oh I just have to pay my life insurance premium again um a different way of looking at it Chris anything else you want to add on this case study um you know no I I know there was a there was a really good overview um the only thing that I wish that the Smith family had done with us was come to us prior to them selling their business um there is a tremendous this amount of stuff that we can do for the serial entrepreneurs and those people who are maybe looking at selling businesses or any assets um we spend a lot of time on the income tax planning side of things and have that parlay into the estate tax uh planning side of things so I think we could in a lot more with them had they come with us a little bit earlier um but this was still an awesome outcome for them well and and this gives me just a good thing to say right now it's like if you're watching this you're like hey I probably would benefit from having a conversation like this we've partnered with you guys because we want to bring the best of the best in different areas of the business and so if you're if you're curious at all want to have a conversation we'll definitely have some links down below that you can use and those can uh put you in touch with people that can have more of these conversations that are backed by experts uh like both of you so I just want to like throw that out again whether this is something that hopefully you can aspire to or or if you actually have questions about your current estate or you're like hey ready to exit in a business or something like definitely have conversations before making those decisions and uh we're very excited to be working with with experts like yourself to help increase Financial IQ thank you Caleb and likewise I mean absolutely yeah we're here to help guide those those conversations um this what we see day in and day out so happy to do so and the more complex the better Chris and I love anytime we can get a little Nery um so this is second case study this one is a little different um there was some additional planning that was required to make this work right for the family so two families really here but we'll call them the Glenn family Scott and Allison both in their early 50s there Estates around 12 million so they're not quite at that taxable point in today's numbers two daughters in college however Scott is an only child and he works and will inherit the parents um business so the assets the business interest we'll call it Glenn Inc um so in the future he and Allison will likely have estate tax exposure when that inher inheritance occurs so on his parents side their estate is around 32 million and they're in their mid 70s and they have done some planning they have been proactive throughout their lifetime about planning they've done some gifting but the father still had some exclusion or some of that amount that he could give away around 7 and a half million it's also important to note the dad was uninsurable um he had several health issues um had been sick for a while so in today's numbers the parents estate tax exposure is 2 million in 2026 it would have been about 8 and a half and at around life expectancy a really life expectancy of his wife it would have been about 20 and a half million so we had to take this into two different parts once again focused on the planning to get it right before we could get to the insurance so part one um we suggested that the mom transfer her shares of the ownership of the business to the dad the reason being was that that dad still had that exemption so then he can take that those assets that have been given to him by his wife or transferred and put those into a dynasty trust using that exemption that he still has left that's 7.5 million just by doing that the parents reduce their state tax exposure to zero um it will go if the sunset occurs which once again we expect 2026 it would go up to about 5 million and at her life expectancy I'm just a little bit under 14 million for that reason we did recommend that if possible the mother get some life insurance on herself to cover that estate tax uh we had recommended a $10 million policy and we like to be very transparent about pricing numbers everything you'll see here she's older she's in her mid 70s so now that premium as a percentage of a death benefit is around 3% and that's just because as we get older um pricing is going to go up and it's also why it's important to do the planning when you're younger and you can get that more competitive pricing uh versus when you're older so there's lessons here is that she could still do the life insurance which she did but also it was much more expensive than if it would have done been done earlier or it could have been done with a dad in a survivorship policy and perhaps even less expensive so this was part one of the solution I know Chris worked more on this one so Chris any anything else that I missed in this first part no no I I don't think so um I I mean we're about to go into part two of it but I think that one of just just worth mentioning uh both of these families neither of them lived in a state that had their own State own inheritance tax so sometimes we have to take that into account um as well if they're living in a in a state that has our own sometimes those numbers are going to go up and sometimes those exemptions are are much lower so it's just another thing uh to think about depending on the state you live in but right there's Federal then there's a state state tax there's also state that would be a whole other conversation kale that add more complexity to it um part two was now establishing a slot or slots for Scott and Allison um they were going to transfer a portion of their assets into the slots they could always gift more later it didn't make sense for them to gift any more now they utilize some of their state tax exemption once again because they couldn't give away all their assets but we did suggest that they purchase some individual life insurance to benefit to take advantage of the fact that they're younger and because we did expect for them to have a estate tax exposure in the future so that that could be used by their children to pay the taxes and so in their case once again premium as a percentage of death benefit was still under you know what typically is charged to manage assets so 78 basis points for her 92 basis points for Scott um Chris anything else here I mean this one is pretty similar to the one before just a different family different structure yeah know different family different structure um you know I think that the the thing to add is that you know whenever we're looking at a plan it's always you know bespoke to what the to what the family's needs are and what their circumstances are sometimes that means we need to work with multiple Generations off the bat like in this one we're working with um I'll call them mom and dad and then uh and then the and then the kids sometimes it's just working sometimes just working with the kids sometimes it's u a couple of trusts sometimes it's it's one trust sometimes it's pre-transaction plan like we talked about a second ago sometimes it's oh oops I already sold my business so now I'm just doing this so um we're we're fortunate that when we get to work with families we really get to take a full step back and really get to know the family understand um what their you know quantitative um needs are and pair that up with their qualitative goals yeah um we can really start crafting some magical things so hopefully these two um kind of outlined at least our thought um in in how we approach problem solving love it yeah yeah that's a great point chist is you know multigenerational today we were discussing a family where we're only working with one of the siblings because the other ones don't get along you so that happens too um but we do like to take when possible and only because it helps us help the family even more is take that big picture approach and say okay let's start from that gen one or you know your parents and let's look to see what haven't they done for your benefit and now let's work with you and let's help you protect your children so there's a lot of layers and there can be a lot of complexity but also planning can provide so much protection so much peace of mind um going back to that wealth protection for many Legacy I for many generations to come um so the last thing we have on here is just this chart Compares um traditional trust to that irrevocable life insurance trust we mentioned to a slat to a slot with life insurance what the major differences are and the key thing is going to be once again the liquidity that tax-free death benefit those are going to be the two major things that kind of stand out when we look at the comparison of some of these um then something that I just read uh think like two days ago it was in that Bernstein study too and I thought it was so interesting we could see this so many different ways but they took these families and they interviewed them and they were trying to you know ask them like what are some of the key things you've learned and one of the persons interviewed was a first generation wealth Creator and he said lessons are dividend so he really wanted to learn from those that came before him from the families that did it right from those that did it wrong you know and apply it to his family to protect himself so we want to share our dividends that we've learned from other families with our clients as you do too so that they don't make the same mistakes and we can help them protect what they've worked so hard for um and then Shameless plug we have a podcast too which we talk about a lot of different stuff make sure have L down below as well yeah absolutely the first of all celest Chris thank you uh I feel very grateful to to learn along with our with our audience and just very very excited for the series because even like gifting a lot of people talk about gifting I know that not everyone has 100% clarity about what that looks like and like maybe there's a video that we do breaking down the different type of trust the pros and cons and the different type of case studies and so I appreciate it um I know that not these videos might not get as many views as some other videos that we do but I really believe the people that watch the whole thing there's there's so much meat on the bones and I just appreciate your expertise like I said there will be links down below uh for if you want to learn more definitely check out the podcast we'd love to see your your podcast grow um any final words that you guys want to say as we get get this series off the ground yeah just uh you really really appreciate you having a song Caleb I know that you have a uh you know the way that you approach problem solving and the folks and the families that you work for you know philosophically we're so well aligned so I just appreciate everything that you do out there in the marketplace too and U yeah again thanks for having us on I really appreciate it yeah thank you so so much for having us and and for your audience I we hear this all the time but one was the best time to plan it was yesterday but the second best is today so don't waste any more time just do the planning take advantage of what's available