Pandemics, Politics, and Protecting Your Legacy

Learn how to protect your legacy and keep your hard-earned assets safe from creditors, lawsuits, and unexpected life events. In this episode, Estate Planning Attorney Peter Klenk explains how simple, cost-effective trusts can give your heirs flexibility, security, and peace of mind in uncertain times.

Transcript

Hi, everybody. It's Peter Klenk, Klenk Law, Wills, Trust and Estates, Probate, all those things we do, it's all we do. Here to talk to you about planning in your legacy. Like, the title pandemics, politics, and protecting your legacy. But really just talking about making sure that your wishes are carried out and that your assets aren't taken by somebody with your guide. They don't become wasted.

I mean, look, your kids know what they wanna spend it on or your heirs or the charity, so be it. But at least be it what they wanna spend it on. Right? How to do that in uncertain times? Because what are the laws gonna be at the end of this year? I don't know. But what are the tax structures gonna be at the end of this year? I don't know. Nobody knows. Nobody can tell you the answer to that.

What will the economy be in the future? Again, nobody can tell you these things. So what you can do though is shelter and protect the things that you're leaving in a way so that your kids or whoever is receiving them can marshal them and invest them in a way that they at least think is a safe way. But also have it be so that the assets are safe. That nobody can take them. Right? No government agency, no creditor, no daughter in law, no son in law, those things.

So what we're talking about here now is gonna be talking about having a using a trust because they're just so easy to use, just set up to create, and they give such benefits. So let's kinda go through that. And I'm not gonna talk about one area here. So we're talking about your legacy and leaving things. So there's all sorts of different ways to use trust. There's hundreds of different types of trust. But we're gonna talk about the trust that you'd be setting up.

And let's, for example, in this case, we're gonna say the kids. If you don't have kids, plug in nieces and nephews or somebody else, but let's talk about kids. And the idea is that you wanna have it be as safe as possible, sheltered as possible, but without running up a big bill and having a bunch of expenses and a bunch of complications. So a trust was created. Now, trusts were created by the British. We had them because we were part of the empire, and we still have them because they were great.

They used to be, yes, something that only wealthy people would use, but now they're for anybody. Anybody who's getting an inheritance. If your kids are gonna blow it before your funeral in Vegas, then don't worry about it. But if it's gonna be held for any length of time a trust is a great tool. So a little background, and I encourage you to go listen to some of my other podcasts about trusts specifically. They'll go into a lot more detail and be probably more information that'll help you.

But in general, the idea is that in your will or your revocable trust while you're alive, you can say that when you go you're leaving the inheritance to your kids in trust. And each one gets a separate one in my example because that's I think the best way to do it. So you have two kids, when you die your stuff is divided into two. You are the grantor, you grant the power to the trustee, which can be kids. They're old enough. Let them do it. It's free.

They won't charge money to hold assets for a beneficiary, which also can be the child. Right? So that's the simplest way. I grant the power to each child to hold their inheritance in trust themselves as beneficiaries, and then you give them broad rights to invest, broad rights to use the assets. Now that scenario, what I just gave you, you created this entity when you die. You don't need it while you're alive. It doesn't bother you while you're alive at all.

And once it's formed at your death though, that means that the assets are held by the trust, not by your kids. So the worst case scenario is your kids in bankruptcy. The law is if you get an inheritance when you're in bankruptcy, you have to turn it over to the receiver. It's gone. Your kid would never get a dime of it. But if it goes into this trust I'm talking about, they can call up the receiver and say, hey, my mom died and left me a trust as beneficiary and trustee.

And they'd say, I mean, why you told me, and nothing I can do about it. Right? That's not your asset. I have no legal right to take it from you. It belongs to the trust. You can pay your bills, but I can't make you do it. So that's what you're teeing up.

Now there's different ways to do it. We, again, revocable trust. We can do it so that you avoid probate. We can do it through the will. The old fashioned way, it's been done for five hundred years. Many different ways to get there. But in the end, what we're doing is setting up this shell.

And again, some people like, well, I don't wanna rule from the grave. Yeah. You're not. What does this do? If you put your kid in charge, they're the ones giving up the money and paying the bills. So if they wanna spend it, they'll spend it. There's no way for anybody to stop them. You're dead. Right? This thing they're in charge of.

But as long as they follow the rules, which are very, very broad, if somebody comes after them, well, the money's still in the trust, nobody can take it. Right? So it behooves them then to not just take it out and go spend it or put it in their account, just to leave it there. What's the cost? There's really no cost. I mean, they're the trustee. They don't charge. There's a tax return every year, but I don't know if your kid will do the tax return.

People will say, well, there's higher tax rates. No, there’s not. If you distribute the income every year from it to the kid, if the kid takes it out, then they pay the tax at their rate. So the reality is the downside is some paperwork. It's really just not a big deal. And what you get is this wall that's built around the assets so that nobody can get in.

So what's the economy? What's the government rules? What are their marital status? All these things suddenly don't matter because those things only affect things that they own. Right? Not things that are in some trust that their parents set up for them. Right? It has to do with what they own.

So you're addressing all of these uncertain things out there by putting this wall around it that again your kids can ignore if they choose to and take the assets out. They don't like it. So you're not again ruling from the grave. But in most cases, you know, once it's set up, the kids kinda sit back and like, well, I don't know. People do get divorced. My marriage is fine, but maybe I will get divorced.

People who get sued, people who get sick. Why not just leave this trust that my mom or dad set up for me and leave the money in there and invest it appropriately and then use it if I need it. Right? And that way the trust can keep going. Because these trusts in some states like Pennsylvania, New Jersey can go forever. The assets can be there for your kid, and if they don't need them, good for them.

They've done well in life. They didn't need their inheritance. They let it grow. But when they go, it just keeps going for the grandkids. The great grandkids. It just keeps going. That way it’s sheltered until somebody spends it, but they could spend it five hundred years from now.

So you can kinda see these things are pretty flexible. They're fairly inexpensive to set up. I'm not that expensive. And they're pretty inexpensive to run. So why not? Why not address all these uncertainties by giving this wall of protection.

So anyway, that's my two cents. Good talking to you guys, and as always, like and subscribe. If you'd like to know more, there are more podcasts coming, or always give us a ring. Happy to help you out with your specific situation. So you guys take care. Have a good day.